A Reverse Pivot: China’s New Grand Canal

Posted on Friday, March 6, 2015 by Samuel Krawitz

(Image Credit: The Economist)

By: Samuel Krawitz

On December 22, 2014, a groundbreaking ceremony was held in the small city of Brito on the Pacific coast of Nicaragua, marking the start of construction on the Grand Canal of Nicaragua— the world’s newest megaproject. The construction is being headed by China through the newly established Hong Kong Nicaragua Canal Development Investment Company (HKND), led by Chinese businessman Wang Jing. The massive project will span 172 miles and cost upwards of USD 50 billion.  The construction plans include ports, power plants, and a bridge over the canal for the Pan-American Highway, as well as proposals for an international airport, free trade zone, and two concrete factories.  

China is currently working to increase its influence in Latin America; a region the United States has traditionally considered its sphere of influence. While the canal could act as a major stepping stone in balancing against the U.S. “pivot” to the Asia-Pacific region, using the canal in this way is ultimately a double edged sword. Completing the canal’s construction could potentially bring economic and strategic benefits to China and Nicaragua, as well as strengthen China’s ties with Latin America; or, depending on the canal’s impact on the environment and economy in both Nicaragua and its neighbors, the canal’s construction could inflict significant damage on Chinese-Latin American relations.

China’s Pivot

This canal project is just the latest of Chinese attempts to increase its influence in Latin America. Recently, Xi Jinping announced plans for investments in the region to reach USD 250 billion in the next 10 years, with projections for trade between the China and Latin America to reach USD 500 billion. In addition to the canal, massive infrastructure projects are being discussed or are under construction throughout Latin America, including twenty-two dam projects and a transcontinental railway. Military engagement between China and Latin America has also been on the rise, mostly to promote good will in countries that are business partners with China. Many of the loan agreements between China and Latin America have very few conditions attached unlike agreements forged with western monetary institutions, making working with China an attractive opportunity.

Value of the Canal for China and Nicaragua

The completed canal is intended to capture the market of triple-e class container ships which the Panama Canal, even with its expansion, would be unable to handle. The Chinese would have the only avenue into the Atlantic which could accommodate these larger ships and could leverage that position to its benefit. The agreement between Wang Jing and Nicaraguan President Ortega also includes a concession to secure HKND’s ownership of the canal, facilities, and lands surrounding the canal for the next 50 years, with the option of renewing for another 50 years. According to experts, having a Chinese company operate the canal in a country that is not strategically aligned with the U.S. eases Chinese fearsthat the U.S. can block Chinese warships from the Atlantic. Unlike the Panama Canal, the Nicaraguan canal would be free from neutrality agreements. Chinese canal ownership also secures an avenue for China’s energy shipping from the Atlantic, potentially from off the coast of West Africa or Brazil.

For Nicaragua, the canal would catapult Nicaragua’s development forward similarly to how the Panama Canal launched Panama’s development. The canal would create thousands of jobs and put Nicaragua on track from being the second poorest nation in the western hemisphere to one of the region’s fastest growing economies, with a projected 14.6% annual growth rate. A canal that brings economic benefits to Nicaragua may entice other Latin American states to cooperate with China in the future, making the canal a worthwhile investment.

Criticisms and Impacts on Chinese Interests

Despite the canal’s potential benefits, there is also a chance the canal’s construction would obstruct Chinese and Nicaraguan interests. Domestic and international critics, including Nicaragua’s neighbor Costa Rica, fear the canal would pollute Lake Nicaragua, a major source of fresh water to Nicaragua and neighboring countries. The planned route also runs through an area with an active hurricane belt, volcanoes, and seismic activity which could further damage the canal, increasing canal costs and deterring shippers from using the riskier route. Furthermore, Colombia has expressed concern over the potential influx of commercial ships operating near disputed maritime territory with Nicaragua. Angering Nicaragua’s neighbors would be detrimental towards China’s pivot to Latin America.

Social impacts to the Nicaraguans may also lead to trouble. Around 30,000 Nicaraguans and indigenous tribesmen live along or near the proposed canal route, but no details have been released about relocation plans or compensation. Only half the labor working on the canal project is going to be Nicaraguan, with Chinese labor and foreign specialists comprising the other half. With growing protests from the Nicaraguan population, this labor divide could further exacerbate the problems between the Chinese and Nicaraguan people due to anger over lost jobs and an influx of Chinese immigrants. Many Nicaraguans also claim that President Ortega rushed the deal through the National Assembly just to sell the country to the Chinese, diminishing Nicaragua’s national sovereignty.


As the U.S. seeks to renew its focus on Latin America, China hopes the canal will increase its sway in the region, not just for the economic benefits but also as a means of demonstrating to the U.S. that they, too, are able to play in another’s backyard. However, even if the canal is not completed, the United States must not become complacent. The canal is far from the only tool in China’s repertoire to advance China-Latin America relations. And while the United States has recently taken steps to mend its relationship with Latin America—mostly notably the decision to normalize relations with Cuba—unless the United States makes significant advances in courting its Latin American neighbors, the U.S. may find itself with a China that is too close for comfort. 

Arming Ukraine: Lessons for Beijing

Posted on Friday, February 27, 2015 by kelseymb

Getty Images via The Hill

By Kelsey Broderick

If the current cease-fire agreement between the rebels and the Ukrainian government fails, as is looking increasingly likely as fighting continues, the United States will have to make an important choice about how to move forward. One of the likely options is arming the Ukrainian government. At a press conference with Angela Merkel on February 9th, President Obama cautioned, "If, in fact, diplomacy fails, what I've asked my team to do is to look at all options"; options which include delivering lethal arms to the Ukrainian government. Whether or not the United States proceeds to go forward with this option will have a profound impact on not only the Ukrainian conflict but also on those watching the drama unfold in Beijing. For Beijing, the outcome of the conflict in the Ukraine could have serious implications for its own ideas of sovereignty and contested territory.

China, Crimea and Core Interests
China has thus far resisted explicitly taking sides in the Ukrainian conflict. On 1 March 2014, China’s foreign ministry spokesman Qin Gang said, "It is China's long-standing position not to interfere in others' internal affairs. We respect the independence, sovereignty and territorial integrity of Ukraine." He was, however, quick to add, “There are reasons for why the situation in Ukraine is what it is today." What Qin was undoubtedly referring to was Western support of a February 2014 coup that ousted the pro-Russian Ukrainian President, Viktor Yanukovych, and paved the way for a pro-West and pro-NATO replacement. This was seen as a direct threat to Russia’s core strategic interests, particularly with regard to Western encroachment on Russia’s borders. Russia responded to this threat by supporting a rebel takeover of Crimea, an area on Russia’s border with a majority Russian speaking population that contains offshore oil and gas reserves and one that houses Russia’s Black Sea Naval Base. 

Beijing also knows a thing or two about core strategic interests. These include not only Taiwan, but also territory in the East and South China Seas, both of which are also internationally contested areas home to large energy reserves.  In the South China Sea, China claims ownership of a large portion of the sea, including areas that overlap with the exclusive economic zone claims of Vietnam, Philippines, Malaysia and others. In the East, China has laid claim to the Senkaku/Diaoyu Islands, an island chain that is currently under control of Japan and lies near rich fishing grounds and oil and gas reserves.

China has repeatedly asserted that it has a historical claim on these areas and has refused to take part in international litigation regarding these claims. Furthermore, the government has made very clear it does not welcome any outside (or Western) involvement in the disputes. The United States, meanwhile, while not directly involved in any of these claims, has robust economic and security agreements with a number of the stake-holders in these disputes and has vowed to increase its presence in Asia. Beijing has undoubtedly drawn parallels between this new push by Washington and the spread of pro-Western sentiment in the Ukraine.

China’s decision not to take a stand on the conflict also reflects the continued and growing relationship between China and Russia. In May, China and Russia signed a $400 billion gas deal and in July, the two countries held a naval drill off the coast of Russia that was the largest drill the People’s Liberation Army had ever participated in. The two countries also share a mutual interest in fostering Eurasian security and hedging against the maritime alliances of the United States

US Response
A decision by the American government to become militarily involved in the dispute in Ukraine would effectively signal to Beijing that expansionist efforts or solutions to territorial disputes that rely on military strength instead of diplomacy will actually give rise to harsh consequences from the United States, particularly when the area in question is of importance to a U.S. ally. Increased U.S. engagement in the Crimea crisis would be particularly striking, as Crimea is not an area that is considered one of the United States’ core interests, much like the dispute in the East and South China Seas. In addition, Beijing might rethink a sudden or rash response to any perceived American encroachment once they see that a similar response would not simply cause America to ‘back off.’

If, on the other hand, the US decides not to pursue a hard line against Russia, then China may be inclined to deepen its friendship with Russia even more. Throwing their support behind Russia’s decision to pursue its core-interests would give China a strong ally if they choose to pursue action in the East or South China Seas. And a strong China allied with a strong Russia would appear as a formidable bloc opposite a weak United States.


China has consistently viewed the American pivot to Asia with suspicion. Xi Jinping has instead called for an ‘Asia for Asians,’ an idea that envisions the people of Asia running their own affairs and managing their own security. If the United States were to provide arms to the Ukrainian government it would send the message that regional disputes that disrupt the security and peace of a region as well as threaten U.S. allies are not actions that the United States will take lightly. China may therefore think twice about escalating conflict in the region under the assumption that they can bully weaker powers without any larger consequences. If Beijing sees that intransigence toward diplomacy and a refusal to stop aggression signals a strong response by the United States, they may be increasingly likely to search for a diplomatic and peaceful solution to their own core interests. And for U.S. allies, sending weapons would show that the U.S. pivot to Asia is not simply empty words.  

A Peculiar Panic: Russia’s S-400 SAM Sale to China

Posted on Tuesday, February 24, 2015 by Samuel J. Mun

By Ian Easton

An excellent Defense News report came out late last year with word that Russia might soon sell its advanced S-400 surface to air missile (SAM) system to China. This has understandably caused something of a panic in Taiwan security circles. Yet the threat may not be as dire as forecast. And, if nothing else, the sale raises a number of interesting questions about the logic of Moscow’s thinking.

First, is it in Russia's strategic interest to have its most dangerous potential long-term adversary equipped with a system that could defend Beijing and reduce Russia's already waning nuclear advantage? Second, will Russia install protective “black boxes” on the export variant of its S-400 SAM so China can't steal and reverse engineer the technology? Will Russia otherwise reduce the export variant's effectiveness? Or will Russia install an electronic back door into the export variant to allow for a remote access “kill switch” in time of need? Finally, what might this deal tell us about Chinese military weakness in terms of indigenous SAM technology?

As for the threat to Taiwan (if indeed S-400s do become operational across the Strait in the coming few years) it must be noted that Chinese air defenses are not invulnerable today, nor will they be in the future. There are a number of risks a Chinese S-400 unit operating near Taiwan, which is officially known as the Republic of China (ROC), would face. In peacetime, S-400 air surveillance radar, if turned on, would be subject to immediate interception by Taiwanese signals intelligence (SIGINT) units on Tung-yin Island, Matsu Island, and the Penghu Islands. It would also be vulnerable to American and Japanese SIGINT units on Okinawa and the surrounding islands, not to mention allied intelligence gathering submarines parked off the Chinese coast, as well as both manned and unmanned aircraft patrolling the East China Sea. Once radar emissions have been captured, they can be studied for the purpose of countermeasure development.         

The effective range of the S-400 system is reportedly quite impressive (if one is to believe Russian claims),  but even with such an intrusive look into Taiwan’s territorial air space, China would not have SAM coverage over Taiwan’s air bases at most operational altitudes. And when in the threat envelope, Republic of China Air Force (ROCAF) pilots could fly low under the system’s radar, which is limited by the curvature of the earth and can't penetrate Taiwan's extremely mountainous geography. In addition, it is often forgotten that Taiwan has had excellent SAM coverage over much of China’s Southeastern seaboard for well over a decade. China is trying to play catch-up with Taiwan and still not there yet.

During a full-scale conflict, Chinese S-400 SAMs across the Taiwan Strait would be vulnerable to attack by Taiwanese electronic jamming and cyber warfare units, anti-radiation drones, cruise missiles, special operations forces, and "wild weasel" type aircraft.  Assuming U.S. intervention, F-22 stealth fighters would also be able to hold Chinese SAMs at risk irrespective of how advanced they may be, and the S-400 would be no exception.  

This possible SAM sale therefore highlights the growing importance of Taiwan's indigenous self-defense programs, including its stealthy unmanned aerial vehicle program, its HF-2E cruise missile program, and its Wan Chien missile program. A Chinese S-400 battalion would be useless against all of these capabilities, and thus highly vulnerable to paralyzing strikes against its command posts and radar nets. Taiwan can still neutralize single nodes of failure in China even with a growing fighter gap working against it. 

Nonetheless, it would be imprudent to be overly sanguine. Chinese S-400s would indeed put pressure on ROCAF fighters conducting routine patrols in Taiwan’s air defense identification zone (ADIZ). They would also offer China an improved defense against Taiwanese F-16s tasked with counterstrike missions during a conflict. To defend against future Chinese SAMs it is important for Taiwan to acquire new fifth generation fighters like the F-35 or a similar indigenous aircraft.  With or without Chinese S-400s, the Taiwan Strait military environment is fast becoming one of the most challenging in the world. ROCAF's pilots have most of the training they need to deny their communist Chinese adversaries air superiority. However, Taiwan must acquire more advanced fighters, missile defense systems, and cruise missiles to keep its defensive edge in this emerging environment.  
There is much Washington could do to help improve Taiwan’s air defenses. For starters, the U.S. should grant Taiwan full participation in the air force Red Flag exercises in Nevada and Alaska. American, Japanese and Taiwanese pilots need to war-game alongside each other and learn from each other.  Each partner air force brings something to the table the others don't have, and ultimately they could all be fighting alongside each other one day in the event that known contingencies were to occur. So it would be best for them to work out the kinks early.

Yet despite the urgent need for greater interoperability between democratic partner nations in East Asia, it appears the U.S. is going to continue bowing to Chinese pressure and keep Taiwan out of Red Flag. For this reason and many others, the Pacific Command is going to find itself sub-optimally prepared to face the emerging strategic environment in the Western Pacific. American policymakers and strategists could do better in supporting Taiwan. And Taiwan could do more to highlight its concerns regarding China’s military build-up. This is no time to panic.        

Sri Lanka’s Election: Implications for China and the US

Posted on Wednesday, January 28, 2015 by kelseymb

Image source: Reuters/Dinuka Liyanawatte

by Kelsey Broderick

The results of the January 8th presidential election in Sri Lanka took many by surprise, but the biggest shock may have been felt in Beijing. Incumbent candidate Mahinda Rajapaksa, who is credited with ending the country’s 25 year long civil war in 2009 and the steep decline of poverty in the country from 2002 to 2009, lost to Maithripala Sirisena, a former member of Rajapaksa’s cabinet. Rajapaksa’s defeat, however, was due primarily to increased frustration with the cronyism and corruption endemic in his administration, with much of this frustration aimed at the increase in opaque loans and investment from China. Now China faces a new Sri Lankan president who will be responsible for addressing these concerns and answering to a population calling for greater transparency and a more balanced foreign policy.

China and Sri Lanka: Partners in Growth

In recent years, Chinese investment in Sri Lanka has grown considerably. Government lending reached $490 million in 2012 and the volume of trade between China and Sri Lanka exceeded $3 billion in 2013, with China becoming the second largest supplier of imports in Sri Lanka after India.  Two recent development projects in particular have gained both local and international attention. In 2013 China pledged $1.4 billion to build a port in Sri Lanka’s capital city, Colombo, and planned to finance 85% of a new development zone in Hambantota. Part of this zone will include a $500 million dollar port on the southern end of Sri Lanka.

Domestically, concerns have been raised over the nature of these investments and their beneficiaries. The government has been accused of handing out these multi-billion dollar projects to the Chinese without oversight, open bidding or public accounting. There have been allegations that the Rajapaksa government has been accepting commercial loans instead of low interest financing or grants in order to curry favor with Beijing and funnel money into the hands of government officials.

Internationally, China’s involvement in Sri Lanka has been viewed as an attempt by China to grow its military presence overseas. In 2014, Sri Lanka allowed China to dock both a submarine and a warship in the capital port of Colombo, which India viewed as a violation of its longstanding security treaty with Sri Lanka.  A Hong Kong newspaper also reported that as part of the investment agreement in Hambantota, a number of berths in the port would be reserved for China for 35 years. These claims have provided strong support for the idea that China’s eventual goal was not to use Sri Lanka as simply a port for refueling, but instead as a military outpost.

New Challenges for Beijing

Now that Rajapaksa has been voted out, however, any plans made by Beijing will have to go through the new government led by Maithripala Sirisena, Sri Lanka’s new President elect. This may prove to be difficult as Sirisena ran on a platform that strongly criticized continuing China’s dominant involvement in Sri Lankan affairs. In his pre-election manifesto he promised that “Equal relations will be established with India, China, Pakistan and Japan – the principal countries of Asia...” Regarding the economy, he took aim at Chinese foreign investment, writing: “…I will prevent the appropriation by foreign states or companies of strategic locations that endanger the economic security of Sri Lanka.” His new cabinet has also taken a rhetorical hard line against China. Ranil Wickremesinghe, the new prime minister, has promised to cancel the new port city in Colombo, while Harsha de Silva, the economic affairs spokesman for the United National Party, has said that the government will review all major infrastructure projects for irregularities.

Looking solely at these claims, it seems clear the new government hopes to curtail China’s role in Sri Lanka in favor of more balanced international relations and a more transparent process of investment. However, in reality it is unlikely that the new government will stop relying on China as a source of easy money. In China, large state-backed banks provide ample funds for state-owned companies to invest abroad. Unlike other sources of foreign capital, the state-owned nature of Chinese companies means that profit is not always a primary goal and thus these companies are willing to take on larger investments with more risk involved. In addition, China and Sri Lanka are set to sign a free trade agreement later this year— an agreement Sri Lanka is unlikely to turn down given their large budget deficit. While it may be easy to promise more diverse foreign investment, Sirisena may be hard pressed to find an equally available source of capital.

Another reason to be wary of the anti-Chinese rhetoric coming from Sirisena’s government is the very nature of his election. Sirisena’s electoral coalition was made up of members of the opposition party, former members of Rajapaksa’s party (the Sri Lankan Freedom Party), former revolutionaries, the country’s largest Muslim party and the principle Tamil minority party. The overlapping interests of these parties may have brought him into power, but to maintain their support he will have to balance a myriad of voices and demands. He was also elected by only 51.3% of the votes, which means Sirisena does not have a strong base of support among a large portion of the country. Given these realities, it may be difficult for Sirisena to implement the reforms he feels the country needs.

Room for Others

Sirisena’s win has, however, opened up a window of opportunity for countries worried about China’s growing influence. India and the United States both took a back seat on investment in Sri Lanka after voting in favor of the UN Commission of Inquiry set up to investigate allegations of massive and serious human rights abuses against the Tamil minority. But Sirisena has repeatedly promised to reply to the allegations of human rights violations from both the UN and Sri Lanka’s 2011 domestic inquiry, take action to promote humanitarian attitudes and investigate possible war crimes. The United States and India should push Sirisena to follow through on these promises and reward progress with increased political and economic engagement. The United States can and should also take advantage of the current opportunity to push Sri Lanka toward a more open and transparent political and social environment. With foreign support from two large democracies, Sirisena may find it easier to move away from China’s sphere of influence. 

Japan’s Snap Election: a Risky Game for Abe and Abenomics

Posted on Wednesday, December 3, 2014 by Kota Takahashi

(Photo Credit: EPA)

By Kota Takahashi

On 18 November, Japanese Prime Minister Shinzo Abe announced that he will hold a snap election for the lower house of the Diet following his decision to postpone the increase of a consumption tax originally scheduled for April 2015. Very few observers, if any, anticipated an election just a few weeks ago; there was no national election scheduled until 2016, and the ruling coalition between the Liberal Democratic Party (LDP) and New Komeito held majorities in both houses of the Diet. Taking these conditions into consideration, two factors help explain the rationale behind Abe’s decision to hold a snap election.

Intra-party Power Struggle within the LDP

The LDP has dominated post-war Japanese politics for all but four years since it was founded in 1955. Absent a competitive opposition party capable of challenging the LDP’s rule, political competition took place among various factions within the LDP for decades. Though the influence of factions has waned over recent years, such traditions still remain in the LDP. In the case of a leadership transition, it would be more likely for Abe to be thrown out of power by other LDP politicians than by opposition parties, given that the election for the LDP president—i.e. the prime minister—is coming up next fall.

The most threatening rival for Abe is Shigeru Ishiba, former Minister of Defense and currently the Minister for Vitalizing Local Economy. Though he lost against Abe, Ishiba overwhelmed him in the initial voting of the previous LDP presidential election in September 2012 by attracting support from local voters. Since then, Ishiba effectively bolstered his inner-LDP power base during his previous tenure as the Secretary-General of the LDP (de-facto head of the party) and continues to enjoy high public popularity. It is widely believed that Ishiba might challenge and possibly defeat Abe in the 2015 LDP presidential election.

Another intra-party concern for Abe is posed by the fiscal hawks within the LDP. This group, who emphasize the importance of maintaining a balanced budget and pressured Abe into raising the consumption tax as scheduled, include influential factional czars of the LDP such as Taro Aso (current Deputy Prime Minister and Minister of Finance and former Prime Minister) and Sadakazu Tanigaki (current Secretary General of LDP and former President of the LDP). Abe has significantly raised the risk of losing his intra-party support by rejecting their demands.

Facing these challenges from within his own party, it was urgent for Abe to rebuild his political foundation within the LDP by gaining strong public backing for his economic initiatives. Indeed, he framed his justification of the tax-hike delay as one of the key agendas of the election, which is, with the exception of LDP fiscal hawks, supported by most Japanese politicians.


Another factor contributing to Abe’s rationale for calling a snap election is the shortcoming of the so-called “Third Arrow” of Abenomics. The other two “arrows” of Abe’s three-pronged economic policy—monetary easing and fiscal stimulus—succeeded in boosting the Japanese economy, but analysts agree that the “Third Arrow” of structural reforms is essential for maintaining long-term growth of the Japanese economy.

Despite its initial optimism, the Abe administration has so far failed to fulfill its economic promises vis-à-vis the “Third Arrow.” One of the reasons is the intransigent bureaucracy, such as the Ministry of Health, Labor, and Welfare’s resistance against labor reforms and restructuring of the Government Pension Investment Fund. Abe’s reform plans have also been blocked by interest groups, most notoriously by the JA-ZENCHU (Central Union of Agricultural Co-operatives) which opposes domestic agricultural reforms and Japan’s participation in the Trans-Pacific Partnership (TPP).

Abe’s initial plan to push through reforms lost momentum after his popularity declined due to other unpopular policies and cabinet member scandals. His branding of this snap election as “the referendum on Abenomics” signifies that Abe is seeking a mandate from voters to implement the critical agenda of his economic policy.

Looking Ahead

Given the disarray of opposition parties and the relatively high popularity of the LDP, the ruling coalition is unlikely to be forced out of power in this election. However, this does not directly translate into a decisive victory for Abe. Any substantial loss of seats, especially if the ruling coalition were to lose the absolute majority (two-thirds of total seats), can lead up to a movement within the LDP to overthrow Abe in next year’s LDP presidential election. Even a decisive electoral victory cannot guarantee a smooth implementation of Abe’s reform policies as the landslide victory in the 2012 election accomplished little in this regard. Either way, the stakes are very high for both Abe and Abenomics.

Implications to U.S.-Japan Alliance

Diplomacy and security policy are not high on the voters’ agenda; in a recent poll, only 7% answered that diplomacy and security policy are high on their checklist, compared to 30% for economic policy. However, there will still be repercussions to the U.S.-Japan alliance. Abe recently suffered a defeat in Okinawa’s gubernatorial election in which a candidate opposing the relocation of Futenma Air Base to Henoko prevailed over the pro-Abe incumbent, and any election results that can be interpreted as a lack of public support for Abe can pose further challenges to the central piece of U.S.-Japan alliance. The same can be said about legislation amendments to implement the new constitutional interpretation on collective self-defense, which is scheduled early next year. On the positive side, TPP negotiation might see a breakthrough in the difficult issue of Japanese agriculture if Abe can propel his economic reforms with this election. All issues being vital elements of the U.S. “Rebalance to Asia,” the success of American Asia policy is arguably at stake in this election.

China’s Friendship Treaty: a Distraction from South China Sea Diplomacy

Posted on Monday, November 24, 2014 by David Gitter

Image Credit: AFP
By David Gitter

As China once again offers ASEAN states billions of dollars and promotes another treaty for "Good Neighborly and Friendly Cooperation" (which sounds an awful lot like the Treaty of Amity and Cooperation), Southeast Asian nations should consider how China perceives ASEAN and what goals it hopes to gain from its interactions with it. By and large, China has maintained a favorable view of ASEAN since opening relations with it in 1991. Two factors contributing to Beijing’s positive perception of the Association include its flexible and non-binding “ASEAN Way,” and its openness to Chinese win-win overtures that help Beijing secure its territorial ambitions in the South China Sea (SCS). Given China’s exploitation of these characteristics in pursuit of its expansionist goals, ASEAN should seriously consider whether it wants to sign on to another vague deal when diplomatic capital might be better spent on alternative frameworks.    

Perhaps unexpectedly, China finds ASEAN a favorable diplomatic partner in part because its diplomatic style is compatible with China’s. American criticisms that are directed at both ASEAN forums and the US-China Strategic and Economic Dialogue are remarkably similar, describing both bodies as talk-shops that lack substance and are at times largely symbolic. However, these very characteristics of the “ASEAN Way” offer Beijing a non-confrontational, consensus-based mechanism for addressing regional issues that is in stark contrast to the expectations levied on Beijing in Western diplomatic forums. Like ASEAN, China’s own diplomatic style has traditionally tended to focus more on form than on substance.[1] Although the ASEAN Way may frustrate western governments that seek to achieve concrete decisions after attending the Association’s many meetings, [2] Chinese diplomats likely find ASEAN diplomacy preferable for its comparatively ambiguous, hard to enforce agreements. This inclination mirrors the Chinese Communist Party’s (CCP) domestic preference for guidelines and regulations versus detailed, enforceable laws that could threaten to control Party actions.[3] In the SCS, this preference is reflected through Beijing’s vocal support for vague and easily circumvented agreements such as the Treaty of Amity and Cooperation (TAC) and the Declaration of Conduct on the South China Sea (DOC), and its relative lack of enthusiasm for a Code of Conduct on the South China Sea (COC). Beijing has even less regard for the SCS plan of the only other non-ASEAN claimant, Taiwan’s East China Sea Peace Initiative, which Taipei asserts is applicable to the SCS and has successfully guided the island’s diplomacy towards maritime dispute resolution with Japan and the Philippines.

In addition to its predilection for amorphous agreements such as TAC and the DOC, Beijing finds ASEAN receptive to its win-win diplomatic framework, which allows China to slowly consolidate its territorial claims in the SCS in exchange for economic gain. China seems to have first adopted this view during the Asian Financial Crisis of 1997, in which China wasted no opportunity to publicize its leadership and responsibility by highlighting its decision not to devalue the RMB at “a big price” to itself. Chinese leaders seem to assess that the crisis showed ASEAN that strengthening mutually beneficial cooperation and regional economic integration was the route that both ASEAN and China must take to achieve common development and prosperity. China now has an FTA agreement with ASEAN and is the Association’s largest trading partner, with a total of 443.6 billion USD in trade in 2013. In fall 2013 Xi Jinping announced his plan for a new commercial route dubbed the “Maritime Silk Road”, in recognition of ASEAN and China’s “shared destiny” that enables ASEAN to benefit from China’s development. Additionally, China believes that its new Asian Infrastructure Investment Bank can become an important source of financing for ASEAN as it strives to meet its massive infrastructure needs. The ongoing theme seems to be that Southeast Asian countries can once again benefit from China’s development and wealth as it did centuries ago. 

Nevertheless, if Beijing’s message of co-prosperity and development is the carrot of China-ASEAN relations, then economic isolation and coercion is the stick. China maintains that the SCS is not an issue between ASEAN and China. When the Philippine’s challenged Beijing over their bilateral territorial dispute, it found its fruit exports blocked and a “safety” ban enacted that stopped Chinese tourism to the archipelago. President Xi Jinping and Premier Li Keqiang made a point to skip the Philippines on their fall 2013 Southeast Asia tour, where the leaders signed lucrative business deals and set ambitious trade targets. Likewise, recent Chinese maps of China’s Maritime Silk Road show its path conspicuously bypassing the Philippines as it winds from Southeast Asia all the way to Venice. Now even as Premier Li pushes for a "Treaty of Good Neighborly and Friendly Cooperation between China and ASEAN Countries", China continues its land-reclamation activities in the SCS and is currently building an island large enough to hold an airstrip. Clearly Beijing’s message is not lost on ASEAN, which has yet to publically unite against China’s gradual territorial gains even at its own expense.

In consideration of Beijing’s efforts to leverage the ASEAN Way and win-win diplomacy to advance its territorial goals, ASEAN states should think twice before signing on to China’s treaty of friendship and cooperation. They should recall that the TAC, DOC, and the ASEAN-China joint statement on DOC in South China Sea have yet to moderate China’s actions in disputed waters; there is little reason to believe a new friendship treaty will incentivize Beijing to restrain itself. ASEAN should instead seriously consider Taiwan’s East China Sea Peace Initiative, which the US Republican Party (now in control of both houses of Congress) strongly advocated for through a Resolution Supporting Taiwan’s Peace Initiative in the South China Sea. If a united ASEAN can leverage stronger US support to shield it from Chinese indignation, the initiative may prove a preferable diplomatic platform for joining ASEAN and Taiwan against creeping Chinese expansion in the SCS.   

[1] Shambaugh, David. "China's Global Diplomatic Presence." In China Goes Global, 45-120. New York:
     Oxford University Press, 2013.
[2] Sutter, Robert. "Security Trends and Issues in Southeast Asia and the Broader Regional Order."
     Lecture, George Washington University, Washington, DC, October 29, 2014.
[3] Shambaugh, David. “The Government: State Council, National People’s Congress, & CPPCC.” Lecture, George Washington University, Washington, DC, November 3, 2014

Modi's Visit to Tokyo: A Snapshot of Japan-India Relations

Posted on Thursday, October 30, 2014 by Kota Takahashi

(Photo Credit: AP)

By Kota Takahashi

Japanese Prime Minister Shinzo Abe has been working fervently to strengthen ties with countries outside of its direct neighborhood while relations with China and South Korea remain cool. A recent highlight of his diplomacy is newly-elected Indian Prime Minister Narendra Modi’s five-day visit to Japan from 30 August to 3 September. This visit was significant in multiple ways. Not only was it the longest visit by an Indian leader to Japan in years, but it was Modi’s first visit to states outside of its direct neighborhood since his elevation to Prime Minister in May. Prior to his visit, Modi’s official Twitter account even tweeted in eloquent Japanese, which received warm responses from the Japanese public. These episodes symbolize India’s willingness to reach out to Japan and underscore the mutually beneficial relationship between the two countries. However, a closer look at what came out of Modi’s visit shows that the reality is not so simple; there is a significant gap in the extent of bilateral cooperation in economics and security.

Modi’s visit brought about important outcomes to facilitate the underdeveloped economic relationship between Tokyo and New Delhi. According to the Japan External Trade Organization, bilateral trade between Japan and India amounted to only about 5% of that between Japan and China, and Japanese direct investment to India was only about one-fifth of that to China.  Abe’s announcement of his intention to pour in a total of USD$32.4 million in public and private investment and financing to India in the next five years was targeted to boost this lagging interaction.  Another important accomplishment in the economic dimension is investment projects directed to Indian infrastructure. India’s poor infrastructure—in which half of all roads are unpaved and 300 million people (roughly the same size as the U.S. population) live without access to electricity—is estimated to cost India as much as 2% of its GDP annually. On the flipside, accelerating the export of infrastructure has been the central agenda of Japan’s economic growth strategy, as seen in its ambitious goal of tripling infrastructure export totals by 2020. This match of supply and demand resulted in the agreement in which Japan will transfer USD$463.3 million to the India Infrastructure Finance Company Limited, along with around USD$144.6 million for the Guwahati Sewerage Project in Assam.

Compared to these accomplishments in the economic sector, progress in the strategic and security dimensions remained at best symbolic. Though its negotiation was reignited in May last year, a nuclear cooperation deal between Japan and India is still yet to be signed. The bilateral framework between Japanese and Indian foreign and defense ministers (2+2) was not elevated to the ministerial level from the current vice-ministerial level. After months of prolonged negotiations—one Indian media source reported that “Japan is close to signing an agreement to supply amphibious planes to India” as early as May last year—talks about the Indian purchase of ShinMaywa US-2 amphibious aircraft from Japan remain inconclusive.

One of the rationales behind this is the difference between the two states in their relations with China. Japan’s relationship with China has been rocky due to territorial rivalry and historical animosity, so much so that their heads of state have not had a summit since they both came to power about two years ago. On the other hand, despite Modi’s swipe at China prior to meeting with Abe, New Delhi has few reasons to frustrate Beijing by forming an anti-Chinese coalition with its regional rival. Beijing was quick to grasp the opportunity to improve China-India relations, sending its Foreign Minister to India promptly after Modi’s electoral victory. Though India and China had a border spat in the same region last year, their relationship was relatively stable at the time of Modi’s trip to Japan. There has been little development in the Chinese “String of Pearls” strategy that some in the defense industry argue is intended to militarily encircle India. And most significantly, since Japan cannot unilaterally satisfy all of India’s investment demands, India needs stronger ties with China to accelerate economic development further. In short, there is a significant disparity between the two countries in how they assess the Chinese threat and its economic power.

Of course, this does not mean that Japan and India cannot cooperate to achieve their national interests or that their ties are insignificant. There are numerous issues where the goals of both countries overlap and there is no doubt that Modi’s visit was a positive development. But the fact that both countries share certain values and interests does not directly translate into a strong political coalition between Japan and India, especially on critical and sensitive issues such as their relations with China. In this context, the recent standoff between India and China in the disputed region near Aksai Chin could work as a catalyst for bolstering Japan-India relations, but it remains to be seen how that will play out. 

China’s Economic Leverage in Hong Kong a Warning for Taiwan

Posted on Monday, October 27, 2014 by David Gitter

Image Credit: AP Photo/Xinhua, Rao Aimin

By David Gitter

China’s position that Taiwan’s economic future lies with the Mainland is crystal clear, and has been a consistent message throughout recent years. In the run-up to Taiwan’s 2012 presidential election, Beijing leveraged a minority of Taiwanese pro-unification groups and think tank scholars to supplement its own assertion that Ma Ying-jeou’s plan for a “Golden Decade” was inseparable from the Mainland’s development, and specifically in line with the economic measures of Beijing’s 12th Five-Year Plan. This year on the sidelines of the Boao Forum for Asia (BFA) Annual Conference, Chinese Premier Li Keqiang publically called on Taiwan to take full advantage of China’s economic growth, and offered Taipei first privileges to the Mainland’s development opportunities. Likewise, President Xi Jinping has stated that cross-strait economic integration will bring about mutually beneficial win-win results that should not be impeded.

Both Ma Ying-jeou and top Mainland officials have reiterated their support for an “economics first, politics later” approach to cross-strait relations, but the difference in perception of what the ultimate end-goal is makes economic integration a dangerous game for Taipei. Top Chinese Communist Party (CPP) leaders have cited the Economic Cooperation Framework Agreement (ECFA) as one of many ways to develop cross-strait relations with peaceful reunification as the target objective. Such integration is viewed by Mainland Chinese in terms of laying a larger foundation for the step-by-step process towards achieving China’s reunification. At the CCP 18th Party Congress in November 2012, Hu Jintao stated that under the one country two systems rubric, both sides of the strait should deepen economic cooperation to increase common interests.

However, this may prove to be a problem for Taiwan if Beijing tries to leverage these common interests to achieve its own political ends which Taipei does not share. Taiwan’s leaders undoubtedly understand this danger, but they see a lack of alternative options for fear of being left out of Asia’s economic integration. This has created a convenient lever for Beijing, as Chinese leaders try to make Taiwan’s regional economic integration contingent upon furthering the cross-strait economic merger.  Even so, it is obvious that by playing along Taipei has secured some dividends. President Ma correctly notes that after signing ECFA, sudden progress was made in other bilateral trade deals with Singapore, New Zealand, Japan, and the European Union.

Despite these breakthroughs, Taipei must fully prepare for how Beijing may use the growing cross-strait economic lever to pressure Taiwan into political concessions. Taiwanese scholars have pointed to how CCP leaders are using economic ties to garner influence in Hong Kong, drawing cogent parallels between the 2003 Mainland-Hong Kong Closer Economic Partnership Arrangement (CEPA) and the more recent cross-strait service trade agreement. CEPA allowed the Mainland to become Hong Kong’s largest trading partner. As economic dependency on the Mainland grew, Beijing fostered considerable informal control through contacts with business leaders in the special administrative region. The CCP has long called for “using business people to pressure politicians.” Notably, Hong Kong business tycoons were rewarded with membership and honorary titles in the CCP’s comprehensive united front entity, the Chinese People’s Political Consultative Conference (CPPCC). Now as foreign governments and the United Nations Human Rights Committee voice their support for Hong Kong protesters’ demand for free elections, many of the city’s own business magnets with vested interests have publically opposed the movement as disruptive to the territory’s prosperity following a closed-door meeting with Xi Jinping in Beijing. Given the CCP’s consistent use of united front tactics such as “aligning friendly forces” in the push for national reunification, it is only logical to assume that when Beijing feels its economic leverage is sufficient, Chinese leaders may increasingly call upon Taiwan’s business moguls to parrot its cause.

Hong Kong’s example demonstrates that Taipei must guard against China’s strategy of utilizing cross-strait economic manipulation to achieve political goals. In order to protect itself, Taipei must ramp up a considerable economic reform agenda that includes aggressively pursuing regional free trade agreements. In addition to helping diversify Taiwan’s economic partners, the Trans-Pacific Partnership (TPP) would be instrumental in driving domestic economic reform and have a positive impact on productivity and competitiveness. Taipei should also recognize growing evidence that China’s economy may be headed for future troubles similar to Japan’s financial crisis in the 1990s, making diversification all the more important. As the Mainland’s neighbors become disillusioned with Beijing’s coercive foreign policy and seek to minimize their own economic dependence on China, new opportunities may take shape for Taiwan with other Asian states. Taiwan should seek to capitalize on these favorable circumstances, and build new lucrative relations independent from cross-strait integration.

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