China’s Master Plan: A Worldwide Web of Institutions

Beijing is building an interlocking series of security, trade and educational bodies to rival the West.

By Hal Brands

The basic theme of this series has been the degree to which the challenge posed by rising, rogue China has both intensified and changed in recent years, as Beijing’s global ambitions and initiatives have reached a new level. 

While most Westerners are familiar with Beijing’s efforts to do so through its economic power and growing military might, another facet of that campaign has received less attention: China’s intensifying efforts to remake the international institutional order.

For decades following the establishment of the People's Republic in 1949, Beijing was an international renegade that sat outside most established institutions. 

From the 1970s onward, it gradually became a participant in but not a leader of a global institutional architecture dominated by the U.S. and its allies. 

Now, Beijing is establishing its own rival institutions and using them as part of its broader effort to reshape the world to its advantage.
It is easy to forget what a drastic break with the past this is. 

During the 1950s and 1960s, Mao Zedong's government was not even a member of the United Nations, because of its dispute with Taiwan over which country was the rightful representative of China. 

After China began its opening to the world in the 1970s, it gradually integrated into the international institutional order, joining the World Bank, International Monetary Fund, World Trade Organization, Nuclear Non-Proliferation Treaty, Asia-Pacific Economic Cooperation forum, and other agreements and bodies.
Yet even so, China largely declined a leadership role in these institutions. 

The second generation of Chinese leaders -- Deng Xiaoping and his disciples -- adhered to the dictum that China should "hide its capabilities and bide its time." 

Some Chinese analysts even believed that U.S. calls for Beijing to become a "responsible stakeholder" in the international order were a trick to force China to exhaust itself by bearing the burdens of global leadership.
Recently, however, Beijing's attitude has been changing. 

One reason is simply that the existing institutional landscape changed too slowly to accommodate its remarkable rise. 

Case in point: In 2010, the IMF approved a change in its voting quotas meant to reflect China's increasing weight in the global economy. 

Yet implementation was delayed for more than 5 years, because of the refusal of the U.S. Congress to ratify the change. 

In these circumstances, it was only natural for Chinese leaders to begin wondering how well existing international institutions served Beijing's interests, and whether they might do better by striking out on their own.
Second, the value of institutional leadership as a competitive tool seems to have become more apparent to Beijing. 

It was surely not lost on Chinese leaders that America has long managed to use the institutions it leads --the World Bank, the IMF and others -- as force-multipliers for its own influence and power. And over the past decade, U.S. leaders have become more explicit in describing the creation of new institutions, such as the proposed Trans-Pacific Partnership trade area, as counterweights to a rising China.
This being the case, Chinese leaders could not help but consider how Chinese-led institutions might be useful in channeling Beijing's growing economic power into greater influence on the global stage. Add in the fact that China's surging national power has given it the ability to undertake initiatives that might have seemed costly distractions before, and the stage was set for a burst of institution-oriented energy.
There have been three principal products of that burst. 

In 2015, Beijing created the Asian Infrastructure Investment Bank, a multilateral development bank dedicated to meeting Asia’s growing need for roads, pipelines, dams and the like. 

Since 2012, China has also been pushing for conclusion of the Regional Comprehensive Economic Partnership, a trade agreement involving the 10 countries of the Association of Southeast Asian Nations as well as China, India, Japan, South Korea, Australia and New Zealand.
Finally, there is the Chinese-led Belt and Road Initiative, an overlapping series of infrastructure, economic and other development projects encompassing countries across Eurasia and beyond.
So what does this mean for U.S. interests and the international system? 

In some ways, it is hard to argue with the more forward-leaning approach China is taking. 

These initiatives all respond to real needs -- the enormous infrastructure gap Asia faces, for instance, or the need to more tightly interlink the countries and economies that populate the Eurasian landmass. What’s more, the U.S. has been urging China to take a stronger leadership role in the international system for decades.
The trouble is that, just as U.S. officials have slowly become more concerned about how China will use its growing power, it may not like the particular ways in which Chinese institutional leadership is exercised.
No institution is truly apolitical. 

All international organizations reflect the geopolitical, economic and ideological preferences of their founders. 

The great fear among China-watchers in the U.S. and elsewhere is that Beijing will use these institutions in ways that privilege its own concept of international order -- one that is quite different than what America, its allies, and other democratic countries may wish to see.
It seems likely, for instance, that Beijing will use its regional economic pact and infrastructure bank as tools for drawing neighboring countries deeper into its economic orbit, slowly but surely rendering them less capable of remaining geopolitically independent of China.
Leading experts also believe that China will use Belt and Road projects to reinforce corrupt, authoritarian regimes and win diplomatic and economic influence at the expense of the U.S. and other geopolitical competitors.
Chinese loans and development aid, for example, have already turned into debt traps that have been sprung on relatively poor countries such as Sri Lanka, forcing them to turn over control of key infrastructure, such as ports, to Beijing.
As I discussed in the first installment of this series, the implications of such developments for China’s military-power projection capabilities are ominous. 

In sum, China has learned that institutional leadership is a form of national power, and that it can be manipulated to good -- or bad -- effect by a country with a cut-throat geopolitical ethos and lots of money to spend.
To be sure, Beijing still faces lots of obstacles in realizing its ambitions for these various projects, and America’s global institutional leadership remains vastly more impressive than China’s. 

But at the very least, China is sending the message that Washington’s primacy in the world’s institutional architecture is no longer so complete.
What’s equally clear, at least so far, is that the U.S. and the West are not adequately responding to the challenge. 

The Barack Obama administration, concerned about the political, geopolitical, and environmental effects of AIIB projects, tried to organize a boycott of that institution but failed in embarrassing fashion.
The TPP would have helped offset China’s regional economic partnership, and Beijing’s economic heft more broadly, but the Donald Trump administration shot America and its geopolitical partners in the collective foot by withdrawing from that agreement in early 2017.
U.S. and allied officials wring their hands about the unhealthy effects of Belt and Road but have failed to offer much of an alternative. 

As in so many cases, the full extent of the challenge China poses is becoming clear, but the solutions have yet to be identified.
Finding those solutions is the subject I turn to in the final installment of this series.

Trump weighs rejoining Trans-Pacific Partnership amid trade dispute with China

By Erica Werner, Damian Paletta and Seung Min Kim

President Trump ordered top administration officials Thursday to look at rejoining the Trans-Pacific Partnership, the sprawling trade pact he rejected three days after taking office.
The move would mark a stunning reversal for Trump, who sharply criticized the pact as a “disaster” and made opposition to global trade deals a centerpiece of his economic agenda as a candidate.
The Obama administration had signed the trade agreement, known as TPP, with 11 other countries, including Japan, Vietnam, Singapore and Australia, to lower tariffs and counter China’s influence in the Pacific. 

An embrace of the TPP would give Trump more leverage in his escalating trade feud with Beijing. 

It also would give U.S. farms, retailers and other businesses better access to foreign markets if China makes good on its recent threats of new tariffs on U.S. goods.
Thursday’s order comes as Trump pushes forward on a chaotic revamp of the United States’ approach to global trade, seemingly veering from trade wars one day to multinational pacts the next. 

He has gone from assailing Canada and Mexico to saying he’s within striking distance of renegotiating the North American Free Trade Agreement. 

He has both pilloried China and praised its dictator, Xi Jinping.
But no reversal has been more extreme than his new flirtation with the TPP. 

His comments were so unexpected that White House officials, lawmakers, business groups and others weren’t sure whether Trump had made a calculated overture or if it was another whimsical idea that he would cool on soon.
Reentering the TPP would not be easy. 

The 11 other countries reached their own trade deal this year, and it is unclear what conditions they would set before they restarted the entire process with the United States. 

The deal would be much stronger with U.S. participation, since it is the world’s largest economy. 

But several countries in the deal have cast a wary eye toward Trump’s swings on trade.
On Jan. 26, President Trump said he was open to a “mutually beneficial” trade agreement with the countries in the Trans Pacific Partnership trade agreement. (The Washington Post)
Canada and Mexico are part of the TPP talks, for example, and Trump has blasted leaders from both countries for what he describes as ripping off U.S. workers. 

Japan is also part of the TPP, and Trump has so far refused to exempt Japan from new tariffs on steel and aluminum imports into the United States.

'On our terms'
Trump gave the new orders to U.S. Trade Representative Robert E. Lighthizer and National Economic Council Director Larry Kudlow during a White House meeting with lawmakers and governors, according to several GOP senators in attendance.
Trump then told Lighthizer and Kudlow to “take a look at getting us back into that agreement, on our terms, of course,” said Sen. John Thune (R-S.D.). 

“He was very, I would say, bullish about that.”
Sen. Ben Sasse (R-Neb.) also witnessed and applauded Trump’s surprise move.
“We should be leading TPP,” Sasse said. 

“China is a bunch of cheaters and the best way to push back on their cheating would be to be leading all these other rule-of-law nations in the Pacific that would rather be aligned with the U.S. than with China.”
But some free-trade supporters viewed Trump’s remarks with skepticism.
“If it holds until this afternoon, that’s a good move,” said Sen. Jeff Flake (R-Ariz.), a free-trade advocate and frequent Trump critic who was not at the White House meeting.
A senior administration official, speaking on the condition of anonymity to describe the White House’s internal approach, said Trump has not set any goals or deadlines for Kudlow and Lighthizer for when a new agreement should be reached.
Instead, the White House is approaching potential new talks as a way to signal that Trump is receptive to free-market proposals if he feels they can be reached in a way that advances U.S. interests, the official said.
Trump walked back a little on his proposal in a Twitter message late Thursday.
“Would only join TPP if the deal were substantially better than the deal offered to Pres. Obama,” he wrote. 

“We already have BILATERAL deals with six of the eleven nations in TPP, and are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!”
Trump — and a number of Democrats and labor unions — had railed against the trade deal during the presidential campaign, saying such pacts allow foreign companies to lure away U.S. jobs and erode the U.S. manufacturing base. 

In June 2016, Trump called the TPP “another disaster done and pushed by special interests who want to rape our country.”
The president’s protectionist impulses since taking office have caused heartburn for many GOP lawmakers who continue to embrace the Republican Party’s traditional support for free trade. 

If the president does move forward with rejoining the TPP, business groups and many Republican lawmakers would be sure to applaud the move, even though it would be a striking example of Trump reversing a campaign-trail promise.

Unions worried
At least some labor groups were alarmed at Trump’s willingness to restart the TPP process.
“TPP was killed because it failed America’s workers and it should remain dead,” Richard Trumka, president of the AFL-CIO, tweeted Thursday. 

“There is no conceivable way to revive it without totally betraying working people.”
Trump administration officials are also working to renegotiate NAFTA, and the president told senators Thursday his team was making progress.
“The president said it could be two weeks, it could be two months, it could be six months,” said Sen. Deb Fischer (R-Neb.). 

“He’s keeping his options open. That’s important.”
Engaging in talks to reenter the TPP would be part of a broader White House strategy to respond to an escalating trade flap between Trump and Beijing. 

But Trump has been having a hard time rallying other countries to backstop his push to impose new tariffs on Chinese goods.
The president is also running into strong pushback from Republican lawmakers, particularly those representing agricultural regions where China’s threatened retaliation against U.S. exports would hit hard.
The president first raised the prospect of reentering the trade deal at the World Economic Forum in late January. 

He said then that he would rethink his opposition if the United States secured “substantially better terms,” without offering specifics.
There has been no indication since then that the administration was making any genuine effort to rejoin the agreement.
“This is another encouraging signal from the administration, following what the president said at Davos,” said Wendy Cutler, who was among the TPP negotiators. 

“I always thought that with time the administration would value the TPP more and more.”
One question is which TPP Trump wants to rejoin: the original 12-nation deal that the Obama administration negotiated, or the 11-nation agreement that is moving toward implementation by the remaining countries.
When the president last year announced he was quitting the deal, the other TPP countries suspended 20 provisions in the original accord and announced a new deal, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). 

The provisions, including key intellectual property protections such as those involving biological drugs, were measures the United States had demanded in return for granting access to its market.
U.S. negotiating partners might expect the United States to “pay for” restoring those provisions at this point, Cutler said.
“They do want us back in. But the question is: At what price?” Cutler said.
Trump was not the only one to oppose the TPP during the 2016 presidential campaign. 

His Democratic rival, Hillary Clinton, came out against the deal as she faced pressure during her primary campaign against Sen. Bernie Sanders (I-Vt.), who was outspoken against the TPP. 

Clinton had played a role in its formation during her time as Barack Obama’s secretary of state.
Even before Trump’s election, the Trans-Pacific Partnership began to founder and stall in Congress as it got caught up in political crosscurrents, losing support from some Republicans and progressive Democrats.
In May 2016, as domestic political backing for the TPP was starting to erode, Obama wrote an op-ed in The Washington Post aiming to rally support.
“Increasing trade in this area of the world would be a boon to American businesses and American workers, and it would give us a leg up on our economic competitors, including one we hear a lot about on the campaign trail these days: China,” he wrote.
The TPP is becoming one of the White House’s few remaining options as Trump searches for ways to exert pressure on China to back down from its threat of new tariffs on U.S. exports. 

U.S. farm groups have said they fear getting caught in the middle of the trade spat that Trump and Beijing have recently escalated, and they want assurances that they will not lose access to foreign markets.
The White House had been looking at using a Depression-era program known as the Commodity Credit Corp. that could be used to extend subsidies to farmers, but Republican lawmakers pushed back hard on that idea during Thursday’s meeting.
“Farmers don’t want a handout. They want access to markets,” Sen. Steve Daines (R-Mont.) said. “The president was surprised by that. He’s like, ‘really?’ He said, ‘Oh, really? Okay, so we won’t do that.’ ”

As China Rises, Australia Asks Itself: Can It Rely on America?

The United States, under Donald Trump, cannot be relied on as a stable partner.
By JANE PERLEZ and DAMIEN CAVE

United States Marines marching in Darwin, Australia, this year on Anzac Day, a day of remembrance for veterans. The United States has long been Australia’s security guarantor. 

BEIJING — When the Australian government set out to write a new foreign policy paper, it faced hotly contested questions shaping the country’s future: Will China replace the United States as the dominant power in Asia? If so, how quickly?
The government’s answers came in a so-called white paper released last month by the administration of Prime Minister Malcolm Turnbull. 

For sure, China is challenging the United States in Asia, though in the end, it argues, America will prevail and Australia can count on its security guarantor of the past 70 years.
But a prominent defense strategist, Hugh White, has disputed that view, arguing in a new essay that China has arrived, the United States is fading and Australia must find a way to survive on its own.
The contrasting assessments have set off a debate in Australia about the durability of the American alliance and China’s intentions toward Australia.
The government tried to reassure the public that there was no need to make a choice between China, Australia’s biggest trade partner, and the United States, its security patron. 

Despite the America First policies of Donald Trump, who is unpopular in Australia, the United States of old would endure. 

Australia would deal with the changing environment, it said, by working “harder to maximize our international influence.”
The arguments come against a backdrop of concerns over China’s growing influence in Australia. These include Chinese meddling in Australian universities and ethnically Chinese businessmen with connections to the government in Beijing giving generously to election campaigns.
Australia’s heavy reliance on iron ore and energy exports to China has long raised questions about the need to diversify its economy. 

However, dependence on China has only grown, as an influx of Chinese students and travelers now also helps to sustain the higher education and tourism industries.
Australia has tried to balance its growing economic dependence on China with its longstanding post-World War II security relationship with the United States.
But China’s assertive behavior in the South China Sea, and Trump’s decision to abandon the Trans-Pacific Partnership, the trade pact America once sought to lead, have rattled the underpinnings of Australia’s policies.

Australia’s leaders have gone beyond the white paper’s careful reassurances, openly declaring that Australia must confront the shifting power dynamics of the region.
Mr. Turnbull has called this the first time in Australia’s history that its dominant trading partner was not also its dominant security partner. 

He argued that the country should see this as an opportunity and not a risk, but his comments were also laced with uncertainty and concern.
“Now power is shifting, and the rules and institutions are under challenge,” he said. 

“The major players are testing their relationships with each other, while undergoing rapid change themselves.”
Foreign policy experts say the white paper’s assessment of American staying power does not reflect a growing consensus among many Australian policymakers that the United States, at least under its current leadership, cannot be relied on as a stable partner.
Michael Fullilove, executive director at the Lowy Institute for International Policy in Sydney, described what many Australians see as a fraying of the liberal international order because, he said, “Donald Trump is neither liberal in his inclinations nor orderly in his behavior.”
Many say it’s time for Australia to stop pretending about American intentions, and begin considering other options. 

This view has found one of its clearest and most strident voices in White, whose 27,000-word essay bluntly argues that Australia needs to wake up: The game is over and China has already won.
“We all underestimated China’s power and resolve and overestimated America’s,” wrote White, who worked on sensitive intelligence and military matters with the United States as a senior official at the Australian Defense Department. 

“Not only is America failing to remain the dominant power, it is failing to retain any substantial strategic role at all.”

Trump with Australian Prime Minister Malcolm Turnbull in New York this year. The Australian government says it can still count on American support. 

In reply to the government’s paper, Mr. White said Australia’s stance was unrealistic because it clung too much to the vestiges of a fading power that would not be able to stay ahead of China’s economic strength.
“The paper has an elegiac feel, the sense of a sunset,” he said in an interview.
The biggest splash came from Mr. White ’s recommendations for what Australia should do about an American retreat. 

Faced with Chinese efforts to impose its influence and different political values, he said Australia will have to do more to defend itself, including acquiring nuclear weapons.
China’s rise is likely to spark an arms race in the Asia-Pacific, with both Japan and South Korea likely to become nuclear powers within a couple of decades.
“And the logic that drives them has implications for others,” Mr. White said. 

Australia could remain a middle power by keeping only a small nuclear arsenal. 

“It might look something like Britain’s submarine-based nuclear force,” he wrote.
American officials have tried to counter such conclusions. 

During his visit to Sydney in April, Vice President Mike Pence told Australian business and government leaders that the United States remains Australia’s most vital economic partner, with American investment growing by 50 percent in the past three years.
Another sign that Washington may seek to reassure its Australian allies has been talk of the possible appointment of Adm. Harry B. Harris Jr., the United States commander in the Pacific, as the next ambassador to Australia. 

Some American officials have said they would welcome the move because it would send a message to China that the United States will not retreat.
Australian media have chimed in, calling Admiral Harris “China’s least favorite American.” 

Still, it’s far from clear whether that would be enough to offset the deep concerns here about Donald Trump.
Australia has also tried to hedge its bets by reaching out to other democracies in the region, particularly Japan and India. 

Citing concerns about China’s advance into the South China Sea, the government’s white paper backed the idea of joining India, Japan and the United States to promote a free and democratic Indo-Pacific region that could offset China.
In China, the Foreign Ministry took offense at the comments about the South China Sea, saying Australia had no business meddling. 

The state-run Global Times suggested China might retaliate with boycotts in tourism and higher education.
“Fortunately, the country is not that important and China can move its ties with Australia to a back seat and disregard its sensitivities,” the newspaper said.
In his essay, Mr. White warned that Beijing could use its growing naval power to ramp up pressure by contesting Australia’s claims to remote pieces of Australian territory, such as islands that it controls in the Antarctic, or by deploying forces to South Pacific neighbors, where China enjoys good relations.
Analysts sympathetic to the Turnbull government have pushed back, saying Mr. White’s essay paints an overly alarmist picture.
“While many of the trends in the region are concerning, White underestimates America’s stake in the region,” said Andrew Shearer, who was an adviser to former Prime Minister Tony Abbott. 

Mr. White is “is premature in reaching the conclusion that Trump will acquiesce to Chinese supremacy, and that the United States is already withdrawing.”
Still, the essay performed a useful service, Mr. Shearer said, by drawing attention to the rapidly shifting balance of power in Asia and the need for a more coherent response by Washington.
Chinese analysts said by 2030 China will have won the geopolitical race.

“Everyone will then live under the shadow of Chinese power,” they said.

America does not get entirely short shrift from Mr. White. 

“It won’t be the dominant power in Asia,” he wrote, “but it will have both the means and the motive to exert some influence over China’s conduct — including in East Asia — through the global system in which it will play a key role.”

Chinese Peril

Australia Wants the U.S. to Stay in Asia as a Check to Chinese Power
By Keshia Hannam

Australia called for a stronger alliance with the U.S. to push back against the spread of Chinese power in Asia and the Pacific.
In the country’s first big update of foreign policy objectives in a decade, the government of Prime Minister Malcolm Turnbull struck a much darker note about Australia’s future relations with China, the country whose demand for raw materials has fueled a 25-year Australian boom. 

And it stressed the importance of the U.S. in guaranteeing stability in the region.
“We believe that the United States’ engagement to support a rules-based order is in its own interests and in the interests of wider international stability and prosperity,” the ‘white paper’ said. 

“Without sustained U.S. support, the effectiveness and liberal character of the rules-based order will decline.”
Although the paper didn’t mention him by name, it was visibly influenced by fears that Donald Trump’s ‘America First’ doctrine would lead to a withdrawal from global responsibility by the U.S., and that Chinese power would expand to fill the vacuum.
Such fears are stoked largely by the seemingly unstoppable rise of China’s economy. 

The white paper predicts a Chinese economy valued at US$42 trillion by 2030 – almost double that of the U.S. and EU. 

The paper suggests that, like all great powers, China will eventually seek to influence the region to suit its own needs. 

That ambition has arguably been helped by Trump’s withdrawal from the Trans-Pacific Partnership, which has prompted many Asian governments to doubt the U.S.’s commitment to the region.
The white paper noted pointedly that “bringing the U.S. and China together in a region-wide free trade agreement would reduce economic tension and help maximise regional economic growth prospects.”
“Power is likely to shift more quickly in the region, and it will be difficult for Australia to achieve the levels of security and stability we seek,” it said. 

“A number of factors suggest we will face an increasingly complex and contested Indo–Pacific.”
Bloomberg reported Turnbull as telling reporters on Thursday in Canberra that: “This is the first time in our history that our dominant trading partner is not also a dominant security partner.”

World's Stupidest President

Donald Trump helps make China great again.
By Richard North Patterson
Xi Jinping arrives in Berlin on July 4 to meet with German Chancellor Angela Merkel.

China’s global aspirations should be no surprise.

For centuries, it has seen itself as a civilization apart. 

Inevitably, Western encroachment bred an indelible resentment of nations which, in China’s view, had usurped its rightful place.
Animated by this sense of destiny thwarted, Xi Jinping means to restore Chinese dominance in Asia — exemplified by its construction of artificial islands as military bases in the South China Sea — the better to supplant America as the world’s leading geopolitical power. 

The hope that globalization would create a more benign and democratic China overlooked these deeper impulses.
They are hardly subtle. 

As the regime’s authoritarianism deepens, China undercuts democracy in Hong Kong, rebuilds its military, moves to control the future of Asia, and expands Chinese economic leverage around the globe.
Enter President Trump.
While Trump’s campaign rhetoric targeting China was simplistic, it played economic hardball — requiring American companies to transfer intellectual property in return for access to Chinese markets, acquiring American know-how while limiting our ability to do business. 

But on meeting Xi as president, Trump melted.
Xi’s lever was North Korea. 

Jettisoning all other concerns, Trump imagined that China, reversing established policy, would help divest its client of nuclear weapons. 

As China played him with hints and half measures, Trump mortgaged our overall China policy to a pipe dream based on nothing but his self-concept as a dealmaker.
Trump’s approach was transactional and narcissistic, reflecting the fatal convergence of ignorance and a short attention span. 

Abruptly, he tweeted that his feckless plan “has not worked out” but that “at least I know China tried!”
What China tried was to leave Trump without a viable plan for curtailing a nuclear program which, too soon, will imperil San Francisco.
Nettled, Trump sold arms to Taiwan, sanctioned two Chinese companies that finance North Korea, and dispatched ships for a drive-by in the South China Sea.
But spasms are not policy.
Trump has yet to grasp that China, like Russia, is our strategic adversary. 

This is the classic case of a rising power challenging a dominant one — economically, militarily, and ideologically — starting with Asia. 

That mandates a China policy that is comprehensive, farsighted, and clear.
Yet Trump and Secretary of State Rex Tillerson have not even assembled a team competent to formulate a vision that reflects American interests and values. 

Worse, Trump shuns the belief in free trade and democratic institutions, which cement our alliances with countries such as Australia, Japan, and South Korea, and provide an alternative to an economic order dominated by China.

Swiftly, China’s calculating regime castigated America for its selfishness and irresponsibility, cloaking its own economic self-interest in altruism. 

In Trump’s diplomatic vacuum, China — ironically, a principal consumer and exporter of coal power — is poised to become the world’s leader in advancing clean energy technology.
As Trump looks backward — trumpeting tariffs and promising to resurrect coal — China moves forward. 

As Trump shuns the European Union, China courts it. 

China is now Germany’s principal trading power, a leader in developing cutting-edge automobiles, the mobile Internet, and safer nuclear power. 

According to US News & World Report, China’s top engineering school has surpassed MIT. 

Despite setbacks, China is the world’s largest economy and its biggest export market.
A centerpiece of China’s geopolitical strategy is the “Belt and Road” initiative , an ambitious plan to finance and develop infrastructure and connectivity linking all of Asia to Europe and the Middle East — including an infrastructure bank intended to cement China’s economic leadership throughout the region. 

Its goal is to supplant the world’s existing economic order with one that serves Chinese prosperity and power.
This program, Xi asserts, embodies “economic globalization that is open, inclusive, balanced, and beneficial to all” — including antipoverty programs. 

In stark contrast, Trump grouses that “alliances have not always worked out very well for us,” signaling our economic and diplomatic retreat.
Whatever America’s faults, by tradition we espouse humane and democratic values. 

A Chinese-led world order would be morally impoverished. 

Yet, soon enough, China’s economic power may cause our traditional allies — in Asia and Europe — to turn away. 

Thus will Donald Trump help make China great again.

Chinese Aggressions

Obstacles at Bay, Beijing Steps up Control Over Disputed South China Sea
By Ralph Jennings

A Chinese soldier waves farewell to Russian fleets as the Chinese-Russian joint naval drill concludes in Zhanjiang, Guangdong Province, China.
TAIPEI — Beijing has reached a new peak in its bid to control the widely disputed South China Sea after pacifying rivals, keeping Washington away and building out artificial islands that are ready for military hardware.
China will be able to keep three fighter-jet regiments on the same number of islets that it has constructed in the sea, according to a June 6 Pentagon report. 

China’s estimated 3,200 acres (1,294 hectares) of reclaimed land in the 3.5 million-square-kilometer sea will be used largely for military installations, a think tank forecast in March.

Joint military exercises with Russia
In another sign of tighter maritime control, Beijing’s official Xinhua News Agency said Sunday that a Chinese destroyer, frigate, supply ship and helicopter had joined Russian vessels for phase one of “complex” and “lengthy” joint military exercises that are starting in the South China Sea. 

Russia has the world’s second most powerful armed forces and China the third.
“I think there is an unspoken understanding that there’s no way China can be stopped,” said Collin Koh, maritime security research fellow at Nanyang Technological University in Singapore. 

“I think it’s a fact that China is the dominant player there other than the U.S.”

"Nine-dash line" control
China’s rise in the sea, which is claimed by five other governments, follows a year of unfettered diplomacy with those countries and a decade of landfilling some of the sea’s 500 tiny land forms to support infrastructure construction.
China will eventually decide what happens within its “nine-dash line” claim that covers more than 90 percent of the sea, said Gregory Poling, director of the Asia Maritime Transparency Initiative of American think tank Center for Strategic and International Studies. 

Beijing cites historic usage as a basis for the claim.
Brunei, Malaysia, Vietnam and the Philippines all call parts of the sea their own, overlapping the nine-dash line. 

They all value the sea for its fisheries, fossil fuel reserves and marine shipping lanes.

Total Chinese control
“I think the goal here is to extend a Chinese umbrella over the entire nine-dash line, which means effectively establishing administration over all of this area that China claims, including all these waters and air space they claim historic rights over,” Poling said.
“So that means if you’re a Southeast Asian fishermen or coast guard vessel or an oil and gas exploration vessel, you don’t operate unless the Chinese let you operate," he said.

Chinese diplomacy
The Communist leadership stepped up one-on-one dialogue with the militarily weaker Southeast Asian countries after a world arbitration court ruled in July against the legal basis for the Chinese claim. 

Beijing offers aid in exchange for muting any protest against China’s maritime military expansion, analysts say.
China offered the Philippines $24 billion in aid and investment last year. 

It has pumped Vietnam’s service sector with tourists while discussing maritime cooperation. 

Malaysia counts China as its top investor and trading partner.

US stepping back from South China Sea
Southeast Asian countries such as Vietnam and the Philippines once looked to the United States for resistance against China. 

Now Donald Trump wants China’s help on stopping North Korea’s missile and nuclear programs.
“There seems to be no intention within the U.S. government in trying to craft up some form of a South China Sea strategy,” Koh said.
Southeast Asian nations aren’t pushing for one either, said Sean King, senior vice president of New York political consultancy Park Strategies.
“There’s been no coordination among the non-Chinese claimants and the only one among them that remotely has its act together on this issue, Vietnam, surely felt abandoned after America ditched the TPP, thus questioning how truly committed we are to the region,” King said.
Trump exited the TPP, or Trans Pacific Partnership, in January, calling the 12-member trade deal bad for the United States.

Signs that US will show more interest
But U.S. officials have hinted this month they will eventually take a harder line on China's maritime expansion.
In May, the U.S. Navy sent a ship on a “freedom of navigation” operation in the South China Sea despite Beijing’s objections.
“China's claim in the South China Sea needs to be handled peacefully and through negotiations, not by island-building and placing weaponry on the resulting dry land,” Defense Secretary Jim Mattis told an Asian defense conference earlier this month as quoted by the U.S. Department of Defense website.
Southeast Asian maritime claimants are keeping options open to ask Japan, India and other countries for help as needed in keeping China away, Koh said.
But today’s “cautious” Sino-U.S. cooperation, plus the specter of a more aggressive U.S. military role in the sea, should stop China from getting aggressive toward other claimants, said Andrew Yang, secretary-general with the Chinese Council of Advanced Policy Studies think tank in Taiwan.

Chinese Aggressions

Rex Tillerson warns of potential conflict with China
by Joel Gehrke

Secretary of State Rex Tillerson told lawmakers Wednesday that he has warned Chinese counterparts that their current foreign policy will "bring us into conflict" in the Pacific.
"We have told them, ‘you are creating instability throughout the Pacific region that will bring us into conflict; please don't do that,'" Tillerson said Wednesday during a House Appropriations subcommittee hearing.
China has been building artificial islands in the South China Sea, replete with military equipment, as part of an aggressive move to assert control over some of the busiest shipping lanes in the world. 

Tillerson cited that behavior as one of the most pressing issues in the U.S.-China relationship, which he acknowledged is reaching "an inflection point" that could lead to war if managed incorrectly.
"We are at an inflection point in the U.S.-China relationship," he told lawmakers. 

"They see it; we see it. Our conversations are around how are we going to maintain stability and a relationship of no conflict between China and the United States for the next 50 years."
Tillerson offered that assessment in response to a question about how the United States could avoid falling into a foreign policy dynamic known as the Thucydides Trap. 

The term refers to the possibility of conflict between an incumbent power and a rising power; it derives from he name of the historian who chronicled the war between ancient Athens and Sparta.
"We cannot constrain their economic growth," Tillerson said. 

"We have to accommodate their economic growth. But as their economic growth then translates into spheres of influence that then begin to threaten our national security, this begins to disrupt these conditions that have allowed us to live without conflict for the last 50 years."
Some Democrat and Republican lawmakers worry that China is gaining influence over traditional allies, including in the Pacific. 

That trend was exacerbated by Trump's decision to withdraw from the Trans-Pacific Partnership, a trade agreement involving 11 Pacific Rim countries.
"[Pacific allies] were counting on TPP and they saw that as a strong message from America," Rep. Ted Yoho, R-Fla., who chairs a House Foreign Affairs subcommittee on the Asia-Pacific, told the Washington Examiner. 

"But it wasn't going to pass. The Democrats weren't going to support it, the majority of them. I wasn't going to support it, being a Republican. And they use that to say, well, we've got to go to China."
In the Phillippines, Rodrigo Duterte has talked openly about a "separation" from the United States and a realignment with China. 

And South Korea's newly-elected president suspended the deployment of a U.S. missile defense system intended to protect against North Korea's nuclear weapons and ballistic missile program. 

China opposes the deployment of that missile defense system, fearing the radar could make diminish the effectiveness of their own nuclear weapons; the communist regime used a series of retaliatory economic measures to punish South Korea for allowing part of the system to be deployed.
"Our policy is, as important as trade is, and as important as China's huge economy is, we cannot allow China to use that as a weapon," Tillerson said. 

"We cannot allow them to weaponize trade. And they are doing that today, and our message to them is, 'you will not buy your way out of these other difficult issues, like North Korea, the South China Sea, with your trade."

Rogue Nation

The Saga of a Sydney Academic Stuck in China Spotlights the Limits of Beijing’s Soft Power
By Charlie Campbell / Beijing

Feng Chongyi
Last week, Li Keqiang visited Australia. 

There he announced plans for joint mine, rail and port projects and removed the last restrictions on imports of Australian beef to China, an industry already worth $300 million annually to local ranchers. 

“It is time for China and Australia to enter into an era of free trade across the board, which means that we need to have free trade between our two countries in wider areas,” Li told reporters in the Australian capital, Canberra.
Li’s visit was the latest salvo in a concerted Chinese charm offensive in Australia, one that has taken on new impetus since the election of U.S. President Donald Trump. 

In one of his first acts, Trump nixed U.S. involvement in the Trans-Pacific Partnership free-trade bloc, which the Australian government had lauded as bringing “tremendous” benefits for local exporters. 

When Trump spoke with Australian Prime Minister Malcolm Turnbull on Jan. 28, the U.S. President said it was “the worst call by far” he’d made. 

The two leaders clashed over an agreement forged by the Obama Administration to accept 1,250 refugees from an Australian detention center, which Trump deemed “the worst deal ever.”
The spat threatened to derail a strategic alliance that stretches back decades — including American-led wars in Vietnam, Iraq and Afghanistan — and push Canberra closer to Beijing. 

Already, China is Australia’s largest trading partner — two-way trade was $115 billion in 2014. Chinese students flock en masse to Australian universities, while Chinese consumers supped $400 million of Australian wine last year.
Still, fears of an Australian defection to China’s corner are misplaced for now, as illustrated by an incident that unfolded 4,600 miles away just hours after Li addressed reporters in Canberra. 

Feng Chongyi, a China-studies academic at the University of Technology Sydney (UTS), was halted at Guangzhou International Airport attempting to board a flight back to Australia. 

He remains in Guangzhou in a "special situation," his lawyer Liu Hao tells TIME. 

No reason for the travel ban has been given.
Feng, who was born in China, is an Australian permanent resident though not a citizen, and reportedly entered China on a Chinese passport. 

Yet he was far from a dissident: he worked for UTS’s Australia-China Relations Institute, headed by former Foreign Minister Bob Carr, which has a reputation for unashamedly propagating a positive spin on the Australia-China relationship. 

Critics have even branded it the local “propaganda arm” of the Chinese Communist Party.
Feng's quasi detention stirred enough public alarm to prompt the shelving on Tuesday of a joint extradition treaty that had been on the books for 10 years and was finally due to be ratified by the Australian parliament. 

Most embarrassingly, the nixing came just hours after Li departed following his five-day visit. 

The incident stood to demonstrate that however closely entwined the two nations become economically, China’s poor human-rights record and repressive legal system will bridle how deep any alliance could ever be.
“Since the Trump election, China has gone on a bit of a charm offensive with Australia,” says Professor Nick Bisley, an Asia expert at Australia’s La Trobe University. 

“But it's far too early days to mark Australia out as a country that’s turning or even ripe for the turning.”
Australia’s wariness is partly prompted by China’s ham-fisted attempts of gaining domestic political leverage. 

In 2013, Chinese hackers stole the blueprints for the Australian Security Intelligence Organisation’s (ASIO) new $480 million headquarters. 

The building remained empty until very recently. 

In October, Labor Party Senator Sam Dastyari was forced to resign from the shadow cabinet after it emerged that a Chinese government-linked company had paid a private travel bill. 

The 33-year-old is known for being sympathetic to Beijing’s expansive territorial claims in the South China Sea.
The Dastyari case prompted Australian intelligence services to map the flow of Chinese money and businessmen into Australia, augmenting demands for an end to foreign donations to political parties. There are also calls to ban Confucius Institutes from Australian universities. 

The Chinese government-funded cultural-promotion bodies have been accused of espionage and brazenly advancing Beijing’s political agenda.
“The China soft-power thing is taken very seriously by Australian security agencies,” says Carlyle Thayer, emeritus professor at the Australian Defence Force Academy. 

“And the realists in defense are very concerned about the South China Sea.”
The ideological gulf is good news for Washington. 

Speaking in Singapore earlier this month, Australian Minister Julie Bishop said that the "United States must play an even greater role as the indispensable strategic power in the Indo-Pacific ... While nondemocracies such as China can thrive when participating in the present system an essential pillar of our preferred order is democratic community." 

Still, deep economic ties between Australia and the U.S aggrandize the bedrock of shared values. Although China ranks top in Australia for trade, American investment dwarfs all competitors, standing at $660 billion in 2015. 

Unease at China’s underhand tactics is partly responsible. 

In April, the Australian government blocked the $283 million sale of the Kidman beef ranch — the world’s largest, roughly the size of Ireland — to Chinese investors as it was deemed "contrary to the national interest." 

The same reason was given for preventing a Chinese firm from buying a controlling stake in Australia’s largest electricity network in August.
“It’s hard to overstate how strong and deeply rooted the [U.S.-Australia] relationship is on both sides of the Pacific,” says Bisley. 

With China, he adds, “it’s a high-value but not a deep relationship.”

China Policy: Trump is a Paper Buffoon

The lesson China will take away is that Donald Trump’s threats are not to be taken seriously.

BY MICHAEL H. FUCHS

Trump is probably the world's most stupid leader

Donald Trump spent a lot of time during the campaign criticizing China, and promising to get tough on China if elected president. 

In just his first few weeks in office, however, Trump has proved to be a paper tiger with China, making himself look weak in the eyes of Chinese leaders, which, in turn, will embolden China’s own assertive behavior.
During the campaign, Trump consistently lashed out at China, making the case that the United States didn’t know how to deal with China. 

Bad trade deals were a prime focus for Trump, who said, “the money they’ve drained out of the United States has rebuilt China.” 

When it comes to the United States’ handling of North Korea and the South China Sea, Trump claimed that “China’s toying with us.”
But as president, Trump doesn’t know how to deal with China. 

During the transition period, Trump took a shot across China’s bow by questioning the One China policy — the premise that Taiwan is a part of China, which had undergirded U.S.-China relations since the 1970s — and by taking a call from Taiwan’s president. 

Trump justified his stance on Taiwan by saying that he did not see why the United States had to be “bound by the ‘One China’ policy unless we make a deal with China having to do with other things.” Some likewise spun his actions as a strategic ploy to shake things up and gain leverage with China on other issues, such as trade.

As Trump began the usual series of initial calls with leaders from around the world, according to The New York Times, “administration officials concluded that Xi would only take a call if Mr. Trump publicly committed to upholding the 44-year old policy.”
And so, merely three weeks after his inauguration, Trump reaffirmed the One China policy in a phone call with Xi Jinping. 

In other words, Trump’s first act as president with respect to China policy was to fold in his own first bluff with China. 

And despite Trump’s claims to know how to negotiate with China, he has gotten nothing in return for backing down on his previous One China statements.

The messages that China will take away from this event are clear and not good for U.S. interests: An irresponsible U.S. president backed away from a threat with nothing to show for it. 

Even the official White House readout of the phone call between Trump and Xi admitted that Trump had to give in: “President Trump agreed, at the request of President Xi, to honor our ‘One China’ policy.”

The lesson China will take away is that Donald Trump’s threats are not to be taken seriously.
This incident would be bad enough of a start by itself. 

But Trump decided in his first week in office to unilaterally weaken the U.S. position with China by withdrawing from the Trans-Pacific Partnership, or TPP. 

The goal of TPP was to provide the United States advantageous trade relationships with key Asian partners in a region where China’s trade relationships were expanding rapidly.
If Trump really wanted to get tough with China on trade, he would have pushed to improve the TPP to advance America’s economic position in the region and give himself more leverage in trade talks with China. 

By simply canceling U.S. participation in the TPP, Mr. Trump gave China a gift, and again got nothing in return.
The ramifications of these initial stumbles could be significant. 

Not only will China believe that the new U.S. president can be pushed around, but China will also believe that it can get away with being more assertive in bullying its neighbors. 

Likewise, U.S. allies and partners in Asia will have less confidence that the new administration can be relied upon to stand up to China, sapping U.S. credibility in the region.
From North Korea to the South China Sea, trade issues to cyber-security, there is no shortage of thorny challenges in the U.S.-China relationship that may require the new U.S. administration to get tough. 

Handing away U.S. leverage in the relationship with China is not the right way to get started.

Paper Tiger Trump

Trump surrenders to China on Taiwan, gets nothing in return, looks weak
By Brooklynbadboy

China knows'Trump isn't strong. 

He's weak.
Trump decided to make a lot of noise, but in the end chose to maintain the status quo, significantly weakening himself in the eyes of the Chinese:
By backing down in a telephone call with China’s president on his promise to review the status of Taiwan, Trump may have averted a confrontation with America’s most powerful rival.
But in doing so, he handed China a victory and sullied his reputation with its leader, Xi Jinping, as a tough negotiator who ought to be feared.
“Trump lost his first fight with Xi and he will be looked at as a paper tiger,” said Shi Yinhong, a professor of international relations at Renmin University of China, in Beijing, and an adviser to China’s State Council. 

“This will be interpreted in China as a great success, achieved by Xi’s approach of dealing with him.”
There's more: China now feels they'll be able to move forward aggressively into further reaches of the Pacific because of Trump's scrapping of TPP and instead engaging in a series of bilateral negotiations. 

This strategy means the White House and State Department will be consumed with one at a time trade agreements while China gets one big comprehensive one:
Canada and China are joining a mid-March summit hosted by Chile on how to advance trade in Asia-Pacific now that Donald Trump has pulled the United States out of the Trans-Pacific Partnership and ceded leadership in the region.
It’s the first effort to move beyond the rubble of the TPP deal – dead since Washington’s exit – and offers a possible way for Beijing to take the lead on influencing how trade should deepen between the West and Asia
Chilean officials say they have invited all 12 countries that participated in the TPP talks as well as South Korea and China, which did not.
That will include Australia, Japan and Mexico among others. 

I suppose Trump could, in theory, conclude individual trade agreements with these countries simultaneously or in some order. 

But why should they? 

Nothing in it for them as the status quo is just fine. 

Besides, China has already showed them how to deal with Trump: ignore him, wait, dangle the promise of flattery, he will surrender.
American leadership was damaged by Mr. Trump staking out a position and then stepping back, said Hugh White, a professor of strategic studies at the Australian National University and the author of “The China Choice,” a book that argues that the United States should share power in the Pacific region with China.
“The Chinese will see him as weak,” Mr. White said of Mr. Trump. 

“He has reinforced the impression in Beijing that Trump is not serious about managing the U.S.-China relationship.”

World’s oldest and largest democracies vs. China's dictature

The US-India-Japan Trilateral: Economic Foundation for a Grand Strategy
By Hemal Shah

What happens when the world’s oldest, largest, and most responsible democracies meet? 

Six years ago, the United States, India and Japan set up their first official trilateral meeting and decided to meet annually. 

Together, they represent 25 percent of the world’s population and 35 percent of global GDP. 

Common goals of economic development, managing China’s territorial aggression in South and East Asia, and preservation of the liberal democratic order bind them together. 

Undoubtedly, they make a compelling strategic logic to come forward and work together to ensure peace and stability in the Indo-Pacific region.
But so far, this trilateral has failed to graduate from constructive symbolism to actual substance. 

The absence of a robust economic foundation is stunting its strategic potential. 

A deeper economic engagement will enmesh each other’s priorities, giving shape and form to their strategic goals in the Indo-Pacific region.
Skeptics are right when they question the real value of this partnership: The Obama Administration’s “pivot to Asia” is arguably dead and Asian allies and partners are rethinking their reliance on the United States. 

In a last-ditch effort, despite his unpredictability, hopes are pinned on President Trump’s promise of standing up to China’s belligerence. 

In India, one wonders if Prime Minister Modi’s “Look East” policy involves the United States, or is a strategy to exclusively strengthen East Asian camaraderie. 

India is still a developing country, remains uncomfortable with any labels of “alliances,” and its relationship with Japan is largely defined by development assistance rather a trade partnership. 

Meanwhile, the U.S. withdrawal from the Trans Pacific Partnership and Trump’s inward-looking trade policies signal a huge blow to Prime Minister Abe’s attempt at addressing Japan’s economic woes.
China unites them. 

Its military continues to encroach on India’s northeastern border; while refusing to scale down its territorial infringement on international waters in the East and South China Sea. 

But China also divides them: The trio flirted with establishing a “democratic quadrilateral” with Australia in 2007, which was quickly dismantled for fear of ruffling China’s feathers. 

The combined trilateral trade of $400 billion pales in comparison with U.S.-China trade of $660 billion alone.
Yet this combination — America’s commitment to democracy and robust military capabilities, the promise of India’s rapid economic growth and strategic location in the Indian Ocean, and Japan’s initiative to protect the collective freedom of navigation for trade — cannot be squandered away. 

For the trilateral to succeed and mount the pinnacle, economic goals should drive the relationship to move from symbolism to functionality, and eventually substance. 

It will also help assert India’s foreign policy posture in the region.
First, the trilateral should be used to strengthen the respective bilateral relationships. 

The United States and India have never been closer but need to act on a clear plan to rise from their goal of $100 billion to $500 billion in bilateral trade. 

They need to prioritize the free trade deal and operationalize the nuclear deal that marked the peak of their relationship.
The shifting dynamic of the revered U.S.-Japan alliance should be addressed. 

In their upcoming bilateral summit, both Trump and Abe need to resolve qualms on trade and tariffs, cost of basing U.S. forces, and a renewed Japanese commitment to stand up for the United States with the reinterpretation of the Constitution on collective self-defense. 

While the India-Japan relationship enjoys an enviable bonhomie, their bilateral trade currently hovers just around $15 billion. 

Leadership chemistry could tie the partnership well together. 

For instance, the indomitable kinship between Modi and Abe, and their respective optimistic beginnings with Trump, should be leveraged for the upcoming dialogue in Delhi this summer.
Second, the United States and Japan should double down to propel economic reform in India. 

As a non-ally of the United States, India is the odd man in the relationship. 

As a developing country, joint strategic goals also mean opportunity costs when capital is deployed to scale up economic prowess. 

At the government level, the United States and Japan are best placed to work together to share recommendations with India on ease of doing business and global best practices on trade facilitation. Modi is competitive and wants India to rise up the ranks of global indices measuring business friendliness. 

The United States and Japan should also help develop India into a major logistics hub in the Indian Ocean region – witness to 40 percent of global trade – and help design the criteria for their new ranking on logistics performance for states. 

They should also work as partners to improve India’s innovation and intellectual property environment to enable defense technology transfer as well as address liability issues with regard to their respective nuclear deals with India.
Third, the government-level dialogue should create a forum on the sidelines to involve the private sector. 

This will inject the missing ingredient to pivot the economic relationship forward. 

The three countries could start with a shortlist of jointly investable projects and exclusively identify special economic zones. 

For example, the Delhi-Mumbai Industrial Corridor currently being developed by Japan offers several opportunities for U.S. companies. 

As India moves into a cashless economy, already well-established U.S. financial services companies could help set up payment systems for the Japanese high speed rail project between Mumbai and Ahmedabad in India. 

The United States and Japan could also adopt a Smart City in India to develop urban infrastructure.
In light of Trump’s deal-making nature, Modi’s incremental shift away from a nonaligned foreign policy, and Abe’s vision of a more assertive Japan, a stronger trilateral partnership makes sense. 

It is heartening to see their annual Malabar naval exercise graduating from a relationship of trust and goodwill to that of building joint capabilities. 

Japan’s emphasis on a long term Asia strategy and patience with India can help neutralize America’s impatience to socialize India to play a bigger role in regional strategic affairs, and ultimately use the platform to reaffirm the liberal world order. 

A strong economic foundation would best dictate the grand strategy of this trilateral partnership.

The Empire Strikes Back

Trump’s decision to repeatedly tweak Beijing’s nose was part of a calculated strategy.
By Benny Avni

You think you’re confused about President Trump? 

Imagine how they feel in Beijing.
They might’ve rejoiced this week when the new president fulfilled a campaign promise to undo the Trans Pacific Partnership. 

Obama designed the 12-country trade deal, in part, to reduce China’s economic clout.
So is Trump a China pushover? 

Former National Security Adviser Susan Rice thinks so. 

On Tuesday she tweeted, “Trashing Trans Pacific Partnership is a big fat gift to China, a blow to key allies, and a huge loss for American global leadership. So Sad!”
But wait. As Press Secretary Sean Spicer said Monday, the new administration will “make sure” China can no longer do as it pleases in international waters. 

Secretary of State-designate Rex Tillerson went further in his confirmation hearing, saying America will prevent China from accessing artificial islands it’s built in the South China Sea.
Add in Trump’s post-election phone call with Taiwan President Tsai Ing-wei, and his announcement later that he intends to fully reexamine the Nixon-era “One China” policy, and you get a new tone that suggests the days of coddling and being cowed by China are numbered.
“Trump has already put the Chinese off their game,” says the Heritage Foundation’s James Carafano. 

“It really seems they don’t know what to make of him and how to best respond. They face a president who is willing to challenge them both on the military and economic [fronts], and they seem unprepared for that.”
Carafano, who has advised Trump’s transition team on foreign relations and national security, told me that once Cabinet secretaries and key members are confirmed and sworn in, China will be high on the agenda of the State and Defense departments.
It should. 

With growing economic clout and an increasingly aggressive military, China has emerged as a superpower-in-waiting.
Tillerson, Defense Secretary James Mattis and White House strategist Steve Bannon (a former US Navy officer in the Pacific who reportedly has keen interest in China policy) will be busy. 

All are China hawks.
Mattis will be in Japan and South Korea next week to start coordinating military strategy with our Pacific allies.

Good. 

The time has come to add some hard power to Obama’s “pivot to Asia” — a great slogan that never really turned into anything tangible.
While Obama endlessly negotiated TPP with too many countries, America’s naval dominance of the Pacific faded. 

Yes, there was the occasional joint naval exercise with allies. 

But they weren’t enough to convince our partners we mean business when we insist on freedom of navigation on the high seas.
China has become more brazen, building artificial islands, fortifying them into military bases, setting up no-go naval passages and demanding planes identify themselves in skies China doesn’t own.
Without much resistance.
So, yes, the new administration will be wise to fill in the trade gap the TPP demise left behind. 

And fast, before China picks up the leftovers. (The Philippines, Malaysia and others are already looking to cut trade and other deals with Beijing.)
Trump must quickly start negotiating a bilateral trade deal with Shinzo Abe, Japan’s nationalist prime minister who isn’t afraid to challenge China.
A deal with Tokyo will help Trump set up agreements with other Pacific partners. 

Such deals can be tailored to each country’s needs (with “America first,” of course), which can be more beneficial to all than the overly complex, multilateral TPP.
At any rate, trade in the Pacific will only be possible if Beijing’s muscle-flexing is kept in check. 

Unless America resumes its role as the guarantor of free navigation, China will make the rules in the region. 

And China’s rules will make the protectionist Trump look like Thomas Paine.
If Team Trump’s initial tough talk gels into a detailed, coherent strategy, and if Trump keeps his campaign promise to increase military budgets, Pacific partners will once again trust America. 

Good trade agreements will follow.
All that, of course, depends. 

Will Trump concentrate on resisting China, or on his campaign-trail demand that allies pay us more for “their” defense? 

Will the Pacific disappear from our agenda before the next presidential campaign begins in earnest? Will coherent strategy replace tough talk?
That’s likely what they’re trying to figure out in Beijing as well.

The Necessary War

China and the U.S. poised to clash as never before
By Michael Den Tandt

Chinese warships take part in a drill on the South China Sea in 2016.
Canada is in a solid position, because of its robust imports of U.S. manufactured goods, to fend off the waves of protectionism now beginning to ripple outward from President Donald Trump’s White House.
The same can’t be said for the follow-on effects of looming U.S. trade actions against Mexico and China, which round out the list of America’s top three goods trading partners, alongside Canada.
Mexico, judging from recent signals emanating from the Trump administration, promises to be a pre-dinner snack on protectionist America’s plate. 

China is the main course. 

The president’s executive order withdrawing the United States from the Trans Pacific Partnership trade agreement, far from pulling America back from the Pacific region, sets the stage for an old-fashioned superpower standoff there.
Long before the TPP (which had comprised Australia, New Zealand, Japan, Singapore, Malaysia, Vietnam, Brunei, Chile, Mexico and Peru, Canada and the United States) ran afoul of right-wing nativists and left-wing populists in the United States, it was an Obama administration strategy for containing the increasing expansionism of Communist China.
The strategy’s most fervent advocates were the Japanese, led by Prime Minister Shinzo Abe. 

Taiwan was not invited to join TPP, doubtless because of the furious backlash this would have provoked from Beijing. 

Nevertheless the Taiwanese, led by President Tsai Ing-wen, had welcomed the pact because of the renewal of U.S. regional security guarantees it represented.
This is why, when Trump and Democratic party insurgent Bernie Sanders began looming large a year ago, both attacking the TPP, opinion leaders in Japan and Taiwan began feverishly speculating about the future of U.S. engagement in Asia.
The U.S. Navy is the guarantor of last resort for international law and international shipping through the South China Sea, worth an estimated US$5-trillion annually. 

China is attempting to assert a claim over much of that open ocean, contained by its so-called nine-dash line, as well as a group of small islets in the East China Sea in Japan’s Okinawa Prefecture.
Chinese incursions into its neighbours' territory have become commonplace in recent years, causing Japan to re-garrison its farthest-flung islands. 

Regional nerves have been further frayed by the People’s Liberation Army’s rapid building of various regional shoals and reefs into what appear to be air strips and fuel depots.
During his campaign for the Republican nomination, adding to his barrage against the TPP, Trump asserted key Pacific allies such as Japan and South Korea weren’t pulling their weight and should be made to pay for protection, or do it themselves. 

The ensuing received wisdom has been that, under Trump, the U.S. would beat a gradual retreat from the Pacific, leaving a clear field for China to continue to grow its influence.
The missing piece in this assumption was trade — a fact made increasingly obvious as Trump cabinet nominees led by Defence Secretary James Mattis and Secretary of State Rex Tillerson have appeared before Congress. 

The president’s inaugural speech confirmed it.
The administration’s self-stated sine qua non is the resurrection of American manufacturing, which it hopes to bring about by reversing a significant goods trade deficit with Mexico, nearly $60-billion in 2015, and a massive goods trade deficit with China, $366-billion in 2015.
China’s export-driven economy has long relied heavily on access to the U.S. market for steady, rapid growth. 

But that expansion, formerly in double digits, has slowed in recent years as the Chinese economy matures. 

This irreversible slowdown has been posited by some analysts as the underlying reason for Xi Jinping’s heavy-handed assertion of control over all aspects of the Chinese state — and Beijing’s new restlessness with regional limitations on its influence. 

Any dramatic curb in Chinese exports to the United States is likely to exacerbate such pressures.
Ergo, all the signals coming from senior Trump administration officials — from the president himself, with his Taiwan-friendly Tweets, on down — are not of waning interest in the Pacific region, but waxing. 

Only rather than the softish power of multilateral trade ties, the primary instrument of American power projection will be military — aircraft carriers and nuclear deterrence.
Answering questions from journalists in Washington, D.C., Monday, White House press secretary Sean Spicer said “we’re going to make sure we defend international territories,” echoing earlier remarks by Tillerson. 

Beijing responded Tuesday by saying its claims in the South China Sea are “irrefutable,” just as it has insisted that its claim to Taiwan, which it considers a wayward province, is non-negotiable.
The Trump administration’s first foreign policy statement, meantime, reads as follows: “Our Navy has shrunk from more than 500 ships in 1991 to 275 in 2016. Our Air Force is roughly one-third smaller than in 1991. President Trump is committed to reversing this trend, because he knows that our military dominance must be unquestioned.”
It boils down to this: Two superpowers possessed of the world’s largest economies, both nuclear-armed are about to clash — economically and strategically — as never before. 

Batten the hatches.

Exxon-Vietnam gas deal to test Tillerson’s diplomacy

The multi-billion dollar joint energy project comes amid past Chinese threats and tough Trump administration talk on the South China Sea
By HELEN CLARK

Former ExxonMobil executive Rex Tillerson testifies during his confirmation hearing for Secretary of State before the Senate Foreign Relations Committee in Washington, DC, January 11, 2017. 

US energy giant Exxon Mobil and state-owned PetroVietnam agreed this month to develop Vietnam’s largest natural gas-fired power generation project, a US$10 billion joint venture known as ‘Blue Whale’ (Ca Voi Xanh).

The deal, signed while outgoing US Secretary of State John Kerry was on his last official visit to Vietnam, threatens to create new ripples in the contested South China Sea under the new Donald Trump administration.
The project is scheduled to come online in 2023 and will draw on a natural gas field situated 88 kilometers from Vietnam’s central Quang Nam province in the South China Sea. 

The field is estimated to hold some 150 billion cubic meters of natural gas, three times the amount of Vietnam’s current largest gas project, a joint venture with Russia’s Gazprom in the southern Con Son Basin.
Exxon Mobil will construct an 88-kilometer sea-to-shore pipeline, while PetroVietnam’s Exploration Production Corporation (PVEC) subsidiary will build gas treatment and four power plants with a total capacity of 3 gigawatts, according to reports. 

A planned expansion phase will generate enough gas for another 5,750 megawatts of power and petrochemical production, the reports said. 

PetroVietnam estimates the project will produce US$20 billion for state coffers over an undefined timeline.
The deal comes against the backdrop of Trump’s decision to scrap the Trans-Pacific Partnership agreement, a US-initiated trade pact of 12 Pacific Rim countries of which Vietnam stood the most to gain. 

The tariff-slashing deal, if it had been implemented, projected to boost Vietnam’s gross domestic product (GDP) by 11%, or US$36 billion, and exports by 28% over the decade spanning 2015-2025. Vietnam is a signatory to the China-led Regional Cooperative Economic Partnership, which does not require the same type of economic reforms that TPP would have required.
The ExxonMobil project will have a strong diplomatic defender in US Secretary of State designate Rex Tillerson, Exxon Mobil’s former chairman and chief executive officer. 

Two days before Kerry met with Vietnamese leaders, Tillerson threatened China over the South China Sea, saying in a Senate confirmation hearing that the Trump administration would send Beijing a “clear signal” and “block” China’s access to artificial islands it has built in international waters.
While within Vietnam’s exclusive economic zone (EEZ), the deepwater field is also in an area China claims on its nine-dash map, which lays wide-ranging claim to 90% of the entire South China Sea. 

In 2011, China indirectly warned Exxon Mobil soon after the company announced a big gas find at Block 118, contained in the Blue Whale project zone, saying foreign companies should refrain from exploration in the "contested" area. 

Other multinational energy companies appeared to buckle under China’s pressure by abandoning their exploration activities with Vietnam.
China has also explored in the same area and is believed to have discovered its first commercially viable store of fuel in the South China Sea. 

In mid-2014, state-run China National Offshore Oil Company (CNOOC) positioned a massive deepwater exploration rig in the contested area, setting off sea skirmishes and sparking anti-China riots in Vietnam that resulted in arson attacks on Chinese factories and the exodus of hundreds of fearful Chinese.

Tillerson and CNOOC chairman Wang Yilin met in Beijing on May 14, 2014, where the two executives discussed “further cooperation” between the two firms without giving specific details, according to a Reuters report. 

After those closed door talks, neither side announced any production plans in the area until this month’s Exxon Mobil-PetroVietnam deal. 

Exxon Mobil also has exploration rights to blocks that could be "contested" in adjoining areas.
Vietnam expert Carlyle Thayer wrote in a January 16 background briefing paper on the deal that Tillerson “would have institutional knowledge of Chinese attempts to intimidate Exxon Mobil from investing in Vietnam dating back to 2007-8” and that the businessman-cum-envoy “will not be receptive to Chinese protests at the Exxon Mobil deal with PetroVietnam.” 

Thayer wrote that Chinese officials had previously privately warned Western oil companies that their interests in China would suffer if they assisted Vietnam’s exploration ambitions.
China has not commented specifically on the multi-billion dollar Blue Whale deal, though mouthpiece media has blasted Tillerson’s Senate confirmation comments on the South China Sea. The China Daily said in a January 13 op-ed that Tillerson’s remarks were “a mish-mash of naivety, shortsightedness, worn-out prejudices and unrealistic political fantasies.” 

The Exxon Mobil-PetroVietnam venture was announced while Kerry was in Hanoi and Vietnam Communist Party General Secretary Nguyen Phu Trong was in Beijing meeting with Xi Jinping, where the two signed a joint communiqué on cooperation and peace. 

The pro forma agreement is not expected to resolve or even mitigate the South China Sea disputes.
Hanoi and Beijing maintain a wide network of cooperative ties and agreements despite their South China Sea disputes. 

Whether these agreements, including a joint steering committee to oversee relations, help to restrain bilateral ructions or are useless in the face of serious disputes, such as China’s 2014 incursion into Vietnam’s EEZ, is difficult to say due to the opaque nature of both nominally communist regimes.

This handout photo taken on June 23, 2014 shows a Chinese boat (L) ramming a Vietnamese vessel (R) in contested waters near China’s deep sea drilling rig in the South China Sea.
Bilateral ties cratered after the 2014 anti-Chinese riots and relations were not reset until November 2015, when Xi Jinping visited Hanoi. 

During Xi’s visit a dozen new bilateral agreements were signed under a comprehensive strategic cooperative partnership where China promised US$157 million worth of investments for hospitals and schools and US$500 million for infrastructure.
The sea disputes have been accentuated and complicated by recent joint exploration ventures Hanoi has entered into with foreign energy concerns. 

The deals have also added new geostrategic dimensions to the volatile region. 

For instance, India’s drive to sell Hanoi advanced missiles and other power-projecting weaponry is believed to be motivated in part to protect its ONGC Videsh Ltd energy company’s joint exploration ventures with Vietnam in the South China Sea.
China’s threat to Vietnam’s exploration activities in the area, however, is as much about political power as natural resources. 

U.S. Energy Information Agency (EIA) estimated in 2013 that the South China Sea holds 11 billion barrels of oil and 190 trillion cubic feet of natural gas, including both proven and possible reserves. China’s estimates for the sea are higher, with the state-run China National Offshore Oil Corporation (CNOOC) projecting 125 billion barrels of oil and 500 trillion cubic feet of gas. 

China consumed around 1.7 billion barrels of oil in 2015, according to industry estimates.
Like China, Vietnam sorely needs the energy to fuel its fast expanding industrializing economy. 

The Exxon Mobil deal is believed to be part of a broad Vietnamese central plan to integrate its coastal economy with natural resources in its EEZ, according to academic Thayer’s briefing paper. 

Those designs for contested maritime areas riled China in the past and will likely do so again if Tillerson backs his tough language with firm action in the South China Sea.