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China accused the US and Japan of “ganging” up on them Saturday, following discussions by the two nations on a range of geopolitical issues, including China’s global expansion.

In the first in-person meeting at the White House since President Biden entered office, Japanese Prime Minister Yoshihide Suga said the two leaders discussed the “severe security environment” and People’s Republic of China’s (PRC) actions in the Indo-Pacific region.

The two nation’s addressed not only China’s increased military involvement in the South China Sea and security measures the PRC is using to pressure Taiwan, but also human right abuses in Xinjiang and Hong Kong.

“The US and Japan are actually ganging up to form cliques and fanning bloc confrontation,” the Foreign Ministry said in a statement Saturday. “This anachronistic move runs counter to the aspiration for peace, development, and cooperation shared by the overwhelming majority of countries in the region and beyond.”

Tensions between China and the US have been on the rise following the outbreak of the coronavirus pandemic, but Japan has had its own qualms with its Pacific neighbor.

In a statement following the bilateral talks, Japan and the US expressed their concern regarding China’s military involvement around the Senkaku Islands in the East China Sea.

The islands, also known as Diaoyu Dao, are uninhabited and administered by Japan, but claimed by China.

“Taiwan and Diaoyu Dao are both Chinese territories. Issues relating to Hong Kong and Xinjiang are purely China’s internal affairs,” the Foreign Ministry said. “China has indisputable sovereignty over islands in the South China Sea and waters around them.”

The US-Japan meeting came just days after 22 Chinese aircraft flew into Taiwan’s air defense identification zone, including fighter jets and nuclear-capable bombers.

The US Navy has in turn increased their presence in the Taiwan Strait and Biden said the US along with Japan, are “committed to working together to take on the challenges from China.”

Source: https://nypost.com/2021/04/19/china-accuses-us-japan-of-ganging-up-on-them/

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US President Donald Trump’s stance on trade may be the most protectionist since the 1930s but in one respect, at least, it strikes a chord both within the Washington Beltway and in the wider world. It recognises that China is no longer just a major customer and formidable competitor but also an important adversary.

Back in the 1970s, US political scientist Edward Luttwak described the then economic threat posed to the United States by the likes of Germany and Japan as the “logic of conflict in the grammar of commerce”. Today’s Sino-US trade relationship could not be described more aptly.

The White House’s use of trade tariffs as a tool is contentious, and China itself will have to consider new and most likely contentious ways of responding to any further broadening of tariffs by the US. These could include more significant currency depreciation or imposing restraints over US firms in China. We might also see trade conflict spill over into other non-commercial areas.

What this all amounts to is an acceptance that the trade conflict with China nowadays is fundamentally and existentially about the struggle for technological and military supremacy, and the acceptability of rules and regulations in the pursuit of industrial policy, including joint venture and technology transfer conditions, preferential treatment of local companies, and the role played by state enterprises.

In this context, the recently revised trade agreement between the US, Mexico and Canada (USMCA), which is designed to replace the North America Free Trade Agreement, also sheds useful light on the conflict.

In two respects, it breaks new ground in the drafting of trade agreements, revealing America’s intention to use them in future, if possible, to contain China and force concessions in its commercial behaviour and practices.

First, it commits the signatories to be bound by the articles of agreement of the International Monetary Fund to maintain market-determined exchange rates and “avoid manipulating exchange rates or the international monetary system” with a view to gaining an unfair competitive advantage.

For Canada and Mexico, throwing China under bus was no-brainer

Even though exchange rates have never figured prominently in this trilateral relationship, it is easy to see how this anti-competitive devaluation language may find its way into other trade agreements the US may make, especially perhaps in Asia. It may also shape future negotiations with China in which the two countries seek to re-engage to defuse the current trade war.

The irony, in 2018 at least, is that China’s foreign exchange policies, which the US would like to see becoming more hands-off, are actually trying to stop the renminbi from falling faster.

Second, and more importantly, the USMCA provides for procedures designed to “drop” any signatory that moves to conclude an agreement with a “non-market economy”, which is not particularly complex code for China.

The phrase itself resonates with an ongoing dispute in the World Trade Organisation between the US and the EU on the one hand, and China on the other, over so-called “market economy status”.

The denial of such status makes a country more liable to be accused of rigging markets, increasing its vulnerability to anti-dumping and other forms of duty or penalties.

US-China trade war is really a clash of civilisations and ideologies

China believes it was promised this status in late 2016, on the 15th anniversary of joining the WTO, but the US and the EU have both rejected it, arguing that if China wants to be regarded as a market economy, it has to behave like one, too.

The bottom line, though, is that the US may well want to use non-market-economy provisions as a template for future US trade agreements, for example with Japan, the EU and the UK.

By doing so, it would aim to restrict the capacity for Chinese goods to enter US markets via other countries, and to effect some recalibration of industrial supply chains at China’s expense. At the same time, it would shut down China’s options to look beyond Asia to Japan, the EU, and Canada and Mexico to offset the effects of the trade conflict with the US.

Japan and the EU, though, would prove much tougher nuts to crack in terms of persuading them to go along with this so-called “poison pill” clause, designed to pressure Beijing. China is their second-biggest export market after the US, and they are the third-largest and largest markets respectively for China.

Japan and China, moreover, have been party to negotiations since 2012 for a free trade agreement in Asia, the Regional Comprehensive Economic Partnership.

In these times, though, it is impossible to predict how things might evolve.

Japan’s relationship with China is mistrustful deep down, and occasionally tense. Japan is also a signatory to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (the successor to the Trans-Pacific Partnership), which excludes China by intent and by design.

China and the EU have been holding regular discussions about a possible investment treaty since 2013, but there doesn’t appear to be any closure in sight, and the EU has always insisted that agreement here would be a precondition for a free trade agreement.

Yet no progress is anticipated, especially with Germany, France and the UK all acting this year to scrutinise Chinese investment in Europe more carefully, blocking some transactions, and citing national security as the main reason.

Attempt to isolate China from world trade system ‘will not work’

Through the clouds of trade conflict, it certainly appears as though the US and China are adopting intractable positions that have deep roots. The consequences for world trade and commerce are likely to cumulate negatively on the global economy. We must hope that the two sides will nevertheless find room to engage and compromise.

The G20 Summit in Buenos Aires at the end of November might be the next scheduled opportunity for the two presidents to tango, so to speak. Yet it is hard to see what type of long-term understanding they might reach at this stage.

George Magnus is a research associate at the China Centre at Oxford University and author of Red Flags: Why Xi’s China is in Jeopardy, published this month.

Source: https://www.scmp.com/comment/insight-opinion/united-states/article/2168600/first-tariffs-and-now-move-isolate-china

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Kindergarten pupils wave national flags as Chinese Premier Li Keqiang reviews the guard of honour with Japan’s Prime Minister Shinzo Abe during a welcoming ceremony before their bilateral talks at Akasaka Palace state guest house in Tokyo, Japan, 9 May 2018 (Photo: Reuters/Toru Hanai)

Signs of a thaw came much earlier. In June 2017 Japanese Prime Minister Abe Shinzo expressed willingness to cooperate with the Belt and Road Initiative (BRI), the signature foreign policy initiative of Chinese President Xi Jinping. This shift in Japanese foreign policy was instantly welcomed by the Chinese government, which happened to be re-orienting its foreign policy as well to improve ties with South Korea and Japan. The move toward closer bilateral relations changed into high gear in April 2018, when the fourth high-level economic dialogue between Japan and China was convened in Tokyo after an eight-year hiatus.

Li’s visit was thus the culmination of warming relations between Japan and China. In addition to holding talks in Tokyo, Abe accompanied Li to Hokkaido and saw Li off on the runway for his flight back to Beijing. Li, in turn, announced that China will grant Japan 200 billion RMB of investment quota for the Renminbi Qualified Foreign Institutional Investors program and donated a pair of endangered crested ibises to Japan.

In another sign of improving relations, numerous cooperation agreements were also signed across a wide range of fields covering investment, social security and cultural exchanges. Above all, Tokyo and Beijing agreed on a long-sought aerial and maritime mechanism aimed at averting unintended military clashes between their forces in and above nearby waters.

For Japan, the current economic and political thaw will serve to further strengthen ‘functional cooperation’ and manage conflicts with China. Expectations on the Chinese side may be much higher. With eyes on the United States, Li has called for the two nations to stand firmly together against protectionism and unilateral action. By accelerating talks on the China–Japan–South Korea free trade agreement and improving bilateral relations with Japan, China hopes to mitigate economic pressure from the Trump administration and drive a wedge between Japan and the United States in the meantime.

Since China’s current Japan policy is centred on promoting governmental cooperation, accelerating economic ties and creating a favourable image of China in Japan, economic cooperation and cultural exchanges are starting to gain significant momentum. But political and security tensions are unlikely to be eased by the deepening economic and cultural exchanges for several reasons.

First, neither country will back down from their stances on territorial issues. Chinese public vessels constantly enter waters surrounding the Senkaku/Diaoyu islands following the ‘three-four-two formula’. On the Japanese side, protection of Japanese territory has always been a central goal for the Abe administration. In the newly released 2018 Diplomatic Blueprint, Japan clearly stated that ‘China’s effort to unilaterally change the status quo in the East China Sea is unacceptable to Japan. Japan will continue to cooperate closely with the countries concerned and deal with the situation calmly and firmly’.

Second, Taiwan and historical issues will be hidden hurdles. During his stay in Japan, Li arranged a meeting with Japanese representatives who had participated in the process of signing the China–Japan Treaty of Peace and Friendship and urged Japan to continue to adhere to the spirit of the Treaty, which states that Japan ‘fully understands and respects’ China’s stance on Taiwan and recognises ‘the serious damage that Japan caused in the past to the Chinese people through war, and deeply reproaches itself’.

Third, due to deep-rooted political distrust and security concerns over China’s military build-up, Japan will cooperate with the BRI only on a case-by-case basis. Although Japan and China have agreed to launch a public–private council to consider specific cooperative projects related to Beijing’s BRI, cooperation will be centred on three areas, according to the guidelines the Abe administration released last year: environmental and energy saving sectors, promoting industrial modernisation in third countries, and logistics in the Eurasian supercontinent. This selective participation will allow Japan to pursue its own core foreign policy — the ‘free and open Indo-Pacific strategy’ — without missing the benefits the BRI offers.

Fourth, the battle for digital supremacy between the United States and China emerged as a potential challenge for developing China–Japan bilateral economic ties. During his visit to Japan, Li has repeatedly expressed desire to cooperate in the high-tech industry. President Trump’s digital protectionism may put Japan in a difficult positon of having to choose a side.

With China’s enthusiasm for improving bilateral relations with both Japan and South Korea, accelerating trilateral cooperation among the three Asian big powers, and Japan’s desire to stabilise bilateral relations with China, economic cooperation and cultural exchanges are expected to boom. In this sense, the costs of military clashes and escalating political confrontation are rising. But China and Japan will continue to fight under the table.

Rumi Aoyama is Professor at Waseda University, Tokyo.

Source: http://www.eastasiaforum.org/2018/05/24/japan-china-ties-are-tightening/

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