Cadence of Conflict: Asia, May 28, 2018

The US “disinvited” two countries this week, not only North Korea, but also China from the biannual naval exercises in Hawaii. Both “disinvitations” were a rescinding of a previous invitation after less than friendly saber rattling from the former invitee. Kim Jong Un’s loud mouth is widely known, so the North Korean “disinvitation” came as no surprise.

China, specifically, has been pressuring African countries to “dis-recognize” Taiwan in favor of Beijing policy. Additionally, China has been pressuring US companies to follow otherwise unrecognized Chinese maps placing Taiwan under China’s political sovereignty, as well as companies from other countries—which Taiwan is not currently under the control of. China sees the request as part of a grand goal of “reunification” and a nostalgic return to the rhapsodic geographical past as the keystone of a socioeconomic strengthening strategy.

The problem from the Western corporate perspective is with the dictionary, not with ideology. China’s government does not decide the laws on Taiwan’s island currently, not in any way. So, listing Taiwan “under” China would create confusion for Western tourists. But, China is run by Communists who believe that logistics are to be dictated, not recognized. In the land of Communist-Chinese, if tourists would be confused, the solution is to simply make a new law this afternoon outlawing tourists who are confused. So, Beijing doesn’t believe the West has any legitimate problem with the policy, but that Western companies are only trying to spite Beijing.

Washington, however, does view the problem as ideological. It would be wrong for Washington to dictate the organizational nomenclature of the Bank of China or Sky News or Spotify. So would be any reciprocal resemblance. Under Trump, Washington is enforcing that ideology globally.

Then, there was yet another snafu among China’s man-made islands. The US can’t stop making news in Taiwan. A Senator makes an “unexpected” visit. US weapons developers are planning to set up shop in Taiwan. The US and Taiwan have decided that they can’t build Taiwanese submarines fast enough. And, the US has decided that Taiwan needs the absolutely best defense to respond to Chinese “saber rattling”, not only asymmetric defense. All of this is remarkably irritating and “disrespectful” to China.

China hates few things more than being disrespected.

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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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Cadence of Conflict: Asia, April 23, 2018

The US is arming East Asia and disarming North Korea. China is a spectator in the Western game.

Reports and gossip about the latest North Korean promise to disarm ensnared many in the media. The South Korean Kumbaya singing President Moon Jae-in was quick to give his “peace in our time” report that North Korea has promised to disarm, with the connotatively-added meaning of “shortly after his election”. Trump Tweeted that disarming is great, “yuge” news, then the mainstream media ripped on Trump for an unverified report, particularly PBS. (Why does PBS still receive tax dollar money?) Japan’s Prime Minister Shinzo Abe was more cautions about North Korean false promises, proving himself the most sober in the room.

Japan is looking into a stealthy F-22 F-35 hybrid from Lockheed Martin, in order to deter impedance from “Chinese” and “Russian” jets in its air defense zone. Taiwan is also looking at Patriot missile defense systems. The increased military talk in China’s backyard, particularly about China,  surmounts to the dogs fighting over who gets to eat the pheasant.

China is making so many flybys around Taiwan that scrambling jets over air defense zone approaches is a strain on the Taiwanese military budget. Taiwan might end up sending China a bill, likely by way of military money from the US and US tariffs on not yet mentioned Chinese goods. Also look for new Taiwan-favored trade deficits with the US in amounts similar to the cost of scrambling jets every few days.

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Cadence of Conflict: Asia, April 9, 2018

China has been a source of great change.

Taiwan has received a license from the United States to build its own submarines. Wang, a legislature who sits on the Foreign Affairs and National Defense Committee said that friendliness from the US is the highest it has ever been. Japan just commissioned its first marine force since WWII. 1,500 troops are ready, specifically to repel invasion of Japan’s islands. Thanks to China’s inspiration and initiative, many nations in the region are also making their contribution to peace and stability in Pacific Asia.

The US is re-evaluating trade with China. While much is just talk, Trump maintains friendly rhetoric. The shakeup with trade will force countries to reinvent and reevaluate trade policy. While a looming “trade war” remains the talk of many so-called “experts”, the long-term benefit will be the overall rebirth of trade throughout the world. Everyone will need to rethink trade. Any kind of thinking is good, especially in these times.

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Cadence of Conflict: Asia, April 2, 2018

China and the US have fixed their rudders on a ramming course. The only remaining question will be over whose hull is stronger.

The “yuge” US trade deficit with China is purported to be $375B USD. Bloomberg was sure to point out that the figure is inflated, some way or another. Xinhua news reports that a more accurate figure is a mere $298B USD deficit. Trump sent a “Section 301” notice of unfair trade tactics to China along with $50–60B USD in tariffs, depending on which news source you read. Trump also asked China to reduce the deficit by a whopping $100B USD and China says that the US is being unfair, placing tariffs on US food.

Asian markets are up, but a Caixin market index—something like a DOW Jones average in China—isn’t up as much as hoped. Everyone has an opinion on what all that means.

Companies in America believe that tariffs harm the consumer. Some voices argue that the US has a “service” trade surplus with China, but still a deficit overall. Trump argues that trade deficits harm the worker and the overall economy. Basic macro-economic theory would say that workers would afford higher prices with much higher pay.

Trade deficits initiated the Opium Wars with China when China welcomed a one-way flow of silver from Britain for tea, but would not allow the eager Chinese population to import British goods. The Opium Wars ended with surrender of several lands to Britain, including Hong Kong. China’s current and main land dispute is over Taiwan. The stage is set for history to repeat and so far it has.

Taiwan is certainly chumming up to the US as China attempts to endear the Taiwanese. Most recently, Taiwan is buying more advanced missiles from the US while two Senators advocate selling F-35s to Taiwan—a sale more likely since Taiwan’s current administration is unlikely to set up secret talks with China as the rival party attempted nearly four years ago. China banned Taiwanese movies casting a purportedly pro-independence Taiwanese actor, Lawrence Ko.

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