Archive for the ‘Regional Issues’ Category

Will countries be increasingly buying Chinese? A New York Times article (available here) reports that China’s defence industries are starting to market their products much more aggressively than in the past. The report notes that while China’s defence exports in the past have focused on fairly low-end equipment – small arms, in particular – increasingly, Chinese defence industries have been hawking their drones, combat aircraft and other more high-end weapons systems and platforms.

A critical breakthrough was the announcement that Turkey was buying a Chinese missile system to be integrated into its existing air combat platforms. Given that this decision presents serious technological challenges to the Turkish military – there will be technical challenges integrating the Chinese missile system into their existing platforms – the Turkish decision was, to put it mildly, something of a surprise. One report likens this decision as introducing a virus into an existing system.

How can we make sense of this Turkish decision? Zachary Keck suggests that it might represent a geopolitical move by Turkey, to distance itself from NATO to facilitate a move towards a more independent foreign policy.

For countries in China’s immediate vicinity, the question increasingly may be this: how much longer can we avoid buying Chinese???


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Our thanks to reader Roslyn Wilson for this infographic, the original of which can be accessed here.

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This piece, courtesy of the BBC, written by Malcolm Gladstone, is truly fascinating.

As Gladstone observes, “Listening well is a gift. The ability to hear what someone says and not filter it through your own biases is an instinctive ability similar to having a photographic memory. And I think we have a great deal of trouble with people who have this gift. There is something about all of us that likes the fact that what we hear is filtered through someone’s biases.”

What does this have to do with this blog, apart from the fact that the story is about how America’s war in Vietnam could have ended sooner, if only policy makers had listened to Kellen instead of Goure? It relates to something that I have studied for a long time, namely intelligence failures in the face of otherwise overwhelming ‘evidence’ to the contrary.

More often than not, intelligence failures do not point to the lack of information and evidence, rather it points to cognitive closure and our inability to ‘see’ and ‘hear’ beyond our subliminal intellectual and cognitive biases. It is kind of like an old TV advertisement for a radio station in Singapore called Gold 90FM (available here, or here). And in the world of intelligence, these kinds of cognitive biases are potentially very dangerous, if not outright catastrophic for the survival of the state.

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Our thanks to reader, Katherine Rose, for this infographic. My own take: it would have been helpful if China’s defence budget growth were compared against China’s economic growth – that might give us a clearer picture as to the extent to which China’s defence growth is a potential problem. Simply put, if the growth of China’s defence budgets have been comparable to China’s economic growth rates, I might be less inclined to be alarmed. If, however, China’s defence budget is growing beyond the Chinese economy, then I might be inclined to be concerned, of not outright alarmed.

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For quite some time now, there is has a great deal of focus on the growing military power of China, a growth fueled largely by China’s growing economy, of course.

The following (in bold) is an article from The New York Times’s Martin Fackler, entitled “China Is Seen Nearing U.S.’s Military Power in Region”.

TOKYO — China’s growing industrial might is likely to allow it to mount an increasingly formidable challenge to the military supremacy of the United States in the waters around China that include Japan and Taiwan, though it will probably seek to avoid an outright armed conflict, according to a detailed new report by a group of American researchers.

The report by the nine researchers, published by the Carnegie Endowment for International Peace, said the most likely outcome for the next two decades showed China narrowing the gap with the United States in military abilities, in areas including building aircraft carriers and stealth fighter jets. At the same time, the report, to be released Friday, said China’s economic interdependence with the United States and the rest of Asia would probably prevent it from becoming a full-blown, cold-war-style foe, or from using military force to try to drive the United States from the region.

One of the authors, Michael D. Swaine, an expert on Chinese defense policy, called the report one of the first attempts to predict the longer-term consequences of China’s rise for a region whose growing economic prosperity has been largely a result of the peace and stability brought by American military hegemony. He said one conclusion was that the appearance of a new rival meant that, for better or for worse, the current American-dominated status quo might not last much longer.

“We wanted to ask, how should the United States deal with this possibility?” said Mr. Swaine, an analyst at the Carnegie Endowment, based in Washington. “Can the United States continue with business as usual in the western Pacific, or must it start thinking of alternative ways to reassure the region about security?”

The other authors included scholars, former government officials and other Carnegie analysts.

The report, an advance copy of which was seen by The New York Times, said the consequences of the region’s shifting strategic balance might be felt most strongly by Japan, an Asian economic power that has long relied for its security on its alliance with the United States. The report found that in most projections, Japan would probably respond to China’s growing power by clinging more closely to the United States, as it has done recently during a heated argument with China over islands in the East China Sea that both countries claim. At the same time, despite the stance of its hawkish new prime minister, Shinzo Abe, Japan’s fiscal troubles and political paralysis will probably prevent it from significantly bolstering military spending, as some in Washington have hoped it will do to help offset China’s increasing capabilities, the report said.

In the most extreme instances, the report predicted, doubts about the ability or commitment of the United States to remain the region’s dominant military power could one day grow strong enough to drive Japan to more drastic measures, like either embracing China or building its own independent deterrent, including nuclear weapons.

For the whole region, the report found the most likely outcome to be what it called an “eroding balance” — essentially, a continuation of the current situation, in which American hegemony is slowly undermined by China’s increasing military abilities and growing willingness to assert its interests. The report said the biggest risk in this environment would be an accidental escalation of a limited dispute, like the current clash with Japan over the disputed islands.

At the same time, the report said that for the foreseeable future, China would not follow the former Soviet Union in becoming a global rival to the United States. Rather, it said, China would remain a regional power with a narrow strategic focus on territorial disputes with its immediate neighbors. Even so, the report warned, that would still make it a serious challenge to the United States, which has vowed to increase its military presence in Asia despite budget cuts.

“Can the United States maintain its primacy of the past 60 years?” asked Mr. Swaine. “The United States says so, but whether it actually can is not entirely clear.”

Fackler’s article clearly suggests that China might have ambitions to be the dominant hegemon in the Asian part of the Pacific, and that whatever global ambitions anyone else thinks China might have are precisely just that – their own thoughts.

Another think-piece, this time courtesy of Pacific Forum CSIS, by Robert A. Manning and Banning Garrett, is entitled “Does China Have a Strategy? Modern China or Dystopia: Alternate Futures?” It is reproduced (in bold) in full below.

As Xi Jinping and China’s new leaders begin their tenure, Beijing’s behavior strongly suggests that although they may have strategic goals, China has no strategy for achieving them. Beijing continues to follow a development model it has outgrown and pursues an assertive, zero-sum foreign policy that is counter to its long-term interests.

The poisonous smog choking Beijing and other major cities is an apt metaphor for the challenges facing China’s new leadership: an unsustainable status quo in a state-centric economic model that has exceeded the limits of utility; a steep environmental price being paid for 34 years of breakneck development; and a political elite whose legitimacy is increasingly weakened by endemic corruption, a lack of transparency, and little accountability. Beijing’s assertive behavior in Asia is mobilizing its neighbors against it at a moment when it needs a peaceful external environment more than ever to meet greater internal challenges.

Chinese leaders are well aware of the great challenges they face, but it seems they have neither a strategy nor the political will to adequately address them. Beijing’s behavior appears a far cry from Western imagery of a far-sighted China guided by Sun Tzu and a long-term strategic calculus.

Xi: A Reform Agenda?

The legitimacy of China’s ruling Communist Party has been based on performance: more than three decades of double-digit economic growth has been the foundation for the success of this de facto social contract. But the development model that has delivered this success needs change. China’s state-centered, investment-driven, export growth model is delivering diminishing returns. This was the premise of China 2030, a report last year co-sponsored by the World Bank and the Chinese State Development and Reform Commission (SDRC), a leading policy body. China 2030, asserted that “realizing China’s vision for 2030 will demand a new development strategy.” The report outlined the sweeping reforms necessary if Beijing is to realize its goal of becoming, “a modern, harmonious, creative, and high income society.” The proposed development strategy requires strengthening the rule of law, a greater role for private markets and “increased competition in the economy.” Importantly, the strategy argues that “reforms of state enterprises and banks would help align their corporate governance arrangements with the requirements of and permit competition with the private sector on a level playing field.”

Thus far there are few signs that a sea change in China’s approach to development is in the offing. The Chinese political elite is part of a wide network of vested interests encompassing those at the top of its state banks and state-owned enterprises and PLA-affiliated interests.

This points up the dilemma of China’s new leadership. It knows that it needs to pursue far-reaching reforms that will have no small impact on the corruption and the benefits enjoyed by China’s upper echelon. But faced with entrenched vested interests, the leadership appears somewhat perplexed as to how to implement specific new policies.

Moreover, the peaceful international environment that China needs now is being undermined by China’s assertive activities in the East and South China Seas and its reflexive strategic competition with the US. It seems that in the aftermath of the 2008 financial crisis, many Chinese hardliners concluded that China had emerged relatively stronger than the United States, which was viewed as on an accelerating trajectory of inevitable decline. The resulting Chinese behavior, from India to Vietnam, has led China’s neighbors to question its intentions and seek a counter-balancing network of actors led by the US. In effect, China has sparked the exact opposite result of what it intended, a sort of self-containment.

What strategic logic led some in China to think this is the moment to abandon Deng Xiaopeng’s dictum: “Hide your strength, bide your time”? At an historic juncture when China faces overwhelming domestic challenges, do some Chinese decision-makers nevertheless see this as the right time for an assertive China to confront the United States and its allies? It is difficult to discern a coherent Chinese strategy in all this.

What Futures?

China appears to be lacking coherent and sensible domestic and international strategies that serve its self-proclaimed interests in peace and development. Nevertheless, there are many people in Beijing who understand that China needs a cooperative relationship with the US not only to ensure a peaceful environment for its development during a difficult period ahead but also to confront the global challenges that neither China nor, nor any other country can manage unilaterally. They – and many of their counterparts in the US – recognize that a cooperative US-China relationship is essential for the future of both countries and a stable global future.

The 18th Chinese Party Congress Report called for “a new type of power relationship.” While vaguely defined, the report contains a section called “Continuing to Promote the Noble Cause of Peace and Development of Mankind” with interesting, but again, platitudes about global challenges and common interests. This may be empty rhetoric, but it merits testing by the Obama administration and other G20 nations.

Persistent strategic mistrust clouds US-China relations, posing a major obstacle to far-reaching US-China cooperation. Each country sometimes portrays the other’s intentions as a strategic challenge inherently hostile to its interests. Many Chinese strategists argue that US strategy is containment to keep China weak and divided and claim the US “pivot” to Asia strategy is proof of this intention. American strategists see China bent on dominating Asia and sharply curtailing US presence while bullying US allies and friends in the region.

Rethinking the US-China Relationship

The strategic logic for building a US-China partnership is as compelling as the obstacles to it are difficult. The ability of Xi and Obama to rebalance the relationship so that it becomes predominantly cooperative rather than competitive is highly uncertain, buffeted by contending interest groups, factions, and political forces pulling in contradictory directions.

In addition to the long-term global challenges, there are a host of compelling near-term issues, progress on which could put the US-China relationship on a more cooperative path. On the issues below there is, at least in theory, ample common ground to find a balance of interests both the US and China can live with:

1. Afghanistan/Central Asia: As the US phases down its military presence in Afghanistan, China, which has substantial economic investments and has been free-riding on the US security presence, needs to rethink its approach. Overlapping US and Chinese interests in Afghan stability, counter-terrorism, and support for economic integration in Central Asia shape a potential agenda for new regional dialogue and cooperation;

2. Cyber-Security: Cyber-attacks are proliferating and a realm where agreement on global rules and norms are desperately needed. Both the US and China have a mutual vulnerability, and at the strategic level could benefit from moving from obfuscation on the issue to a serious dialogue aimed at establishing codes of conduct and accepted norms;

3. Greater Middle East: The ongoing turmoil and transformation in the Middle East and North Africa should be an area of overlapping interests in stability and accountable governments that are not hostage to extremist forces. Syria is the most pressing test case for Sino-American cooperation;

4. East Asia: There is an urgent need to create a new modus vivendi and rules of the road on what sort of US military footprint in the region China can live with, and vice-versa.

Alternative Futures for China

How the US deals with China – and how China manages its internal transformation – will have major if not decisive impact on what future China evolves toward. Below are three futures for China – not predictions, but heuristic tools to think about outcomes of current strategic and policy choices: “Harmonious World,” Muddle Through, and Middle Income Trap.

1. Harmonious World: This is the best case scenario. China’s new leadership begins over the next 5-6 years to strengthen rule of law, move its financial system to a more market-based allocation of resources, allows the RMB to become convertible and ascend as a global currency. Consumer-driven growth sustains a 6-7 percent annual growth rate as China decreases its reliance on exports and increases social stability through political and judicial reform to open up the political system and enhance rule of law, transparency and accountability. Internationally, as China and other G20 nations push for a larger voice in rule-making, they cooperate with Western countries to revise the international rules-based order. China also finds a new, more stable and cooperative modus vivendi in East Asia.

2. Muddle Through: This future is a crisis-reaction rather than strategy-driven China in which the leadership responds with limited effectiveness to environmental crises, bursting of the residential real estate bubble, corruption, and increasing inequality and social discontent. China engages in reform by default more than by design. Over a decade-long journey over a bumpy road, China, slowly takes steps to enhance rule of law, increase accountability, and gradually reforms the economic and financial system to enhance competitiveness, reduce the monopoly power of the SOEs, and take other steps, reluctantly and belatedly, to restructure the economy and slow the trend of increasing inequality. This future is characterized by a reactive foreign policy that is a mix of nationalism, caution, and both cooperation and competition with the US.

3. Middle Income Trap: Pressures to sustain 7-8 percent growth result in more excessive and politically motivated, unsound lending by state banks to keep the economy appear to be growing while increasing the debt load and engaging in unproductive investments. This proves counter-productive and hits a wall as the residential real estate bubble deflates, middle-class investors who put their savings into buying apartments are hit hard, and social unrest grows. China falls into the middle income trap as it fails to move up the value chain in production to compete with advanced countries and yet its higher wages render it unable to compete with other developing countries. As China focuses increasingly on internal challenges, including social unrest and political instability, it tends to view the outside world as a source of its problems and a strategic threat, thus stoking nationalism.

Between these two reports, the picture of China’s growing military capabilities starts to look a but more muddied, I suggest.

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For our readers who might be focusing on the Korean peninsula security dynamic as it continues to unravel (or at least appear to unravel), a series of analyses from a variety of sources of North Korea’s threat to the region:

From the BBC:
Andrea Berger from RUSI (available here), and her recent analysis of what drives North Korea’s military threats to South Korea, the United States, and indeed just about ANYBODY Pyongyang does not like;
The threat that North Korea’s missile programmes and nuclear programme poses to the Asia-Pacific region (available here), and possibly to the United States (although the article pretty much rules that out as technologically impossible for North Korea); and
North Korea’s missile programmes analysed in detail (here).

From The Washington Post:
North Korea’s declaration of war (delivered very recently ), the analysis (available here);
But declaring war is one thing, being able to wage is a completely different thing for North Korea, so what kind of military plans can Pyongyang scrape together? A possibility is outlined here;
And if North Korea possesses no capacity to wage war, does this mean the current rhetoric is all just one huge strategic bluff? An answer can be found here.
And if all this was not enough, a suggestion (here) that the pictures circulated by North Korean official news agencies may have been doctored (gasp!)

My own take: its all bluff and bluster. North Korean policy makers aren’t that dumb, they know they cannot afford to piss off their Chinese backers, and doing anything to piss the United States off will consequently piss the Chinese off as well.

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My thanks to colleague and friend Greg Dalziel for this (link here), a visual representation of the military balance between the United States and China. As the infographic demonstrates, there remains a vast gulf in terms of military spending and military power (or at least, potential military power) between the two states. And it is worth noting that the military expenditures of China and the US look by and large fiscally very prudent.

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