PacNet #40 – Decoding the Infrastructure Development on Myanmar’s Coco Islands

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Satellite imagery released by Maxar Technologies in January 2023, revealing new construction on Myanmar’s Great Coco Island, has raised concerns and questions. The imagery discloses an extended airport runway and two new widened hangars next to it. A report from Chatham House Policy Institute says that the runway seems freshly lengthened to 2,300 meters (7,500 feet) from 1,300 meters 10 years ago, and the new hangars enlarged by approximately 40 meters. The extensive nature of this development provokes suspicions as to whether the infrastructure under construction is a Chinese espionage base for its military expansion into the Indian Ocean.

Why China?

China has been a friend to the Myanmar military since the late 1980s. Even when Myanmar was isolated during the junta’s rule in the 1990s and 2000s, China remained a supportive partner of the regime. Despite the harmonious relations with the civilian government during the democratic transition of 2011-2020, China has always wanted to keep closer ties with the Myanmar military for economic and security reasons. The 2021 coup has strengthened the Myanmar military’s relationship with China and increased Beijing’s sway over the country. The presence of a Chinese intelligence base on the Coco Islands, long rumored among the international security community, had little to no evidence before the satellite imagery’s release.

Given the prevailing instability across the country, the Myanmar military cannot carry out the ongoing construction on the Great Coco Island without China; only the latter has both the willingness and capability to develop an airport on the remote island.

Why would China secretly—not publicly—develop such infrastructure? What is the project’s goal, in the short or long term?

While not part of the Belt and Road Initiative, the infrastructure development taking place on the Coco Islands reminds of other projects under the BRI in other parts of the world, as these projects often generate controversy and criticism. Specifically, rumors have swirled that these projects serve China’s regional military and security objectives, rather than the needs of the communities they take place in.

For instance, in 2018 and 2019, Koh Kong province in Cambodia underwent the Dara Sakor Airport Development project funded by China’s Union Development Group. The extreme difficulty of attracting visitors to Koh Kong Beachside resort makes the development of an international airport an illogical decision. Dara Sakor, deviating from the initial plan to develop an international airport for commercial airliners, developed a long runway (10,500 feet) with a “tight turning bay” favored by jet fighters. The Dara Sakor investment zone covers 20% of Cambodia’s coastline and lies close to the Ream Naval Base, granted to China for 30 years in return for the funding required to renovate the naval base. Although the developer insisted that the airport will be for civilian use, international observers immediately criticized the project as benefitting Beijing’s military strategy.

Sri Lanka’s Hambantota Port, another China-sponsored infrastructure project, also raised security concerns. In 2017, Sri Lanka leased a 70% stake in the port to China Merchants Ports Holding Company Limited (CM Port) for 99 years under a concession agreement signed by Colombo’s cabinet of ministers, keeping the remaining 30% under Sri Lanka Ports Authority (SLPA). Although the CM Port and SLPA ostensibly jointly manage the port’s commercial operations, observers still consider the port a Chinese debt trap. As with Dara Sakor, the Hambantota port is poorly connected to the rest of the country, prompting questions as to its purpose. Some analysts believe China could potentially use the Hambantota Port as a pretext to establish a security base due to its strategic location for the import of energy from the Middle East.

Why Coco Islands?

As with the projects above, the Coco Islands’ remote location, poorly connected to the rest of the country, prompts questions as to whether its airport construction will eventually provide critical infrastructure for China, facilitating future military expansion. The Islands are remote from and poorly connected to the rest of the country. This seems consistent, however, with the PLA’s naval base expansion in Djibouti and China’s current aspiration to set up a permanent military base in Equatorial Guinea.

China considers the Atlantic Ocean important for its exports and the Indian Ocean crucial for its energy and raw material requirements. China has and will continue to undertake infrastructure projects along the maritime route as part of its Belt and Road Initiative. The suspicion and concerns over the China-developed infrastructure mainly arise from the lack of transparency and mysterious nature of the relationship, given the previously mentioned cases of BRI construction in corrupt states.

The Coco Islands’ undisclosed construction, along with other infrastructure ventures in its vicinity, has revived the “String of Pearls” Theory, with the Coco Islands as “beads” in China’s strategy to expand its military presence. According to this theory, China will persist in establishing its economic and military footholds in or around the Indian Ocean by investing in dual-use infrastructure development projects. The Maldives, Seychelles, and Madagascar can expect similar projects sooner or later. However, it will remain crucial to observe how China handles tensions in Pakistan’s Gwadar Port, key BRI infrastructure on China Pakistan Economic Corridor.

All in all, the ongoing construction of an airport on the Great Coco Island suggests China’s unwavering determination to broaden its sphere of influence. As Myanmar faces isolation, China sees an opportunity. If it wishes to ease such doubts and suspicions, China should establish a mechanism for sustainable transparency to demonstrate its sincere and responsible economic cooperation. Without transparency, China will find it hard to justify the development of infrastructure of such questionable use.

Furthermore, other major powers, namely the United States, European Union, and possibly India, should enhance their active engagement in the Southeast Asian and Indian Ocean subregions through political discussion and/or security cooperation with ASEAN member states to appropriately respond to the expanding influence of China. It is crucial to explore constructive measures with Myanmar’s neighbors that promote a balanced regional environment, foster ASEAN’s centrality, and ensure collective stability and prosperity.

Shwe Yee Oo ([email protected]) is Resident Nonproliferation Fellow at Pacific Forum.

PacNet commentaries and responses represent the views of the respective authors. Alternative viewpoints are always welcomed and encouraged.

Photo: Chinese President Xi Jinping in front of PRC and Myanmar’s flags in 2019 by Fred Dufour of Reuters. 

PacNet #38 – EU holds the key to US-China rivalry

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An earlier version of this article appeared with The Hinrich Foundation.

President Biden came into office vowing to confront China more forcefully and professing a desire to work closely with US partners to form a “united front” on shared China concerns. This was a key point of differentiation with the previous Trump administration, which sometimes seemed intent on taking a wrecking ball to longstanding US alliances. Trump had gone so far as to refer to EU trade practices as “worse than China.”

Repairing bruised relations with the European Union and enlisting its support on common policies to push back more vigorously against China has been a top priority for the Biden administration. Results thus far have been mixed and the ultimate success of the policy remains in question.

Focusing on the European Union is a sensible recognition of the critical balancing position Europe occupies. EU policies that align more tightly with US measures to counter China would substantially strengthen the punch they pack. A European Union that sits on the fence—let alone one that leans towards China—would sap effectiveness from almost any US strategy. Ironically, the most significant rivalry in the Indo-Pacific might hinge on decisions taken in Brussels.

While the United States and the European Union have had a close working partnership for three-quarters of a century, their interests and viewpoints are far from identical, especially on China policy

Both sides largely share concerns over China’s alleged human rights abuses and its drive to obtain technological capacities that have potentially game-changing military applications. They also share broad discomfort over China’s authoritarian system, its geopolitical worldview, and its growing propensity to flex its military muscle in the South China Sea.

But sharper distinctions between the United States and the European Union arise over how best to “manage” China’s rise. The EU has been more inclined to try to thread the needle: challenge China on human rights and geopolitics when needed but strive to maintain robust commercial ties and emphasize cooperation on global issues such as climate change.

US-China policy assumes a greater disruption to the trade and investment relationship, especially in technology, and anticipates a relationship increasingly defined by clashes rather than cooperation.

Divergent voices within Europe

The key question is whether the policy common ground currently shared by the United States and the European Union will expand or contract. There are important voices within the European Union pulling in different directions.

French President Emmanuel Macron has been an emphatic voice within the European Union arguing against following the more aggressive US lead, warning that such a course would reduce Europeans to American “vassals.” Macron argues for a middle path that avoids picking sides between the US and China. During a recent visit to China, Macron plainly stated: “We mustn’t decouple with China.”

Ursula von der Leyen, President of the European Commission, has articulated a vision more in line with the US perspective. In her estimation, the EU-China relationship has grown “more distant and more difficult” as a result of “a very deliberate hardening of China’s overall strategic posture” and “increasingly assertive actions.”

For now, the EU approach appears to “de-risking”—reducing dependence on China in strategic sectors—rather than the partial decoupling suggested by US policy.

The direction the European Union ultimately leans will be key. Almost across the board, on issues ranging from export controls to investment reviews or the usage of Chinese telecommunications equipment in critical infrastructure, greater policy coherence between the European Union and the United States will enhance the effectiveness of the measures.

China’s triangulation

The critical role played by the European Union has certainly not been lost on officials in Beijing. Attempting to split the European Union from the United States to the maximum extent possible—triangulation—is the most sensible course for China to pursue.

China has made substantial efforts to cultivate strong bonds with Europe. Arguably, the high water market for these efforts occurred during the waning days of the Trump administration. The European Union and China appeared to have reached an agreement on a Comprehensive Agreement on Investment despite urgent pleas from incoming Biden administration officials to wait until the new US administration assumed office and official input from team Biden could be provided. The US entreaties were ignored by the European Union.

Achievement of the long-sought investment deal with the European Union was perceived as a major coup for China and a devastating setback for the United States, especially given its unsuccessful last-minute efforts to slow the train. The wheels would come off the CAI in 2021 however. Acrimonious disputes over EU sanctions in response to alleged human rights abuses in China caused Europe to pause its implementation process and the agreement remains in limbo today, presumed dead.

Russia’s invasion of Ukraine has presented a far greater impediment to China’s efforts to court EU sympathies. China has professed neutrality and has avoided condemning Russia, let alone applying sanctions. Moreover, China has indirectly helped Russia fund the war by substantially increasing imports of oil and gas, a move which has been widely interpreted in the West as a not-so-subtle tilt towards Russia.

From the EU perspective, the invasion is nothing short of cataclysmic—a direct challenge to the very founding principles upon which the European experiment is based. The prevailing view in Brussels is that unconditional condemnation and material support to help Ukraine repel Russian advances are required.

China’s position is causing the EU to fundamentally reconsider its relationship. According to European Commission President von der Leyen: “How China continues to interact with Putin’s war will be a determining factor for EU-China relations going forward.”

US shortcomings

If China has not played its EU cards flawlessly, neither has Washington. The Biden administration has frequently proceeded in a manner that makes it less likely that the hoped-for common front with the European Union can be achieved. The European Union has been rankled by what it sees as a lack of consultation and coordination from the United States and an insufficient appreciation for collateral damage being inflicted on EU interests as the United States conducts its strategic rivalry with China.

A case in point is the recently passed Inflation Reduction Act, which takes aim at China’s dominance in the electric vehicles sector through the provision of massive subsidies for EVs produced in the United States, or in countries that have a trade agreement with it. There is no trade agreement between the European Union and the United States. EU producers in this critical sector would therefore not be eligible for IRA subsidies and would find themselves competitively disadvantaged vis-a-vis not only US producers, but also Korean, Mexican, or Canadian producers.

It should have been blindingly obvious to US officials that the EV subsidies contained in the IRA would significantly sideswipe EU producers and precipitate a firestorm of protests from Brussels. Yet, both the White House and Congress either missed the point or deemed it to be insufficiently important. Predictably, EU officials were apoplectic upon being apprised of the IRA provisions.

In the aftermath of intense diplomatic fallout, the US is now scrambling to do damage control that could have been more effectively accomplished on a preemptive basis. An inelegant band-aid solution seems at hand, in the form of a limited agreement on critical minerals that will be generously interpreted as a “trade agreement” for the purposes of the IRA. This would largely address the European concerns by making EU producers eligible for US subsidies.

Despite the likelihood of a resolution on the horizon, the entire episode is unlikely to have increased European confidence in their working relationship with the United States.

Can they get their act together?

A seamless US-EU policy on China will never happen. But the divergences in viewpoint should be manageable. Both sides recognize that we are in a new strategic era that will require a new and more guarded approach to China. Differences arise over how aggressively and to what extent China guardrails need to be put into place.

The key question moving forward is whether we’re headed towards a greater convergence or divergence in outlook. In either case, the logic in favor of working together more constructively on China policy—if for no other reason than to limit collateral damage—is overwhelming. It’s time for both sides to conduct themselves accordingly. Avoid presenting the other side with any fait accompli. More robust consultation and transparency as policies are being developed and negotiations are being conducted will go a long way. Above all, drop the internecine squabbles and stay clear of the unforced errors that are setting the relationship back.

Stephen Olson ([email protected]) is a Senior Research Fellow at the Hinrich Foundation with over 30 years of international trade experience. Previously, he was an international trade negotiator in Washington DC and served on the US negotiating team for NAFTA negotiations.

PacNet commentaries and responses represent the views of the respective authors. Alternative viewpoints are always welcomed and encouraged.

Photo: Flags raised during EP President Martin Schulz’s welcoming of PRC President Xi Jinping to the European Parliament in Brussels by European Union 2014 – European Parliament.

PacNet #37 – Comparative Connections Summary: May 2023

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Comparative Connections Summary:
January-April 2023

 

REGIONAL OVERVIEW

“Like-Minded Minilateralism” Coming of Age

BY RALPH COSSA, PACIFIC FORUM & BRAD GLOSSERMAN, TAMA UNIVERSITY CRS/PACIFIC FORUM

As broad-based multilateral organizations seem to be increasingly unable (or unwilling) to tackle the major security challenges of the day—Russia-Ukraine, China-Taiwan, North Korea, and Myanmar, to list but a few—more focused “minilateral” efforts involving “like-minded” allies and partners are coming to the fore. Foremost among the dysfunctional are the United Nations Security Council (UNSC) and broader UN mechanisms, thanks to Russian and Chinese intransigence. Sadly, ASEAN-led mechanisms like the East Asia Summit and ASEAN Regional Forum, not to mention ASEAN itself, also fall into this category, as does the G20, whose foreign ministers failed to reach any meaningful conclusions at their early March 2023 meeting, their first with India at the helm. Enter the Quadrilateral Security Dialogue (or “Quad,” involving Australia, India, Japan, and the United States), AUKUS (Australia-United Kingdom-US technical cooperation agreement), various minilateral cooperative efforts (including US-Japan-Philippines and US-Japan-Korea), and a resurgent like-minded G7, now that its (failed) experiment of drawing Russia and China into its process has come to an inglorious end. But not all new efforts are succeeding. President Biden hosted his second “Summit of Democracies” which drew little fanfare or attention.

 

US-JAPAN RELATIONS

The US and Japan Build Multilateral Momentum 

BY SHEILA A. SMITH, COUNCIL ON FOREIGN RELATIONS & CHARLES MCCLEAN, YALE MACMILLAN CENTER

2023 brings a renewed focus on the US-Japan partnership as a fulcrum of global and regional diplomacy. With an eye to the G7 Summit in Hiroshima in mid-May, Prime Minister Kishida Fumio began the year with visits to G7 counterparts in Europe and North America. Later in the spring, he toured Africa in an effort to gain understanding from countries of the Global South. The Joe Biden administration looks ahead to a lively economic agenda, as it hosts the APEC Summit in November on the heels of the G20 Summit in New Delhi in September. National Security Advisor Jake Sullivan laid out in detail the economic ambitions of the Biden national strategy on April 27, giving further clarity to how the administration’s foreign policy will meet the needs of the American middle class. Regional collaboration continues to expand. Both leaders will gather in Australia on May 24 as Prime Minister Anthony Albanese hosts the third in-person meeting of the leaders of the Quad. Also noteworthy in this first quarter of 2023 is the progress in ties between Japan and South Korea.

US-CHINA RELATIONS

US-China Effort Set “Guardrails” Fizzles with Balloon Incident

BY SOURABH GUPTA, INSTITUTE FOR CHINA-AMERICA STUDIES

The proposed “guardrail” that Joe Biden and Xi Jinping sought to erect last fall in Bali failed to emerge in the bitter aftermath of a wayward Chinese surveillance balloon that overflew the United States and violated its sovereignty. Though Antony Blinken and Wang Yi met on the sidelines of the Munich Security Conference afterward, aspersions cast by each side against the other, including a series of disparaging Chinese government reports, fed the chill in ties. Taiwan President Tsai Ing-wen’s meeting with House Speaker Kevin McCarthy during the return leg of her US transit added to bilateral and cross-strait tensions and were met with Chinese sanctions. Issues pertaining to Taiwan, be it arms sales or a speculated Chinese invasion date of the island, remained contentious. The administration’s attempt to restart constructive economic reengagement with China, including via an important speech by US Treasury Secretary Janet Yellen, appears to have fallen on deaf ears in Beijing.

 

US-KOREA RELATIONS

Nuclear New Year

BY MASON RICHEY, HANKUK UNIVERSITY

South Korean president Yoon Suk-yeol has tried to make a priority of transforming the traditional US-South Korea military alliance into a “global, comprehensive strategic alliance” with increasing ambitions beyond hard security issues on the Korean Peninsula and in Northeast Asia in general. Yoon and his foreign policy team get an “A” for vision and effort—joining the NATO Asia-Pacific Four (AP4) and releasing an Indo-Pacific Strategy in 2022 are evidence. But, like Michael Corleone trying to go legit in The Godfather III, every time they make progress getting out, they get pulled back into the Peninsula. To wit, during the first trimester of 2023 Korean Peninsula security issues again commanded disproportionate attention from Seoul and Washington. The proximate cause for this dynamic is North Korea’s mafioso-in-chief, Kim Jong Un, who started 2023 with a January 1 missile launch and kept at it throughout the winter. This, of course, followed record-breaking 2022 North Korean missile tests and demonstrations, which totaled approximately 70 launches of around 100 projectiles. Given the near-zero prospects for North Korean denuclearization and the growing arsenal at Pyongyang’s disposal, it is understandable that any South Korean president would be distracted from interests further afield.

 

US-INDIA RELATIONS

An Even Larger Role in Everything

BY AKHIL RAMESH, PACIFIC FORUM

On May 24, 2022, President Joe Biden met Indian Prime Minister Narendra Modi on the sidelines of the Quad summit in Tokyo. According to the White House readout of the meeting, “The leaders reviewed the progress made in the US-India Comprehensive Global Strategic Partnership. They committed to deepen the Major Defense Partnership, encourage economic engagement that benefits both countries, and expand partnership on global health, pandemic preparedness, and critical and emerging technologies.” While such statements are often aspirational and lag in implementation, the first four months of 2023 show the renaissance in US-India ties to be real.

 

US-SOUTHEAST ASIA RELATIONS

Washington Zeroes in on Manila

BY CATHARIN DALPINO, GEORGETOWN UNIVERSITY

With an apparent renaissance in the US-Philippine alliance, spurred by rising tensions in the South China Sea and the Taiwan Strait, the Biden administration ramped up diplomatic activity with Manila as the two countries moved toward an official visit from President Ferdinand “Bongbong” Marcos, Jr., in May. At the same time, the 42nd iteration of Cobra Gold, which returned to full strength for the first time since the 2014 coup in Bangkok, suggested momentum in the US-Thailand alliance, albeit with a lower profile. While the international environment continued to be roiled by US-China rivalry, the Russian war in Ukraine, and high food and commodity prices, Southeast Asia’s own internal turmoil was evident. The junta in Myanmar extended the state of emergency and stepped up aerial bombing of areas held by the opposition and armed ethnic groups. As Indonesia takes up the ASEAN chair, prospects for implementing the Five-Point Consensus Plan are dim, if not dead. Vietnam and Thailand began leadership transitions—Hanoi with an anti-corruption purge and Bangkok with the launch of general elections—while Cambodian Prime Minister Hun Sen continued to eviscerate the opposition ahead of his near-certain re-election in July.

 

CHINA-SOUTHEAST ASIA RELATIONS

China Strengthens Regional Leadership Countering US Challenges

BY ROBERT SUTTER, GEORGE WASHINGTON UNIVERSITY & CHIN-HAO HUANG, YALE-NUS COLLEGE
Southeast Asia featured prominently in Beijing’s increasingly strong international efforts to portray Chi-na as a source of strategic stability and economic growth with comprehensive global governance plans supportive of interests of developing countries and opposing the United States. These efforts intensified after the landmark 20th Party Congress in October and the 14th National People’s Congress in March. They were reinforced as Xi Jinping emerged from COVID restrictions and preoccupation with domestic matters to engage actively in summitry with leaders of Vietnam, Laos, the Philippines, Cambodia, Malay-sia, and Singapore. China’s economic importance for regional countries grew as did its dominance over the contested South China Sea. Its show of force against Taiwan in April had little discernible impact on China-Southeast Asia relations, while notable US advances in military cooperation with the Philippines warranted Chinese warnings that escalated during the reporting period.

 

CHINA-TAIWAN RELATIONS

Confrontation Muted, Tensions Growing

BY DAVID KEEGAN, JOHNS HOPKINS SCHOOL OF ADVANCED INTERNATIONAL STUDIES & KYLE CHURCHMAN, JOHNS HOPKINS SCHOOL OF ADVANCED INTERNATIONAL STUDIES

As 2023 began, cross-Strait confrontation was muted. Travel began returning to pre-COVID levels across the Strait and between the mainland and Taiwan’s offshore islands. At China’s annual National People’s Congress, outgoing Premier Li Keqiang and reanointed President Xi Jinping eschewed inflammatory rhetoric about reunification with Taiwan. Taiwan and the US kept Taiwan President Tsai Ing-wen’s transit of the US low-key. Tsai met House Speaker Kevin McCarthy in California, deflecting the speaker’s ex-pressed interest in visiting Taiwan and avoiding the destabilizing Chinese military exercises around Tai-wan that followed Speaker Pelosi’s visit last August. Despite this calm, seeds of confrontation proliferated. China cut a communications cable to Taiwan’s off-shore islands and announced a coast guard drill to inspect commercial shipping in the Taiwan Strait, both interpreted as practice for gray-zone coercion. China persuaded Honduras to sever its longstanding diplomatic ties with Taiwan. Taiwan increased its military budget and expanded training with US forces. Former Taiwan President Ma Ying-jeou visited China and met Chinese officials, endorsing the 1992 Consensus and signaling that the upcoming election campaign for Taiwan’s president will again offer two very different visions of Taiwan’s future relationship with mainland China.

 

NORTH KOREA-SOUTH KOREA RELATIONS

North Cranks up Nukes— and Slams Down the Phone

BY AIDAN FOSTER-CARTER, LEEDS UNIVERSITY, UK

The first four months of 2023 brought no progress or respite in inter-Korean relations. Pyongyang sent no further drones into Southern airspace as it had in December, but continued to rattle Seoul with tests of advance weaponry and ever more lurid nuclear rhetoric. South Korea hardened its language and stance, with a restored emphasis on human rights in the North—now officially defined as an enemy once more. ROK President Yoon Suk Yeol also found enemies within: leftists who made contact with the DPRK in third countries were no longer ignored but prosecuted. More ominously, so were four top officials who served the previous president, Moon Jae-in, over how they handled two difficult inter-Korean incidents in 2019-20. Elsewhere, Seoul complained in vain about Pyongyang’s abuse of its assets in two defunct joint ventures: stealing some, destroying others. Soon after, the North stopped answering the phone. It is hard to see how North-South relations will improve, but all too easy to imagine them getting even worse.

 

CHINA-KOREA RELATIONS

Deepening Suspicions and Limited Diplomacy

BY SCOTT SNYDER, COUNCIL ON FOREIGN RELATIONS & SEE-WON BYUN, SAN FRANCISCO STATE UNIVERSITYChina and South Korea began 2023 with the temporary imposition of tit-for-tat restrictions by both governments on travel to the other country after China lifted its zero-COVID policy. Although the restrictions proved temporary, they pointed to the reality of a sustained downward spiral in China-South Korea relations accompanied by increasingly strident public objections in Chinese media to the Yoon Suk Yeol administration’s steps to redouble South Korean alignment with the United States regarding Indo-Pacific strategy, supply chain resiliency, and shared values. South Korean Minister of Foreign Affairs Park Jin’s congratulatory call to newly appointed Chinese Minister of Foreign Affairs Qin Gang on Jan. 9 was one of the few positive senior-level inter-action between the two countries in early 2023; by the end of April, the main diplomatic interactions between China and South Korea had devolved into a dueling exchange of private demarches and public assertions that the other side had committed a “diplomatic gaffe.”

 

JAPAN-CHINA RELATIONS

Talking—But Talking Past Each Other

BY JUNE TEUFEL DREYER, UNIVERSITY OF MIAMI

The 17th China-Japan Security Dialogue resumed in late February after a four-year pause but produced no resolution to outstanding problems. In early April, Chinese and Japanese foreign ministers also met for the first time since 2019, with the four-hour meeting similarly unproductive. The Chinese side expressed annoyance with Tokyo for its cooperation with the United States, its support of Taiwan, the release of Fukushima nuclear-contaminated wastewater into the ocean, and Tokyo’s recent restrictions on semiconductor equipment exports. The Japanese foreign minister sought, but did not obtain, information on a Japanese national who had been arrested on spying charges, complained about Chinese intrusions into the territorial waters around the disputed Diaoyu/Senkaku Islands, and stressed the importance of stability in the Taiwan Strait. There was no mention of the long-postponed state visit of Xi Jinping to Tokyo as a matter of reciprocity for former Prime Minister Abe Shinzo’s visit to Beijing.

 

JAPAN-KOREA RELATIONS

The Return of Shuttle Diplomacy

BY JI-YOUNG LEE, AMERICAN UNIVERSITY & ANDY LIM, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES

In March 2023, Japan and South Korea had a long-awaited breakthrough in their bilateral relations, which many viewed as being at the lowest point since the 1965 normalization. On March 16, South Korean President Yoon Suk Yeol and Japanese Prime Minister Kishida Fumio held a summit in Tokyo and agreed to resume “shuttle diplomacy,” a crucial mechanism of bilateral cooperation that had been halted for about a decade. Behind the positive developments was President Yoon’s political decision on the issue of compensating wartime forced laborers. The two leaders took steps to bring ties back to the level that existed prior to actions in 2018 and 2019, which precipitated the downward spiral in their relationship. Japan decided to lift the export controls it placed on its neighbor following the South Korean Supreme Court ruling on forced labor in 2018. South Korea withdrew its complaint with the World Trade Organization on Japan’s export controls. Less than a week after the summit, Seoul officially fully restored the information sharing agreement (GSOMIA) that it had with Tokyo. They also resumed high-level bilateral foreign and security dialogues to discuss ways to navigate the changing international environment together as partners.

 

CHINA-RUSSIA RELATIONS

War and Peace for Moscow and Beijing

BY YU BIN, WITTENBERG UNIVERSITY

Perhaps more than any other time in their respective histories, the trajectories of China and Russia were separated by choices in national strategy. A year in-to Russia’s “special military operation” in Ukraine, the war bogged down into a stalemate. Meanwhile, China embarked upon a major peace offensive aimed at Europe and beyond. It was precisely during these abnormal times that the two strategic part-ners deepened and broadened relations as top Chinese leaders traveled to Moscow in the first few months of the year (China’s top diplomat Wang Yi, President Xi Jinping, and newly appointed Defense Minister Li Shangfu). Meanwhile, Beijing’s peace initiative became both promising and perilous as it reached out to warring sides and elsewhere (Europe and the Middle East). It remains to be seen how this new round of “Western civil war” (Samuel Hunting-ton’s depiction of the 1648-1991 period in his pro-vocative “The Clash of Civilizations?” treatise) could be lessened by a non-Western power, particularly after drone attacks on the Kremlin in early May.

 

JAPAN-SOUTHEAST ASIA RELATIONS

Great Power Politics: The Indo-Pacific, Southeast Asia, and the Global South

BY KEI KOGA, NANYANG TECHNOLOGICAL UNIVERSITY

2023 marks the 50th Year of ASEAN-Japan Friendship and Cooperation, and there are expectations that their relationship will be upgraded to a “comprehensive strategic partnership.” Given the good diplomatic, security, and economic relations between Japan and Southeast Asian states, ties are likely to be strengthened. However, Japan is now taking a more competitive strategy toward China, as indicated in the three security documents issued in December 2022, while Southeast Asian states generally continued the same strategic posture by which they have good relations with all great powers in the Indo-Pacific region. Also, while Japan issued the “New Plan for the Free and Open Indo-Pacific” that emphasizes the “Global South,” it remained silent about ASEAN centrality and unity in the Indo-Pacific, and it was unclear what roles Japan expects ASEAN to play. Although both Japan and Southeast Asian states need to adjust their roles in the Indo-Pacific region, it remains to be seen whether the 50th anniversary becomes an opportunity for clarification.

PacNet commentaries and responses represent the views of the respective authors.

PacNet #35 – Mekong water usage tests China’s claimed good-neighborliness

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China claims to be a uniquely benevolent international actor—a great power that, unlike other great powers past and present, does not practice “power politics” (self-interested bullying of smaller states) and is not “selfish” or warlike. The PRC government styles itself as the custodian of principles that, if implemented, would excise international relations of conflict and injustice.

Smaller neighbors to China’s south particularly fear domination by a strong China. To assuage their concerns, Beijing proclaims that it “opposes the strong bullying the weak” and supports “building a world of shared prosperity and promoting common development of all countries through every country’s development.”

The issue of managing fresh water resources provides a rigorous practical test of these sweet-sounding PRC assurances. Three major Southeast Asian rivers—the Mekong, the Salween, and the Ayeyarwady (Irrawaddy)—originate in the PRC-controlled Tibetan plateau. Even with this geographic advantage, China has insufficient water. Chinese make up 20% of the world’s population, but their country contains only 6 or 7% of the world’s fresh water supply. The good-neighborliness promised by Beijing’s official diplomatic rhetoric collides with the permanent scarcity of a vital resource. Not surprisingly, the latter wins out in actual PRC policy practice. But while unswervingly serving its own self-interest, Beijing also employs familiar methods to limit damage to the PRC’s desired international image.

Underneath the ceremonial public statements, the actual Chinese belief is that China owns the Lancang and that Chinese people have the right to take or use the water as they wish. They don’t think of it as a regional resource to be shared equitably with their neighbors.

China’s official position, repeated by PRC officials such as Ke Yousheng, China’s permanent representative to the United Nations’ Economic and Social Commission for Asia and the Pacific, is that “we should also respect the legitimate rights and interests of riparian countries in the rational development and utilization of water resources, and take care of each others’ interests and concerns.” The reality is that Beijing prioritizes taking care of Beijing’s interests, with little “respect” for the interests and concerns of downstream neighbors.

Before arriving in Southeast Asia as the Mekong, the river flows through PRC territory as the Lancang. China operates 11 hydropower dams along the Lancang, with another 95 dams on tributaries that feed into the river. The Chinese dams harm the livelihoods of millions of people in the downstream Southeast Asian countries in two ways. First, the dams remove sediment, which includes nutrients that helps plants grow, from the waters flowing through them. As a consequence, rice fields that use Mekong water for irrigation are becoming less productive. Second, by impounding or releasing large amounts of water, the dams can cause or worsen droughts or floods downstream. In 2019, Chinese dams held back such an immense amount of water that downstream countries suffered a severe drought while the Lancang section of the river enjoyed unusually large water levels. Conversely, the Chinese dam operators sometimes open the floodgates during dry seasons without warning, making the river level downstream rise by several meters overnight and causing massively damaging floods. China is also compounding these negative effects by building dams in the downstream countries that will supply electricity to China.

Chulalongkorn University Prof. Thitinan Pongsudhirak argued in 2021 that Chinese officials adjust the flow of water into the Mekong as a diplomatic tactic—for example, releasing more water as a gift before an important meeting between Chinese and Southeast Asian officials. “It’s very clear that the Chinese are using the dams for political leverage,” he said.

Reminiscent of its engagement with ASEAN to advance Chinese territorial claims in the South China Sea, Beijing uses its influence over a regional organization to manage the political problem of Chinese dams disrupting the Mekong.

In 1995, Thailand, Vietnam, Cambodia, and Laos signed an Agreement on the Cooperation and Sustainable Development of the Mekong River and founded the Mekong River Commission (MRC). China declined to join, thus avoiding the agreement’s obligations. Since then the MRC has criticized Chinese dam-building and demanded more information about the operations of dams in China that affect the flow of the river.

Beijing countered by establishing an alternative organization, the Lancang-Mekong Cooperation (LMC) forum, in 2016. As Hoang Thi Ha, an analyst at Singapore’s ISEAS – Yusof Ishak Institute, notes, “The LMC is a prime example of Sino-centric multilateralism, in which China is the one who sets the rules and frameworks.” For instance, the LMC sponsors research projects that highlight the negative impacts of climate change, but not the problems caused by dams, helping Beijing divert criticism away from its own behavior.

The other important aspect of PRC damage control is the creation of alternative narratives that fight back against accusations that the PRC has acted dishonorably. The issue of the Lancang dams has given rise to several examples.

Beijing offers up the typical colonialist argument that its increased influence and economic penetration result in blessings for the region rather than exploitation: “China is solidly promoting Chinese-style modernization, which will bring new benefits to the development of the countries along Mekong River.”

Throughout the COVID-19 pandemic, China faced outside criticism for its reluctance to share key data, presumably out of fear it would make the PRC government look bad. Beijing has responded by insisting that China has been extraordinarily transparent. Similarly, answering complaints that China does not publicize information about Lancang River water storage and release by Chinese dams (which the Chinese government considers a national security secret), government functionaries have retorted that China “provided hydrological data of Lancang River free of charge during flood season to MRC for 15 consecutive years [since 2002].” That data was wholly inadequate; it included only rainfall and water level information from two Chinese-operated hydrological stations, and only for part of the year. China agreed to release additional information starting in 2020 only under outside pressure. PRC media opportunistically called it “a major step taken by China that fully demonstrates the country’s goodwill and sincerity as a responsible upstream neighbor.” Outside analysts continue to question the accuracy and timeliness of the data provided by the PRC government.

The “major step” of releasing additional data resulted from an April 2020 report in which a US-based environmental watchdog organization used satellite data to expose the extent of downstream damage caused by China’s dams.

The PRC government responded to this embarrassing revelation with a three-headed alternative narrative. The first point of this narrative was that the study defaming Chinese dams was scientifically flawed. Secondly, PRC commentators argued that Chinese dams actually help the downstream countries by evening out the flow of water. In particular, these commentators said, the dams made the drought of 2018-2019 less severe for Southeast Asia. Finally, Chinese media and officials attributed criticism of the dams to a US anti-China agenda. A PRC Ministry of Foreign Affairs spokesperson called the 2020 report a “malicious move to drive a wedge between” China and its neighbors. Chinese vice foreign minister Luo Zhaohui claimed that “For political purposes, some countries outside the region have repeatedly used the Mekong water resources issue to spread rumors and stir up trouble, alienating all parties and undermining sub-regional cooperation.”

This allegation is consistent with PRC strategic communication about the South China Sea dispute. In that case, Beijing argues there would be no disharmony between China and its Southeast Asian neighbors if the United States was not “stirring up trouble.”

Beijing might be able to have it both ways with the Chinese domestic audience, persuading them that their government can provide water and electricity while simultaneously being a “good neighbor.” But for China’s actual neighbors, this is increasingly non-credible, as is the notion of PRC exceptionalism. 

Denny Roy ([email protected])is a senior fellow at the East-West Center, Honolulu. He specializes in strategic and international security issues in the Asia-Pacific region.

PacNet commentaries and responses represent the views of the respective authors. Alternative viewpoints are always welcomed and encouraged.

PacNet #32 – Europe’s China confusion does the world a disservice

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An earlier version of this article appeared in The Japan Times.

Talk about mixed messages! Days after European Commission President Ursula von der Leyen made one of the toughest speeches ever on China by an EU official, French President Emmanuel Macron visited that country with a delegation of business leaders.

Macron’s visit saw him meeting with supreme leader Xi Jinping, emphasizing points of convergence with Chinese proposals to end the Ukraine war and touting Europe’s “strategic autonomy”—diplomatic speak for creating distance from the United States on important policy matters.

It’s music to Chinese ears. Beijing is eager to exploit those differences to dilute any consensus on China policy within Europe and widen gaps between it and Washington to prevent the emergence of a unified position toward China.

European incoherence is worrying and not for just obvious reasons. Internal differences deprive the world of a credible alternative to the hard line toward China that dominates thinking in the United States. This is especially troubling for Japan, whose logic in many ways mirrors that of Europe.

In a speech the week before Macron’s visit, von der Leyen said that Xi “essentially wants China to become the world’s most powerful nation,” and that had been accompanied by a “deliberate hardening” of China’s strategic stance, with the country becoming “more repressive at home and more assertive abroad.” She pulled no punches, noting that “Just as China has been ramping up its military posture, it has also ramped up its policies of disinformation and economic and trade coercion. This is a deliberate policy targeting other countries to ensure they comply and conform.”

The EU identified China as a “systemic rival” in its 2019 strategic outlook. That label takes on special significance given von der Leyen’s pledge “to ensure that our companies’ capital, expertise and knowledge are not used to enhance the military and intelligence capabilities of those who are also systemic rivals.”

For her, however, and in distinction from US policy, the preferred policy is to de-risk trade with China, not to decouple. “We do not want to cut economic, societal, political or scientific ties. … But our relationship is unbalanced and increasingly affected by distortions created by China’s state capitalist system. So we need to rebalance this relationship on the basis of transparency, predictability and reciprocity.”

That means recognizing Chinese ambitions for what they truly are, rather than what some might want them to be—or as they may be presented—and promoting competitiveness and resilience within EU economies and businesses. That means reducing vulnerabilities created by reliance on single suppliers for critical or essential materials. That means employing defensive measures, like the trade controls mentioned above.

Her tough words contrasted with Macron’s message. He and Xi issued a joint communique in which they agreed to “improve market access” for each other’s businesses and designated 2024 as a “China-France Year of Culture and Tourism,” a move intended to get Chinese tourists to visit France as pandemic travel restrictions are eased. They also closed a deal to open a second production line for Airbus in China, another boost to the company’s ambitions in that market.

Macron emphasized the need to promote Europe’s “strategic autonomy,” or as he explained in an interview during his visit, reducing dependence on the United States and preventing Europe from getting “caught up in crises that are not ours.” Addressing the Taiwan situation, he added that “the worst thing” would be for Europeans to “become followers on this topic and take our cue from the US agenda and a Chinese overreaction.” Those comments generated considerable pushback in Europe; the Biden administration focused instead on cooperation with France.

China welcomed Macron; von der Leyen, a member of Macron’s group, not so much. Politico contrasted the treatment given the two. Macron was met on the airport tarmac by the foreign minister; von der Leyen got the ecology minister at the regular passenger exit. Macron’s schedule was overflowing, von der Leyen’s was bare-bones. Macron had a glittery state banquet with Xi while von der Leyen held a news conference at EU delegation headquarters. As Politico summarized the atmosphere, “While state media trumpeted the Sino-French relationship, Chinese social media demonized von der Leyen as an American puppet.”

If all that was too subtle, Fu Cong, China’s ambassador to the EU, was blunt in remarks to the Financial Times the day of von der Leyen’s speech. “We do hope that the European governments and the European politicians can see where their interests lie and then resist the unwarranted pressure from the US,” adding “it will only be at their own peril.” After all, he noted, “Who in their right mind would abandon such a thriving market as big as China?”

The easy explanation for EU schizophrenia is “good cop, bad cop.” That assumes a level of foresight and coherence in European diplomacy that seems unduly optimistic. Most observers concede that there are, as Mikko Huotari, director of the Mercator Institute for China Studies explained, substantive differences between von der Leyen and the major EU governments on how to handle EU-China relations.

There is also a self-serving element to Macron’s statements: In this and similar formulations, European strategic autonomy would be led by France. In his typically incisive and caustic analysis, Tufts University professor Dan Drezner writes that “Macron is playing his part of the French president and trying to call attention to himself.” According to Drezner, the appropriate “considered response is a polite shrug.”

Still, there is a real cost to Europe’s incoherence but it isn’t the one that typically comes to mind. A European position that is both clear-eyed about China while acknowledging the need for engagement would provide an important counterweight to the narrow-minded consensus that dominates thinking in the United States.

Writing in The National Interest last month, Paul Heer, a former American national intelligence officer for Northeast Asia, worried about the “bipartisan consensus on the nature and scope of the threat from China,” challenging the validity of the premises upon which those judgments are based and warning of groupthink that could lead US policy dangerously astray.

Heer agrees that China is a formidable and ruthless opponent and one that requires a comprehensive, whole-of-government competitive US response. Still, he rejects — citing the Annual Threat Assessment of the US intelligence community — that it is “an ‘existential’ winner-take-all threat to US global power and influence or to the American way of life, requiring a wholly adversarial cold war US response.”

His conclusion matches that of Harry Hannah, another former American intelligence official, who argues in a Stimson Center Red Cell report that a fixation on China risks repeating Cold War mistakes, especially that of ignoring or underplaying other developments that could be equally if not more important to US national security. Hannah is especially keen to empower other actors whose interests and values align with that of the United States, even though they may not be identical. Ignoring them or forcing them to toe the US line, he argues, plays to Beijing’s preference for a great power “Group of Two” that marginalizes other countries—many of which are US allies or partners.

A united Europe, one with a coherent and consistent policy toward China, could, in this conception of global order, balance China without going to the US extreme. While Europe alone can’t check China, its approach approximates that of Japan and together they offer a more inviting alternative to those skeptical of the all-or-nothing US policy. It is a credible option for those in Washington uncomfortable with the prevailing hard line, too.

Europe can’t replace the United States on issues of Indo-Pacific security. Forging a framework for constructively engaging one of the world’s superpowers is just as vital, however. Brussels can’t do that alone. Only by working with Tokyo and other like-minded countries can Europe succeed.

Japan has been reaching out to Europe for some time now, a process that began two decades ago and accelerated under the Trump administration as Tokyo and Brussels sought allies to gird an international order weakened by Beijing, Moscow and, sadly, Washington. Japan and the EU signed the Strategic Partnership Agreement, the Economic Partnership Agreement and the Partnership on Sustainable Connectivity and Quality Infrastructure to strengthen their cooperation and counter the forces of revisionism.

The United States needs to adopt a more flexible approach to its allies and partners, giving them the space to maneuver as they see fit—as long as they work toward the same goals. But this demands that those allies step up as well. Recent events show that Brussels understands the challenge; meeting it remains beyond its grasp.

Brad Glosserman ([email protected]) is deputy director of and visiting professor at the Center for Rule-Making Strategies at Tama University as well as senior adviser (nonresident) at Pacific Forum. He is the author of Peak Japan: The End of Great Ambitions (Georgetown University Press, 2019). This article is drawn from a forthcoming book on the new national security economy.

PacNet commentaries and responses represent the views of the respective authors. Alternative viewpoints are always welcomed and encouraged.

Photo: President Xi Jinping and President Emmanuel Macron at an official ceremony at the Great Hall of the People (6 April 2023, CNN) by Gonzalo Fuentes via Reuters. 

PacNet #29 – Toward a resilient supply chain to counter Chinese economic coercion

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On Aug. 3, 2022, following US House Speaker Nancy Pelosi’s visit to Taiwan, Chinese customs suspended natural sand exports while blocking imports of citrus fruits, chilled white scallops, and frozen mackerel. Export bans are usually symbolic in Taiwan, as farming and fishery exports make up just a fraction of Taiwan’s economy. However, some of the suspended products seem to target specific locales—fishermen, for example, traditionally represent an influential voting bloc in the coastal areas of Taiwan. Beijing may have hoped to turn them toward the relatively China-friendly Kuomintang, and against President Tsai Ing-wen’s Democratic Progressive Party in the local election three months later.

Although China justified the bans by claiming Taiwanese exports violated food safety standards, the timing of this episode suggests Beijing had engaged in economic coercion to change another government’s behavior—and not for the first time.

With China’s rapid economic growth since the late 1970s and early 1980s—and especially after Beijing joined the World Trade Organization in 2001—China’s ability to reward and penalize other countries economically has also grown. As China has increased its interdependence with other countries, it has frequently deployed economic coercion to increase its leverage on issues such as territorial and maritime disputes, in retaliation for criticism over its human rights violations, or to protect its security interests.

Countries in Asia have responded differently toward Beijing’s economic coercion, critically affecting their relations with the regional economic behemoth. Perhaps contrary to the PRC’s expectations, such reactions have contributed to these countries’ growing independence from Chinese coercion, and present an opportunity for the United States to build its regional influence.

Japan

In September 2010, a Chinese trawler collided with two Japanese Coast Guard patrol ships near the Senkaku Islands, an uninhabited—yet disputed—archipelago in the East China Sea. After the Japanese government arrested the trawler captain and sought to put him on trial, China protested. Its expressions of disapproval included halting shipment of rare earth elements (REEs) key to producing hi-tech products like hybrid cars, wind turbines, and guided missiles. The 2010 fishing boat incident triggered Japan’s concerns about dependence on China for processed rare earth materials, as Japan was the largest importer of China’s REEs, and had no alternative supply sources at the time.

The crisis forced Japanese public and private economic actors to pursue multiple REE diversification projects. Notable efforts included increased REE recycling; seeking alternative sources of supply from the United States and Australia; intensifying undersea exploration; and increased use of other substitutes. Consequently, from 2008 to 2018, the share of Japanese rare earth imports from China fell from 91.3% to 58%. China’s ban on rare earth elements showed the downside of “weaponization of interdependence,” by disturbing the global value chain and eventually causing China to lose much of the leverage it had as a key trading partner with Japan.

Australia

The relationship between China and Australia has deteriorated in recent years amid a range of events, starting with Australia banning Huawei from its 5G networks in 2018. The relationship soured further in 2020 as Australia called for an inquiry into China’s response to the COVID-19 outbreak. In response, China imposed an 80.5% tariff on Australian barley and barred imports from Australia such as beef and coal, among other measures. Although Australia has found alternative markets for products such as beef, coal, and copper ore, other products such as lobster and timber continue to suffer compared to their 2019 trade levels.

The case of Australia shows another critical consequence of exercising economic coercion: Rational countries will make the choice not to trade with countries they perceive as aggressors based on the negative perceptions left over from economic coercion, even if this means paying a price economically. This once-close relationship, which took decades to build between the Australian sellers and Chinese buyers, was effectively destroyed by China’s penalties.

South Korea

In July 2016, the US Department of Defense and South Korean Ministry of National Defense announced in a joint statement the alliance’s decision to deploy a US Terminal High Altitude Area Defense (THAAD) antimissile battery in South Korea to defend against the increasing North Korean missile threat. THAAD is a highly effective, combat-proven defense against short-, medium-, and intermediate-range ballistic missile threats. Beijing opposed THAAD in Korea based on the fear that the batteries weakened China’s nuclear deterrent and signaled US intent to contain China.

In response, Chinese tourism to South Korea dropped by about 40% and Korea’s consumer goods and cultural products were boycotted inside its giant neighbor. Estimates of the total cost to South Korea range between $7.5 billion and $15.6 billion. To normalize economic relations and remove informal economic sanctions, the South Korean government in 2017 announced its commitment to “three nos”—no additional deployment of THAAD batteries, no South Korean integration into a US-led regional missile defense system, and no trilateral alliance with the United States and Japan. However, ordinary South Koreans’ views of China deteriorated. According to research by the Asan Institute for Policy Studies, in the aftermath of the dispute South Koreans viewed China even less favorably than they view Japan, which colonized the Korean Peninsula from 1910-45 and had consistently been Koreans’ least favored country (with the occasional exception of North Korea).

Lessons of Chinese coercion

Chinese economic coercion poses a serious threat to international trade. Clearly, China has been imposing and administering export restrictions, which requires countries to conform to export duties, export quotas, and to meet minimum export price requirements, to achieve Chinese political goals. To halt such coercion, CSIS Senior Vice President for Asia Victor Cha has introduced the concept of “collective resilience” to counter Chinese economic coercion. Specifically, collective resilience is a concept where the United States organizes partners to build economic leverage and discourage Beijing from engaging in coercion in the first place. Members of Quadrilateral Security Dialogue, Indo-Pacific Economic Framework, and Chip4 Alliance are often regarded as key partners of the United States. US partners should cooperate with the Biden administration to establish an early warning system, map out critical supply chains, and diversify the resources for important goods to construct a resilient supply chain.

The United States and its allies and partners should build a bloc to deter China’s acts of economic coercion. To build a robust supply chain that reduces China’s role in supplying critical technologies, members of the bloc should first come to an agreement on ways to build fair and resilient economic order. However, the two massive bills passed by the US Congress—the Inflation Reduction Act (IRA) and the CHIPS and Science Act—pose a severe threat to this mission. Not only does the IRA provide subsidies to vehicles assembled only in North America, the latter bill provides $52 billion for semiconductor companies constructing new high-end manufacturing plants in the United States. This could undermine US credibility, as both can easily be seen as unfairly subsidizing its companies and violating the spirit, if not specific laws of, the World Trade Organization. At the same time, based on the regional proximity and the influence China has on the region, allies will feel pressure to enter a costly and prolonged subsidy war between the United States and China. Export controls on transfer of cutting-edge technologies to China and building a resilient supply chain in the Indo-Pacific won’t work unless key allies and partners cooperate.

The Biden administration should therefore work with its partners to form economic security strategies on advanced technologies where innovations are spurred, while the commercial competitiveness of each country is protected. The US’ Asian allies have already learned from their Chinese counterpart that the only way to avoid weaponizing the economy is to boost the competitiveness of one’s industry, while reducing the economic dependence of the country exercising economic coercion.

Su Hyun Lee ([email protected]) is a researcher focusing on US-China relations and economic security in Korea National Diplomatic Academy. Previously, she was a 2021-22 Resident Korea Foundation Fellow at the Pacific Forum. She holds BA in East Asian International Studies and MA in International Cooperation both from Yonsei University.

PacNet commentaries and responses represent the views of the respective authors. Alternative viewpoints are always welcomed and encouraged.

PacNet #27 – Why China’s Middle East diplomacy doesn’t herald a new world order

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An earlier version of this article appeared in The Washington Institute for Near East Policy.

March 10’s agreement to reestablish diplomatic relations between Tehran and Riyadh was a no “peace deal,” but the rivals did decide to cool tensions and reopen embassies after a seven-year lapse. China’s role in facilitating the deal raised the most consternation in Washington, leading some to declare that “a new era of geopolitics” had begun and assert that the agreement topped “anything the US has been able to achieve in the region since Biden came to office.”

Yet there are plenty of reasons to be skeptical about the notion that the deal signals a newfound Chinese diplomatic prowess or a shifting regional order. For one, Beijing has been wading into Middle East diplomacy for years—most recently via President Xi Jinping’s December trip to chair regional summits in Saudi Arabia—but with little to show for its efforts. (For a detailed look at China’s past diplomatic activities in the region, see Carol Silber’s “China’s Track Record on Middle East Diplomacy.”)

Further, it remains unclear how crucial Beijing was to the Iran-Saudi negotiations. The two parties had been conducting backchannel talks for years in the hopes of de-escalating tensions, with previous rounds sponsored by Iraq and Oman. Those talks were sidelined with the change in government in Iraq and the spread of protests in Iran last year.

Reports on the new agreement suggest that both sides were readily able to reach consensus on important issues, at least on paper. Riyadh apparently agreed to soften coverage on Iran International, the London-based media outlet funded by Saudis, which Tehran has depicted as the leading anti-regime instigator throughout the recent protest movement. In return, Iran reportedly agreed to encourage its Houthi allies in Yemen to maintain the current year-long truce. Since that war began in 2015, Saudi Arabia has spent millions of dollars defending its territory against Houthi missile and drone attacks, which have often targeted major civilian sites. In short, Riyadh and Tehran already had strong incentives to take at least a few initial diplomatic steps to bolster their internal stability, so forging this deal is hardly a masterstroke for Beijing.

Another open question is whether the deal will be implemented in full, and whether Beijing intends to hold each side accountable. According to the trilateral statement issued on March 10, Iran and Saudi Arabia agreed to “resume diplomatic relations” and reopen their embassies within two months. They also affirmed their “respect for the sovereignty of states and…non-interference in internal affairs,” as well as their intention to implement their 2001 security cooperation agreement and their 1998 deal covering economic, cultural, and scientific cooperation.

Yet the 2001 security cooperation agreement is vague—although it includes generic language encouraging information sharing and joint training to counter organized crime, terrorism, and drug trafficking, it does not provide a specific path toward initiating such cooperation. Moreover, the trilateral statement makes painstakingly clear that China’s role was “hosting and sponsoring talks,” and it may host another regional summit later this year. It has given no signal that it intends to be the agreement’s guarantor or keep it on track.

Indeed, the risks of derailment are high given the lack of trust between Riyadh and Tehran. Renewed protests in Iran could trigger another surge of regime anger toward Saudi Arabia, whether or not Riyadh and its allies are involved in fomenting the unrest. And although the Houthis are closely aligned with Tehran and depend on its weapons, cash, and training, they might still launch further strikes on Saudi Arabia for their own reasons, thereby threatening the fragile ceasefire. Similarly, Iran’s network of proxies in Iraq and Syria could decide to attack Saudi partners or the kingdom itself, undermining Riyadh’s internal support for compromise.

The deal may even exacerbate the broader geopolitical tensions Beijing likely aims to calm. Iran may perceive the agreement as a tacit endorsement of its current nuclear policy, matching diplomatic intransigence with unprecedented technical advances. If Tehran decides to double down on its nuclear strategy as a result, it will further alarm Western, Arab, and Israeli officials. In other words, while the deal might de-escalate tensions between Iran and Saudi Arabia, it could simultaneously exacerbate Tehran’s tensions with other actors, potentially raising the possibility of military escalation.

Washington should therefore be clear-eyed about what Beijing’s mediation means—and what it doesn’t. China’s investment in the Middle East will likely continue growing; after all, it is the region’s dominant economic force and has long sought to match its diplomatic standing with its sizable economic footprint. Until now, its diplomatic reputation in the region has not been challenged by realities on the ground. Getting Iran and Saudi Arabia to publicly agree on a de-escalation accord is a win to be sure. But actually holding them to the agreement over the long term is an entirely different challenge—one that will reveal a great deal about China’s true influence.

Henry Rome is a senior fellow at The Washington Institute for Near East Policy.

Grant Rumley is the Institute for Near East Policy’s Goldberger Fellow and author of its 2022 study “China’s Security Presence in the Middle East: Redlines and Guidelines for the United States.”

PacNet commentaries and responses represent the views of the respective authors. Alternative viewpoints are always welcomed and encouraged.

Photo: A photograph released by Chinese state media showing officials Wang Yi, China’s top foreign policy official, with Ali Shamkhani, the secretary of Iran’s security council, and Musaad bin Mohammed Al Aiban, Saudi Arabia’s minister of state, in Beijing by China Daily via Reuters

PacNet #26 – The UK integrated review and integrated deterrence

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The much-awaited release of Britain’s updated Integrated Review (IR2023)—a “refresh” since the 2021 iteration (IR2021)—has many in the Euro-Atlantic and the Indo-Pacific now trying to assess UK intent and capability in the region. The paper does go some way to addressing concerns that UK domestic politics would pull the ground from underneath “the Tilt” before it had even begun. The region is described as “Inextricably linked” with the security of the Euro-Atlantic, though this strategic logic is compelling, the operational follow-through bears some scrutiny.

So, what is the United Kingdom security posture in the Indo-Pacific and how can it meet the theatre-resourcing demands made by current geopolitical realities and current capacity?

First, there is a superior strategic logic to the idea of linkage between the Euro-Atlantic and the Indo-Pacific as part of a broader construct the “global commons and rules-based international order.” This framework promotes the idea that the two regions—and Russian and Chinese efforts to destabilize and dominate those regions—are part of a broader geopolitical struggle. The common thread of Russian and Chinese authoritarian systems also reaffirms this conceptualization as does their growing political and military alignment and intention “to remake [the order] in their image” (IR2023). This framework is likewise found in the 2022 US National Security Strategy and the 2022 Japanese National Security Strategy.

At slight variance to this compelling logic, is the debate about resourcing and operational concerns in Europe in the wake of Russia’s invasion of Europe. In both the United States and United Kingdom, there are those experts who believe that London’s focus should be Europe and that attention towards the Indo-Pacific is a “distraction.” Some of these voices are even official, as for example, that of US Secretary of Defence Lloyd Austin stated in July 2021: “If, for example, we focus a bit more here [in Asia], are there areas that the United Kingdom can be more helpful in other parts of the world.” This view has been a constant refrain by Labour Shadow Defense Secretary John Healey, who stated, “Alliances with like-minded nations in the Indo-Pacific are important. We can contribute strongly with technology, capability, diplomacy, to the Indo-Pacific, but there needs to be a realism about military commitments into the Indo-Pacific. Our armed forces are ill-served by leaders who pretend that Britain can do everything, everywhere.”

In all fairness, the IR2021 or IR2023 both make clear that the United Kingdom’s prioritization will be of the Euro-Atlantic—the “region of primary and overriding importance to UK interests – where the build of…efforts would be focused through NATO.” Furthermore, Secretary of Defence Austin’s view does not preclude the sort of diplomatic, economic, technological, and security cooperation that the United Kingdom is already doing in the Indo-Pacific. Of note: the Indo-Pacific Strategy of 2021, calls for an “engaged Europe” as one of its strategic means, and states that the United States will “bring our Indo-Pacific and European partners in novel ways, including through the AUKUS partnership.”

At its heart, this is a disconnect between two different theatres and two different types of threat, posing different operational challenges. In Europe, the threat is largely about annexation of national territory by a revanchist Russia and the possibility of a land war in Ukraine that could spill over into NATO-member territory. Few believe that it is about the future architecture of Europe. In contrast, it is more about the regional maritime system and its importance to the global system in the Indo-Pacific. Admiral John Aquilino, Commander of US Indo-Pacific Command in October 2021 made this clear when he visited the United Kingdom and called the Indo-Pacific the “defining security landscape of the 21st Century.” Noting the centrality of the region’s maritime trade flow “every day, half of the entire world’s container cargo and 70% of ship-borne energy supply flows through this area. The most important message I can send…is how vital the Indo-Pacific is to the future prosperity and security of Europe and global cooperation.”

Is the United Kingdom therefore set to play a role in an integrated deterrence vis a vis China? The jury is still out, particularly in the Indo-Pacific, though the Tilt appears to have been achieved and now the region is to become a “permanent pillar” of UK foreign policy. With the exception of AUKUS and GCAP, which are new since IR2021, much of the Tilt has been achieved through diplomatic and technical/economic agreements rather than through defense or security means. There have been modest increases in the United Kingdom military presence in the region, such as the two naval patrol vessels, and arguably the AUKUS/GCAP agreements are the headline deliverables that will see decades of engagement in the region. IR2023 emphasizes the United Kingdom approach in the region to be via deepening relationships with allies and partners or soft power. The United Kingdom has widened its security and defense network across the Indo-Pacific over the past decade and appears to be trying to deepen this network now. Not much can be drawn from IR2023 until the Defence Command Paper is out—reportedly not due for release until June 2023.

If deterring China is the goal what should the United Kingdom be doing to help achieve this? The United Kingdom is not about to deploy vast numbers of troops, ships, or aircraft to the region especially whilst the war in Ukraine persists. But the United Kingdom could use its footprint across the Indo-Pacific to better support a coordinated deterrence plan with other allies or partners in the region.

France and the United Kingdom have already agreed a plan to coordinate carrier group deployments, which could be a signpost for the integrating effect the United Kingdom brings. With the AUKUS announcement there are likely to be more submarine deployments to the region including the establishment of a trilateral submarine task force. What is lacking for the region is any form of security architecture in which allies and partners can discuss issues and coordinate responses or contribute forces. Evidently this would not include China and by developing an integrated security structure it builds a better integrated deterrence effect where allies and partners are stronger together.

The United Kingdom could expand its experience of establishing maritime Combined Task Forces (CTF) that have been successful in the Arabian Gulf, the Indian Ocean, and Malacca Straits[1]. All these CTFs have included a mix of international partners and proved to be successful in deterring illicit activity, strengthening maritime security and reassuring region or international communities. London could establish something similar for the Indo-Pacific, or even several across the region, where partner nations can come together to police the increasingly crowded volatile seas and airspaces of the region? While the United Kingdom can help to establish this/these HQs in the region they would likely not be led by the United Kingdom, and they shouldn’t be. The United Kingdom could provide the backbone, providing a “socket” for the United Kingdom to “plug” into when UK forces were deployed in the region, but more importantly bring like-minded partners together to improve security across the region. The byproduct being a more coherent deterrent strategy toward the region.

[1] In the Arabian Gulf is Combined Maritime Forces including CTF 150, 151 & 152. EUNAVFOR which used to be based out of the UK countering piracy in Somalia and the Indian Ocean. Based out of Singapore was the International Fusion Centre to counter piracy in the Malacca Straits.

Brig Rory Copinger-Symes ([email protected]) is a former Chief of Staff to EUNAVFOR and Director of Security Cooperation in Indo-Pacom Headquarters. He is now a senior advisor to Bondi Partners, an Australian consultancy and advisory firm.

Dr. John Hemmings ([email protected]) is Senior Director of the Indo-Pacific Program at the Pacific Forum, a think tank in Honolulu. He has been a witness to two Parliamentary Defence Committee Inquires on the Indo-Pacific region and formerly worked at RUSI on Northeast Asia.

PacNet commentaries and responses represent the views of the respective authors. Alternative viewpoints are always welcomed and encouraged.

Issues & Insights Vol. 23, SR3 – Strategic Competition and Security Cooperation in the Indo-Pacific

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Introduction

There is a growing acceptance among countries in the Indo-Pacific region that strategic competition between the United States and China is changing perceptions about security and the adequacy of the existing security architecture. While some have characterized the competition between the two as a new Cold War, it is clear that what is happening in the region is far more complex than the competition that characterized the original Cold War between the United States and the Soviet Union. First, the economic integration that has taken place since the early 1990s makes it much more difficult to draw bright ideological lines between the two sides. Further, the Asian context of the emerging competition is one where the two competitors have grown to share power. As the dominant military power, the United States has been the primary security guarantor in Asia and beyond. China, on the other hand, has emerged over the past decades as the primary economic catalyst in Asia and beyond. Currently, each side seems increasingly unwilling to accept that arrangement.

Download the full volume here.

Table of Contents

Introduction

Carl Baker

Chapter 1 | Southeast Asia Faces Its Boogeyman – Great Power Competition Returns to Southeast Asia in the 21st Century

Drew Thompson

Chapter 2 | Geoeconomics and Geopolitics in Southeast Asia

Thitinan Pongsudhirak

Chapter 3 | Economic Aspects of National Security

Brad Glosserman

Chapter 4 | China as a technological power: Chinese perspectives and the quantum case

Hoo Tiang Boon

Chapter 5 | Minilateral groupings as an alternative to multilateralism in an era of strategic competition

Thomas Wilkins

Chapter 6 | The Role of Indo-Pacific Economic Institutions in Shaping Security Competition

Prashanth Parameswaran

Chapter 7 | Economic Development Cooperation amid Indo-Pacific Strategic Competition

Gong Xue

Chapter 8 | Regional Security Cooperation in the US-China Strategic Competition

Kei Koga

Chapter 9 | Strategic Competition and Security Cooperation

Raymund Jose Quilop

PacNet #19 – Rare earths realism: Breaking the PRC’s global refining monopoly

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“The Middle East has oil, and China has rare earths.” – Deng Xiaoping (1987)

Rare earth elements (REEs) are a class of 17 metals essential to the technology, transportation, energy, defense, and aerospace industries. These are used for high-powered magnets and precision parts in anything ranging from batteries, solar panels, and wind turbines to smartphones, lasers, and jet engines. The People’s Republic of China (PRC) came to dominate global supply chains for these valuable inputs during the Deng-era of foreign policy characterized by the adage, often translated as “hide your strength, bide your time.” Subsidized state-owned enterprises were empowered to drive competitors out of the rare earths mining and processing businesses, giving the PRC a virtual monopoly by the late 1990s.

The wider world only came to appreciate the strategic implications of this concentration in 2010, when a maritime dispute between the PRC and Japan triggered a total halt of rare earths exports from the former to the latter. Though trade resumed after the incident, the episode highlighted both the vulnerabilities that the dependency allowed, and the PRC’s willingness to exploit those for political leverage. Japan was subsequently motivated to begin investing in alternative suppliers abroad, while the United States moved to jumpstart its own shuttered domestic capacity.

State of the market

Thirteen years later, the green shoots of new market entrants display a small but meaningful movement towards diversifying the world’s REEs supply. The United States and Australia have demonstrated political resolve to break the PRC’s hold on the market. Japan and India are also attempting to establish domestic industries but the barriers to entry remain formidable. The industries of mining and ore refinement are notoriously lengthy and capital-intensive—doubly so in countries with complex licensing and ecological surveying requisites. The PRC still dominates the entire vertical industry and can flood global markets with cheap material, as it has done before with steel and with solar panels. In 2022, it mined 58% of all REEs, refined 89% of all raw ore, and manufactured 92% of REE-based components worldwide. There is no other global industry so concentrated in the hands of the Chinese Communist Party, nor with such asymmetric downstream impact, as rare earths—so the United States and other should pursue further diversification with unique urgency.

The United States: Reviving heavy industry

Beijing’s 2010 dispute with Tokyo was one of its several assertive foreign policy maneuvers to set off alarm bells in Washington and precipitate the Obama administration’s “pivot to Asia.” As the swiftness of the PRC’s rise continued to outpace expectations during the Trump years, American political appetite shifted from defending hegemony in Asia, to addressing its own vulnerabilities at home—including the outsourcing of mining industries for REEs, amongst others such as lithium, nickel, and graphite. The global bottleneck for midstream industry segments like refining is so severe that the few American rare earths miners in operation send their raw ore to China for processing, before it returns to the United States as permanent magnets for use in F-35s, Tesla Model 3s, and the like.

In conjunction with an overarching strategy to address this weakness by revitalizing domestic supply chains for critical minerals, the US government is supporting the buildout of processing facilities in California and Texas for two rare earths juggernauts in-the-making—MP Materials, an American company, and Lynas Rare Earths, an Australian firm. Additionally, the Biden administration’s recent Inflation Reduction Act provided tax incentives for critical mineral businesses, and supercharged two faculties that will allow the executive branch to bolster industrial development on an ad hoc basis: the Department of Energy’s Loan Programs Office and the Defense Production Act. The United States should continue focusing grants towards ventures past the proof of concept stage in rare earths refining and magnet manufacturing, so that they can then access the Department of Energy’s lending resources to scale quickly.

People’s Republic of China: Tightening the reins

The media often characterizes the PRC’s rare earths dominance as the “trump card” of wolf warrior diplomacy, but Xi Jinping likely understands that the implicit threat of applying this leverage outweighs the cost-benefit of its actual use. The international environment of today is far less forgiving than that of 2010, and a rare earths embargo applied tomorrow on a nation like Japan or the United States would easily spark a bellicose trade dispute and push a tsunami of funding towards emerging competitors.

However, there exists a dangerous window during the next several years, when the PRC’s influence over the global industry is diminishing but still overwhelming enough to put importing nations in a bind. In this sense, Beijing could still use its “trump card” over a critical political moment—becoming even more tempting once its monopoly’s decline appears inevitable. Beijing’s cognizance of this scenario is reflected in its recent merger of three state-owned mining giants into the China Rare Earth Group. This massive consolidation allows the party to more easily control the market and develop synergies to bring costs even lower, which will hamper foreign upstarts.

Realist conclusions in a global market-based system

In the long run, monopolistic behavior will be solved by the interconnected markets on which modern society is built. The strategic calculus and narratives between great powers may be swiftly changing, but the fundamental rules of the game remain. The more likely the world perceives the weaponization of the rare earths industry by Beijing, the more pressure will be applied on the two competitive market forces already working towards solutions.

The first is the potential for new market entrants. Rising Chinese export tariffs and spiking prices signal opportunity. Canada, India, and the United Kingdom have all recently announced their intent to develop their first domestic refineries for REEs, with national security interests undoubtedly providing propulsion. Relatively small investments now could pay off big by shaking up market dynamics later this decade, so the United States could seed promising ventures abroad, and consider this high-profile sector an opportunity to build up “friendshoring” partnerships with alternate producers.

The second is the threat of substitutes. Necessity is the mother of invention—and if substitutes can replace REEs in end-use products, then supply fears may be sidestepped. The embedded risks of REEs have already been driving manufacturers like Toyota and Volkswagen to redesign their electric motors with less rare earths or alternative (albeit less efficient) magnet metals. The US departments of  Energy, Defense, and Commerce have been pursuing alternatives, but governments should also consider rewarding companies who find innovative ways of designing their products without REEs, in the style of bug bounties. Even without implementing substitutes, establishing backup options builds supply chain resilience and saps the power of a monopoly.

Tetrataenite is one promising breakthrough in magnetic alternatives. Until recently, this nickel-iron alloy was only observed in meteorite samples, but last year was successfully replicated in a University of Cambridge laboratory. Experts say it has an outside chance at upending the entire rare earths industry in the years to come.

Aside from pressing into the two competitive market forces of new entrants and substitution, the United States should continue subsidizing the rapid development of its rare earths supply chains—particularly the midstream layers: ore processing, mineral refining, and alloying. The faster it can do so, the narrower the window will be for Xi Jinping to play hardball during the waning years of China’s monopoly, and the less likely that opportunity is to coincide with an attempted invasion of Taiwan.

The economic downturn, domestic discontent, and international scrutiny resulting from Beijing’s stringent COVID-19 lockdown policies have left Xi Jinping’s political capital temporarily spent as he works to patch up relations and entice businesses back to the PRC. To break the global refining monopoly without sparking a larger geopolitical firestorm, an inflection point in broadening supply diversification needs to be achieved soon.

Brandt Mabuni ([email protected]) is a resident WSD-Handa Fellow at Pacific Forum. 

An earlier version of this article was published on Pacific Forum’s Young Leaders Blog.

PacNet commentaries and responses represent the views of the respective authors. Alternative viewpoints are always welcomed and encouraged.