Cables From The Diplomatic Frontlines - China front: early wins and losses
China front: early wins and losses
A major Win: Japan/Australia military partnership treaty
Last Friday’s 2+2 talks between the foreign and defense ministries of the US and Japan, can be considered a success: both sides emphasized the importance of strengthening and modernizing the US/Japan military alliance (including partnership on hypersonics and the space-based capabilities), to address the challenges stemming from China’s threat to the “rule-based global order” (an important framing to highlight the importance of the US/Japan partnership to other nations pursuing liberty and prosperity - Chinese diplomats on the other hand, frequently fail to frame their own agreements and partnerships beyond narrow interests at hand).
Naturally, the meeting did most probably go beyond the mentions of high-level aspirations, and likely also focused on specifics around defending Taiwan.
And just a day prior to the meeting, Japan and Australia signed an important defense partnership.
The ‘‘Reciprocal Access Agreement’’ is a big deal for Japan - which, prior to this new deal with Australia, had only one similar treaty agreement with its closest ally: a Status of Forces agreement with the US.
The agreement (that will enable easier joint-drills and movement of forces between the two nations) was crucially framed as a necessary tool to counter China.
This is quite important, since Australia is now getting more openly committed to a course of confrontation vis-à-vis Beijing - and doing so to such an extent, that even a hypothetically new dovish PM in Canberra may find it difficult to course-correct and return to the old days of close trade partnerships (and nothing more) with China.
The defense agreement creates two further favorable implications for the US:
1. It is a supplement to the AUKUS deal from September - Japan wasn’t initially a party to that deal, but is now being quickly integrated into the overall framework of US, UK, Australia and Japan quartet of close military alliances.
First (and as recently as December of 2021), there was a Japan/UK deal for a joint development of a new generation of fighter jets, and now, this new defense pact with Australia.
2. The deal puts further pressure on South Korea to clarify its (to date ambivalent) potential role in Taiwan’s defense, and integrate closer into America’s security architecture in the Pacific - going beyond the existing bilateral commitments vis-à-vis the US.
China holds enormous leverage over South Korea - primarily, through its capacity to spoil a potential Korean reunification.
It is not surprising therefore, that Korean leaders have so far refrained from clarifying their position with more specificity (and in a way, that is more suitable for the US interests), relying instead on generic (and in the final analysis, not very meaningful) platitudes.
In the May 2021 meeting with President Biden for example, the South Korean President Moon Jae-In confirmed the importance of ‘‘preserving peace and stability across the Taiwan Straits.”
But how consequential is this statement really?
Given that any leader, anywhere could confirm the same?
In fact, Xi Jinping could also repeat the sentiment - keeping a straight face and meaning something completely different - that Taiwan should reunify and submit with little resistance, so that the peace and stability be preserved.
But things are going to change with Japan’s ever closer and explicit commitment to join the US and its allies in the region - to form a unified defensive front against China.
The signaling pressure on South Korea to demonstrate a comparable level of worth as a military ally will mount significantly - and given that South Korea’s military is the 6th most powerful in the world, this is critical for the US interests.
It is reasonable to assume that the South Koreans wouldn’t want to fall behind Japan and Australia, into a second - tier alliance with the US.
And although it is unlikely that the outgoing Moon-Jae In’s administration will get distracted from its main goal of securing a legacy of rapprochement and normalization with the North Koreans, the new incoming administration of Spring 2022, will have its hands full with strategic decisions to make.
Maintaining ambivalence on Taiwan will become ever harder for the new South Korean leadership.
Losses:
1. Lithuania softens under Chinese pressure and lack of strong US support.
Back in late 2021, these cables focused on Lithuania as a case study - how US failure to protect a small NATO ally from Beijing’s bullying, would reduce America’s global power, prestige, and reputation for formidability.
That the risk of Lithuania’s crumbling under Chinese pressure, would furthermore create a highly consequential negative precedent - vindicating Beijing’s bullying tactics, and encouraging them to double down on the strategy in future (against other vital US allies).
Both outcomes are unfortunately close to materializing.
China didn’t get punished as needed - it didn’t face serious retaliation from Western states led by the US.
Lithuania continued to feel the heat, and unfortunately, its president backtracked in a rather embarrassing manner.
President Gitanas Nauseda admitted publicly that his government’s decision to open a Taiwan Representative Office (a de-facto embassy) in Vilnius was ‘‘a mistake’’.
This statement made by the Lithuanian president, is first and foremost damaging (let alone, extremely humiliating) to Lithuania itself.
China will now smell blood, and will most likely double-down - pressing its advantage in attempting to force Lithuania to shut down the embassy altogether.
But this is also an important reminder to the US foreign policy leaders - even the most steadfast and active allies may start hedging their bets when a) under extreme pressure, and b) not receiving adequate help.
Immediate response to this undignified statement (more so a cry for help really) shows the carelessness of US leadership to the matter.
No serious attempt was made to rally allies and to punish China.
Instead, the Lithuanian government can rest assured that the US Trade Representative Katherine Tai supports them in the face of ‘‘economic coercion’’.
Contrast this with Taiwan’s response.
The Taiwanese government (realizing the urgent need to reward loyalty of allied nations) purchased the Lithuanian exports initially destined for Chinese markets (prior to Beijing’s boycott).
Taiwan furthermore announced creation of a $200mln investment fund for Lithuania - and an additional $1bn in credit to help Lithuanian companies develop the very strategic microchip production industry.
Even though such assistance may not necessarily be sufficient to fix the problem in the long-term, (especially if the multinationals shamefully decide to appease China and reduce their footprint in Lithuania), the message is still clear: Taiwan is taking action, and will help its allies to catch up on strategically crucial high-tech sectors.
It is now the EU and America’s turn to step up and protect their EU and NATO ally in the face of Chinese bullying.
And to be clear, it is not the dearth of policy choices, but a lack of will that lets China get away with all this.
2. China outmaneuvers the US on trade & influence in the Pacific.
The very first day of January 2022, marked the beginning of a new era in global trade - the Regional Comprehensive Economic Partnership (RCEP), the largest trade deal of the world covering approximately 30% of the global GDP, came into effect.
There are 15 participating countries: 10 South East Asian countries (Asean), as well as Australia, Japan, South Korea, New Zealand, and China.
Member states will enjoy a tariff-free trade in approximately 90% of goods.
Crucially, there will be a gradual alignment of trade rules and investment standards between the signatories.
And China (being the largest trading partner in RCEP), will get an outsized say in shaping these rules (from dispute settlements to IP rights) in a strategically beneficial (to Beijing) way.
The US in the meantime, will be watching from the sidelines as nearly a 1/3rd of the global population is trading freely with China - boosting Beijing’s soft power and influence every day.
China realizes the importance of joining, shaping, and leading these trade deals - with the US willingly accepting being outmaneuvered on influence.
Indeed, last September, Beijing submitted an application to join the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP) - few years after America’s withdrawal under the previous administration.
America’s withdrawal from the original Trans-Pacific Partnership (TPP) was of course silly.
The economic arguments for withdrawal were extremely ill-informed.
Simplistic assessments like ‘‘free trade = bad for manufacturing jobs in the US’’ ignored the crucial fact that most (85%) of the job losses in this area were caused by automation, and not due to outsourcing of manufacturing labor to other countries.
And besides:
1) The remaining globalization caused job losses will continue on the same track - regardless of any free trade pacts that the US joins.
Are low-cost manufacturing jobs not moving to a number of third-world countries as of today?
They are, and this trend will continue.
2) The future of America’s economic might and wealth will be grounded in high-skilled, high-tech value-add sectors - not low-cost/human labor intensive manufacturing industries.
These arguments additionally ignored the overall economic benefits of remaining in the Pacific trade deal.
The TPP would have for example created an additional 128,000 overall jobs in the US.
But regardless of the moderate economic benefits, the key loss to the US was of a strategic nature - inability to influence rules and standards of trade, and therefore, tilting the playing field against China.
Containing Beijing’s influence is so important, that even the UK (that, economically, stands to gain significantly less on this trade deal than America) decided to join the CPTPP.
There is unfortunately no suggestion that the Biden administration is going to alter the US posture on these crucial trade deals.
And while the US sits on the sidelines, China is already plotting its next influence campaign: targeting our backyard - Latin America, with an “action plan’’ to ‘‘take over’’ the region.
It is still not too late to act - the Biden administration must quickly engage in relevant policy reviews, and quit following this disastrous policy of passively and helplessly watching the daily rise in China’s economic and strategic influence with no effective parry.