Cadence of Conflict: Asia, November 12, 2018

Xi Jinping announced yet another new policy for China: Blaming other countries is wrong, each country must deal with its own economic and environmental issues without the problem being someone else’s fault. While this 180° new direction should be welcoming to foreign companies whose intellectual property was taken by China, along with the neighboring lands that China has no presence in, yet threatened to invade, such as Taiwan, Xi gave no particular details as to how he planned to adjust China’s current action plan. In fact, Xi’s announcement came as if it was not any change at all, but a continuation of the current policy, that taking unoccupied territory and accumulating foreign technology without payment was necessary for China’s economic and environmental well being within its borders. Perhaps his intention was to further confuse the West about China’s international policy or perhaps he has made himself even more understandable than he ever has before. We’ll have to wait and see what actions follow to interpret Xi’s meaning.

China is growing its ties with Israel, for the time being. An infrastructure deal is said to be the kind that will irritate US President Trump. China, however, should be more concerned. Israel has some of the best counter-intel gathering in the world. If China does use the building contracts as an opportunity to spy, after Israel has a chance to respond, it might be the Chinese who break contract. Israel is one nation that China won’t be able to bully. As stubborn as ancient Asian worldviews can still be today, Israeli culture can be more stubborn. It’s not about race, it’s about two cultures about to collide. ‘Tis folly to double-cross a nation whose name means “wrestles with God”; and the name is not a reference to wrestling with China.

This week, Taiwan and Hong Kong did what they do best more than they have done before. When a Financial Times writer is banned from Hong Kong because he intends to interview an author—and that author’s speaking engagements are shut down after Chinese requests—the wisdom of Roger Branigin returns to the western readership: “I never argue with a man who buys ink by the barrel.” China wasn’t satisfied to argue with an author who is more famous for it, but now wants to argue with more in the ink business. But, that wasn’t the most significant development of the week. Taiwan is labeled as the “island of hope” for Asia at an international forum for Human Rights hosted in Taipei.

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Cadence of Conflict: Asia, October 1, 2018

When China cancelled a meeting in Washington, the Chinese thought they were sending a message; Washington thought they wouldn’t be sending any more messages at all. The Chinese government wants mutual respect, trade that results in equal numbers, and that countries not be bullied into taking sides in a China-US disagreement. Though China lobbed this new policy in a complaint against the US, there have yet to be steps or specific commitments on how China will hold up its side of this new policy. It will be difficult to get clarification without communication.

US tariffs are unfair. It’s so obvious that it doesn’t need to be proven. China has a right, after all—and everyone should agree—to develop itself as a nation. China’s right to have any and all resources given to it from everywhere in the world, to whatever extent is needed for development, is an entitlement China has by birth and is already universally accepted around the world. Those in the US who oppose this obvious consensus are a rogue fringe not deserving of academic mention.

But, Taiwan is being a big bully—a meanie-face. By not rebuking the US for considering a third of a billion dollar arms sale to Taiwan, the Taiwanese are spitting in Beijing’s face once again. As if that bullying wasn’t enough, Taiwan is also planning a new place to park its helicopters. Of all the audacity!

Hong Kong, however, stands no chance against the great and mighty China. By banning a pro-independence party, the Hong Kong government sure showed them! There’s no possible hope for any kind of backlash or rise in sympathy, once the rightful leaders have made their all-powerful will known in the fully self-governed special administrative region of Hong Kong.

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Cadence of Conflict: Asia, July 2, 2018

NBC reported news of recent months to counter news of recent weeks. It wouldn’t be the first time NBC had a precarious definition of “news”. Intelligence reports about very specific details of possible uranium production were broken as “news” by NBC. Bloomberg and others reported that NBC reported it. Taipei Times reported that Bloomberg reported that NBC reported it. NBC breaking this “older” news made more news than the outdated “news” itself. The whole claim smells smelly. It’s likely a ruse, but we’ll need about two weeks to know with confidence.

Hong Kongers like to protest so often that they are expected to protest annually. This year, protesters claimed a 50k head turnout; Hong Kong police estimated less than 10k, which would be a record low. Surely neither crowd estimate had any bias or motive to distort the numbers.

Remember, Hong Kong students like to protest more than is deserved. China could do better with counter-PR, but not much can be done when dealing with spoiled students. Don’t be roused into hating China by the dwindling spoiled Hong Kongers. Protests are profitable in Hong Kong because they help sell newspapers in a market saturated with so many newspapers that they throw them at pedestrians on the sidewalks. Hong Kong’s biggest problem is complacent Christians.

A more genuine problem of concern is the attention Chinese manufacturers are drawing from Western press coverage of Taiwan court rulings. Taiwan makes about 60% of the world’s computer components. China wants in on the game and people are being prosecuted in Taiwan for stealing company secrets that would go to China. The biggest element of a case is in place: motive.

Most of the so-called “news” about trade wars are the most obvious. Companies are having problems with trade during a trade war. Really? This is considered news these days. Either that, or it is an obvious attempt to skirt the deeper issues behind the China-US trade war for global economy hopefuls hoping to sway public sentiment by reporting what was all foreseeable.

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Cadence of Conflict: Asia, June 4, 2018

North Korea inches further and further toward talks with the US. China fears this. If Kim Jong-Un get in the same room as the man who wrote The Art of the Deal, North Korea could become a stronger ally to the US than even South Korea overnight. That would likely lead to a quick reunification of the Korean Peninsula, as well as other shifts in power, even before any alliance might be formalized. But, Trump’s deal-making reputation should bring no shocks to what is about to transpire in the Singapore Summit.

Then, there’s China, about to be left behind. The hardline crackdown on free speech throughout China won’t be without consequence. Symphony has been saying so for years; Albert Ho effectively said the same, quoted in a Bloomberg article dated June 4. Party power is getting brittle. But, the consequences of brutal brittality are rarely explored. So, here goes.

Hong Kong won’t shut up anytime soon. The whining, whimpering bratty students of Hong Kong may be wrong to demand rights when freedom was largely handed to them by the British. But, those bratty students sure are drawing a press load of attention to China. That alone should be a heavy factor in logistics calculation. Hong Kong is a megaphone for any anti-China sentiment because the world reads about Hong Kong every day. After all, Hong Kong is “Asia’s World City”.

But, then there’s the problem of cracking down within “China proper”, the Mainland governed directly by Beijing, not a SAR like Hong Kong or Macau. If China considers friendly sarcasm to be a threat within China—that means tech companies and hardware manufacturers won’t have candid conversations about quality control and competitive design. Once free speech becomes a minefield, people will divert mental resources away from fee and open brainstorming toward making sure that they don’t say anything offensive. The key to good brainstorm sessions and innovation is that nothing is off the table and no one is allowed to take offense at anything whatsoever. That’s can’t happen in China anymore. Bye-bye Western manufacturing paradise. It’s only a matter of time before Western outsourcing brands figure it out. One little story, like an innovator being locked up for a tech suggestion because it was interpreted as “opposing to the Party”, might plunge Chinese factory stocks into the void below.

“Single-Party Rule” is the key topic now, at least according to Western papers. That’s the protest mantra in Hong Kong. It’s the talking point of headlines and marches. It is the so-called “problem” as is being presented to the world. The Western press is on a path for reporting a narrative that stirs sentiment for two-party rule in China. Whether it’s a typhoon, an earthquake, a solar flare, or some other “act of God”, if China suddenly adopts a two-party system, Western newspaper readers will have already been prepped to think it is a good thing.

Then, there’s Vietnam, exploring foreign investment “zones”. Deserved or unfair, distrust is stirring against China as a place of investment. This will have a double-edged effect in Vietnam. Firstly, Western manufacturing will flock to Vietnam as a way of fleeing the newspaper villain, China. But, with a Communist Party having total rule in Vietnam, Western investors will demand certain assurances before dumping too much money into yet another single-party market. Sooner or later, we could be looking at Vietnam adopting a friendly two-party system as a stronger strategy of competing with China. That will only add to the momentum of change in East Asia.

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Cadence of Conflict: Asia, May 7, 2018

This was week of talk. A delegation from Washington went to talk with China. Trump talked about talking nice while talking. Economic talking heads are talking about the talks and everybody’s talking about it. Once the delegation that went to Beijing to talk gets back, they will talk with Trump. Warren Buffet even had some things to talk about.

Trump’s delegation to Beijing was indeed an olive branch. It spelled out “the line” in the sand, toured it, explained, it, discussed it, explored it, and made that line very, very clear. To quote Morgan Freeman’s Lucius Fox, “Mr. Wayne didn’t want you to think that he was deliberately wasting your time.” But, the line is not the least bit likely to be respected.

China will ignore everything the US delegation explained and forewarned, but they will never be surprised when Trump does exactly what the delegation said he would, though they may act like it. More importantly, the list of expectations shows how well Trump knows China and Chinese methods of doing “business”.

Words like “retaliate” and “oppose” often surface with disfavor, as well as the US clearly being wise to the tactic of unofficially using backdoor channels to unofficially impose other restrictions to get what one wants. And, the US maintains its position on the “301” trade notice that China is non-market economy, specifically that China is to drop the matter completely and withdraw its appeals on the matter with the WTO.

There is no wiggle room in the US demands and those demands strongly demonstrate that Trump knows exactly the kinds of things Chins is likely to do. In essence the list of demands forbids exactly what China is most likely to do in the near future.

By contrast, China’s demands are mainly that the US back off on its recent action; that’s all. Consider the argument going around from pro-China stories about the trade “imbalance”—especially that US’ service and consulting help to narrow the “trade deficit”. The list of Chinese demands don’t account for this or ask that they be calculated in the “trade deficit”.

The mere demands, in themselves, tell us that China does not know what is about to happen in Washington and that Trump knows all to well—probably better than any of his advisers in the White House—what will happen in Beijing. China is in great danger.

Surprises are coming, somewhere. That’s how history always plays out. No war ends without the unexpected and there’s always a joker or two hiding in the deck. The surprises will likely include special and disputed territories, such as Macau, Hong Kong, and Taiwan, as well as international public opinion and some sector of trade or international protocol not yet considered or discussed by anyone—they will surprise everyone. That “surprise sector” could include ocean boundaries or specific products often traded. It could also be an act of God, such as an earthquake, hurricane, or tsunami. But, we have no idea except that any intermediate history student should anticipate at least two surprises before the current cloud passes in the greater storm.

China looks at the US the way the poor working class looked at the aristocracy in Russia. Beijing thinks they are demanding “what is their right”. Remember, this is akin to “Opium War III”, started by a trade imbalance. China demands that the money and “tax payable by way of free technology” continue to flow net into China; the US demands things like “equal” and “fair” in the flow. That is rhetoric from the Opium War prelude. If that war resurfaces, the “English” speaking country won’t be Britain, though Britain still has a dog in the fight: Hong Kong is not to be changed for fifty years, yet this week Hong Kong military youth groups—comparable to Boy Scouts—rejected Chinese requests that they march according to PLA marching steps—meaning that China tried to make a change and Hong Kong could become a target for punitive action from China. Hence, Hong Kong is “fair play” in everyone’s opinion, including public opinion about everyone in the game.

If China had any kind of conflict with the West—whether militarily or over trade—the conclusion could require complete surrender of Hong Kong back to British rule—and Hong Kongers wouldn’t mind.

In the territorial disputes, Taiwan declaring independence would certainly rock the boat. Research says Taiwanese overwhelmingly view China as unfriendly. So, Taiwanese certainly wouldn’t mind making their contribution to making a few waves.

China is already on the bench with the Korean issue. Pyongyang just updated the North clocks to no longer be thirty minutes off, but back in time with the South. Where’s China?—exchanging trade demands with the country whose trade blockade preceded the Korean talks.

In all this, Warren Buffet’s advice is that China is a good place for the West to invest. We’ll see.

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