Much ado about nothing something

The American press, along with the BBC, are making a big deal about the recent sales of US arms to Taiwan. Granted it's newsworthy, however, this sale has been in the pipeline since the Bush administration and Chen Shui-bian was president (who is now in jail). Bush delayed doing anything about it because of Chen's push for Taiwan independence and local Taiwanese opposition (read the KMT or Nationalist Party) withheld approval to the purchase. China's response is par for the course and will result in the same old freeze on military-to-military exchanges. Now would be a good time to yawn.

Update (5:22PM)

Looks like China is putting a new spin on the arms sales. Apparently they're going to punish the American companies who are producing the arms being sold to Taiwan. No further details are being provided on the new punishment, but contracts could be modified or canceled. It seems the company that has the most to lose is United Technologies, as they have quite a bit of commercial (read non-military) business in China and are building the Black Hawk helicopters. Boeing probably won't be impacted too much, as they're only delivering a few Harpoon missiles. Should be interesting to see what happens.

Part of me wonders how much of this is for show and how much is real. Beijing has to realize that Taiwan being within the orbit of the U.S. is not the worst scenario (it could declare independence). Granted American involvement in the Taiwan issue has some overtones of imperial intervention, but it's far less than what the British, Russians, or Japanese did to China in the late 19th/early 20th centuries. Moreover, American involvement restrains Taiwan from doing anything that would force China's hand in attacking the island (independence or developing nuclear weapons). Not saying American intervention is right or wrong, but things could be far worse.

Left out in the cold

With the China-Asean FTA Taiwan is in a bind. The goods it sells to China will be 5-15% more expensive now compared to the Asean members and could result in a significant decline in trade if no solution is found. To put it in perspective, Taiwan enjoys a $67 billion trade surplus with China and its exports to the Chinese market constitute 26% of their total. Let me repeat that. 26% of Taiwan's exports go to China.

What options does Taiwan have to counter the China-Asean FTA? Taiwanese companies could lower their prices accordingly, but that is something they probably don't want to do. The other option is for China and Taiwan to sign an FTA of their own (which could happen this year). Not only would this level the playing field for Taiwan in the Chinese market, but it could also open the door for quasi-FTAs with the Asean members themselves. Beijing has quite a few reasons for implementing an FTA with Taiwan, two major ones being that 1) Taiwanese companies employ lots of Chinese workers and 2) failure to establish one could be a PR disaster for China in Taiwan.

I've made the entire grand strategy available so you can flip through it. The assignment was to write it from the perspective of the government in power, with the expectation that it would be an internal document not seen by the public. I included bits of humor and I think you'll be able to spot them. Please be honest and not claim it as your own work. Use of the bibliography is fine obviously.

The Economist weighs in on Japan and China

It feels good when a highly reputable newspaper such as The Economist is in sync with your opinion (or is it the other way around?). As I mentioned earlier this week in Land of Waning Influence?, relations between Beijing and Tokyo may be warming, however, there are still lots of issues that could quickly change the dynamic. In this story Banyan touched on all the points I raised and more or less confirmed what I discussed. Is this blatant self-praise? Absolutely. I'll try to keep it down in the future.

A Chinese-led Greater East Asia Co-Prosperity Sphere?

As promised I've done some research on the China-Asean Free Trade Agreement (FTA) that came into effect on January 1, 2010. As it turns out, there are several reasons why it hasn't received much press.

The Financial Times has an excellent overview of the FTA and its implications for the nations that are party to it. Long story short, it'll lower tariffs in all the countries. The FT highlights some winners of the agreement, notably Indonesia and Vietnam who are large exporters of commodities to China. Essentially their goods will be taxed less when shipped to the PRC which means more business for those industries. However, The Economist accurately points out that tariffs between the Asean states and China have been on a declining trend for the past several years, making the FTA even less spectacular.

This is all well and good for China and the Asean members, however, I don't see it impacting trade with the E.U. or the U.S. all that much. Fact of that matter is that western countries are increasing the tariffs levied on Chinese imports as a result of China's currency manipulation and subsidies to various industries.

So the bottom line for my friend Asia is that the FTA received little attention for the following reasons: 1) tariffs have been on the decline prior to the FTA 2) it's only between a select few states and 3) it doesn't impact the major economies in Europe or the United States.

I'll probably put something up later today about how the FTA impacts Taiwan and how I think the Ma government should respond. I wrote a paper last semester about Taiwan's grand strategy and this FTA provided the bulk of of my discussion on Taiwan's economic priorities. Stay tuned!

2010 Census

Every morning I make the attempt to read as much news as I can. While reading one of my favorite news sources, I stumbled across a link to the U.S. census, which is very slick. How is it related to the blog you ask? It's in Chinese! The other thing that impresses me about it is that one can select from a long list of other languages; truly a reflection of the diversity of the United States.

Busy busy busy

Things are a little busy on my end as next week I'm presenting a paper at Columbia University's graduate student conference on East Asia. Putting the final touches on my presentation and practicing quite a bit so everything goes smoothly.

My research question was whether American arms sales to Taiwan restrain them from developing nuclear weapons. It was a lot of fun researching the issue as I had little knowledge about Taiwan's nuclear weapons program (or civilian for that matter). Turns out the PRC developing nukes was a major motivation for the Nationalists to pursue a nuclear deterrent (along with warming Sino-US relations in the 1970s).

It highlights a major problem in the Sino-US relationship: the arms sales themselves. Beijing considers the island a renegade province and deeply resents American involvement in the matter. However, the United States for decades has acknowledged China's position on Taiwan (not the same as agreeing with it though), yet continues to sell weapons to the ROC all the while saying that the matter of reconciliation/unification is between Beijing and Taipei. Yet as history has shown, if the United States gets too friendly with Beijing, Taiwan gets nervous and resumes its nuclear weapon program. Although at this point in time I wonder how warm relations between China and the US could get considering their current disputes over trade, climate change, and China's growing influence in general.

Socialism and Marxism aren't dead

I had fallen behind my reading of the People's Daily and stumbled across this article the other day. For those of you who can't read Chinese, the headline roughly translates to "The World's Clear Hope: China unable to do what Western democracy does."

This type of article is a poignant reminder that as far the CCP is concerned, socialism is alive and well in China. Moreover, they aren't going to adopt western democracy anytime soon. At the end of the article the last paragraph basically says that democracy isn't suited for China because it is so far removed from traditional Chinese culture and because it can't solve China's problems. My response: Marxism was a western philosophy you (China) were able to take and mold into a suitable form, so you could do that for democracy, if you wanted to. Let's not forget that Mao essentially re-wrote Marxism as a result of his experience during the Long March. And after he remolded Marxism for China's purposes, it, uh, solved your problems (but created others).

The story though has a certain ring of truth to it, which is why I like the article despite its ideological overtures. There are definitely elements in the West who would prefer that China under Marxist/Maoist guidance fall on its face and instead succeed with democracy because it would make them feel all warm and fuzzy inside (yes, including you too Mr. Fukuyama). However, reasonable people would prefer a stable China for several reasons, mainly because we benefit from China's economic reforms. A destabilized China as a result of civil war or disorderly transition of power would drive the markets down a lot, possibly creating another Great Recession or Depression depending on its duration and impact on exports. Either way, it wouldn't be pretty.

My final thought is that a democratic China may not be any better than the China we have now. Any Chinese government would pursue its interests just like any country. The idea that a democratic China would resolve all its problems with the West is ridiculous. The U.S. and E.U. are fighting over bananas in a trade war and can't come to agreement about Iraq and Afghanistan, despite having democratic ideals in common. Would human rights in China be better? Quite possibly, but the West is short on credibility for concern on human rights after failing to address Rwanda in the mid '90s and the current situation Sudan. But please, let's stop wishing that China were democratic and instead focus on resolving the problems and misunderstandings that exist between us. Wishful thinking is pointless.

An eye into the past

It appears that more documents have been made available to the Chinese public concerning the Cultural Revolution (its full title is the Great Proletarian Cultural Revolution (无产阶级文化大革命) and took place from 1966 to 1976, with varying degrees of intensity). From my perspective, this is one of the greatest tragedies in Chinese history. During this period Chinese society was flipped upside down, resulting in the persecution of thousands of people who were thrown into labor camps, while at the same time making a mockery of the education system in China. My Chinese friends who have lived through it shared some stories about their experiences a few years ago and I'm still moved by the human suffering. I highly recommend those of you interested read up on it - it helps explain China's course today.

Back to the story at hand though. Will this action shed new light on the lost decade? Probably not. There are hundreds of millions of Chinese people who have their own stories to tell and would do far more in revealing unknown bits of information. However, without making it a bigger deal than it is, the Chinese government's decision to make them available is a good sign and should be welcomed, despite their limited availability.

This action highlights something that I feel is appropriate for China as a nation to conduct at this point in time: a public exploration of the Cultural Revolution. There is no shame in saying that mistakes were made and apologies be issued. So much suffering was inflicted that almost everyone has something to apologize for. Moreover, it would allow the Chinese government to start afresh, saying "This is what we've done in the past. We're sorry. Let's develop our nation together." Everyone deserves a second or third chance, and the Chinese government is no exception.

What's the big Dalai?

Apparently there is going to be another round of discussions between Beijing and the Dalai Lama's reps. As par the course, The Economist does a superb job of explaining why they won't amount to much. For those of you who could use a refresher on Tibet and China, the U.S. Congressional Research Service has a handy report.

I always chuckle inside whenever topics concerning China's borders come up, mainly because there are cultural forces at work. The West has been big on drawing lines in the sand (or dirt or stone) to establish administrative regions and the borders of empires and states. In imperial China things worked a little differently, where nearby rulers of various civilizations (Korea, Japan, Tibet, Mongols, and loads more) would travel to the capital and recognize the Chinese emperor as the big cheese. Then trade would commence (along with some parties). Imperial China cared more about spheres of influence than direct administration because all the other nearby rulers accepted China's superiority. As such, they had no need for drawing hard borders. Then the Europeans come along with their maps and love of drawing lines. Not a good recipe for agreement. Fast forward to present day and we are having the same argument.

I find it ironic that China, under a supposedly communist government, is laying claims to Tibet when it was an imperial power (although one could make the strong argument they're claiming what the Republic of China claims). One would like to think that the new China (read PRC) would practice what it preaches about socialism and anti-imperialism, but let's not kid ourselves. The more things change, the more they stay the same.

Land of waning influence?

The New York Times ran a story a couple of days ago about Japan's warming relations with China. At the beginning it does a good job going to extremes, all but saying that Japan is going to nix its alliance with the U.S. in the short-term. However, at the end it redeems itself by accurately pointing out that despite the recent improvements in Sino-Japanese relations, there are still major differences between China and Japan (read Kim's paradise in North Korea).

I think that the end of the article is more realistic and the main point to walk away with. Japan and China are not going to be BFFs any time soon, as there are still deeply rooted memories of Japan's invasion of China and the atrocities its military committed. Also, they still have outstanding border disputes.

Closer ties between China and Japan are a good thing. The last thing the U.S. needs is an anxious Japan worried about China and effecting a change in Article 9 of their constitution. If that were to happen, China would no doubt ramp up its already ambitious military modernization. China benefits from continued U.S. security cooperation with Japan as it prevents such events from transpiring. Of course, this is applicable to the now. If in the future Chinese interests would be better served by a downgrading of U.S.-Japanese relations, Beijing could sweeten the pot for Japan. Although whether Tokyo would respond favorably depends on China's actions, Washington's treatment of Japan going forward, and if Sino-U.S. ties are tenuous.

Reading list

I've read a lot of books on China (more than 25 and counting). As such I think it would be worthwhile to provide a reading list of sorts for those of you who would like to learn more about it and its relationship with the U.S. I've put them in descending order, from easy reading at the top down to the hardcore at the bottom. Feel free to throw out your recommendations.

Understanding China by John Bryan Starr
China: A New History by John Fairbanks (THE book on Chinese history)
Integrating China Into the Global Economy by Nicholas Lardy
The Great Wall and the Empty Fortress by Andrew Nathan & Robert Ross
The Search for Modern China by Jonathan D. Spence
America's Response to China by Warren Cohen
Mao's China and the Cold War by Chen Jian
Ten Episodes in China's Diplomacy by Qian Qichen (Qian is a former Chinese foreign minister. This book is useful in that it provides insight into the official Chinese government's line of thinking on foreign policy.)
China's Unfinished Economic Revolution by Nicholas Lardy (dated info but a good read)
Governing China: From Revolution to Reform by Kenneth Lieberthal (a textbook really, but good for understanding China's governmental organization)

Google vs. China

I know this old news by today's standard, however I think this story warrants a post.

Essentially Google is threatening to close up shop in China because some GMail accounts were hacked, specifically those of some Chinese activists. This has been a boon for people who already have a bone to pick with China (read anyone who has lost a job as a result of Chinese, American politicians looking to score some points, and those with legitimate human rights concerns). However, I think most of the discussion has focused less on why the Chinese government censors the Internet in the first place.

Article 35 of the Chinese Constitution provides the right of freedom to speech and article 40 provides the freedom and privacy of correspondence to Chinese citizens. However, article 40's caveat is that when it comes to state security, all bets are off. How is state security in China defined? Simply put, broadly. Any mention of independence for Tibet or Taiwan is anathema to the Chinese Communist Party (CCP), as their legitimacy for being in charge is based largely on the fact that they brought an end to the warlordism that existed during the early years of the Republic of China (that now lives on Taiwan). I find this eerily reminiscent when a new dynasty would claim that it had inherited the "mandate of heaven" and was therefore fit to rule. At some point I'll have to do a post on why the CCP isn't that much different from the imperial system that existed until 1911.

Essentially, the Chinese government believes the best way to avoid chaos is to prevent any signs of disunity. Such disunity is embraced by the West, especially in Italy where every province would form its own country if it could. The West prides itself on individual success and identity, traits that go against socialism where society itself as a single unit is held sacred. Consequently censoring the Internet is a way of ensuring that Chinese society remains intact. What about their free market reforms you ask? Well, that's not really capitalism; it's socialism with Chinese characteristics.

As for the topic at hand, I'm not sure where this dispute between Google and China will lead. Google hasn't had much success against Baidu, a homegrown Chinese search engine. Google may figure that China isn't worth the expense and head home. On the other hand, they may be trying to get a better deal for their other ventures such as their new cell phone. What I think is apparent is that Google's line of standing up for the rights of its customers is wonk and has more to do with business concerns. As my father told me growing up, "Let the numbers do the talking." Google is no doubt looking at its numbers.

欢迎！／歡迎!

Welcome!

The United States established contact with imperial China in the late 1700s through merchant sailors. Later in the 20th century it would establish relations with two governments of China, the Republic of China (which is alive and well on Taiwan) and the People's Republic of China, simply known as China today.

So why the blog's name? Simply put the United States has historically known "China" as a relatively weak country since it was founded in 1776. However, with China's growing influence the United States is forced to factor in its response or position on any policy issue. Essentially, China's development is requiring a fundamental shift in how the United States perceives and reacts to the growing power. Therefore, I argue that the United States is getting to meet the real China for the first time.

This blog is an attempt to understand the dynamics at play in the Sino-US relationship, examining both the short and long-term. I'll mix in a lot of history, for only by looking at and understanding the past can one appreciate the current situation.

As I post news articles and my thoughts, feel free to add your comments. If by chance you disagree with my opinion, say so and include a link to a source that was used to base your opinion on. That way I can understand where you're coming from and learn something new.

Enjoy!