Cadence of Conflict: Asia, March 27, 2017

North Korea is ready to nuke, Hong Kong has a new CEO, and China is talking. In fact, China is talking with almost everyone, even Taiwan, as headlines would have us believe.

Hong Kong’s new CEO, Carrie Lam, is ostensibly favored by China’s Communist Party. But, all politicians in the special administrative region are vetted by Beijing. The western press is beside themselves with how much control Beijing exerts, regardless of how loyal Lam actually is. Nothing has been proven yet because she hasn’t had a chance to do anything yet. She was just elected. Of course, in the minds of the western press, Beijing is guilty until proven guilty.

Hong Kong is self-proclaimed as “Asia’s World City”. It is the doorstep of semi-closed China to the open West. What happens in Hong Kong is exactly what Beijing wants the world to see. What Beijing sees as an advertisement the West sees as “public relations”—for better or worse. Lam is Beijing’s choice as the new “poster girl”. While she didn’t get there by being incompetent, the true test of CEO Lam’s leadership will be whether she creates or prevents excuses for western headlines to make China look like a bully.

While the West villainizes Beijing, it is becoming more and more clear that China is doing what it thinks best for itself, but doesn’t understand PR with self-governing nations. All this outreach—Pakistan, New Zealand, India, Cambodia, the US, Taiwan—it’s going to backfire with stories like China not allowing a married Australian resident academic to return to Australia. In the mind of the West, the decision is what matters. In the mind of Beijing, the reasons are what matter.

China’s President Xi admitted last week, more or less, that China needed to play “tech catch-up” with the States. Now, China is investing in US startups to get military technology insight. Smart. The open, free enterprise, private, self-governed sector usually has the best tech.  The question Beijing should be concerned with is whether its researchers will hunger for the same inspiring freedom as the companies they seek to glean from. While Beijing hopes to acquire information, they may inadvertently acquire free market ideology. That can be quite unsettling, as if the Pacific doesn’t have enough “waves” already.

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Cadence of Conflict: Asia, March 20, 2017

North Korea made headlines again. Reports have it that North Korea performs a routine ritual of saber rattling every spring. It’s definitely “saber spring” in “Kim world”. Trump thinks the Great Successor is a naughty boy, behaving very “badly”.

China’s answer is to educate the US on calmness and diplomacy, while continuing to build weaponized islands in the South Sea. The US is certainly paying attention. Secretary of State Rex Tillerson just made a pit stop in China. While the US won’t take anything off the table, including pit stops and naming that “military action” won’t be taken off the table, the stronger, less visible, and probably more important response from the US is money. The Fed is raising interest rates and China appears to be in some kind of economic cross-hairs. Read More

Cadence of Conflict: Asia, March 13, 2017

Forget Japanese waters, headlines worry about North Korea and Hawaii. South Korea has their own two cents to add over the assassination of Kim Jong-un’s half brother at Kuala Lumpur International. China says that North Korea and the US are like two trains headed on a collision course. China has a kind of “plan” to bring the US and North Korea together, but the US won’t make concessions for obeying a UN resolution and there is no mention of China cutting off its supply. It seems China wants to be the “great reconciler”, but the rift is too far between East and West. Japan’s answer is to strike first.

Taiwan may be able to make its own response. This week, the US handed off two Perry-class frigates to Taiwan. Taiwanese naval officers will learn how to operate the frigates from the US Navy and the ships should set sail in May. This is a very interesting development since President-elect Trump received a phone call from President Tsai, and since the US still has yet to deliver on several military sales, especially F-16s, that closed during the terms of former Presidents Obama and Ma.

China’s response to events this week is two-fold. An editorial with a persuasive tone appeared in China’s state-run Global Times, arguing that India would help itself more if it cooperated with Chinese strategies rather than Japanese and US strategies. Xi Jinping also underlined and emphasized China’s great need to catch up on technology. This comes in the wake of the coming American Lockheed Martin F-35 “Lightning II” fighter jet and the US Navy’s new electromagnetically trajected railgun. China’s response is both telling and predicting.

While China has made advances, both in approaching Tomahawk cruise missile technology and in nearing the completion of its first home made aircraft carrier (reverse engineered from a Soviet era carrier), China still feels claustrophobic. Taiwan, Japan, South Korea, and India, not to mention the distant-yet-present US are all naval forces too close to China’s back yard. Xi feels the “squeeze”. China is in a tight spot.

President Xi also revisited his long-standing mission of countering squander and corruption within the Communist Party. By underlining the points he did, he seems to be vying for equity and credit. Doesn’t China’s leader have enough credibility or does Xi know something the West doesn’t? Regardlessly, the greater wild card is India. China believes that India is on the fence and is open to persuasion—and China is correct. Soon, India will feel its own squeeze. The question, then, will be whether India feels inclined to side with China rather than forces farther to its east or if India will decide to reverse engineer Western technology write persuasive editorials of its own.

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Cadence of Conflict: Asia, February 27, 2017

Americans love flags. The over-sized flag, the “Star Spangled Banner”, was a strategic tool of Fort McHenry at the Battle of Baltimore and the US national anthem itself is named after the flag. If the United States ever truly intended to communicate that it believes Beijing seats the rightful government over the island of Taiwan, then Washington DC would have demanded that Taiwan fly the Chinese Communist flag over its own flag, like Hong Kong does. But, it didn’t and they didn’t ask. The test of what Donald Trump thinks about China is not a question of how many times he sees the word “China” on his globe at home, but what flags he accepts flown where.

Is China wise to what’s going on? Perhaps money is making all the difference. China’s PLA Navy is headed for an increased budget. If money was China’s answer, perhaps money tipped-off Beijing in the first place.

According to Obama Treasury rules, China is only 1/3 of a “currency manipulator”, exceeding a $20B trade deficit with the States. The other two rules relate inflation to GDP and official currency purchases to GDP—two things where China plays by a different set of rules than American economics. China “declares” its own currency value, it is not determined by the markets, making what the US refers to as “inflation” irrelevant to China. The second irrelevant Obama rule relates to “official” currency purchases. If only economics were only affected by “official” purchases, many other economic problems would be solved. But, economies are affected by “actual” purchasing, not merely whatever we happen to label as “official” this decade. The Chinese, especially, are experts at looking good “officially” while doing the bulk of their work under the table. Why else would Asians be so focused on cram schools and testing?

Then, there is the task of calculating “GDP” in a heavy back-and-forth trade economy. In 2011, the US slapped tariffs on China-made solar panels, which were made with materials imported from the US, which China also slapped a tariff on. Not only is actual “domestic” product difficult to measure in a “Venn diagram” of overlapping markets, there is also the problem that China’s government behaves like a company itself—benefiting from tariff revenue, thereby triggering another slew of investing and purchasing opportunities. If economics were a pair of glasses, China operates in ultraviolet light that no pair of US lenses can detect.

So, not only were the Obama Treasury “currency manipulator” rules an attempt to measure the light with a wind sensor, Trump gets what Trump wants. If China is destined for the “currency manipulator” list, it will get on that list one way or another, and there is a laundry list of ways that can happen.

But, then, there is North Korea.

While the “experts” lecture the world about how “trade wars” always backfire, China harbors its own trade war with the government in Northern Korea. Kim Jong Un isn’t happy with Beijing and Beijing wants to talk about it with the US.

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Cadence of Conflict: Asia, October 31, 2016

Cadence of Conflict: Asia, October 31, 2016

Chinese President Xi has been hailed with a personality cult akin to support for Chairman Mao, at least in some circles. As if the Xi personality cult wasn’t enough, China also saw a bloodless victory in the Philippines. In an effort to seek their own so-called “independence”, Philippinos’ new choice of a president has thrown-off many ties with the US in exchange for more dependency on China. China still patrols disputed Philippine islands, but fishing boats don’t get harassed any more. It probably makes sense in the Philippines every bit as much as it made sense to France and Italy 80 years ago.

The Pacific resembles pre-WWII Europe with more and more likenesses every week. NPR reported that Philippine President Rodrigo Duterte will stop swearing as much. That headline probably made sense to NPR, given the situation. As for swearing and the Pacific, Hong Kong, with no military, is putting up the greatest fight against China. Lawmakers “swore” during their swearing-in, contrary to some stipulations that no Hong Kong lawmaker can object to Chinese rule.

The Philippino “switch” was always going to happen. Their desire for “independence from other countries” will eventually drive them to fly China’s flag above their own, just how China’s desire for respect provoked Beijing to provoke the West, just how “America and her interests” drove the US to fly its flag at military posts in countries across the globe thereby frustrating Beijing and Milan.

With Taiwanese public continuing strong objection to Chinese patrol expansionism (75:18%), with Hong Kong (under China) wanting out from China, with the Philippines shifting sides, and with Cambodia cozying up to Beijing, we could see more jersey swapping in the coming months. Japan and South Korea are standing against North Korea on nukes—by cooperating with the US. That coalition could very easily extend to Taiwan, as far as N Korea nukes are concerned. The islanders of Taiwan oppose nuclear “anything”, just like post-Fukushima Japan.

Taiwan also has a close cooperation with the US military, the kind of cooperation the Philippines just renounced. The Pentagon has yet to give an elaborate position on the Philippines’ wave-making. In war, if the Philippines violates any alliance agreements, the Pentagon could declare the Philippines as “rogue” and get the excuse they need to use force. Who knows what would happen then.

China’s “no-objection” policy for HK lawmakers has given Great Britain whatever excuse the Crown needs to anchor the Royal Navy in Hong Kong, much like Queen Victoria did against China via Taiwan. When Southeast Asian Islands start spitting at each other, Hong Kong could could get snatched-up in a Pacific-West coalition. Having no military could be the only reason Hong Kong can court sympathy from the West. Guarded by mountains between the New Territories and Shenzen, Hong Kong would be strategic. The West would then see Hong Kong as the “trump card” while China would come back with the Philippines as the “wild joker”.

The Philippines and Hong Kong don’t seem to have figured out that every island is just another pawn. The Pacific Daily Times Symphony Editorials take no sides, except the side of foresight: It was all predictable.

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