Country Report: China (December 2016)

Danielle F. S. Cohen (assisted by Dong Jiaxin)

During the fall of 2016, Chinese experts continued to evaluate Sino-Russian and Sino-US relations. They drew attention to Japan’s “Taiwan faction,” assessed strengthening Japanese-Australian relations, and analyzed South Korea’s foreign relations strategy. They also considered the negative impact of local NGOs on China’s ability to complete various One Belt, One Road (OBOR) projects. Written before Trump’s election, the Trump-Tsai phone call, and the collapse of the Park administration, the articles bring into sharp relief a set of assumptions about regional and global affairs that have been suddenly called into question.

Sino-Russian Relations

In Shijie Jingji yu Zhengzhi No. 9, 2016, Xing Guangcheng assesses Sino-Russian relations as a new form of great power relations. Although the two countries have not formed an alliance, they have established a strong “comprehensive strategic coordination partnership.” This partnership encompasses a wide array of political, economic, and cultural issues, is durable at both the leadership and the popular levels, and extends to regional cooperation in the border regions.

As a starting point, Xing details the “four nos” that characterize Sino-Russian relations. First, there is no alliance. Xing points to the power imbalance between the Soviet Union and China as a key reason for the downfall of their relationship, and argues that the current Sino-Russian relationship is able to proceed smoothly precisely because it is grounded in equality. Second, bilateral relations are not antagonistic, meaning that the two countries have agreed not to actively oppose each other. Third, the bilateral relationship is not directed at any third party, but is instead designed to promote each country’s national interest. Consequently, Xing argues, the partnership does not restrict either party’s relations with other states. Finally, the relationship is non-ideological, in contrast to the Sino-Soviet alliance. Each country agrees to respect the development path of the other and to refrain from intervention in domestic affairs, particularly with regard to democracy, human rights, and the color revolutions.

Xing next explores bilateral cooperation in regional affairs. He emphasizes Russia’s support for China’s OBOR projects and its willingness to link its Eurasian Economic Union (EEU) to China’s Silk Road Economic Belt (SREB). Xing highlights the two countries’ cooperation on a high-speed railroad and the Mongolian economic corridor. He also notes Russia’s renewed attention to the development of its Far East, and its efforts to increase economic cooperation with the countries of Northeast Asia and ASEAN.

According to Xing, the strong bilateral relationship reflects the two countries’ support for multilateral institutions, including the SCO, BRICS, and the G20. Since the Cold War, the two countries have shared a commitment to the creation of a multipolar world and the development of a more equitable international order—in other words, they both oppose US hegemonic control of international security and the global economy. Xing’s list of actions to which both countries are opposed, including unilateral sanctions and regime change, reads as an indictment of US foreign policy. Naturally, this position is framed as a shared desire for global stability and respect for international law.

Xing concludes that the mutual trust and equal footing of the two countries, made possible by the resolution of their border disputes, enables the stable development of bilateral relations. These principles distinguish the Sino-Russian relationship from other great power relations, and allow the two countries to overcome disagreements about particular issues through productive consultations.

Sino-US Relations

In Shijie Jingji yu Zhengzhi No. 9, 2016, Yuan Peng lays out an ambitious plan for the United States and China to create a new model of great power relations in order to remake the world order. Yuan begins by portraying a collapsing international order, with stagnant economic growth and a refugee crisis in Europe, social and economic tensions brought to the fore by populist movements in the United States, and the Middle East entering the “Dark Ages.” He argues that the successful creation of a new world order will require cooperation between China and the United States, which in turn necessitates a new form of great power relations that stresses cooperation rather than power politics. Despite the vitally important task ahead of them, the two countries have not reached a consensus on their mission. As the leader of the postwar world order, the United States is invested in the status quo. Although the Chinese have not directly challenged this order, Yuan cautions that this reflects their pragmatism, rather than their acceptance. Meanwhile, some in the United States are suspicious that OBOR, which the Chinese describe as an integrated domestic and regional development plan, is actually an attempt to surreptitiously construct a new world order with China at the center. Nevertheless, Yuan is optimistic that the two countries can find a way to work together. (Among the successes Yuan points to is Sino-US cooperation on the Iran nuclear deal, now called into question by the incoming US administration.)

To encourage Sino–US cooperation, Yuan proposes a three-step strategy. First, the two countries must stabilize their relations and develop a bilateral framework that is capable of meeting current challenges. Yuan argues that China has been more willing to offer recommendations, while the United States has been less willing to engage in these discussions. China must take concrete actions to alleviate US concerns, such as defining its core interests in order to remove uncertainty from the relationship. Meanwhile, the United States needs to think more strategically about the long term. Both need to exhibit a greater willingness to consider the position of the other side. Despite existing tensions, Yuan asserts that the institutionalization of relations between the two countries, such as the development of crisis management mechanisms, suggests that relations are progressing.

Second, China and the United States must develop a model for co-existence in the Asia Pacific. Yuan argues that Xi’s call for “peaceful co-existence” is not an attempt to carve the region into spheres of influence, as the United States believes. He points approvingly to proposals by prominent Western figures, such as Kissinger’s “Pacific Community” and Brzezinski’s “Pacific Charter.” Likewise, the Chinese are using bilateral investment treaties as a path toward building a China-US FTA in the medium term, and to eventually achieve an Asia-Pacific FTA that supersedes both RCEP and the TPP. (The likelihood of a China–US FTA has decreased significantly with Trump’s election, as exemplified by his stated desire to impose a 45 percent tariff on Chinese goods. It is also now highly unlikely that the United States will ratify the TPP.)

Third, China and the United States must share responsibility for resolving global challenges. Yuan points positively to recent international cooperation, including the G20’s efforts after the global financial crisis, the 2015 Paris Climate Accord (the future of which is uncertain under the incoming Trump administration), and cooperation on medical crises, such as that posed by Ebola.

Yuan concludes that the great powers—China and the United States—must take the initiative to create a new world order that is capable of meeting current challenges. While the new order should retain the norms of the UN Charter and the Westphalian system, the two countries should be transformative and innovative in order to advance with the times and create a more equitable world order.

Yuan’s article is seemingly conciliatory, emphasizing the potential for cooperation between the two countries, but is also strikingly bold, with its assumption that China should play an equal role to the United States in constructing a new world order. In doing so, it moves far beyond the usual Chinese insistence that Beijing is more interested in regional stability than in global power. Yuan’s assumption that the United States will play a leading role in creating the new world order is called into question by president-elect Trump, who ran on an isolationist foreign policy platform, and the prospects that the United States would cooperate with China on such a project, already acknowledged to be less than stellar by Yuan, become even dimmer given Trump’s outreach to the ROC and sharp criticism of the PRC’s economic policies.

Japan’s Taiwan Faction

In an article in Xiandai Guoji Guanxi No. 9, 2016, that takes on new significance in the aftermath of the Trump-Tsai phone call and Trump’s public questioning of the “One China” policy, Lian Degui and Lan Xi examine the history of Japan’s Taiwan faction and its implications for current Taiwan-Japan relations. Tsai’s election renewed the energy of pro-independence forces on Taiwan, who found a sympathetic ear in the pro-Taiwan faction of Japan’s right-leaning politicians.

Lian and Lan first detail the creation of the Taiwan faction following World War II. The group initially consisted of ex-military officers and hawkish pre-war politicians who had returned to power as members of the LDP following the war. They supported Chiang Kai-shek’s efforts to retake mainland China out of a sense of gratitude to Chiang for allowing Japanese soldiers to survive the transfer of Taiwan to the ROC and because of their strong anti-communist views. Lian and Lan detail the role of Abe Shinzo’s relatives in the formation of the Taiwan faction, most notably his maternal grandfather, Kishi Nobusuke, who visited Taiwan as prime minister in 1957, and his great-uncle, Sato Eisaku, who remained reluctant to normalize ties with the PRC as his time as prime minister came to an end in 1972. Lian and Lan also trace the rise and fall of qinglanhui (青岚会), a pro-Taiwan faction of the LDP that opposed Japan’s normalization of relations with the PRC, from 1973-1979. This group included many members of the Fukuda faction, who were under the influence of Kishi. Although the surviving members of this group are elderly, their descendants (whether biological or ideological) are ascendant in the modern LDP. Following normalization in 1972, the LDP’s Taiwan faction established the Japan-China Legislators’ Problem-Solving Talks to continue economic and cultural exchanges between Japan and Taiwan. Since 1997, this group has expanded beyond the LDP to include members of various Japanese parties. Japan’s pro-Taiwan faction has worked to maintain the separation between the two sides of the Taiwan Strait.

Although personal support for Chiang Kai-shek and anti-communist views were important motives for the formation of the Taiwan faction, its organizers were also motivated by a desire to ensure Japan’s security through coordination with the United States. In the late 1950s, they pushed for a revision to the US-Japan security treaty to include Taiwan. Their concern was not as much with continued control of Taiwan by Chiang as with a desire to prevent unification. Japan came to see Taiwan as an “unsinkable aircraft carrier” that protected Japan’s maritime interests. The pro-Taiwan faction also worked successfully to insert a “Taiwan clause” into the 1969 Sato–Nixon communique. In the 1990s, they pushed for “situations in areas surrounding Japan” to include incidents in Taiwan. Although the 1997 US-Japan Defense Guidelines did not explicitly mention Taiwan, given objections raised by Beijing, Lian and Lan argue that Abe, a member of the Japanese special committee that oversaw the negotiations, has asserted that the phrase clearly includes Taiwan.

Today, the pro-Taiwan faction works to maintain Taiwan’s separation from the mainland in order to preserve Japan’s regional strategic interests. To this end, Abe’s younger brother, Kishi Nobuo, led a 2014 meeting of the LDP Group of Junior Lawmakers for the Promotion of Economic and Cultural Relations between Japan and Taiwan. Abe is reportedly studying the possibility of enacting a Japanese version of the Taiwan Relations Act, which would upgrade Japan-Taiwan political and security relations.

Lian and Lan conclude that the Taiwan faction seeks to increase Japan’s strength relative to China by playing the Taiwan card against the mainland. Japan hopes to benefit from a “divide and rule” strategy. In 2013, as tensions with the mainland over the Senkaku/Diaoyu Islands ratcheted up, Japan and Taiwan reached a fisheries agreement that allowed Taiwanese fishermen access to part of what Japan claims as its EEZ. Lian and Lan also allege secret collaboration between Japan and the Tsai administration since she took office in May. In addition, they argue that Japan seeks to preserve the Cold War system, of which it has been a beneficiary. It wants Taiwan to remain part of a new Cold War system based on shared values, and is pursuing a Japan-Taiwan FTA. Furthermore, the Taiwan faction supports Taiwan’s de facto independence. According to the authors, this position dates back to early Taiwanese pro-independence activists, who fled Chiang’s regime and found refuge in Japan. Finally, they view the Taiwan faction’s support for Taiwan as consistent with US strategy (perhaps even more so in the Trump era).

With the rise of Tsai Ing-wen, and the leadership of Shinzo Abe, the potential for deepening Taiwan-Japan relations is strong. In October 2015, then-candidate Tsai visited Japan and met with Kishi Nobuo in Yamaguchi Prefecture. She also allegedly met with Abe himself, a meeting both Abe and Tsai deny. Kishi visited Taiwan in May and met with Tsai just before she took office. The next month, Tsai joined Abe’s mother at a performance of the NHK Symphony Orchestra in Taipei. With these meetings, Lian and Lan caution that Taiwan and Japan are bumping up against China’s bottom line on Taiwan. As a result, they are threating the stability of Sino-Japanese relations and the region itself.

Japanese-Australian Relations

In Guoji Wenti Yanjiu No. 5, 2016, Liu Qing explores the strengthening special strategic partnership between Japan and Australia. He argues that the two parties are likely to work together to build a regional order in the Asia Pacific, but mistrust and domestic political differences will prevent them from forming a military alliance. Liu first assesses recent developments in Japanese-Australian relations. The special strategic partnership, announced in 2014, has three defining characteristics. First, the two countries have institutionalized meetings between their top leadership, including an annual meeting between their prime ministers. Second, each country has invited the other to join cabinet meetings on security. Third, the two coordinate their responses to regional trouble spots, including disputes in the East and South China seas.

During the past two years, the two countries have expanded their cooperation beyond non-traditional security issues, such as disaster relief and humanitarian aid, to encompass traditional security threats. Japan’s new security laws enable more extensive military cooperation, and it is eager to develop its military and technological capabilities through coordination with Australia. The two countries have also emphasized intelligence sharing and joint military exercises. At the same time, they have improved their economic relations. The Japan-Australia Economic Partnership Agreement, which went into effect in January 2015, liberalizes trade between the two countries. In March 2016, the Reserve Bank of Australia and the Bank of Japan signed a bilateral local currency swap agreement. As bilateral ties have strengthened, Japan and Australia have reached out to third partners besides the United States. This outreach includes stronger cooperation with various states in Southeast Asia, particularly on maritime affairs, and deepening relations with India.

Liu identifies several key domestic and international motivations for increased bilateral cooperation. Economic interdependence plays an important role. Japan is Australia’s second largest trading partner and foreign investor. Australia is a crucial source of natural resources and energy imports for Japan, as well as an important export market. Meanwhile, with the United States stretched thin by terrorism and conflict in the Middle East, Japan and Australia are increasingly worried about the future of the Asia-Pacific regional order and the increasing influence of China. By cooperating with Australia, Japan seeks to increase its influence in the Asia-Pacific and become a normal power. Australia hopes coordination with Japan will allow it to achieve “Asianization” and a “northward” security strategy, through which it can extend its influence from the southern Pacific into East Asia. Both countries promote the concept of an Indo-Pacific region to legitimize more extensive cooperation. Finally, the US Asia-Pacific rebalance has reinforced closer Japanese-Australian relations. Although the regional alliance system has traditionally operated as a US-centered hub-and-spokes model, the United States now encourages stronger relations between its alliance partners and deepening US-Japanese-Australian trilateral cooperation. To the United States, Liu argues, Japan is the “forward base” and Australia is the logistical support base. Trilateral cooperation strengthens the three parties’ regional capabilities, and, presumably, their ability to check China’s maritime ambitions.

Liu anticipates that Japan and Australia will focus on building a new regional order. He expects them to support RCEP and the TPP to promote regional economic integration; strengthen military cooperation; coordinate more closely with the United States; and improve relations with the Philippines, Vietnam, and Indonesia. Nevertheless, Liu identifies three factors that limit their future cooperation. First, their interests are not perfectly aligned. Both countries are hedging on China, to some extent, by pursuing stronger trade relations with China, while countering its regional influence. Nevertheless, Australia takes a more neutral position on China, while Japan is more suspicious. Second, gaps in mutual trust arise from unresolved issues of history dating back to World War II and from a cultural gap. Liu charges that Australia has a “white superiority” complex that prevents it from fully understanding Asian culture. He also argues that the Japanese value Australia more than Australia values them, and asserts, citing only weak survey data, that there is a disjuncture between the close bilateral relations between the two countries’ elites and the views of their populaces. Finally, the strength of the bilateral relationship may ebb and flow depending on which party controls each government.

Liu closes with several cautionary thoughts on interpreting the bilateral relationship. Japan and Australia have not formed an alliance, and, so far, Liu sees no indication that they will. In addition, Liu warns against overestimating the influence of the United States on their bilateral relationship, arguing that both countries are primarily driven by their desire for regional influence. Despite strengthening bilateral Japanese-Australian ties, Sino-Australian relations remain much stronger. Finally, Liu cautions that if Sino-US relations worsen (as now seems likely), Australia may be forced to choose sides. In this case, Japan will seize the opportunity to improve its relations with Australia. Liu concludes on an ambivalent note, arguing that observers should praise the Japanese-Australian economic relationship, while criticizing efforts to build a unified security position that is directed against a third party like China.

South Korean Foreign Policy

In Dangdai Yatai No. 4, 2016, Liu Le explores recent South Korean foreign policy from the perspective of middle power diplomacy and examines its attempts to maintain positive relations with both China and the United States. Liu argues that South Korea’s foreign policy strategy derives from four key factors. From a historical perspective, Korea has long viewed itself as a middle power. Accustomed to multiple parties vying for influence over the peninsula, Korea has extensive practice in adopting a nimble and pragmatic policy that allows it to balance its separate relations with two stronger partners.

At the international level, China’s rise has created a bipolar system within East Asia. The region is characterized by quasi-anarchy (the United States has alliances and strategic partnerships, but China and Vietnam go it alone), weak hedging, and a duality between the US-led bilateral security alliance system and Chinese-led multilateral economic cooperation. In this context, the international system punishes drifting and hedging, but rewards a dual diplomacy strategy (the article’s English abstract translates this as “two-sided diplomacy,” but Liu does not intend to convey the duplicitous meaning that such a translation connotes). Naturally, if Sino-US relations worsen precipitously, the structural elements Liu lays out may change, and South Korea, like Australia, may face increased pressure to choose sides.

At the domestic level, Liu argues that South Korean leaders have reached a consensus that dual diplomacy promotes their national interest. The United States is South Korea’s key security ally, its main diplomatic partner, and an important economic partner. Meanwhile, China is South Korea’s largest trading partner, its preferred strategic dialogue partner, and a close partner in cultural and educational exchanges. South Koreans widely agree on the need to maintain balanced relations between China and the United States, Liu concludes.

Finally, at the leadership level, the Park administration has carefully pursued a dual diplomacy strategy. Liu praises Park’s skill at taking advantage of subtle shifts in the Sino-US relationship and her nuanced understanding of Chinese strategic culture, which have allowed her to build close relations with China within the parameters of Korean-US relations. Liu could not have predicted Park’s sudden downfall. The anticipated leadership change in South Korea, combined with the uncertainties of US foreign policy under Trump, may alter South Korea’s foreign policy strategy, although it will continue to regard itself as a middle power for the foreseeable future.

NGOs and China’s OBOR Strategy

In Waijiao Pinglun No. 5, 2016, Liu Jianwen explores how China can prevent NGOs from interfering with its OBOR projects. Liu laments the success of NGOs in halting major programs, such as the planned hydroelectric dam in Myitsone, Myanmar and the construction of a railroad between Kyaukpyu, Myanmar, and Kunming, China. Liu is concerned that China has not yet found ways to effectively prevent NGOs from damaging its national interests.

Liu defines NGOs as domestic-oriented non-profit groups that seek social equity and economic development. They gain power when countries democratize because they represent the common people’s interests in the economic development process, which sometimes contradict the broader priorities of the government. However, these NGOs may sometimes seek institutional interests or be swayed by faddish causes. Liu argues that NGOs may even increase the influence of populist and extremist actors. Liu maintains a tone of contempt toward NGOs, which he views as tools of the West, and is often dismissive of the possibility that local people might genuinely be hurt by large-scale development projects.

Liu highlights several tactics NGOs deploy to advance their goals. They may reframe an economic cooperation project, such as the Myitsone dam, as an environmental threat. They may also frame such a project as a threat to human rights, by arguing that natural resource exploitation will increase corruption in a non-democratic system or by asserting that development projects will damage indigenous groups’ environmental rights in their native territories. NGOs also politicize development projects by pressuring governments and companies not to do business with non-democratic regimes, a policy that directly contradicts the Chinese practice of not attaching political conditions to assistance projects.

According to Liu, a number of factors enable NGOs to hamper China’s OBOR projects (defined broadly here to include virtually any Chinese economic development project abroad). NGOs have successfully linked resource exploitation to the marginalization of indigenous people. At the same time, the democratization that allows NGOs to proliferate also increases the uncertainty of investors, who must consider the increased risk to the long-term prospects of a project produced by the possibility of frequent leadership changes (despite Liu’s concern, democracies seem to have no trouble attracting foreign investment). Developing countries also tend to develop economic nationalism, which strengthens the position of those who oppose the influence of foreign capital. Furthermore, Liu asserts that the West has cultivated ties with some NGOs as part of a policy to weaken China.

Liu argues that China must learn to minimize the damage caused by NGOs. The first step is simply to recognize how much influence they hold. Once this step is achieved, China must strengthen relations with NGOs in order to persuade the general population that foreign investment in also in their interests, rather than continuing to focus only on inter-governmental agreements. China must also diversify its investments so that it is not so heavily focused on the exploitation of natural resources because natural resource development leads too easily to nationalism and protectionism, and offers too little in the way of job creation. Instead, China should focus more heavily on public services projects with the countries along the OBOR routes to address problems such as poverty, disease, and environmental degradation. By increasing individual well-being, these types of projects make the population less resistant to China’s regional economic programs. Liu also contends that China should increase foreign investment by private companies because NGOs are more skeptical of government-led projects. At the same time, business should engage in “socially responsible” behavior, which extends not just to addressing the local needs of affected populations, but also to respecting domestic laws and international norms.

Liu concludes that NGO activity is a form of “new interventionism,” by which the West attempts to constrain China’s ambitions through popular channels when official government channels fail. Because it is difficult to persuade local populations that Chinese development projects are justified by economic benefits alone, Chinese businesses must work with NGOs to address the welfare needs of local populations and act with a sense of social responsibility.

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