The Chinese Government and Anti-Japan Protests: Some Food for Thought

By Michelle Chang, BASC Research Assistant

As the diplomatic crisis between China and Japan over disputed territories in the East China Sea drags on, thousands have mobilized in both countries to protest what each side calls the violation of their country’s sovereignty by the other side. Particularly in China, protesters took to the streets in every major city and in cities like Chengdu attracted more than 10,000 participants. While all reports of the protests in China make note of angry youths boycotting Japanese products and in some cases of Japanese properties being demolished by protestors, what attitude the Chinese government has taken towards the protests has been obscured by conflicting pieces of evidence. 


On the one hand, the government has been very careful not to let public anger get out of control. Particularly in Beijing, demonstrators outside the Japanese Embassy were tightly managed by the police and were often outnumbered by police forces. Moreover, notices, comments, photos, and videos of anti-Japan protests were quickly taken down from the Internet in China. An article in TIME Magazine speculates that the Chinese state is fearful because anti-Japan protests in China have a history of turning against the Chinese government after a while, drawing a parallel between the current crisis and the 1919 “May 4^th Movement” that started as a reaction against the Treaty of Versailles but in the end sealed the demise of Imperial China. 


On the other hand, however, there are reasons to believe that the Chinese government has also indulged the protests to some degree. According to an article in the Washington Post, the government publically described the protests as “understandable.” Moreover, it seems rather unlikely that a state capable of silencing both the Tibetan and the Uighur independence movements would have been incapable of stopping the mob gatherings that reduced to waste so many Japanese shop windows, showcases, and even Toyotas on the streets. What attitude the Chinese government takes towards the protests, therefore, is an interesting question to think about. As domestic tensions over various social issues have built up over the years, a foreign enemy seems to be an easy outlet for public anger. But keeping that anger under control is difficult business.

Let's Go, G20

Do-Hee Jeong, BASC Research Assistant

Twenty celebrity singers in South Korea recently released a collaborative G20 campaign song, “Let’s Go,” to mobilize young Korean citizens for the upcoming G20 Seoul Summit as part of a larger campaign to promote the G20 not only in Korea, but internationally as well. The active campaigns, reminiscent of those during the quadrennial World Cup hype in South Korea, emphasize the great weight the November summit holds. So why is this upcoming summit so important?

The November summit’s importance is two-fold. First, it will establish the legitimacy of the G20 as an organization that produces concrete solutions to global economic problems. Second, as the first summit hosted by state that was not a member of the G8, the summit will test the ability of non-G8 members to successfully manage a global forum and make significant contributions.

The Seoul Summit will be an important follow-up from the previous summit in Toronto. It will have to provide a basis for an international framework for strong, sustainable, and balanced growth focusing on macroeconomic policy coordination; reform of international financial institutions, mainly the IMF and World Bank; and reform of financial regulation during this aftermath of the global financial crisis. It is important that the G20 deliver real outcomes not only to avoid a double-dip recession, but also to solidify the legitimacy and effectiveness of the G20 as a premium forum for international economic cooperation.

Korea is also the first non-G8 country to host the G20 Summit, and therefore carries the importance of setting the precedent for other non-G8 members to play central roles in the future. Korea plans to promote the creation of a global financial safety net that will provide insurance mechanisms in case of another liquidity problem created by future global financial crises; development that will take many lessons from Korea’s unprecedented transformation from aid-recipient to donor country; and a business summit that will provide an official avenue for the private sector’s voice on global matters. Seoul’s success in promoting its agenda and hosting the two-day summit will legitimize and open more doors for the involvement of non-original G8 members in the G20.

Although the campaign song—along with the numerous promotional videos created by Korean celebrities and popular street events that inform the public about the G20—may be just mere displays of Korean pop culture on the surface, they nevertheless demonstrate the great significance of the upcoming Seoul G20 Summit.

(Source: The information is based on Secretary General of the Presidential Committee for the G20 Summit Changyong Rhee's speech during the 2010 MacArthur Asia Security Initiative Annual Meeting in Seoul)

Reframing Trade: Obama, Democrats, and Trade Liberalization after the Midterm

Kathy Bowen, BASC Research Assistant 

  

With all but a cadre of Obama loyalists predicting a thumping for the Democrats this November, does the Administration have much, if anything, to look forward to after the midterm elections? The good news for liberals - of the Ricardian variety - is that a GOP majority in Congress may be more likely to approve bilateral deals with South Korea, Columbia, and Peru, a Trans-Pacific Strategic Economic Partnership agreement, and a final settlement to the Doha Round. Obama has thus far seen little movement on any of these initiatives, in part because many Democratic incumbents were elected with the support of organized labor, a group traditionally opposed to trade liberalization. Notwithstanding the outcome this November, future Democratic administrations may not have to sacrifice their party’s majority to achieve victories on trade. With an improved rhetorical packaging, the Obama Administration may be able to reframe the trade debate to make new agreements a winning issue for Democrats.

Pressure from labor unions and skyrocketing unemployment has increasingly shifted the Democratic Party’s rhetoric from ambivalence to antagonism on trade-related issues, manifested most recently by a wave of Congressional China-bashing. However, Democratic-led protectionism is not a new phenomenon. Trade liberalization has divided progressives for decades, splitting the party largely between politics and policy – or between traditional constituents and a ‘forward-looking’ economic agenda (Mishel and Teixeira, Economic Policy Institute). The former has dominated far more often than the latter, as blue collar workers and organized labor, empirical bastions of Democratic support, have fervently denounced new trade initiatives. This dynamic was evident during the Clinton years, with the Midwest and industrial Northeast heavily against ratification of the North American Free Trade Agreement (NAFTA), and reappeared again during George W. Bush’s fight over the Central American Free Trade Agreement (CAFTA). Non-college-educated middle-class workers, historically a significant source of Democratic electoral support, opposed NAFTA because of its potentially detrimental effects on American manufacturing jobs and wages; CAFTA debates recycled many of these same arguments, with the agreement ultimately passing by an incredibly narrow party-line vote.

The pressure is especially pervasive this session, with many incumbent Democrats facing tough reelection races and desperately needing the vote-gathering and financial potential of organized labor. According to Jagdish Bhagwati, senior fellow at the Council on Foreign Relations, this crop of Democrats is particularly ‘indebted to trade-fearing unions,’ inhibiting the otherwise pro-trade Obama Administration. United States Trade Representative Ron Kirk captured the Democrat’s bind in a speech to Arkansas farm interests this month, admitting that it was “only politics” that kept him from submitting free trade agreements with South Korea, Columbia, and Peru to Congress (Truitt, Ag Today).

Kirk’s moment of candor demonstrates the extent to which the Democrats' rhetoric is damaging to Obama’s trade agenda, independent of members’ actual voting record on trade issues. First, vocal Democratic opposition to trade initiatives creates the perception of future legislative hurdles, dissuading the Administration from submitting already completed agreements to Congress and from negotiating them in the first place. Second, protectionist posturing transmits a broader signal that does not go unnoticed by Washington’s trade partners. Negotiations for what is arguably Obama’s top trade priority, the Trans-Pacific Partnership (TPP), have been put on hold until after the midterm elections because of uncertainty regarding Obama’s ability to muster sufficient Democratic support. Alex Frangos writes in the Wall Street Journal that “in Asia, the impression is also that any trade pact will require the political atmosphere in Washington to change.” Moreover, former ASEAN secretary-general Ruodolfo Severino was quoted as suggesting that the current mood in Congress would make it impossible to enter into a free-trade area like the TPP. He suggested that if Obama cannot get a bilateral deal with Korea approved, which has been in the works since 2007, it is unlikely he would get Democrats to move on a deal involving many more parties.

Thus, Democrats are contributing to Washington's turn away from trade. Can policy overcome politics, or will Democratic administrations be perpetually forced to play up protectionism? While it remains unlikely we will see a push for trade-friendly initiatives prior to the midterm, Obama may be able to sell his own party on trade come January.

First, the immediate political pressures on Democrats to appease organized labor will have dissipated. Empirically, political pandering has been the largest proximate cause of Democratic protectionism.

Second, Obama has already begun to refashion the trade debate in his favor, and bolder steps in this direction could yield political pay-offs. While pundits have gone so far as to brand Obama’s trade agenda as “anemic” (Wolverson, CFR) and even a “contradiction in terms” (Drezner, WSJ), the National Export Initiative at least takes the right approach at framing the issue. By setting the goal at doubling US exports over the next five years, Obama officials can tout trade initiatives as a means to an end for American business. The language of keeping America competitive vis-à-vis exporters like China will make it difficult for opponents to capitalize on trade politically, and will allow Obama and Democrats to take the moral high-ground on Chinese trade and currency policy. While most Democratic China-bashing can be chalked up to an attempt at developing a winning issue for the midterm, this kind of rhetoric is unproductive at best, catastrophic at worst. Trade as a means of securing foreign market access and bolstering export-led growth can be spun as a way to beat China at its own game while avoiding its use of unfair fiscal and monetary practices. This framing may also create a longer-term political niche for Democrats between free-market liberalism and economic populism.
.
Finally, Obama should tacitly pursue labor protections in accordance with trade initiatives. While a persuasive argument exists to forgo muddying trade agreements with Christmas tree-like provisions, political realities require an acknowledgment of labor’s grievances. Obama should make concessions to organized labor as a means of currying favor with rank-and-file Democrats. In exchange, Democrats may be more willing to move on the Administration’s trade priorities. Labor standards can either be conditioned on the FTA itself, or can be disaggregated from the larger deal. The latter method could be adopted in contentious bargaining contexts, in order to avoid creating the perception among foreign governments that labor standards are a deal-breaker. Beyond its short-term political benefit, promoting labor protections alongside trade liberalization could help to avoid a broader public backlash to globalization.

With the midterm quickly approaching, and a presidential election in the not-too-distant future, any successful movement on the Administration’s trade initiatives will require a bolder effort to reframe the issue. Trade liberalization and a Democratically-controlled Congress do not have to be inimical objectives for the Obama Administration, but achieving both in the longer-term will necessitate a shift in the rhetoric surrounding trade. Democrat’s don’t have to tank their traditional sources of electoral support to champion a progressive trade agenda; however, Obama does need to more aggressively frame trade as a means to achieve export-led economic growth while simultaneously making side-deals to build up political capital with organized labor.

China’s Clean Energy & Climate Change Dilemma

Ren Yi Hooi, BASC Research Assistant

            For years, China has been heavily criticized for its massive energy consumption and colossal volume of carbon emissions, the inputs and outputs of its rapid growth. Recently, however, China has made impressive strides in green energy development and pollution reduction – even surpassing the United States as the leader in clean energy investment for the first time in 2009. This has ironically resulted in a backlash of US sentiments against China’s ‘unfair’ trade dominance in the green energy sector.

           

Through the end of 2009, China—the largest industrializing nation— was castigated by the United Nations and in particular the United States for being the world’s leading carbon emitter. Indeed, China consumed over three billion tons of coal in 2008 and 2009, more than triple the amount used by the United States, and total energy consumption in China doubled in less than a decade this century. And at the Copenhagen climate change conference last December, China took much of the blame for the breakdown in talks.  However, with China taking effective action to capitalize on other sources of energy, global attention has shifted from the damage it has caused to the immense progress it is making in the arena.

            China invested over double the amount that the United States expended on clean energy technology, spending a total of $34.6 billion as compared to $18.6 billion in the US in 2009. More specifically, it has not only become the world's largest market for wind turbines, but also established itself as the largest global manufacturer of solar panels. As Chinese officials recently announced a plan to spend $75 billion a year on clean energy, China’s swift progress in the industry does not appear to be stalling anytime soon. Of course, China’s development of green energy does not necessarily mean that it will actually reduce its usage of coal or other conventional energy sources – but one should at least give it points for trying. Moreover, China has made efforts to assume a leadership role in global environmental cooperation. It is hosting a UN conference on climate change this week. Although little tangible progress is expected to ensue from this conference, it demonstrates China’s realization of its responsibilities as a major world player as well as its emerging desire to create change on the global forefront. China’s investment in green technology has appeared to pay off, as its exports increased over 500% to around $27 billion between 2004 and 2008. However, this has also incurred heavy political cost. 

            US lawmakers and trade unions alike have criticized China’s moves in the green energy industry, saying that it employs “predatory trade practices…to give its manufacturers an unfair advantage in the green technology revolution." In addition to a letter from 180 congressmen, the USTR also received a 5,800-page petition from the United Steelworkers union. This document accuses China of using billions of dollars in subsidies, performance requirements, preferential practices and protectionist and predatory activities to dominate the solar and wind industries and other clean-energy sectors. The USTR has until October 24^th to decide whether to accept the petition, which could mean a WTO-level dispute if accepted. China flatly rejected the complaint, stating that such comments were hypocritical when China is under pressure to cut greenhouse gas emissions. Despite the litany of new trade-related complaints the US has generated about China, the old criticisms remain in place. At the ongoing climate change conference, both countries again disagreed over the issue of whether developed or developing countries should bear more responsibility for carbon emission reductions, and the possible establishment of a mechanism to verify such reductions. All of these developments reflect the mounting tension between China and the United States over China’s new green energy policy.

            What insights can we draw from this state of affairs? First, the United States should perhaps take the time to think about long term considerations before pressing other countries to take up any course of action. As seen from this example, US criticism of China’s energy consumption caused it to turn towards alternative sources of energy, yet that again fueled the ire of the United States. Should the US decide to pursue its complaints against China’s green energy developments, it could result in severe bilateral conflict with China. Worse still, it could affect the green initiative on a global scale by making other countries question how seriously they should commit towards environmental responsibility given the US reaction to China’s efforts. Next, even if even if it was a mistake for the US to point fingers a little too early, this example still highlights the ease with which noble causes like climate change can be used as a screen behind which unfair trade or protectionism lurks. We should not just be aware of this possibility, but also begin to think about how such developments can be mitigated. Lastly, the spat between China and the United States reminds us that the critical issues of global warming and climate change really require genuine global cooperation, not the pushing of responsibility or a race for individual limelight. If only each country could focus on doing what is best for the earth, instead of what it is best for its interest groups, we would be able to see a far greener world. 

Image courtesy of http://venturebeat.com/2009/12/28/china-makes-nice-after-copenhagen-passes-green-energy-law/.

Cyber Security: A New Frontier for the U.S.-Japan Alliance?

Kristi Govella, BASC Project Director

Last week, American and Japanese officials announced that they will join forces to combine Internet-based attacks that disrupt the operations of firms and governments. The agreement came in a meeting between communications minister Kazuhiro Haraguchi and Julius Genachowski, chairman of the U.S. Federal Communications Commission.

This announcement may mark a move in a direction that has long been discussed by U.S.-Japan alliance managers—the broadening of the relationship beyond strict definitions of military security. Given the restrictions on Japan’s military activity due to Article 9 of its constitution, the two countries have often found themselves at odds over the appropriate amount of burden-sharing. While the U.S. was relatively happy to provide for Japan’s protection during the Cold War, when the island nation represented a bulwark against communism, such expenditures have become harder to justify in an era where many wonder what the alliance is targeted against. Moreover, Japanese domestic politics have made the relocation of the Marine Corps Air Station Futenma on Okinawa extremely controversial, creating further tensions in the alliance.

Given these problems, cyber security seems to represent an important area that the U.S. and Japan can cooperate on with relative ease. In the current information age, cyber security is an issue of critical concern, but one that is often discounted—partly because current leaders have been relatively slow to understand the impact and insecurity that new technologies have brought to their countries. These issues made headlines earlier this year, thanks to the accusations made by Google about attacks from Chinese hackers, with the possible support of the Chinese government itself. If these allegations are true, they suggest an interesting intersection of traditional and cyber security, illustrating that the two are not as different as we might (like to) think. Given the importance of this issue and continuous comments that Japan does not contribute enough to the U.S.-Japan alliance, cyber security seems like a perfect area for Japan to focus its attention—it certainly has the resources and knowhow to do so, and since its participation would not require “military” contributions, Article 9 does not represent a constraint.

This proposition is not uncontroversial, however. Some alliance managers believe that adding new dimensions to the alliance may only serve to distract the two countries from what should be their top priority: ensuring the military security of Japan and the Asia-Pacific region as a whole. From this viewpoint, cyber security should be dealt with in other forums, and Japan’s contributions on the cyber security front should not be taken as substitutes for traditional military cooperation.

While the latter perspective raises important concerns about keeping bilateral priorities straight, cyber security seems less of a distraction than environmental cooperation or a host of other things that have been suggested as potential areas of growth for the U.S.-Japan alliance. As illustrated by the previous Chinese example, cyber security is intimately intertwined with national security. As Japan and the U.S. continue to work on information sharing and greater military coordination, it will be important to make sure that this information is safeguarded from would-be aggressors. And it seems like Japanese leadership on the issue would represent an area of real contribution.

Japan and the U.S. agreed to lead discussions on the issue when they attend an APEC ministerial meeting on telecommunications and information in Okinawa in October, so we will have to wait to see what kinds of goals the two countries will set for themselves. Japan seems to be moving forward with steps to increase its own domestic cyber security. Yesterday, a government panel worked out a set of information security strategies featuring steps against Internet attacks to be taken by the public and private sectors over the next four years, including training to minimize the damage of attacks against vital infrastructure (computers at railways and financial institutions, for example) and developing a damage prevention system. So perhaps Japan is taking this matter seriously. In any case, both the U.S. and Japan seem to be recognizing that the world has changed—it remains to be seen if they will redefine their military alliance in response to these new realities.

Image courtesy of http://www.flickr.com/photos/23905174@N00/ / CC BY 2.0

U.S.-China Naval Rivalry over Oil?

Do-Hee Jeong, BASC Research Assistant

Not even a decade ago, China was totally absent from competition over oil, but today this emerging global power’s efforts to obtain long fought-after resources is a commonplace topic making headlines everyday. Propelled by its rapid economic development and rising competitiveness, China has become a central player in the global race to find oil deposits and gain self-sufficiency. This strategic move is perhaps not very surprising given the fact that industrialization and development accompanied by rising consumption have increased China’s demand for oil, putting pressure on the government to seek out more resources. It also seems natural then that the growing importance of oil and natural gas has led the government to secure its economic interests through military naval power.

Last week, the Chinese military announced that it will seek to project naval power beyond the Chinese coast to the Pacific shipping lanes that connect China to its oil ports in the Middle East, an area where the United States Navy has until now been the only dominant force. Chinese admirals want warships to escort commercial vessels from as far as the Persian Gulf to the Strait of Malacca in Southeast Asia to protect Chinese interests. In March, two Chinese warships made their first appearance in the Middle East at Abu Dhabi. Last month, Chinese officials told the Obama administration that the South China Sea was now part of its “core interest” of sovereignty and that China also intends to extend its reach to the Philippines, a zone that overlaps with the U.S. Navy’s area of supremacy.

The modernization of China’s navy has also been dramatic and unprecedented. Currently, the Chinese navy receives more than a third of China’s military budget, with the total budget estimated to be around $105 to $150 billion by the Pentagon. As part of its “far sea defense” strategy, China has tested long-range ballistic missiles that could be used against aircraft carriers. It plans to deploy aircraft carrier groups within the next few years and is developing a modern submarine fleet that can better protect vital transport of key resources. Already, a base in Yalong Bay on the southern coast of the Hainan Island has submarines that are able to reach deep water in the South China Sea within 20 minutes. A 2009 Pentagon report also estimates that China has a naval force of about 260 vessels and more than 60 submarines.

This growing assertion of economic interests is a marked change from China’s traditional policy of defending its own coasts and governing Taiwan. This is the first time China has ever asserted its “core interest” of sovereignty outside of Tibet and Taiwan. Chinese officials told senior American officials that it would not withstand any foreign interference in its territorial issues in the South China Sea, and both sides have clashed over the definitions of each country’s “exclusive economic zone” in the region. Although the Chinese have until recently been focused on domestic development and stability, its growing dependence on oil and other resources has shifted its attention outward. Not only is China seeking to extend its sphere of influence in other developing countries - most notably in Africa and Latin America - but is also now fortifying its sea lanes to further secure its vital economic interests.

Although the Chinese claim this expansion of naval power is for self-defense, these moves not only exacerbate its tensions with the United States but also create instability and anxiety across the Asian region. This announcement coincides with President Obama’s proposal to expand exploration in the United States coastline to reduce foreign dependency on oil and natural gas. Both countries are now competitors in the race to secure self-sufficiency in energy and gain control over oil deposits to maintain dominant positions in the global market. Furthermore, in the midst of U.S. pressure for Chinese currency revaluation, the announcement of extending naval influence in traditionally U.S. dominated sea lanes seems to be a symbolic move to show China’s growing self-confidence. China is asserting its own interests by changing the rules of the game initially established by the United States.

Of course, the expansion of the Chinese navy currently does not pose a significant threat to U.S. military hegemony. Although China’s navy may not be 20 years behind the United States’ anymore, its capabilities still lag behind those of the United States’ and China’s military spending is still relatively miniscule in comparison to the U.S. However, even if the Chinese navy poses no real threat to the U.S. and this military expansion is purely for defensive purposes, China’s recent actions still create growing tension and instability in the international community. Although the threat is not yet real, the possibility of China’s navy to challenging the dominant American presence in the Pacific is unsettling for many.

Map courtesy of The New York Times

Leaving China: How Smart is Google?

Michelle Chang, BASC Research Assistant

One month ago, on March 22nd, Google decided to step out of China and end four years of censoring the web for the Chinese government. Thus exited the world’s most powerful Internet company from the world’s most populous country. While only maintaining some R&D and advertising activities in China, Google shifted mainland Chinese users from “google.cn” to “google.com.hk”. The company kept to an earlier statement it made in January that it would stop filtering information from Chinese Internet users.

Over the past four years, Google had been cooperating with the Chinese government to filter out sensitive political information and pornography from the web. While attracting intense criticism for compromising freedom of expression, Google argued that the benefits of allowing more of the Chinese population access to Internet information outweighed the costs. However, in mid-December 2009, Google started to detect cyber attacks from China on its corporate infrastructure. While the attacks were initially traced to a small vocational school, Google insisted that the level of sophistication of the attacks made it almost certain that the attacks were overseen by the government and the military. Furthermore, the attacks were directed at the Gmail accounts of Chinese human rights activists.

The cyber attacks exceeded the limit of how much Google was willing to compromise in order to stay in China. In a statement issued in January 2010, Google took a firm stance against censorship of information and refused to comply with the Chinese government. Over the following months, bitter verbal conflicts took place between Google and the Chinese government, and there was much speculation and debate about whether Google would eventually forsake the biggest Internet market in the world in defense of freedom. And in March, Google irreversibly decided to end its operations in mainland China.

To most people, leaving a country with one-fifth of the world’s population seems like a huge sacrifice on Google’s part. In fact, however, Google will suffer little commercial loss from the pullout. Google’s annual revenue in China is estimated at $300 million to $600 million, only a fraction of the company’s $24 billion annual sales worldwide. Instead, the biggest victims are likely to be Chinese companies. Two of China’s largest mobile companies, China Mobile and China Unicom, were forced to scrap lucrative deals with Google under political pressure. Moreover, many small startup companies who used to make their living through advertising opportunities on Google now have to find other alternatives.

Not only does Google not suffer much commercial loss from exiting China, its decision could actually be a smart business strategy in the short run. Indeed, over the past few years, Google’s compliance with the Chinese government attracted much unwanted criticism from the West. By taking a stand against an authoritarian government and defending freedom of expression, Google manages to evoke a positive corporate image in many people’s minds.

However, several problems await Google in the long run. First of all, the relationship between Google and the Chinese government has risen to such a point of hostility that it is now virtually impossible for Google to re-enter the mainland Chinese market. Secondly, by taking a stance against censorship, Google sets a high standard for itself that it might not always be able to meet, thereby opening itself up to future criticism. Indeed, if it refuses to censor information in China, how should it conduct itself in other countries that also allow censorship, such as England? In the future, Google might face a lose-lose situation in which its only options are to compromise its corporate image or forsake more lucrative markets.

While leaving China has relieved much political and social pressure from Google, the future looks rather ambivalent for the Internet giant.

Photo:

http://www.flickr.com/photos/antonis/ / CC BY-NC-SA 2.0