Category Archives: Indo-Asia-Pacific

India-U.S. Strategic Convergence in the Indo-Pacific Region

By Jyotirmoy Banerjee

As early as 2010 Secretary of State Hillary Clinton spoke of the need for U.S. naval cooperation with the Indian Navy, given the importance of the Indo-Pacific basin for world trade. Although the Pacific was already an American lake since the end of World War II,1 in 2011 President Obama launched the new strategy of “rebalancing “Asia-Pacific as a “pivot.” This, notes a Philippine study,2 was an indication of the growing alarm that the U.S.—and many Indo-Pacific littorals—continued to feel about the dramatic rise of China’s economic and military power. Further, as a U.S. commentary noted, “China scared everybody into our arms”3 The U.S. Defense Department’s strategic guidance released around this time singled out India to observe that the U.S. “is also investing in a long term strategic partnership with India to support its ability to serve as a regional economic anchor and provider of security in the broader Indian Ocean region.”4

To be sure, the U.S. has a large number of military bases in the Asia-Pacific region, and deploys some 80,000 troops in Japan and South Korea. U.S. naval and air power can be credibly projected into every part of this region stretching from Bollywood to Hollywood and from the polar bear to the penguin. Under President Obama, however, the U.S. strategic priority, or “rebalancing,” was meant to shift from the Middle East to the Asia-Pacific, and expand U.S. presence within the region by forging closer military, trade, and other ties. President Trump’s Defense Secretary Jim Mattis took the shift further and termed India as a “Major Defense Partner” while urging U.S. agencies to expedite drone sales to India.5 On 30 May 2018 he renamed the U.S. Pacific Command as INDOPACOM, or Indo-Pacific Command, in Honolulu as America’s “priority theater.” Shortly thereafter, at the Shangri-La Dialogue in Singapore Mattis stressed the concern of not only the U.S. but several other littorals of Asia’s eastern periphery at China’s allegedly overbearing behavior, e.g. placing war potential on the features it occupies in the Spratly and Paracel Islands, including “the deployment of anti-ship missiles, surface-to-air missiles, electronic jammers, and more recently, the landing of bomber aircraft at Woody Island.”6

India’s Prime Minister Modi, however, refrained from censuring China, presumably to avoid being openly ensnared in a U.S.-led “counter-China” strategy. But Mattis called for underpinning a free and open Indo-Pacific with his country standing “shoulder to shoulder with India, ASEAN and our treaty allies and other partners.” He identified the “Indo-Pacific” region as “critical” for America. He did not hesitate to transparently arraign India against China: “The U.S. values the role India can play in regional and global security, and we view the U.S.-India relationship as a natural partnership between the world’s two largest democracies, based on a convergence of strategic interests, shared values, and respect for a rule-based international order.”7 Indeed, Hillary Clinton had openly come out against China’s long-standing claim of practically all of the South China Sea—with its so-called “9-dash Line”—during her Hanoi visit in 2010. This was welcomed by the affected states of Vietnam, the Philippines, Malaysia and Brunei.8 Nevertheless, China continued to pursue its “active defense strategy” and “anti-access /aerial denial (A2/AD)” to counter any intervention in waters under its control, presumably by the U.S.

In November 2013 Beijing had gone ahead with establishing an Air Defense Identification Zone (ADIZ) over portions of the East China Sea. It was a matter of concern that China might establish a similar zone in the South China Sea conflicting with territorial claims by others. In August 2018 the PLA Navy (PLAN) sent two frigates and a supply ship to the Gulf of Aden and the waters off Somalia. And a Chinese commentary proudly proclaims, “As China’s ship-building industry has been making rapid progress in recent years, the number of warship types has also increased, including combat support ships that are essential among the ocean-going fleets…The Type-901 comprehensive supply ship Hulunhu (Hull 965) is known as the “nanny of aircraft carriers.’” 9

There were other reports of PLAN exercises too. “Naval vessels from three theater commands of the People’s Liberation Army (PLA) have conducted air defense and anti-missile live-fire exercises in the East China Sea,” declared the PLA Daily in August 2018. The exercises would beef up the PLAN’s defense capability “in response to potential threats from anti-ship missiles from Japan, the U.S., and other countries near China.”10 The PLAN hosted that same month “Seaborne Assault,” a five-nation military exercise.11 China deployed several hundred surface-to-air missiles as well as the anti-ballistic missile interceptor HQ-26 on the South China Sea islands. Chinese military expert Yin Zhuo justified such deployment in light of the powerful naval force of the U.S. in the region. Yin alleged that the U.S. was the one which truly threatened regional stability, though Western media had been spreading the theory of the “so-called China threat.”12

The reasons for China’s apparent high-handedness around the sea lines of communication (SLOCs) in the East and South China Seas through the Indian Ocean all the way up to eastern Africa are not far to seek. Beijing’s energy-hungry, export-driven economy that heavily depends on raw material and fuel imports seeks to buttress its supposed lordship over regional SLOCs which, however, are also critical to the survival of other Asia-Pacific states. China transports $1.5 trillion worth of goods, including petroleum through the IOR.13 In 2015, in an unprecedented move that worried New Delhi, a Chinese nuclear submarine deployed to the IOR. Stretching Beijing’s overseas influence, a PLA military contingent also appeared that year in South Sudan on a UN peace-keeping mission while a hospital ship offered free medical services to Fijian islanders.14 In July 2017 reports circulated that the PLA was setting up China’s first permanent overseas deployment in Djibouti – right next to the U.S. Navy’s Camp Lemonnier base there – since its withdrawal from North Korea in 1958.15 In August 2017 the Chinese aircraft carrier Liaoning started its exercises in the East China Sea but then quickly shifted its force to South China Sea and flew its combat aircraft – the J-15 “Flying Shark” – for the first time over that sea. The U.S. has sent a number of aircraft carrier strike groups to cruise in the South China Sea and, alleged China Military, frequently harassed Chinese soldiers stationed on the islands. The presence of the Liaoning was to stake out China’s claims in the region. Moreover, the South China Sea is an important advance base for China’s strategic nuclear submarines and Liaoning can be there to provide air cover for them.16

Regarding China’s ambitious Belt and Road Initiative (BRI), there are fears that engaging China in these large infrastructure projects could put participating countries at debt risk. The port of Hambantota in Sri Lanka is an example. And many in Pakistan anticipate a similar debt-ridden fate over the Chinese-aided Gwadar port in their country. It is feared that this debt will then be used by China as leverage to gain access to resources and pursue its strategic interests.17

The issue of military or economic dominance in the Indo-Pacific is just a part of the greater challenge: finding a balance of power between the U.S. and China that is acceptable to both nations. Ever since the 1997 Bill Clinton-Jiang Zemin talks and despite a number of other high-level meetings, U.S.-China relations remain characterized by the classic “Thucydidean trap,” where the status quo power (U.S.) is concerned at the rise of another power (China). The resulting strategic tension bodes ill for both as well as the region.

In such a changing strategic naval scenario, where the U.S. has been taking a fresh look at its naval deployments and diplomacy in the Indo-Pacific, India with its vast coastline and geographic position can play a significant role. Over 80 percent of world oil exports, 50 percent of the global container traffic and 33 percent of global cargo trade move through the IOR and its strategic chokepoints like the Straits of Hormuz and Malacca. The renaming of the Asia-Pacific to Indo-Pacific clearly signaled the role the US expected India to play in countering China.

In its turn India had already stressed in its January 2015 statement on “U.S.-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region” the importance of safeguarding maritime security and ensuring freedom of navigation and over-flight throughout the region, especially in the South China Sea. In a transparent reference to China it had added, “We call on all parties to avoid the threat or use of force and pursue resolution of territorial and maritime disputes through all peaceful means…”18

India also provided some muscle to that statement. In May 2016 a strong Indian naval force deployed to the South China Sea,  took part in the Malabar-16 exercise with the  U,S, and Japanese navies,  and also called at the  ports of several littorals stretching all the way to the East China Sea right up to Vladivostok. The Indian Navy declared the region as being of “vital strategic importance to India.”19 In 2017 a U.S. naval study observed that “India’s maritime engagement and activities with Southeast and East Asian countries are increasing…indicating greater space for USN-Indian Navy cooperation” and that “U.S.-India naval ties under the Modi administration are thriving.”20

Following the new U.S. conventional arms transfer policy and the drone export policy of April 2018, State Department official Ambassador Tina Kaidanow declared that the U.S. was “raising the bar in the [arms transfer] relationship with India.”21 India, however, has been more circumspect on that relationship. Even though the Doklam border conflict with China was just a few months old,22 Premier Modi did not raise the issue of China’s assertiveness at the Shangri-La Dialogue, as already noted. However, he highlighted India’s naval activities and cooperation with regional navies, including the U.S. Nor did India quickly fall in line with Japan urging an early meeting of the Quadrilateral Security Dialogue, or the quad, revived in 2017, with U.S., India and Australia. The dialogue was held in June 2018 only after India completed its diplomatic engagements with China and Russia. New Delhi was also careful to not mix up the Malabar Exercises with the U.S. navy with the Quad, which India believed would be a red flag to China.23

At the same time, India was delighted that in April 2018 the Trump administration decided to release armed Guardian drones to India,24 no doubt partly upon Mattis’ urging, and thus taking a step further to cement bilateral strategic ties. It would be the first time U.S. sells a large armed drone to a country outside the NATO. For the past few years only unarmed drones had been permitted to India. India’s importance for the U.S. lies in the fact that its navy, with its two dozen destroyers and frigates, an aircraft carrier, and assorted submarines, including a nuclear-powered one, as well as other vessels, is the largest among Indian Ocean Region (IOR) littorals.

In July 2018 the Indian Navy adopted a “new mission-based deployment” plan. It involves deploying mission-ready ships and aircraft along critical sea lanes of communications.25 This was in response to the uneasiness created by China’s “string of pearls” strategy, a U.S. coinage, which China calls the “21st Century Maritime Silk Road.”26 It refers to Beijing’s ever-expanding overseas commercial and concomitant military ties, naval movements and base and facility acquisitions in the IOR (Hambantota and Colombo port  in Sri Lanka, Cocoa Island and Kyaukphyu in Myanmar, Gwadar and Karachi in Pakistan, and Djibouti in the Horn of Africa),  construction of seaports, railroads and highways in littoral states,  island-building in the distant waters of the South China Sea and a massive submarine-building program, with the country now boasting more submarines than the U.S.27 What’s more, a Pentagon report on 16 August 2018 raised the spectre of PLA bombers training to strike the U.S. and its allies.28

In early September this year, an Indo-US ‘2+2′ dialogue was held for the first time at the Foreign at the Foreign and Defence ministers’ level in New Delhi. The significant results included the signing of The Communications, Compatibility and Security Agreement (COMCASA). This was a landmark agreement in  Indo-US defence and security relations. The ensuing joint statement described the two countries as “strategic partners, major and independent stakeholders in world affairs.”29

Beijing’s ambitious moves look very much like an attempt to turn China into the hub of a new order in Asia and the Indian Ocean region. It is also to counter the U.S. “pivot” to Asia. China’s $40 billion Silk Road Fund and its Asian Infrastructure Investment Bank are further indicators of its policy. It plans to develop a 3,000-kilometer, $46 billion China-Pakistan Economic Corridor (CPEC) connecting its restive Xinjiang province to the Baluch port city of Gwadar on the Arabian Sea. India has responded with a comparatively feeble “Look East Act East” policy, but India will need the U.S. as much as the U.S. needs India to shore up countervailing power to China’s seaward thrust in the IOR.

Dr. Jyotirmoy Banerjee, former Professor of International Relations (Strategic Studies), Jadavpur University, Kolkata has over four decades of academic experience, including frequent research and teaching stints in Germany, Poland and the USA. Besides winning Fulbright, Alexander von Humboldt and Goethe Institute Fellowships, each several times, he has been recipient of other post-doctoral grants of the Rockefeller, Erasmus Mundus, InterNationes and UGC research programs. His academic peregrinations have stretched from India’s academia to California-Berkeley, Pennsylvania, Hawaii (Manoa), Massachusetts, St.Francis College, Indiana, Berlin (FU), German Society for Foreign Affairs in Bonn and Berlin, German Foreign Ministry (AA), the Toenissteiner Kreis in Cologne as well as Wroclaw University in Poland. He has presented at the State Department, U.S. National Security Council, and the Library of Congress in Washington DC.

References

[1] Cumings B. (2016) The Obama “Pivot” to Asia in a Historical Context of American Hegemony. In: Huang D. (eds) Asia Pacific Countries and the US Rebalancing Strategy. Palgrave Macmillan, New York, pp 11-30.

[2] Uriel N. Galace, “In Retrospect: Assessing Obama’s Asia Rebalancing Strategy”, http://www.fsi.gov.ph/in-retrospect-assessing-obamas-asia-rebalancing-strategy/, CIRSS Commentaries, VOL. III, NO. 16, December 2016, electronically accessed 8/9/2018, 10.34 P.M. IST (All times are in Indian Standard Time unless otherwise mentioned).

[3]  MICHAEL J. GREEN, “The Legacy of Obama’s “Pivot” to Asia”, https://foreignpolicy.com/2016/09/03/the-legacy-of-obamas-pivot-to-asia/. | SEPTEMBER 3, 2016Electronically accessed 8/10/2018, 06.20 A.M.

[4] Quoted in S. Amer Latif,”India and the New U.S. Defense Strategy”,https://www.csis.org/analysis/india-and-new-us-defense-strategy,February 23, 2012.Electronically accessed on 8/19/2018,6:50 AM.

[5] “’Once-in-a-generation’ opportunity for US to find more common ground with India: Jim Mattis”, Apr 27, 2018, https://economictimes.indiatimes.com/news/defense/once-in-a-generation-opportunity-for-us-to-find-more-common-ground-with-india-jim-mattis/articleshow/63936701.cms. Electronically accessed on 8/26/2018, 4.00 AM.

[6] Euan Graham, “Mattis Lays Out U.S. Indo-Pacific Strategy at Shangri-La,” https://www.realcleardefense.com/articles/2018/06/04/mattis_lays_out_us_indo-pacific_strategy_at_shangri-la_113504.html, June 04, 2018. Electronically accessed on 8/14/2018, 04.50 A.M.

[7] Remarks by Secretary Mattis at Plenary Session of the 2018 Shangri-La Dialogue, Secretary of Defense James N. Mattis; John Chipman, Director-General and Chief Executive, IISS, June 2,2018.Transcript. https://www.defense.gov/News/Transcripts/Transcript-View/Article/1538599/remarks-by-secretary-mattis-at-plenary-session-of-the-2018-shangri-la-dialogue/ Electronically accessed on 9/13/2018, 04.46 A.M.

[8] Jeffrey A. Bader, “The US-China Nine-Dash Line: Ending the Ambiguity”, https://www.brookings.edu/opinions/the-u-s-and-chinas-nine-dash-line-ending-the-ambiguity/, Feb.6, 2014. Electronically accessed on 14 August 2018, 6.12 A.M.

[9] Bei Guo Fang Wu,” PLA Navy ends era of “supply-ship troika” in its escort mission”, http://english.chinamil.com.cn/view/2018-08/09/content_9247256.htm, Electronically accessed on 8/13/2018, 4:36 AM. Emphases added.

[10] Li Jiayao (Global Times Editor), “PLA naval exercises in East China Sea test missile interceptions”, http://english.chinamil.com.cn/view/2018-08/13/content_9249528.htm, Electronically accessed on 8/13/2018, 4:38 AM.

[11] Li Jiayao, “”Seaborne Assault” concluded in China”, http://english.chinamil.com.cn/view/2018-08/11/content_9249169.htm. Electronically accessed on 8/13/2018 4:41 AM.

[12] “China’s missile deployment in South China Sea completely reasonable: expert”, http://eng.mod.gov.cn/Opinion/2017-01/04/content_4769263.htm. Electronically accessed on 8/13/2018 5:17 AM.

[13] Sarosh Bana, “Rebalancing with India”, https://idsa.in/idsacomments/rebalancing-with-india_sbana_310516. Electronically accessed on 8/25/2018, 3.34 AM.

[14] http://english.chinamil.com.cn/view/2018-08/09/content_9246542.htm. Electronically accessed on 8/13/2018 4:43 AM; http://search.chinamil.com.cn/search/milsearch/stouch_eng.jsp. Electronically accessed on 8/13/2018 4:56 AM. 12 Charles Clover,Sherry Fei, “Chinese military base takes shape in Djibouti” https://www.ft.com/content/bcba2820-66e1-11e7-8526-7b38dcaef614, JULY 12, 2017.Electronically accessed on 9/9/2018, 4.55 A.M.

[16] “Expert: China’s home advantage in South China Sea cannot be overlooked”, http://eng.mod.gov.cn/Opinion/2017-01/04/content_4769264.htm. Electronically accessed on 8/13/2018 5:27 AM. The expert Li Jie, however, believes that aircraft carrier Liaoning is developed based on the Russian-made aircraft carrier Varyag and therefore it will inevitably be affected by the original design. But more critically, the number of ship-borne fighter jets of Liaoning is only half of that of US super aircraft carriers. In this way, it is hard for ship-borne fighter jets of Liaoning to bear air defense, anti-submarine and long-range strike at the same time.

[17]  Darlene V. Estrada, “China’s Belt and Road Initiative: Implications for the Philippines,” VOL. V, NO.3,March 2018, http://www.fsi.gov.ph/chinas-belt-and-road-initiative-implications-for-the-philippines/ Electronically accessed on IST 8/10/2018 6:36 AM.

[18] US-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region”, January 25, 2015, http://www.mea.gov.in/bilateraldocuments.htm?dtl/24728/USIndia_Joint_Strategic_Vision_for_the_AsiaPacific_and_Indian_Ocean_Region. Electronically accessed on 8/25/2018, 5.11 AM.

[19]  Sarosh Bana, op.cit.

[20] Nilanthi Samaranayake, Michael Connell,Satu Limaye,”The Future of U.S.-India Naval Relations”,February 2017,Center for Naval Analyses, http://www.dtic.mil/dtic/tr/fulltext/u2/1029962.pdf. Electronically accessed on  8/25/2018,5:58 AM.

[21] U.S. Arms Transfer Policy: Shaping the Way Ahead,August 8, 2018 (transcript), https://www.csis.org/analysis/us-arms-transfer-policy-shaping-way-ahead. Electronically accessed on 9/9/2018, 7 AM.

[22] The dispute was over Chinese construction of a road in Doklam near a trijunction of India-China-Bhutan border area.

[23]  Indrani Bagchi, “ India, Australia, US, Japan to hold meet in Singapore”, Jun 6, 2018. Electronically accessed on 8/19/2018, 6 A.M.

[24] Ajay Banerjee, “India could be gainer as US changes policy on supply of armed drones”, https://www.tribuneindia.com/news/nation/india-could-be-gainer-as-us-changes-policy-on-supply-of-armed-drones/576937.html, 8/19/2018, 6:16 AM.; “US offers India armed version of Guardian drone: Sources”,  “https://timesofindia.indiatimes.com/india/us-offers-india-armed-version-of-guardian-drone-sources/articleshow/65043647.cms, Jul 18, 2018. Electronically accessed on 9/9/2018, 6/20 AM.

[25] “Navy to implement new plan for warships in Indian Ocean region”, https://economictimes.indiatimes.com/news/defense/to-counter-china-navy-to-implement-new-plan-for-warships-in-indian-ocean-region/printarticle/61231821.cms. Elecronically accessed 8/21/2018, 1.20 AM. 

[26] “China reinvents ‘string of pearls’ as Maritime Silk Road”, https://asia.nikkei.com/Politics/China-reinvents-string-of pearls-as-Maritime-Silk-Road, April 29, 2015. Electronically accessed 8/21/2018. 2.21 AM.

[27] Ibid.

[28] “Chinese bombers ‘likely training for US strikes’ says Pentagon”, https://asia.nikkei.com/Politics/International-Relations/Chinese-bombers-likely-training-for-US-strikes-says-Pentagon, August 17, 2018. Electronically accessed 7/21/2018, 8.01 PM.

[29] Indrani Bagchi, “2+2 talks set strategic direction for Indo-US ties”, Sep 9, 2018, https://timesofindia.indiatimes.com/india/22-talks-set-strategic-direction-for-indo-us-ties/articleshow/65737608.cms, Electronically accessed 16 Sept.2018, 6.16 PM.

Featured Image: Secretary of Defense Jim Mattis meets with India’s Prime Minister Narendra Modi in Washington, D.C., June 26, 2017. (DOD photo by U.S. Air Force Staff Sgt. Jette Carr)

Is the Belt and Road Initiative Too Big to Fail? Pt. 2

What could and should the United States do if the Belt and Road Initiative collapses? 

By Grant Newsham and Tuan Pham

Part one of this two-part series discussed the growing concerns of a Belt and Road Initiative (BRI) bubble that may burst, and that China’s hurried and reckless BRI investments through the years are beginning to drag down its already slowing domestic economy.

So to advance the strategic dialogue, let’s assume that the BRI bubble has, or is close to bursting, and is exacerbated by a weakened Chinese economy and a destabilizing trade war. In part two, each author individually offers his perspective on what America could and should do (and conversely not do) as the result thereof. 

Opportunities – What to Do 

Pham: Make the most of the strategic opportunity and build more economic leverage on the issues of China’s unfair trade policies and practices, discriminatory trade barriers, unequal trade balances, forced technology transfers, and intellectual property rights theft. Leverage the recent U.S.-European Union agreement to ally against China which has nearly broken the world trading system. Then, convert the accumulated economic leverage into additional political leverage in the geographic spheres of North Korea, South China Sea (SCS), East China Sea, and Taiwan and contested domains of space and cyberspace – similar to how Beijing uses the BRI. When appropriate and expedient, rejoin the Trans-Pacific Partnership to complement the other U.S. instruments of national power; bind America to the other regional economies; blunt the other Chinese economic initiatives like the Regional Comprehensive Economic Partnership and Asian Infrastructure Investment Bank; and ultimately offer an enduring alternative to the BRI. From there, use the added influence to further encourage and challenge China to become a more responsible stakeholder that contributes positively to the international system and uphold the international rule of law and respect for global norms (human rights, freedom of navigation, etc.); and in the long-run, possibly consider a grand bargain to adopt mutual agreements and avoid another Cold War (no large-scale conflict directly between the two sides, but each may be supported by major regional “proxy” wars) and the Thucydides Trap (a rising power challenges a dominant power leading to a great power competition for preeminence).

Of note, the concept of the Thucydides Trap has detractors who understandably and fairly warn against the Chamberlain Trap (avoiding conflict through concessions) and cite the years of ill-advised U.S. acquiescence and accommodation (strategic patience and wishful thinking) in the SCS. Nevertheless, no matter which side one takes on this philosophical debate, the reality remains that China and America are interlocked in a strategic competition for regional and global pre-eminence. So, how best to contain and manage this competition and keep it from escalating into a “no-win” conflict?

Newsham: Recognize that China’s objectives with the BRI are ultimately political. BRI is one front in an existential, multi-front campaign to displace and overtake the United States – and America’s pernicious notions of individual liberty, rule of law, and equality among nations – that have served the world well for the last 70 years.

As such, the U.S. Government (USG) ought to do several things with the BRI in mind. First, develop and implement a political warfare effort that exposes the BRI as ultimately a combination of colonialism and loan-sharking. As often as not, BRI investments and projects are over-priced, poorly thought out, and shabbily constructed; and benefit China and Chinese companies more than the recipient countries. 

Toward this end, the USG might also profitably direct its vast intelligence resources toward exposing the corruption and payoffs that are part and parcel of Chinese business and government efforts connected with the BRI. The USG bringing charges against Patrick Ho, a former top Hong Kong official, for bribing African officials on behalf of a Chinese company shows what is doable. Locals who resent Chinese heavy- and under-handedness will welcome exposure of such improprieties.

Second, keep trade pressure on China in response to longstanding unfair trade practices. This pressure – and attendant reductions in the foreign exchange needed to keep the Chinese economy chugging along – reduces funds available for BRI activities – to include investments, bribes, and bailouts. It’s ironic that U.S. and Western businesses have effectively funded the BRI efforts – not to mention China’s military development.

But it’s not enough to criticize China and the BRI – even if well founded. Indeed, one must admire China and Chinese companies’ willingness to get involved in countries where American companies refuse to go. The USG needs to work closely with the private sector and change the “risk profile” for American companies so they might show some initiative and go where Yankee Traders of old used to go. And since this is ultimately a political struggle, why not link the public-private partnership effort with that of allied countries such as Japan, Australia, South Korea, the United Kingdom, and others?

In summary, recognize the BRI for what it is, expose its vulnerabilities and rapacious aspects, keep trade pressure on China and thus reduce the foreign exchange available for its BRI activities. And as importantly, the United States and like-minded countries need to offer a better alternative.

Challenges – What Not to Do

Pham: In light of the deepening economic stagnation, the present risk of domestic political instability may drive Beijing’s future foreign policy. Economic prosperity (purse) and nationalism (people) – buttressed by the People’s Liberation Army (gun) and propaganda (pen) – have long been the principal sources of legitimacy, credibility, and stability for the Chinese Communist Party (CCP). As the prosperity and nationalism wanes, President Xi Jinping (undisputed core leader of CCP) may increasingly rely on propaganda and security – tempered to a certain extent by fiscal constraints – to maintain the party’s (and his own) power and influence over the masses. In other words, make people look outward at the forest and not inward at the trees.

But here lies the strategic quandary for U.S. policymakers. The tricky part is to avoid strategic overreach and to find the right balance of making the most of the strategic opportunity without  triggering the CCP to a tipping point that elicits a strong nationalist response (including military confrontation).

Newsham: Don’t bail out Xi and China if they’ve been overextended on the BRI. They won’t appreciate the gesture. The more problems Beijing has with financially draining overseas ventures – and the inevitable local opposition they provoke over time – the less China can concentrate its efforts on military development and bringing its regional neighbors to heel while being able to take on its declared main enemy – the United States. It also dispels the image of inexorable Chinese domination.

Don’t try to calibrate just the right mix of pushback and engagement (to include on the BRI) that will make Beijing become a “responsible stakeholder.” Why should it? China has done well enough over the last 40 years without adjusting its behavior. Robert McNamara also tried “calibrated” pressure with North Vietnam. It didn’t work very well. Instead, stand up for America’s own interests and keep the pressure on.

Don’t consider the chance for a few American firms to make some money on BRI projects to outweigh the existential threat the CCP-led China poses to the free, liberal world order. And don’t forget that today’s China holds over one million people in internment camps and is trying to do the Uighurs what King Edward the First tried with the Scots. It is also a repressive security state along the lines George Orwell wrote about and where modern technology is creating new and unprecedented tools of oppression. At the end of the day, regardless of the highways, ports, and bridges it might build (for a considerable price and of questionable quality) in far-flung places, it should always be remembered that the BRI is an outgrowth of a staunchly authoritarian and repressive regime. 

Conclusion 

China risks big with the BRI, and accordingly, could lose big if indeed the declining trend lines are proven correct. If so, how does it impact Beijing’s strategic ambitions for national rejuvenation and ultimately global preeminence? But more importantly, how could and should Washington make the most of the strategic opportunity?     

Grant Newsham is a retired U.S. Marine Officer and a Senior Research Fellow at the Japan Forum for Strategic Studies.

Tuan Pham is widely published in national security affairs and international relations. The personal views expressed therein are their own. 

Featured Image: Officials attend the groundbreaking ceremony of the rail project linking Bangkok and Nakhon Ratchasima, on Dec. 21 in Nakhon Ratchasima, Thailand. (Photo by Yukako Ono).

Is the Belt and Road Initiative Too Big to Fail? Pt. 1

What could and should the United States do if the Belt and Road Initiative collapses? 

By Tuan Pham and Grant Newsham

More and more China Watchers, to include these two observers in Japan, are having increasing doubts about the Belt and Road Initiative (BRI), Beijing’s trillion-dollar wide-ranging infrastructure enterprise that spans across Asia, Africa, Europe, Oceania, and the Americas to elevate Chinese global economic and political standing. The grandiose national plan seeks to make a lot of money, acquire more resources, gain additional power, and expand influence to advance Beijing’s strategic ambitions of national rejuvenation (the Chinese Dream) and ultimately global preeminence – or even better, dominance. So what if these pundits are correct and the possibly over-leveraged BRI continues to underperform and not deliver the promised returns, receive increasing political backlash (buyer’s remorse over crushing debt burdens), and eventually collapses? What are then the ensuing opportunities and challenges for America?

This two-part series is a thought exercise to engender strategic thought, dialogue, and planning on this possibility. Part one starts with making a case for a BRI bubble that may burst. In part two, each author individually offers his perspective on what America could and should do (and conversely not do) as the result thereof.      

A BRI Bubble

There are growing concerns of a BRI bubble that may burst, and that China’s hurried and reckless BRI investments through the years are beginning to drag down its already slowing domestic economy. Beijing reportedly is applying the brakes. Chinese officials are now expressing qualms that Chinese corporations need to be cautious on how much they lend under the flagship project, but interestingly are not mentioning how much state funding is being expended on the BRI.

Nonetheless, Beijing reportedly has begun a comprehensive accounting of how many deals have already been done, on what financial terms, and with which countries. Beijing has also tightened capital and exchange controls to better manage BRI investments out of concerns over China’s domestic financial conditions. Altogether, the moves are intended to rein in the “wild west” investing environment, hedge against an uncertain Chinese economic outlook, and curtail the worrying capital flows outside the country. Since last year, Beijing appears to be trying to bolster an apparent lagging enthusiasm for the BRI.

However, to fully understand the nature, scope, and extent of the problem, it is best to start at the beginning. In the early 2000s, Beijing implemented the “Go Out” policy, which incentivized Chinese corporations to seek business ventures abroad by providing easy credit, cheap loans, and attractive financial guarantees from China’s national banks. Ten years later, stimulated by the government-sponsored BRI and fueled by relaxed financing, Chinese firms undertook even more speculative investments based on the flawed assumptions that the BRI was too big to fail and the central government will simply bail them out if they do fail. Not surprisingly, many of these risky BRI projects have underperformed and incurred massive debts and the impacts for the Chinese banks, and through them the Chinese economy, are now becoming evident. That is why Beijing has been assertively (and some might say desperately) cajoling (pressing) other countries and international organizations to invest in the BRI – and take on some, or most, of the risk.

China’s Economic Stagnation

Many observers have long worried that the BRI (with its hidden nationalist agenda and geo-political implications) represents an economic and political power play by Beijing, buttressed by its vast monetary reserves and driven by the Chinese Communist Party’s (CCP) preoccupation with realizing its long-term goal of achieving global influence and ultimately global preeminence. But even with its immense economic power (second only to the United States), China still has its limits. Its economy is showing signs of slowing, and it is in a nascent trade war with the United States. At the same time, Beijing is struggling to tame its own mounting debt problems – problems that international lending and domestic spending sprees haven’t helped – and may even be letting up on its campaign to arrest debt growth as it faces a weakening economy at home and escalating trade tensions abroad.

Weeks before the onset of the trade war, a government-affiliated Chinese think tank, the National Institute for Finance Development, warned of impending financial panic potentially leading to financial crisis. It pointed to this year’s cascade of bond defaults, tightened liquidity, declining stock markets, and weakening Yuan. The report added that U.S. interest rate hikes and a looming trade war suggest that “the Chinese people are very likely to experience a financial panic very soon,” and that Beijing had best come up with a crisis management plan to deal with the panic.

The Chinese stock market lost two trillion dollars in value in the last six months, a worrisome economic indicator for Beijing, particularly in the midst of a destabilizing trade war that is beginning to increasingly impact the Chinese economy. The CCP’s claim to unopposed rule explicitly and implicitly depends on economic performance (prosperity), and an underperforming market is a poor reflection of its governing competence and by extension its political legitimacy. A bearish Chinese stock market is also a psychological reflection of how the Chinese people think of their current and future economic prospects. If so, once public doubt builds and takes hold, the wave of pessimism could intensify and spread, and if left unchecked become pervasive fear and panic.

Trade War Wildcard

The ongoing Sino-U.S. trade war is proving to be a propaganda quagmire for Chinese President Xi Jinping and the CCP, both on the domestic and international fronts. Regarding the former, they lose “face” if they say nothing or too little and they face public anger and political risk if they say too much and cannot deliver on their promises. As for the latter, Xi may have realized that jingoistic rhetoric may not be helpful and may even be counterproductive to ending the trade war on favorable terms and instead undermines Beijing’s carefully crafted international image as a defender of global trade.

The official CCP response to the trade war has aimed at depicting China and the Chinese economy as being strong enough to cope with a trade war. Yet, Beijing’s statistics bureau has reportedly published inaccurate economic data to bolster the arguably false impression that the Chinese economy is handling U.S. trade pressures well. Indeed, the CCP might be in more distress at this point if the world realizes that it has been exaggerating (bluffing) about its economic strengths and capacities to withstand a trade war, as evident by its continued “optimistic and suspect” gross domestic product (GDP) outlook despite lack of corroborating economic data and growing skepticism of Beijing’s statistical methodology.

All in all, the trade war has cornered Xi and the CCP as is evident by the changing and inconsistent public messaging and media censorship to control domestic narratives. If they cannot cope with the trade war and lose control of the aforesaid narratives, then their control over Chinese society might diminish while undermining Xi and the Party’s power and authority. If so, expect even fewer civil liberties, greater censorship, and more draconian crackdowns in the coming months to restore the CCP’s grip on public order and confidence in Xi’s leadership. The latter apparently showing some political vulnerabilities in the form of a surprising rebuke at home and telling personal affirmation of the need for resolute leadership. In recent weeks, Beijing’s government, intellectual, and media have been rife with “rumors” over leadership discontent with Xi – particularly over his bold power consolidation and brazen rollback of collective leadership norms, mismanagement of the all-important bilateral relations with Washington, and poor handling of the ongoing trade conflict with the United States.         

Beijing has also embarked on an aggressive media campaign to influence foreign audiences (sharp power). The latest being a short satirical video by the China Global Television Network (international offshoot of state-owned broadcaster China’s Central Television), mocking President Trump and highlighting many of China’s concerns (grievances) in the ongoing trade dispute; and an op-ed piece in the Los Angeles Times, pushing the narrative that “the American people need to hear the truth about U.S.-China trade, instead of Trump’s charges of bad faith…despite what the president says, trade is free and fair, and these 10 points explain why.” They are:

(1) Although China, as a developing country, has higher tariffs on U.S. goods than the United States does on Chinese goods, its tariffs are still lower than those of many other developing countries.

(2) As for goods coming into the United States, inexpensive Chinese imports have helped the U.S. middle class.

(3) It isn’t Chinese barriers but U.S. export controls that limit our economic exchange.

(4) Trade deficit numbers can be deceiving.

(5) When American protectionists talk about the trade deficit with China, they deliberately ignore the U.S. surplus in “service trade.”

(6) Another thing protectionists deliberately ignore is that the sales of U.S. companies in China have surpassed $500 billion.

(7) In 2017, China’s external payment of intellectual property fees reached $28.6 billion, 15 times more than when it joined the World Trade Organization (WTO) in 2001. U.S. intellectual property owners are the biggest beneficiaries.   

(8) No laws or regulations compel technology transfers; joint ventures are based on deal-by-deal negotiations and some U.S. companies are willing to transfer technology for Chinese market access.

(9) President Trump wants to stop “Made in China 2025,” the state-subsidized plan to modernize Chinese industries, and he charges China with “state capitalism.” However, Chinese subsidies are not out of line with WTO regulations, and they are available to foreign-funded enterprises too.

(10) China’s trade practices are generally in compliance with WTO rules. 

This is of course better characterized as Chinese “advocacy” rife with half-truths and questionable assertions rather than a fair-minded assessment. Hopefully it is not taken at face value.

Conclusion

This concludes a short discourse on why the BRI bubble may burst. The dialogue sets the conditions for further discussion in part two on what America could and should do (and conversely not do) as the result thereof.     

Tuan Pham is widely published in national security affairs and international relations. Grant Newsham is a retired U.S. Marine Officer and a Senior Research Fellow at the Japan Forum for Strategic Studies. The personal views expressed therein are their own.

Featured Image: A Chinese flag flies over Tashkurgan, a small town at the front line of the $62bn China-Pakistan economic corridor (Cpec). (Tom Phillips for the Guardian)

Competition and Neutrality of Southeast Asian States in Indo-Pacific Strategy

By Shang-su Wu

Due to their central location between the Indian and Pacific Oceans, maritime Southeast Asian countries have increasingly important roles in the Free and Open Indo-Pacific (FOIP) Initiative. Despite some constraints, such as the inability of the Association of Southeast Asian Nations (ASEAN) to coordinate its membership’s defenses, these regional states and their relatively weak but growing navies, with a home field advantage, matter in terms of the balance of power in the Indo-Pacific region. Based on their non-alliance tradition and economic interests with China, Southeast Asian countries would not join FOIP, but engagement between them would be crucial for the strategy connecting the two oceans.

Geographically, Indonesia, Malaysia, and Singapore are the most relevant to control of the critical straits, whilst other coastal states, such as Brunei, Myanmar, the Philippines, Thailand, and Vietnam have a potential influence over adjacent sea lines of communication (SLOCs). These Southeast Asian countries are not militarily or economically equivalent with any member of the Quad (the U.S., Japan, Australia, and India), or China, and it is unlikely that these relatively weak countries could challenge the rights of passage under the United Nation Convention on Laws of the Sea (UNCLOS). However, while their naval and air bases are strategically important for securing nearby SLOCs, the physical capture of such locations appears politically and militarily infeasible nowadays.

Politically, it would be very difficult for the UN Security Council (UNSC) to pass any resolution authorizing any power to conquer one or more Southeast Asian countries, as a veto would be expected from other permanent UNSC members. Although hybrid warfare, such as a Crimea-style invasion, could not be excluded, lack of similar historical and ethnic linkages could make such operations more uncertain, if not unlikely. In addition, unlike some “trouble-maker” countries that challenge existing international norms, Southeast Asian countries generally remain neutral, taking modest positions which keep them from becoming legitimate targets in the international community.

Militarily, force projection in Southeast Asia is already a certain challenge for most aggressors, and to secure control over local populations could be even more difficult. For example, territorial defense with grassroots organizations prepared by the Indonesian Armed Forces (Tentara Nasional Indonesia, TNI) would provide systematic resistance during and after conventional warfare in cases such as Sunda, Lombok, Makassar, and other Straits in the Indonesian Archipelago. Securing control of the Malacca Strait is further complicated since it falls under the control of three countries. Given that conquering the islands at chokepoints in key straits would be difficult, the roles of maritime Southeast Asian countries in the FOIP need to be discussed in various scenarios.

Scenarios, Positions and Policies

The potential maritime conflicts between sea powers in the Indo-Pacific region can be categorized into three scenarios: major conflict, tight confrontation, and peacetime. A major conflict between China and the U.S., and perhaps its allies, would only likely impact Southeast Asia if China is able to maintain sea control over the first island chain. If Beijing loses the first battles or cannot retain sea control over the specific disputed area, its dream of sea power could vanish and make Southeast Asia strategically less important. In contrast, if China is able to gain the upper hand over the U.S. or another Quad member in a first-round exchange, this could force the latter to choose between preparing for the next battle or blockading the key straits in Southeast Asia, aside from negotiating for peace. In a blockade, there is no doubt as to the importance of the maritime Southeast Asian states along the straits. Another scenario is a major Indo-Sino conflict shifting from land borders to the maritim domain, where Southeast Asia is an inevitable chokepoint for both navies. In a scenario of tight confrontation where aircraft and vessels of China and the Quad members follow each other with occasional provocations, the relatively narrow sea passes in Southeast Asia are convenient for such tailing operations. During peacetime, the straits in Southeast Asia still provide critical locations for surveillance and deterrence.

Southeast Asian countries would have three political positions in the face of such scenarios: strict neutrality, loose neutrality, and aligning with one side. Loose neutrality would be the common practice in the region, evidenced in all maritime Southeast Asian countries’ policies and participation in the non-alliance movement. Although the Philippines and Thailand retain their defense treaties with the U.S., their current policies are notably different. During the previous Aquino administration between 2010 and 2016, Manila was probably seen as pro-Washington due to countering Beijing’s territorial claims in the West Philippine Sea, but President Duterte has replaced these policies with Beijing-friendly ones. In contrast to the common practice, strict neutrality and alignment with one side would be less favorable options for Southeast Asian countries during peacetime or even in crises of tight confrontation due to different concerns. Strict neutrality does not fit the complicated inter-state competition overshadowing the era of globalization, but alignment would present risk for being on a loser’s side.

Under these loosely neutral positions, each Southeast Asian country may have certain policies favoring a specific power. Arms procurements and intelligence sharing would represent relatively implicit policies showing their preferences or linkage. Joint exercises, foreign military presence, and deployments are clearer indicators.

The Regional Military Capacity

Thanks to decades of economic growth, maritime Southeast Asian countries have significantly modernized their navies and other related forces, which have strategic values for two main reasons. Firstly, as an overt invasion of Southeast Asian countries is unlikely, their military capacity is unlikely to be fully neutralized. As a result, their specific capabilities, particularly submarines and other sea denial means, can deter potential aggressors. Secondly, despite inferior quantity and perhaps quality, regional militaries have home field advantages, such as theater familiarity and shorter LOCs.

Several characteristics appear when examining Southeast Asian naval modernization. Firstly, the naval modernization among regional states is diverse on both national and asset level. On the national level, some countries, like Singapore, are comprehensively armed, and some others, such as Brunei, are at best partially equipped. On the asset level, vessels and aircraft in the same classes may have differing performances due to different designs and costs. For example, some regional frigates are armed with layered defense against anti-ship missiles, but some have only a single system of short-ranged surface-to-air missiles (SAM) without any additional margin.

Secondly, despite the diverse practices, regional countries take a balanced fleet approach and invest in both sea control and sea denial capabilities. The level of distribution between sea control, such as major surface combatants, and sea denial, such as submarines and fast attack craft (FAC), depends on each country’s strategic circumstances. The balanced fleet approach weakens the capacity of Southeast Asian navies in conventional warfare against a stronger adversary, as most ships remain vulnerable in the face of superior firepower and are unlikely to achieve their sea control mission during wartime. However, the regional navies have to deal with peacetime missions, such as counter piracy and maritime territorial control, where large surface platforms are essential. In other words, the balanced fleet approach reflects the compromise between the needs of peacetime and wartime.

Thirdly, regional submarines provide a vital deterrence by denial capability. Southeast Asian submarines within their home waters, despite their small numbers, relatively little experiences, and less sophisticated technologies, would still pose a credible threat to intruding sea powers. An external sea power may have the capacity to absorb some losses, but these losses would stretch limited expeditionary capabilities, damage its national pride, and possibly affect domestic political decision making. Striking the home bases of these submarines would be an effective measure to lower their operational sustainability, but it would significantly escalate the situation during a crisis and threaten whatever argument for legitimacy the invader was trying to use to justify their actions.

There are some drawbacks in regional naval modernization. Although more and more capable surface combatants are joining the service, a great portion of the fleets have weak air defense and anti-submarine capabilities which makes them vulnerable to modern anti-ship missiles and submarines. Maritime patrol aircraft would provide the main method of surveillance, but are vulnerable and unable to conduct patrols in a hostile air space. Without maritime patrol aircraft, these regional navies would have limited surveillance capacity. Southeast Asian states possess fighters with airborne sea strike capability, and they may be able to respond to challenges from a ski-jump aircraft carrier with limited capacity and support. However, as all these fighters belong to air forces which focus and train for more missions than maritime operations, their jointness with navies would be limited. Due to these drawbacks plus the issue of relatively inferior quantity, maritime Southeast Asian countries have little room for escalation.

Gaining Support

The traditional methods of formal alliance may not successfully work with maritime Southeast Asian countries under the present context. Trade, investment, and other economic ties with China would constrain the willingness and likelihood of direct participation by maritime Southeast Asian countries in the FOIP Initiative. Moreover, Beijing is also endeavoring to develop and deepen security ties in the region, evidenced in arms deals, personnel exchanges, joint exercises, and other forms of interactions. However, it is possible to gain the contribution of regional countries to the FOIP Initiative, under their loose neutrality position. As maritime Southeast Asian countries have relatively less experiences in various military capabilities, the militaries of Quad members with rich operational experiences could provide more interaction based on the existing foundation.

Intertwined interests would be another significant motive for supporting the FOIP. Given their maritime interests and territory, Southeast Asian countries are likely to further expand their maritime capacity and the Quad members can supply proper assets and technologies to fill their existing shortfalls, while arms deals with logistical and training packages provide another channel to strengthen military-to-military relations. Last but not least, the Quad members, with their combined market share dwarfing China’s, should build up economic ties with maritime Southeast Asian countries. It would not be easy for regional countries to formally participate in the FOIP, but their cooperation or other positive responses would be the core of a strategy across the two oceans.

Shang-su Wu is a research fellow at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University in Singapore.

Featured Image: Marina Bay Sands Resort in Singapore (Wikimedia Commons)