KORUS Free Trade Agreement: An Agent of Stability

Almost sixty years ago at the end of the Korean War, the relationship between the United States and South Korea took on a new meaning.  The relationship was built on a cooperative framework between allied forces in order to promote stability on the peninsula through a strengthened commitment to the mutual goals of protecting democratic values, peace and economic security.

Within the past few months the United States Congress and the Korean Parliament took large steps in solidifying their commitment to these basic tenants of the U.S.-Korea relationship when they passed the Korea-U.S. Free Trade Agreement (KORUS FTA).  Their support of this agreement is evidence that shared economic prosperity is a strong part of the U.S.-Korean relationship.  As the political dynamics on the Asian continent continue to change, it is critical that the U.S. maintain and build its relationship with Korea as a means to enhance America’s position to promote political and economic stability in the region.

Most of those who have been following the debate and progress of the long-stalled KORUS FTA have heard most about how the reduction or removal of several tariff and non-tariff barriers will lead to greater economic opportunity through increased market access for American goods and services.  Korean duties on major agricultural products like meat and dairy products and cotton and soybeans will be eliminated and many U.S. businesses will experience simplified and expedited customs procedures that will allow them to reach customers in South Korea with less red tape.  Overall, the U.S. International Trade Commission estimated that tariff cuts alone to a variety of U.S. goods could amount to an increase of $10 billion to $11 billion of U.S. goods exports alone.  KORUS is mutually beneficial to the South Korean economy and its competitiveness.  Reducing tariffs and increasing exports will increase the country’s gross domestic product by an estimated five percent.

The KORUS FTA was negotiated and signed by the United States and South Korea on June 30, 2007; however, the George W. Bush Administration did not submit legislation to the then Democratically-controlled Congress due primarily to partisan differences over autos and beef.  The often referenced case is the American automobile industry, which originally opposed the agreement, but after the Obama Administration achieved key concessions that soothed the concerns of the industry, not only did the auto industry itself welcome the opportunity to compete on a level playing field, the United Autoworkers also joined to support.  Their support came as a result of Korean commitments to immediately reduce their eight percent tariff on U.S.-built passenger cars, including electric vehicles and plug-in hybrids, to four percent and to immediately reduce their ten percent tariff on trucks to zero.  After five years, tariffs on U.S.-made motor vehicles, including electric cars and plug-in hybrids, will be reduced to zero.

Though these tariff reductions and concessions are important and positive elements, they should not overshadow the FTA’s equally positive effects on strengthening the U.S.-Korea relationship and how U.S. trade policy can function as a key diplomatic tool.  As North Korea pursues a misguided nuclear weapons strategy, it threatens the tenants of the U.S-Korean relationship.  The tensions on the Korean Peninsula are heightened by the growth of China’s influence in the region while other nations have grown increasingly wary of the foreign and military policy goals of the communist-led countries of Asia.  The KORUS FTA provides opportunities for greater economic security and emboldens the democratic institutions of a key partner in the region since the end of the Korean War.  Our growing economic relationship will empower both the United States and Korea to be active agents for stability.

Growing trade relations with our allies is rarely easy to achieve; however, with the mutual goal of fairness to our businesses, workers and consumers, the KORUS FTA will not only benefit our economic well-being but also support our longstanding relationship with Korea that has sought to maintain peace and prosperity on the Korean Peninsula.

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The Dragon Comes to Africa

Africa’s development has been a focus of goodwill for the American people for decades, and a central topic of geostrategic importance for policy makers. China is working to develop Africa too—but how they aid and invest in the continent is different. This is leaving Africans with a choice about how to develop and where they end up. The countries of sub-Saharan Africa are learning quickly that even free money can come with negative effects.

China, the source of a massive influx of cash into the sub-Saharan continent, is offering sub-Saharan Africa money and technical support, ostensibly with no conditions.  This is the opposite of most Western trade and aid which comes with a number of conditions for transparency, good governance, and encourages sound economic planning.

China is taking a modern version of the mercantilist approach towards its trade, aid, and investment in Africa.  While the easy money may seem attractive to African leaders now, they may yet rue the day they fell under the sway of the Chinese.  Most Chinese loans to African governments and private firms for infrastructure projects are offered under agreements that require Chinese firms to do much of the work involved and in which African natural resources are often used as a source of collateral or payment.  So the Africans not only lose out by forgoing opportunities to  build technical expertise (because the Chinese are importing labor from mainland China), but also by depleting their natural resource stocks and failing to use them locally to modernize their own economies.

Most development economists agree that when a country relies solely on natural resource exploitation, the manufacturing and other industrial sectors of the economy often remain seriously underdeveloped. Digging and shipping natural resources is a low-value added and commodity process. Africa is starting to develop some advanced processing facilities for minerals, but not with much help from the Chinese. And this is the key to understanding the approaches and the risks to Africa right now.

Chinese trade with Africa has increased by 1,124% from 2000 to 2010, when it reached $100.5 billion and China became the largest investor in Africa, beating out even the World Bank.  In 2010, about 63% of African exports to China consisted of crude oil and another 32% was made up of raw materials – mostly metals and wood; 95% of China’s imports from Africa were basic natural resources that China then uses to fuel its own economy, leaving the Africans far below them on the value-chain ladder.

While China’s use of imported labor, natural resource exploitation, and general lack of investment in the domestic African economy are all concerns, perhaps the largest concern is that China provides its financial largesse to governments with unsavory leaders (Robert Mugabe of Zimbabwe and Omar al-Bashir of Sudan come to mind) with no restrictions on how the funds may be used or limitations that prevent those funds from being used to purchase firearms (often from China) or other destructive goods that can be used to subdue their own domestic populations.  China insists it is only upholding the principle of sovereignty, but the international community has consistently worked to forbid such capital transfers to autocratic governments that commit human rights violations.

Even if you look past the financial support of the most despotic regimes, China’s increasing economic dominance of Africa gives quarter to those in pseudo-democracies who need aid or funds for infrastructure projects and prefer the soft terms of the Chinese aid or loans against the more forceful and accountability-producing restrictions that are placed on them by American or other Western aid.  Why deal with the foreign assistance bureaucracy of Uncle Sam when you can get an easy deal with the Chinese?

U.S. restrictions on aid and trade are put there to encourage governments to observe human rights norms, strengthen democracy and governance systems, and provide for the equitable well-being of their people.  When there’s an easy alternative to U.S. funding, U.S. influence in the region is significantly diminished as Americans begin to look like colonial-era missionaries trying to “save” the African people.  Unfortunately, it is the Chinese who, through their mercantilist practices and investments, may be enabling many of the countries of sub-Saharan Africa to go through another generation of endemic poverty by undermining local labor markets, failing to observe labor rights, and exploiting natural resources without building domestic capacity that enables countries to truly prosper from their innate natural wealth.

All is not lost.  The United States, working with its global partners, can continue and expand upon its funding to good governance, transparency, and human rights civil society groups that can use the technical skills they learn to better pressure their own governments.  Secondarily, African states should be encouraged to create better financial due diligence procedures to ensure that the money that’s promised them is going into sustainable endeavors that will benefit the people first and the elites second.  If the United States and other responsible actors do not use their leverage to intervene, we fear the second “scramble for Africa” will leave the continent as destitute as did the first.

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After America

Not so long ago, a high-ranking Chinese official, who obviously had concluded that America’s decline and China’s rise were both inevitable, noted in a burst of candor to a senior U.S. official: “But, please, let America not decline too quickly.” Although the inevitability of the Chinese leader’s expectation is still far from certain, he was right to be cautious when looking forward to America’s demise.

For if America falters, the world is unlikely to be dominated by a single preeminent successor — not even China. International uncertainty, increased tension among global competitors, and even outright chaos would be far more likely outcomes.

While a sudden, massive crisis of the American system — for instance, another financial crisis — would produce a fast-moving chain reaction leading to global political and economic disorder, a steady drift by America into increasingly pervasive decay or endlessly widening warfare with Islam would be unlikely to produce, even by 2025, an effective global successor. No single power will be ready by then to exercise the role that the world, upon the fall of the Soviet Union in 1991, expected the United States to play: the leader of a new, globally cooperative world order. More probable would be a protracted phase of rather inconclusive realignments of both global and regional power, with no grand winners and many more losers, in a setting of international uncertainty and even of potentially fatal risks to global well-being. Rather than a world where dreams of democracy flourish, a Hobbesian world of enhanced national security based on varying fusions of authoritarianism, nationalism, and religion could ensue.

The leaders of the world’s second-rank powers, among them India, Japan, Russia, and some European countries, are already assessing the potential impact of U.S. decline on their respective national interests. The Japanese, fearful of an assertive China dominating the Asian mainland, may be thinking of closer links with Europe. Leaders in India and Japan may be considering closer political and even military cooperation in case America falters and China rises. Russia, while perhaps engaging in wishful thinking (even schadenfreude) about America’s uncertain prospects, will almost certainly have its eye on the independent states of the former Soviet Union. Europe, not yet cohesive, would likely be pulled in several directions: Germany and Italy toward Russia because of commercial interests, France and insecure Central Europe in favor of a politically tighter European Union, and Britain toward manipulating a balance within the EU while preserving its special relationship with a declining United States. Others may move more rapidly to carve out their own regional spheres: Turkey in the area of the old Ottoman Empire, Brazil in the Southern Hemisphere, and so forth. None of these countries, however, will have the requisite combination of economic, financial, technological, and military power even to consider inheriting America’s leading role.

China, invariably mentioned as America’s prospective successor, has an impressive imperial lineage and a strategic tradition of carefully calibrated patience, both of which have been critical to its overwhelmingly successful, several-thousand-year-long history. China thus prudently accepts the existing international system, even if it does not view the prevailing hierarchy as permanent. It recognizes that success depends not on the system’s dramatic collapse but on its evolution toward a gradual redistribution of power. Moreover, the basic reality is that China is not yet ready to assume in full America’s role in the world. Beijing’s leaders themselves have repeatedly emphasized that on every important measure of development, wealth, and power, China will still be a modernizing and developing state several decades from now, significantly behind not only the United States but also Europe and Japan in the major per capita indices of modernity and national power. Accordingly, Chinese leaders have been restrained in laying any overt claims to global leadership.

At some stage, however, a more assertive Chinese nationalism could arise and damage China’s international interests. A swaggering, nationalistic Beijing would unintentionally mobilize a powerful regional coalition against itself. None of China’s key neighbors — India, Japan, and Russia — is ready to acknowledge China’s entitlement to America’s place on the global totem pole. They might even seek support from a waning America to offset an overly assertive China. The resulting regional scramble could become intense, especially given the similar nationalistic tendencies among China’s neighbors. A phase of acute international tension in Asia could ensue. Asia of the 21st century could then begin to resemble Europe of the 20th century — violent and bloodthirsty.

At the same time, the security of a number of weaker states located geographically next to major regional powers also depends on the international status quo reinforced by America’s global preeminence — and would be made significantly more vulnerable in proportion to America’s decline. The states in that exposed position — including Georgia, Taiwan, South Korea, Belarus, Ukraine, Afghanistan, Pakistan, Israel, and the greater Middle East — are today’s geopolitical equivalents of nature’s most endangered species. Their fates are closely tied to the nature of the international environment left behind by a waning America, be it ordered and restrained or, much more likely, self-serving and expansionist.

A faltering United States could also find its strategic partnership with Mexico in jeopardy. America’s economic resilience and political stability have so far mitigated many of the challenges posed by such sensitive neighborhood issues as economic dependence, immigration, and the narcotics trade. A decline in American power, however, would likely undermine the health and good judgment of the U.S. economic and political systems. A waning United States would likely be more nationalistic, more defensive about its national identity, more paranoid about its homeland security, and less willing to sacrifice resources for the sake of others’ development. The worsening of relations between a declining America and an internally troubled Mexico could even give rise to a particularly ominous phenomenon: the emergence, as a major issue in nationalistically aroused Mexican politics, of territorial claims justified by history and ignited by cross-border incidents.

Another consequence of American decline could be a corrosion of the generally cooperative management of the global commons — shared interests such as sea lanes, space, cyberspace, and the environment, whose protection is imperative to the long-term growth of the global economy and the continuation of basic geopolitical stability. In almost every case, the potential absence of a constructive and influential U.S. role would fatally undermine the essential communality of the global commons because the superiority and ubiquity of American power creates order where there would normally be conflict.

None of this will necessarily come to pass. Nor is the concern that America’s decline would generate global insecurity, endanger some vulnerable states, and produce a more troubled North American neighborhood an argument for U.S. global supremacy. In fact, the strategic complexities of the world in the 21st century make such supremacy unattainable. But those dreaming today of America’s collapse would probably come to regret it. And as the world after America would be increasingly complicated and chaotic, it is imperative that the United States pursue a new, timely strategic vision for its foreign policy — or start bracing itself for a dangerous slide into global turmoil.

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Since the conclusion of last year’s UN climate change conference in Copenhagen, doubt surrounding the efficacy of the multilateral negotiating process had been steadily gaining momentum, and the criticism was set to explode in the event of failure in Cancun. Last December, after two years of unrealistically ambitious expectations, the Copenhagen Accord was cobbled together in the eleventh hour by President Obama and a handful of other heads of state, putting an end to a disappointing two weeks of controversy, chaos, and finger-pointing. The New York Times’ Andrew Revkin described watching events play out in Copenhagen to be “like witnessing the derailment of a slow freight train on a curve that could be seen to be too sharp well ahead of time.” By all accounts, the mood at this year’s conference at Cancun’s Moon Palace resort was much more cooperative, and the resulting set of decisions, the Cancun Agreements, is being lauded as a sensible and balanced compromise, albeit an imperfect one. Nevertheless, support for a move away from the UN process in favor of a bottom-up approach based on national policies and bilateral engagement will surely continue, and deservedly so. The Cancun Agreements can serve as the blueprint for an eventual legally-binding successor to the Kyoto Protocol. But there is still much progress to be made – and a wide gap to be bridged between stated commitments and scientifically-recommended action – that will require simultaneous action on several diplomatic tracks.

Even if the Cancun conference had not produced such an unexpectedly favorable result, the UN process deserves to be preserved. The all-inclusive forum is likely the best means of addressing certain issues affecting many of the world’s poorest and most vulnerable countries, particularly adaptation, clean energy technology transfer, and deforestation. Furthermore, the perception that success hinges on the adoption of a legally-binding treaty is false. It is important not to downplay the ability of “soft law” political agreements to produce tangible results. Besides, without the political will in the U.S. Senate, any internationally-binding treaty would be irrelevant, and the woes of New START should shed any lingering hope that a climate change treaty stands a chance of Senate ratification in the foreseeable future. And even in the absence of legislation, the U.S. has the capacity, through federal regulation and aggressive state and local initiatives, to come very close to meeting its short-term emissions reduction commitments (17% reduction below 2005 levels by 2020). At that point, it is not unreasonable to envision the emergence of the political will for strong legislative action, especially if successful state or regional efforts present a sound model for a national initiative.

Still, it is important not to overlook the shortcomings of the UN negotiating process, and to seek more appropriate avenues for progress where they exist. Despite the success in Cancun, other bilateral and multilateral efforts like the G20 and the Major Economies Forum on Energy and Climate should play a larger role in climate diplomacy. Climate change is a multifaceted problem, and climate diplomacy requires a creative multi-pronged approach. But perhaps the best way to improve the process is by, as Revkin explains, “shifting from climate-centric diplomacy to a slate of efforts aimed at advancing the human condition in ways that limit climate-related risks.” Climate and energy policy would benefit from a conceptual shift away from a concentration on carbon reduction toward one on green growth. It is much less constructive to focus on ways to ensure “equitable access to the world’s carbon space,” in the words of Indian Environment Minister Jairam Ramesh, than to focus on ways to foster long-term low-carbon growth.

Regardless of the future course of UN negotiations, the U.S.-China relationship will continue to be the key to any long-term solution, and there is still a substantial “trust deficit” to overcome. But the ostensible staring contest on climate change action between the world’s two largest emitters is quickly becoming a specious perception. China plans to institute a carbon trading market in its next five-year plan this March, which will make its carbon intensity reduction pledge a binding domestic policy. More importantly, China and the EU continue to outpace the U.S. in clean energy investment by a wide margin, which should have already prompted what Energy Secretary Steven Chu has called the United States’ “Sputnik moment.” Clean energy investment over the next ten years is projected to be as large as $2.3 trillion, according to a report released this month by the Pew Environment Group. In 2009, China’s clean energy investments nearly doubled that of the U.S. – a trend that, if continued, will severely impede the United States’ ability to compete for jobs and export markets in the 21st century economy. The climate change crisis is already being conceptualized around the world as a clean energy opportunity. As the notion of a global “tragedy of the commons” slowly evaporates, a global “clean energy race” is rising in its place. And the U.S. is running the risk of being left all alone at the starting gate.

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Praseodymium, Gadolinium, Erbium: you may not have heard of them before, but chances are you’ve used them recently. All three are examples of rare earths, the 17 elements occupying the middle of the Periodic Table.  Rare earth elements- which, in actuality, are as globally ubiquitous as many other metals- are a critical component of both current and future technologies, helping to create products from cell phones to fiber-optic cables to electric cars.

These elemental tongue-twisters, once only the provenance of scientists and technology manufacturers, have become the object of much attention and speculation from policymakers in the past few weeks, courtesy of China. Although the PRC only has 35% of the world’s rare earth reserves, it has cleverly maneuvered its way into controlling 95% of global supply for the elements, thanks to heavy investment in the industry and a willingness to incur massive levels of environmental pollution while mining them. In the past few months, China has strategically wielded its monopoly as a diplomatic weapon, halting shipments to Japan during the two countries’ nasty territorial dispute over the Senkaku/Diaoyu islands. Now reports say that China is using the same strategy against the U.S. in retaliation for the United States Trade Representative (USTR) accepting a petition alleging that China is subsidizing green energy investment in violation of WTO practices.  All in all, it appears that China is beginning to engage in tit-for-tat diplomacy that raises serious questions about its intentions and its ability to behave like the superpower it strives to be.

Not that China has admitted to halting shipments. When questioned, Chinese government representatives have strenuously denied any official ban on exports of rare earths to Japan, and have also insisted that shipments to the U.S. have not been stopped. However, in Japan at least, every single company importing the elements has experienced delays of some sort or problems with paperwork, etc.  Japan uses one fifth of the global supply for rare earths, and, without fresh imports from China, could use up its stockpile of the materials in 5 to 6 months, with devastating consequences for industry. Whether this will happen in the U.S. remains to be seen. If it does, however, it will undoubtedly have a serious impact. While there are plans to ramp up production elsewhere in the world, including in the U.S., we are still several years away from freeing the industry from China’s iron grasp.

Obviously, the situation begs the question of how we could have let this happen, especially as the U.S. previously produced rare earths domestically and boasts reserves of about 13 million metric tons (out of a global total of 99 million). When viewed from an economist’s perspective, the answer is obvious- China did it better, it did it cheaper, and it didn’t have to worry about those pesky environmental standards the EPA is always going on about. Strategically, the answer is less clear. For decades, it has been obvious both how important and necessary rare earths are to U.S. technology and defense- rare earths, for example, are used in missile guidance systems.  It has also, for those paying attention, been fairly obvious that China was working hard to corner the industry- in 1992, Deng Xiaoping compared China’s relationship with rare earth to that of the Middle East and oil. Regardless, whatever the reason we didn’t realize China was amassing total control of the rare earth industry, the point is now moot.  The world has gotten the message, and in a few years China may or may not be glaring at mines in Kazakhstan and ruing the day they dramatically reminded the international community that they were monopolizing a key global industry.

But while the American media works itself into a frenzy about how the U.S. will get its rare-earth fix, Asia wonks are less interested in the rare earths themselves and more in how China is using them: specifically, if China’s current behavior is an aberration or an indication of things to come. Wen Jiabo would have you believe that “China is not using rare earths as a bargaining chip,” and that export cuts have nothing to do with diplomacy and everything to do with domestic considerations- specifically a mix of factors including a 2006 decision to consolidate rare earth mining companies, diminishing reserves, increasing consumption at home, concerns about environmental damage, and a desire to exercise tighter control over the industry in general. It is true that the Chinese government announced it would cut exports by 40% in July, well before the incident with Japan, and that China has been gradually decreasing exports by 5-10% a year since 2006, policies that bring up their own questions about the country’s cutthroat economic policies. However, while the Japan incident may have coincided with a general draw-down, it is difficult to believe that the halting of rare earth shipments is a case of correlation instead of causation.

So what does it say about China that the country is responding to diplomatic problems by cutting off vital supplies? Nothing good. At best, China has just rather publicly undermined its case to be taken seriously be the international community. It’s hard to respect China as a major international power when it behaves in a manner so, well, tetchy and childish. At worst, China has just moved one step closer to confirming all the allegations made by its most adamant critics: that it can’t be trusted, that its rise will seriously disrupt the world order, and that it is a military threat to the U.S.  Especially when considered with China’s other actions over the past year on key issues like climate and currency, the signal China seems to be sending the West is stark: don’t expect us to play nice.

Ironically enough, policies like these may end up hurting China the most in the long run. Every time China lashes out, it reinforces the tendency of other countries to hedge against it, often driving those countries back towards the waiting arms of the U.S., as recently demonstrated by the case of Southeast Asian and Chinese claims to the South China Sea.  It also makes it harder for Chinese allies who are viable members of the international community- countries other than, say, Iran and North Korea- to defend Chinese policy and actions in international forums like the WTO or UN. In short, it seems that any benefits China gleans from uncooperative behavior are far outweighed by the negatives.

It will remain to be seen whether China backs down on rare earths, or continues to interfere with shipments. While the extent of the impact halting exports has on global industry cannot yet be determined, the impact it has had on global perceptions of Chinese intentions is clear: China is not yet mature enough to be a respected power-player in the international community.

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There are encouraging signs that mil to mil relations between the Pentagon and the PLA are thawing.  This week, after a freeze in relations that lasted nearly a year, Defense Secretary Robert Gates met with his Chinese counterpart, General Liang Guanglie, at the ASEAN “Plus” Defense Ministerial in Hanoi.  At the meeting, Gates received an invitation to visit Beijing, probably sometime in the first half of next year, although the dates still have to be worked out. Separately, there have been reports of a meeting between Chinese and American officials on maritime security in Honolulu. Though limited, these are welcome developments as the Administration lays the groundwork for President Hu’s visit to Washington next year.

But these steps are unlikely to lead to the kind of comprehensive security relationship that the U.S. wants with China.  Rather, a form of limited engagement and competition is more likely to be the new norm.  The Chinese are still angry over the $6.4 billion arms deal with Taiwan, and they are irritated by U.S. offers to mediate the dispute over the Spratley islands in the South China Sea, which they consider a “core” national interest.  This summer’s joint U.S.-South Korean exercises in the East China Sea, did nothing to ease tensions either.  Many people in the Chinese leadership feel encircled by the U.S.  These moves only reinforce their fears.

Fei-Ling Wang, a Chinese-American scholar of Georgia Tech, offers a key insight into the relationship.  According to Wang, we shouldn’t view the PLA as a traditional military organization.  Instead, it should be viewed as a political arm of the Chinese Communist Party (CCP), out to protect the interests of Party leaders, not necessarily the best interest of the Chinese nation.  This helps explain the gap between the rhetoric of China’s peaceful rise and some of the more nationalistic language recently coming out of Beijing.  CCP leaders need a new platform to maintain their hold on power.  Asserting China’s territorial interests allows them to do that.  Even though the nation of China is now highly secure and prosperous, “the CCP regime, powerful, awash in money and enjoying a tight (however slipping) control of the country, still experiences a deep sense of insecurity due to its lack of political legitimacy among the Chinese people,” observes Wang. “The CCP came to power through the military victory of the PLA. The loyal support of the PLA has always been crucial to the regime, and the upcoming change of the top leadership in Beijing, scheduled to be in 2012-13, will once again require and test the PLA’s loyalty.” For the CCP, struggling to continue its one-party rule in the rapidly rising and changing China, the banner of nationalism (however stretched and manipulated) has become a powerful – and sometimes its only -  means to command the respect of the people.

At the same time, Wang points out, the PLA has grown its own “autonomous” interests in a way analogous to a military-industrial complex we see in other places – the Chinese top brass and rank and file are deeply interested in seeing the PLA’s budget grow. To have a powerful external enemy, even to create one if needed, serves this particular interest well.

So what does all this mean for the U.S. security relationship with China?  First, the U.S. should adjust its expectations about the kind of bilateral relationship it can build with the Chinese military.  It means a more targeted approach towards engagement.  Second, the U.S. should continue to reinforce its position in the Western Pacific.  The U.S. has already begun to do this, beginning with Secretary Clinton’s comments regarding the South China Sea earlier this summer.  U.S. allies are nervous, and they want the U.S. to remain actively engaged in the region.  Third, the U.S. should seek to build new multilateral relationships within Asia that include China.  This could help reduce Chinese fears of encirclement and build more confidence among allies in the region.  An increasingly powerful but utterly untested PLA is a political organization that is still inseparable from the CCP; yet it has its own, growing, pursuit of funds and fame that deserves the attention of Pentagon planners.

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In a 2004 speech, Prime Minister Wen Jiabao summarized the basic tenets of China’s ‘Peaceful Rise’ doctrine: the growing power and clout of China, he said, “will not come at the cost of any other country, will not stand in the way of any other country, nor pose a threat to any other country.”

If only China’s neighbors still believed him. Earlier this year, China declared the South China Sea, which is partially claimed by Vietnam, Malaysia, Indonesia, the Philippines, and Brunei, to be part of China’s “core interest” of sovereignty, similar to regions such as Taiwan and Tibet on which China sees no room for negotiation.  China’s statement followed closely on the heels of past aggressive Chinese actions in the disputed waters, which have included seizing Vietnamese fishing boats, ordering foreign oil companies not to work with Vietnam on maritime oil exploration projects, planting a Chinese flag on the ocean floor, and training guns on an Indonesian naval ship. Needless to say, from the perspective of the other five nations that share territorial claims on parts of the Sea, these actions look anything but peaceful.

China’s southern neighbors are right to be worried. The past year  has produced a number of indicators that Chinese regional policy is shifting away from its previous strategy of soft-power projection to a more assertive, hard-line position.  For much of the past decade, Chinese regional policy rested heavily on a strategy of wooing its southern neighbors with economic opportunity and investment, generous foreign aid packages, diplomatic engagement, and cultural exports. In 1997, trade between China and mainland Southeast Asia (Cambodia, Laos, Burma, Thailand and Vietnam) was just over $1 billion. A decade later, that number was $53 billion. China supplemented these increasing economic ties with a heavy investment in regional infrastructure, increased participation in regional forums like ASEAN, a flurry of bilateral agreements, and high-level diplomatic visits. Dubbed a ‘charm offensive’ by foreign policy experts, China’s ‘Peaceful Rise’ strategy sought to both allay fears over the country’s growing economic and military might and to ensure access to valuable natural resources and strategic corridors.

For a while, it seemed to be working. Southeast Asia seemed increasingly Sino-centric, with regional opinion favorably inclined towards China. For much of Southeast Asia, China rapidly bypassed the U.S. as the perceived force in the region.

Recent events, however, seem to suggest that China’s soft-power offensive is taking a back-burner to protecting the country’s perceived strategic interests. The current row between China and Japan over the Senkaku/Diaoyu islands; Chinese territorial claims to the South China Sea; Chinese plans for damning the Mekong; the buildup of China’s blue-water navy: all these are sending signals that China is less concerned about its reputation amongst its southern neighbors and more about pursuing its strategic  interests, even at the cost of its popularity. Although it is too soon to tell decisively, the famed Chinese “charm offensive” may be over.

This is good news for the U.S.  ASEAN has made no secret of its desire for the U.S. to step in as a balancing power to China, and with Obama meeting tomorrow with ASEAN delegates, it seems the administration is eager to take on that role. Unintentionally, Chinese actions have cleared the way for the U.S. to once again assert itself in a region that American diplomats were lamenting as lost just a decade ago. Whether or not China will seek to backtrack and once again woo its neighbors out of the arms of the U.S. is unknown, but for now the Obama administration should enjoy its current popularity. In 2009, when Secretary of State Clinton informed ASEAN leaders that “The U.S. is back” it was unclear if she was right. From today’s perspective, it seems she was.

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Just a few years ago, conventional wisdom held that Google would be the vanguard of Internet freedom in China, transforming the way information flows throughout the historically closed society. But while the rapid expansion of the Internet in China has indeed served as a vital medium for political activism, Beijing has essentially kept pace with its extensive surveillance network to silence “cyber dissidents” and with its use of the Web as a pro-government propaganda machine to steer public opinion. At first glance, it appears that China’s censorship practices warrant a strong U.S. policy and a thorough condemnation from the Obama administration. But as Emily Parker, the Arthur Ross Fellow at the Asia Society, explains, U.S. technological innovation – not U.S. policy – is likely the most capable, effective, and politically sensible tool for chipping away at China’s Great Firewall.

Since Google’s departure, the Chinese government has taken action to tighten its grip on the Internet. Earlier this month, China quietly acknowledged the creation of a new “Internet news coordination bureau,” officially responsible for “guidance, coordination and other work related to the construction and management of Web culture.” And just this week, China’s legislature proposed an amendment to the Law on Guarding State Secrets that would require telecommunications companies to “detect, report and delete” leaks of “state secrets,” broadly defined by the government as “information concerning national security and interests that, if released, would harm the country’s security and interests.” These measures are just the latest pieces fastened to a massive regulatory system, much to the chagrin of the international human rights community and many of China’s 400 million Internet users.

But the Great Firewall is far from impenetrable. In fact, web-savvy citizens can circumvent it fairly easily through channels that exist beyond the government’s control like proxy servers or, more efficiently, virtual private networks (VPNs) – indispensible because they make foreign e-commerce possible. However, widespread unfettered access to “sensitive” information, like Google was expected to bring, remains elusive. But where Google Diplomacy failed, Parker believes that Twitter Diplomacy could succeed. While access to social networking sites remains blocked, an element of Twitter’s design called an open Application Programming Interface (API) allows coders to set up feeds that can be accessed at different URLs, which the government must stamp out one by one. This feature is especially significant since, according to Parker, the main objective of China’s censorship efforts is not to limit freedom of expression, but rather freedom of assembly through the use of the Internet as an “organizational tool”. And if the Twitter-driven escalation of the opposition protests in Iran last summer is any indication of the power of social networking sites to spur political action, Beijing’s recent censorship expansion should come as no surprise.

Increased access to VPNs and advancements in social networking allow Chinese citizens, themselves, to dissolve the Great Firewall from within. As Parker says, “what’s important is that these are fundamentally technological approaches, not overtly political ones.” It is important to remember that the U.S. and China have a complex, delicate, and deeply interdependent relationship, so if Internet freedom is to become a central political issue in China it must not be a result of direct U.S. political involvement. Such an approach would almost certainly provoke a nationalist backlash while lending credibility to Chinese government claims of American “imposition of value systems”.

Like many social and economic trends in China today, the natural appetite for freedom of information is converging with the incompatible constraints of a repressive government. Eventually, this convergence may reach a tipping point, and if it does, a stronger society will probably emerge. But if the United States hopes to play a role in nudging China toward that tipping point, it will most likely do so from Silicon Valley, not from Washington.

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1. To Sanction or Not To Sanction: A report from Myanmar

By almost any standard, the outcome of the UN Climate Change Conference in Copenhagen last week fell well short of its increasingly humble expectations. Copenhagen was considered pivotal because the “Bali Roadmap” laid out in 2007 circled this meeting on the calendar as the conclusion of the negotiating period which was to create a legally-binding post-Kyoto agreement. But by the beginning of the conference, the goal had been reduced to just establishing a politically-binding framework that would set the world on a course toward reaching a comprehensive international agreement in 2010.

Modest yet politically significant emissions reduction pledges by the US, China, and others prior to the conference contributed to a mood of cautious optimism at the outset of the two-week summit. But on just the second day, the massive rift between developed and developing countries was exposed with the leak of the so-called “Danish text” – drawn up by delegates from Denmark, Australia, the UK, and the US – which would allegedly place most of the power in the hands of developed countries at the expense of developing countries. The text was dismissed by the executive secretary of the UNFCCC, Yvo de Boer, as just an “informal” draft. But China quickly fired back with its own draft text, flipping the blame and the burden onto wealthy countries. A day later, delegates from the US and China traded barbs as the US State Department Envoy Todd Stern told reporters that “there’s no way to solve this problem by giving the major developing countries a pass,” to which Chinese Vice Foreign Minister He Yafei responded that Stern either “lacks common sense” or is “extremely irresponsible”.

The controversy stirred up in the first few days served as a precursor for the deep division between rich and poor countries that would plague the remainder of the negotiations. The next week was remarkably unproductive. Countless controversial draft texts fluttered around the Bella Center amid a walkout by African countries and thousands of angry rioters – impatient with the lack of progress – taking to the streets. With the looming arrival of over a hundred heads of state, the symbolic dichotomy of rich vs. poor countries had grown ever clearer and was threatening to derail the negotiations.

On the second to last day, Secretary of State Hillary Clinton made a substantial overture, committing the US to help build a $100 billion annual fund by 2020, contingent upon an international verification system to monitor emissions cuts. But China insisted that it would not submit to any international monitoring, calling such a system “intrusive” and an infringement on its sovereignty. With the world leaders due to arrive the next day, the US and China had reached an impasse. On the eve of the summit’s conclusion, the high-level representatives worked round-the-clock until 5 am to produce a draft text for the heads of state. Three hours later, Air Force One touched down in Copenhagen and President Obama was presented with the two and a half page draft agreement. At the Friday morning plenary, Obama reiterated the need for an international verification system, declaring that “without such accountability, any agreement would be empty words on a page.” Evidently, Chinese Premier Wen Jiabao took offense, boycotting a pair of crucial negotiation sessions, instead sending his Vice Foreign Minister. A frustrated Obama reportedly said that “it would be nice to negotiate with somebody who can make political decisions.”

Obama finally managed to meet with Wen and, as time expired, the US, China, India, Brazil, and South Africa struck a mild deal to snatch the conference from the grip of complete catastrophe. Obama called the Copenhagen Accord a “meaningful and unprecedented breakthrough” but admitted its glaring deficiencies, citing the inability to overcome a “fundamental deadlock in perspectives.” The agreement is woefully inadequate, having stripped nearly all of the substance from the early morning draft. The Copenhagen Accord includes a three-year, $30 billion “jump-start” financing system for developing countries and an aspirational $100 billion per year Copenhagen Green Climate Fund to take effect in 2020. But it does not include explicit goals for near or long term emissions reduction targets, nor does it include a commitment to a sound international verification system. Most disappointingly, the Copenhagen Accord dropped the previously agreed upon timeline for sealing a legally-binding international treaty by the late 2010 COP16 meeting in Mexico City.

The US arrived in Copenhagen considered by most to be the main obstructionist to a global deal, but there is little doubt that the Chinese took home that ignominious prize. The tireless attempts by each side to cast the other as the villain may have doomed the negotiations long before the Obama-Wen showdown on the final day. Still, there is plenty of blame to go around, not the least of which should be placed on the US Senate for failing to pass legislation prior to Copenhagen. There were also flaws in the structure of the conference itself, as it was poorly organized and even more poorly executed. In the end, Copenhagen will likely be remembered as one small step in the right direction. But there remains a very long road ahead toward breaking the stalemate between the world’s rich and poor. Next stop: Mexico.

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Two recent blog posts by John Pomfret over at the Washington Post got me thinking about how much more complicated China’s position on North Korea has become since the beginning of the Obama Administration.

As Pomfret points out in his May 27 post, for many years the U.S. has been waiting for China to solve the North Korea problem without realizing that our goals are not aligned.

First, there’s a silly assumption in Washington that our interests (no nukes in North Korea) are the same as China’s. But they’re not. China’s first interest in North Korea is making sure the Kim regime doesn’t collapse. China’s second interest? Making sure the Kim regime doesn’t collapse. From Beijing’s perspective, nukes in North Korea rank somewhere around 10th.

Pomfret goes on to give a great explanation about why regime change is the real threat to China.  At the end of the day, as long as the DPRK could be coaxed to the negotiating table, China was satisfied that it was not falling apart.

Then, a few days later, in a June 6 post, we get the following from Pomfret:

There are surprising noises coming from China these days about North Korea. One influential Chinese academic thinks China’s policy — long supportive of the hermit kingdom — might be changing.

So, what happened in less than a week?  Has China finally realized that no nukes is their number one priority?  Not exactly.  Turns out China, as evidenced by the Zhu Feng article that Pomfret is referring to,  may be realizing that the regime in Pyongyang is not interested in negotiations and doesn’t care what Beijing thinks.

If in fact this is true, the Obama Administration should get the credit for forcing this incipient shift within China.  Not because of its own North Korea policy, of course.  I don’t think that Obama has any more of a clue about how to change North Korea than Bush or Clinton did before him.  The difference between this Administration and the previous two is a distinct disdain for drama.

Bottom line is that by not overreacting to the latest string of DPRK provocations, the Obama Administration is keeping the spotlight on North Korea where it belongs.  Let’s be honest — the Bush Administration was prone to answering the North Koreans’ insanity with a little crazy talk of its  own.  This gave China the cover it needed to consider the problem to be a case of two unreasonable sides that needed it to play peacemaker in the middle.  But when one side starts stops inciting the other, and the other reacts by increasing its irrational behavior, China starts to lose face in the process.  No longer is Beijing the reasonable party standing between two unreasonable countries — suddenly it is the patron of the only country unwilling to sit down at the table.

Like I said, none of this suggests that Obama knows how to solve the DPRK problem (or for that matter the Iran problem or the Cuba problem, etc.).  What it does suggest is that maybe the Administration has learned an important lesson from the last two Administrations:  the first step to solving these intractable problems may be to avoid any reasonable suggestion that the source of the problem is the U.S. itself.

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