15 June 2016

The new political geography against China


In May 2016, President Barack Obama’s trip to Vietnam reversed, at a single stroke, forty-five years of precedent policies.

In 1971, then US President Richard Nixon went to China to offset the impending American defeat in Vietnam and enroll Beijing on the Western side of the Cold War against the USSR. In 1978, President Jimmy Carter blessed China’s war against Vietnam, which had recently invaded Cambodia to topple the pro-Chinese Khmer Rouge. After that war, despite existing ideological differences, America green-lighted technological exports to China that greatly helped Chinese development in the following decades.

Obama’s recent visit to Vietnam has kicked this process into reverse.

The US lifted its embargo for sale of offensive weapons to Vietnam while still keeping its embargo on the sale of military technology to China imposed after the Tiananmen crackdown in 1989. A few days after Obama’s visit, Japan announced a major military agreement with Vietnam, signaling the establishment of at least two major poles of a new anti-Chinese coalition in the area. Japan and Vietnam, which both have a history of hostility with China, will work together against a common threat: certainly the threat is meant to be Beijing.

It is possible that, given the present clashes and friction around China and in the South China Sea, other countries in the region may join this effort. India is already engaged in intelligence and defense cooperation with Japan and Vietnam.

This is the map of a new political geography against China in the region coordinated by the US. It has not come all of a sudden. A long history precedes these events.

In 1997 and 1998, after the Asian financial crises, China kept its currency stable. It didn’t devalue it, as many financial institutions were suggesting at the time. The Chinese resistance saved the region from a dangerous round of competitive devaluation, which would have worsened the situation – or at least, this was the perception in the region at the time. Based on this experience, in 1999, when Chinese premier Zhu Rongji said that the thorny issues of the South China Sea should be set aside and solved in the future, all countries in the area sided with him and the issue was left dormant for over a decade.

Things were different in 2008 and 2009 with the burst of the American financial crisis. Then, China did indeed contribute to the global recovery by flooding its economy with cash that prompted world demand and growth. But in 2009, when Obama had been just elected president, the US asked Beijing to appreciate the RMB, and Beijing refused. There are still many misconceptions about what was really going on then. The Chinese felt that this US request represented only American interests, and assumed that countries in Asia were already quite satisfied with China’s behavior. In their own opinion, the Chinese were already contributing enough to the US recovery by buying US treasury bonds and sticking to them despite the difficulties of the American economy at the time.

In fact, the request for the RMB revaluation, although voiced by Washington, did not represent only the American view. Many countries in the world, particularly in the region, felt their economies were badly affected by China’s artificially low exchange rate, and that the greatest contribution China could present would be to help those countries’ exports by reevaluating the RMB exchange. They did not present this position to Beijing strongly for various reasons, including some timidity vis-à-vis China. But they did represent these ideas very strongly to Washington, which then took them on.

Proof of the change in the regional sentiment came in 2010, when then secretary of state Hillary Clinton voiced the US interest in the free navigation in the South China Sea. Countries in the area then expressed their support for the US against China, in stark contrast to what happened ten years earlier with Zhu Rongji. China had underestimated the complex dynamics between countries in the region, US, and themselves.

It is not enough for China to seek a good relationship with the US. It is also fundamental for China to have extremely good relationships with its neighbors. The one cannot exclude the other. The gist of this perception is hinted in the speech to the Naval Academy of US Secretary of Defense Ashton Carter. Carter noted that America takes in the concerns and worries of other countries, whereas in the South China Sea, China ignores other countries’ concerns and isolates itself. With hindsight, and looking at the past twenty years of history, perhaps one can see a clear pattern.

During the 1997 financial crises, China managed to put its interests in line with those of the world and of the region and, therefore, it defeated forces that aimed at attacking its own economy. Ten years later, China failed to do so, and had a very skewed vision of international affairs. Many countries felt that their economic and territorial interests were at odds and clashing with those of China.

Now, the issue of the South China Sea has two dynamics, one external, but also one internal. Nationalist factions may use it to force the hand of Chinese president Xi Jinping, who is engaged in a delicate reform of the People’s Liberation Army (PLA). Forces against Xi Jinping’s ongoing anti-corruption campaign might want to drag Beijing into an impossible situation in the South China Sea to make life difficult for president Xi, internally and externally.

The opposition to Xi is really not about the South China Sea or any other foreign issues. It is about Xi’s anti-corruption campaign and its alleged intention to reform the state-owned enterprises – something that would redistribute trillions. In this case, critics would oppose Xi in any case, whether he shows his mettle with the ugly foreigners, or if he tries to take into consideration their concerns.

There might also be forces in China that are against the policy of ‘One Belt, One Road’, which aims at expanding trade in Asia and, therefore, try to push China away from Central Asia and towards the choppy waters of the South China Sea. Officials in Asia and America also quote the arrogance and ignorance of Chinese officials who are callous to other countries’ concerns and are eager only to push forward China’s narrow interests.

All these elements seem to contribute to China’s present international difficulties. These problems, if not solved in a very radical way, could become extremely dangerous for China, as they would compound and multiply the internal difficulties coming from a slowing economic growth and a growing mountain of debts.

In the 1970s, China’s contribution to the Western alliance was also important in bringing down the Soviet Empire. The new regional alliance that the US is shaping in Asia might have similar consequences for China’s current political system. However, China can still unravel this by reaching out both to its neighbors and to the United States and seriously taking on their concerns. The problem is: can Beijing’s internal dynamics allow this?

Francesco Sisci is a Senior Research Associate of China Renmin University. The author of Asia Times’ Sinograph column, he was also Asia Editor for the Italian daily La Stampa and Beijing correspondent for Il Sole di 24 Ore, and has written for numerous Italian and international publications.