Judging from the initial days of US President Donald Trump’s time in office, it looks like the new administration might end up turning the international system upside down. First, of course, is the China factor. Trump and US Secretary of State Rex Tillerson have clearly warned Beijing that its provocative and unilateral sovereignty claims and building of military facilities on artificial and existing islands in the South China Sea will be resisted.
Tillerson told the Senate Committee on Foreign Relations that China’s island building in waters contested by six nations was illegal.
“We’re going to have to send China a clear signal that, first, the island building stops. And second, your access to those islands is not going to be allowed,” he said.
China’s South China Sea activity was “extremely worrisome,” and posed a threat to the “entire global economy,” from Beijing’s control of the waterways to dictate international trade and maritime passage, he said.
It has come to this because: “The failure of a response has allowed them just to keep pushing the envelope on this,” he said. “The way we’ve got to deal with this is we’ve got to show backup in the region with our traditional allies in Southeast Asia.”
In other words, the US would need to galvanize the region under US leadership to confront China. So far, this has not happened for two reasons despite former US president Barack Obama’s announcement in 2011 of the US’ “pivot” to Asia
While the US has opposed China’s activities in the South China Sea and occasionally sent a military vessel or two to assert its right of freedom of navigation through Beijing-claimed waters, its actions have been sporadic without any clear policy backup, which has given China the impression that the US lacks resolve to follow up.
This in turn has led nations in the region to waver, not sure of the US’ willingness and stamina to stay engaged in the region. Therefore, China’s neighbors, even those with contested sovereignty claims, such as the Philippines, are seeking to make their own peace with China.
There is widespread confusion in the Asia-Pacific region and elsewhere in the world about the — what looked like at times — random utterances of Trump and his team. For instance, even though Trump has ramped up the rhetoric against China, Australian Minister of Foreign Affairs Julie Bishop appears worried about lack of engagement with regional countries.
In a speech at the US-Australia Dialogue on Cooperation in the Indo-Pacific, she said it was “essential” for the US to give “serious consideration and at the highest levels” to closer involvement with ASEAN — which still has the power to positively shape/contain China’s rise.
However, it does not seem likely this will happen, because there is not much stomach to confront China in the region, which is not only a strong military power, but also a major trading partner and investment source for these countries. Indeed, Trump’s withdrawal from the Trans-Pacific Partnership, which was supposed to be the second plank of the US’ “pivot” to Asia — military engagement being the first — does not encourage nations in the region to line up behind the US.
China’s response to Tillerson’s remarks at the Senate Foreign Relations Committee was relatively subdued and measured, while maintaining its sovereign position in the South China Sea.
Chinese Ministry of Foreign Affairs spokesman Lu Kang (陸慷) said at a regular news conference that China “has the full right” to conduct activities in the waters.
However, “the South China Sea situation has cooled down and we hope non-regional countries can respect the consensus that it is in the fundamental interest of the world,” he added.
However, some state-controlled media outlets said that any US military interference to stop access would require Washington to “wage war.”
China strongly objected to President Tsai Ing-wen’s (蔡英文) telephone call with then-US president-elect Trump, offering congratulations on his victory, which China regarded as a violation of the basic premise of US-China relations, which is based on the “one China” principle.
Interestingly Trump’s basic position was that the US has been ripped off by this “principle,” as it got nothing in return for (sort of) giving away Taiwan. He seemed keen to activate the Taiwan issue to create leverage in resetting US-China relations.
At the time, Trump said: “I don’t know why we have to be bound by a ‘one China’ policy unless we make a deal with China having to do with other things, including trade.”
“We’re being hurt badly by China with devaluation [currency manipulation]; with taxing us heavy at the borders when we don’t tax them; with building a massive fortress in the middle of the South China Sea, which they shouldn’t be doing and frankly, with not helping us at all with North Korea,” he said.
Even though Trump has now recognized the “one China” principle, the only predictability about the new US president is his unpredictability.
At another level, the loss of manufacturing jobs in the US, said to be due to artificially suppressed labor costs and currency manipulation, has allowed China to flood the US market with its goods.
Trump wants to bring those jobs back to the US. This was an important tenet of his election campaign and a significant factor in his victory.
The US has the world’s largest trade deficit with China, estimated in 2015 at US$367 billion, its highest with any country. As of November last year, the US owed China a little more than US$1 trillion.
Trump believes this situation has been brought about in an underhand way, because of China’s undervalued currency, which gives it an unfair advantage. To rectify this imbalance, Trump is threatening to impose import duties on foreign goods, as he has threatened to do with Mexico.
Indeed he has forewarned Germany that a planned BMW manufacturing plant in Mexico intended to advantage its exports into the US might also face similar treatment.
However, China is supposedly the biggest culprit. The resulting trade war, it is feared, might eventually lead to the kind of economic depression not seen since the 1930s, which could also increase the chance of conflict in the volatile political and security situation developing in the South China Sea.
It is true that a sharp decline in Chinese exports into the US has the potential of creating large-scale unemployment and social instability in that country, as well as political problems for the Chinese Communist Party regime; because the implicit social contract between the regime and people is based on political allegiance in return for incremental economic improvement.
However, on the other hand, China too can hit back by diverting its imports, as in the case of US aircraft, to European manufacturers, which would hit selective sectors of the economy. Besides, it has the potential of rising inflation in the US and at the same time it is not easy to revive or resurrect the jobs of the past.
The important point to make is that in the same way as armed conflict, trade wars — once unleashed — are difficult to contain and the two tend to converge at some point. However, Trump has his own logic to show the world that the US means business and its business is to show the world that the US will hit back and hit back hard.
Sushil Seth is a commentator in Australia.
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