Category Archives: China-Koreas

The Sound Of Another Trump Flip-Flop

100 yuan notes

IT IS ALL going rather swimmingly for China with the United States right now. Following the happily smooth summit between President Xi Jinping and US President Donald Trump in Florida last week, the US president has said that China is not manipulating its currency.

During his election campaign last year, Trump had repeatedly accused Beijing of artificially driving down the value of the yuan to increase its export competitiveness, and had said he would label China as a currency manipulator on his first day in office.

His about-turn pre-empts the US Treasury’s forthcoming biannual report to Congress on the foreign-exchange policy of the United States’ principal trading partners: being designated a currency manipulator by the US Treasury legally triggers US Congressional sanctions against the offending country.

In the Obama-era, the Treasury had always found a way to avoid that, but the risk to China once Trump won the election last November was acute.

Trump now accepts that China has not been manipulating its currency for a while. His need to work with Beijing on dealing with North Korea — regardless of his previous comments that the United States would take unilateral action against Pyongyang if China failed to rein in its neighbour as Washington expected — appears to have helped clarify his vision.

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Beijing’s Pyongyang Puzzle

IT IS UNUSUAL for Beijing to make public what has previously been a private suggestion that the United States stops its annual two-month military exercises with South Korea in exchange for North Korea halting its nuclear and missile programmes.

It is a trade-off that Washington and Seoul have equally publicly rejected, to no one’s very great surprise. But it indicates a growing sense of urgency on Beijing’s part about the situation on the Korean peninsula especially given the policy vacuums in both Washington and Seoul caused by the new Trump administration and the expected imminent impeachment of President Park Geun-hye respectively.

Pyongyang has said that the four missiles it launched earlier this week were a test strike against US bases in Japan. Provocative language. The same day, the first components of the THAAD missile defence system arrived in South Korea — a deployment seen similarly provocatively in Pyongyang but also in Beijing.

Beijing’s denial of reports of retaliatory pressure on South Korean businesses convinces few.

Meanwhile, the shadow of February’s fatal attack on North Korean leader Kim Jong-un’s half-brother, Kim Jong-nam, at Kuala Lumpur airport continues to fall widely. If, as is widely suspected, it was a North Korean hit, and one involving chemical weapons,  then the Trump administration may move to reverse President George W Bush’s 2008 delisting of Pyongyang as a state sponsor of terrorism.

That, in turn, would dash the hopes of the likely next government of South Korea that the Trump administration may be more willing to enter dialogue with North Korea. On the campaign trail, candidate Donald Trump had said he would be prepared to meet Kim Jong-un, though he has not repeated the offer as president.

The next South Korean government, whoever leads it, it likely to return to the ‘sunshine’ policy of greater engagement with North Korea than the current scandal-embroiled one.

Some evidence is now emerging that the Obama administration was quietly taking a harder line against the North than appeared on the the surface, cyberhacking North Korean missile launches last year, with some success, in retaliation for the believed North Korean hacking of Sony Pictures in 2014. 

However, the Trump administration, in the absence of a better shaped policy, has mainly fallen back on browbeating China to do more to rein in its neighbour, a capacity it may not have, or at least to the degree Washington believes. For its part, China, under whose protection Kim Jong-nam had lived in Macau and Beijing, is hopeful that diplomacy can replace stand-off and the unsettling uncertainty that goes with it.

Last month, it suspended coal imports from North Korea until the end of this year, a hefty blow to North Korea’s revenue as it accounts for two-fifths of the country’s export earnings, and the toughest sanctions China has imposed to date. Beijing had previously been using a ‘living-standards’ loophole in the UN sanctions against North Korea to sustain the coal trade despite its formal adherence to them.

That it has now changed its stance on this indicates both the frustration of many Chinese officials at what looks like an increasingly anachronistic ally in Pyongyang and their impotence to do more.

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China Gives North Korea The Coal’d Shoulder

OUR MAN IN Munich, where those who make their living from discussing global security were gathered of late, sends word that foreign minister Wang Yi said there that the cycle of sanctions and missile tests has to stop and North Korea and the United States should return to the negotiating table.

Whether that would be as part of a resumption of the six-party talks or a bilateral meeting was unclear, but Wang said Beijing was ready to play the role of mediator, which leaves either interpretation open.

Yet in the meantime, China is suspending all imports of coal from North Korea until the end of this year. This is as close to compliance with UN sanctions against Pyongyang’s nuclear weapons programme that one can get. China is North Korea’s primary export market and coal is its biggest single export.

Last week, China was believed to have turned back from Wenzhou a $1 million shipment of  North Korean coal the day after North Korea had tested an intermediate-range ballistic missile in defiance of UN Security Council resolutions banning the country from carrying out such actions.

Suspending imports is the latest tightening by China as coal exports are what Pyongyang relies on to generate cash, particularly since China stopped importing some precious metals almost a year ago and banned the sale of fuel in the opposite direction. North Korean coal exports to China rose more than 12% last year, coming in through a loophole in the UN sanctions that allows imports on which North Koreans depend for their livelihood.

The mysterious death of North Korean leader Kim Jong Un’s half-brother Kim Jong Nam by apparent poisoning, if proved to be connected to North Korea as suspected, may have also tested Beijing’s patience beyond endurance.

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How Much Candidate Trump Will President Trump Contain?

Donald Trump seen in Washington, November 2011. Photo credit: Gage Skidmore. Licenced under Creative Commons

THE U.S.PRESIDENT-ELECT, Donald Trump (above), had few kind words for China during the presidential election campaign. He accused it of stealing millions of American manufacturing jobs and threatened protectionist tariffs against Chinese exports.

Yet to China he was the preferable candidate. His Democratic rival, Hillary Clinton, was seen, on the basis of having been seen at close quarters as U.S. secretary of state, to be no bosom buddy of Beijing.

The maverick nature of Trump’s campaign and his questioning of the basis of the United States’ traditional security alliances had, however, caused some optimism in Beijing that his election would weaken America’s international standing in the region and that his reservations about free-trade agreements would kill the Trans-Pacific Partnership (TPP), the economic prop of Washington’s ‘Asian pivot’.

However, set against that the uncertainty and volatility in regional affairs that a prospective Trump presidency will bring, in particular on the Korean peninsula. Beijing does not like uncertainty, and there less than anywhere.

Worse, long-cultivated contacts with the Washington China-policy and financial elite have been rendered for nought by the imminent arrival of a US president who at 70 has never held elected office and so has no track record, no known team and no known thought-through China strategy. Beijing also has reason to fear that Trump’s victory will put at risk the forces of globalisation that have propelled China’s economic and thus global ascendency.

It is unrealistic to expect that a Trump administration can repatriate low-wage manufacturing jobs. Those that automation and technology have not rendered redundant are already going to Vietnam and elsewhere in Southeast Asia if they are going anywhere as China ‘rebalances’. Moreover, China is only one aspect of the economic trends that are transforming the US economy in a way that leaves so many Americans, especially older, white ones, feeling left behind, a sentiment Trump so expertly tapped during his election campaign.

That is not to say that Beijing will not try to score points against electoral democracy, though it will not want to examine too closely the insurgence of rank-and-file voters against a ruling political class. Beijing is also unlikely to pass the opportunity to take an early measure of the next US president, probably by being more assertive in the South China Sea.

That, though, is a double-edged sword. It risks prodding Trump in the direction of politicising the issue rather than contesting it on legalistic grounds — such as through asserting freedom of navigation rights and using the UN Convention on the Law of the Sea. That approach, adopted by the Obama administration, has given Beijing scope to build its presence in the South China Sea with a lessened risk of direct US military confrontation.

Beijing’s scope for action now will also be tempered by the reactions of other regional nations to Trump’s election victory. Japan, for one, may see an opportunity to fill a potential vacuum both by building up its military capabilities and by being more active with its development aid and investment in the region. The Asian Development Bank, which falls under its sway, easily outguns the Beijing-created Asian Infrastructure Investment Bank.

South Korea, too, may end up with nuclear weapons from a Trump administration, a development that would be unwelcome in Beijing, not least because it ups the nuclear stakes on the peninsula, elevating the risk of instability that Beijing so abhors.

Further south, the Philippines, Malaysia, Thailand and Indonesia are all calculating where their strategic interests lie between China and the United States.

There has been a quiet (pace the Philippines new president Rodrigo Duterte) shift of emphasis towards developing stronger economic links with China while retaining Washington’s security umbrella. That shift will be being recalibrated in the light of candidate Trump’s criticism that US security partners are ‘free-loading’.

He is not the first US president to have made that complaint, but few have suggested that the US will take its umbrella away if its regional allies do not contribute their fair share to the costs.

Whether President Trump will take the same view as candidate Trump on this and all the other issues that touch on China is probably as much of a guess in Beijing as it is in the rest of the region, and even possibly, at this point, in Washington.

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Beijing Struggles To Rein In Pyongyang

NORTH KOREA’S LATEST nuclear test further undermines the argument that only Beijing can rein in Pyongyang but won’t do so. China’s ability to direct Kim Jong Un is diminishing as quickly as it is losing patience with his regime.

It is not alone in that. Kim has shown himself to be undeterred by international sanctions against his rapidly progressing nuclear programme — to which the latest and harshest Beijing has signed up.

China wants stability in the region and a buffer it can rely on between it and U.S.-aligned South Korea. Kim’s hell-for-leather pursuit of nuclear arms makes the region less not more stable, and Kim feels that he can disregard China’s national security interests with impunity for as long as U.S.-China relations are tense. 

He felt sufficiently secure of his position to test fire three ballistic missiles during the G20 summit that China was hosting in Hangzhou at the start of this month, much to the fury of Beijing which was otherwise basking in playing the role of world leader and was notified of the test through back channels only a few hours in advance.

For a long time, Pyongyang’s unpredictability has been supported by Beijing as a way to keep Washington on the back foot in the region. Now that is outweighed by the risk to Beijing that a nuclear-armed North Korea would lead to a nuclear-armed South Korea and Japan, and that being the sole ally to an archaic remnant of the Cold War only undercuts China’s international standing as a modern world power.

So Beijing’s calculus is changing. Its endorsement of the tough UN sanctions passed in March following Pyongyang’s previous nuclear test was a sign of that. Beijing had been lukewarm to previous sanctions rounds, and uneven in their enforcement. Even though that was a stance to which it seemed to be returning after South Korea decided in July to deploy the United States’ THAAD anti-missile system that China sees directed more at it than North Korea, Beijing’s condemnation of the latest nuclear test was harsh. 

However, if, as seems the case, Kim is using his pursuit of making North Korea a nuclear state central to cement his dynastic legitimacy, then halting nuclearisation can only come from regime change. Sticks and carrots from China, or the international community more broadly, will not induce a change of course on Kim’s part. They have certainly not shown any sign to date that they will.

Regime change in North Korea will most likely come from economic collapse that causes elites to contest diminishing economic resources. That shows no sign of happening soon of its own accord.

China could precipitate it. North Korea is dependent on imports from China of energy and food, so Beijing has the means to act.

But engineering economic collapse is the ‘nuclear option’, so to speak. It would bring a large-scale influx of refugees into northeastern China. Beijing has contingency plans for dealing with that eventuality (they were leaked to Japanese media in 2014), just as South Korea does.

What is not known is what preparations China is making to take control of an imploded North in what would be a scramble to beat the United States and South Korea in the rush to provide humanitarian aid and security for the peninsula as a whole in the name of reunification.

South Korea does have contingency plans to move troops into the North fast. If they were to run into the Peoples’ Liberation Army forces coming in the opposite direction, North Korea could become as chaotic as the Middle East, especially if remnants of Kim’s regime undertake guerrilla warfare, or China was to afford political protection to them.

In the meantime, Beijing is becoming as stymied as Washington in dealing with Pyongyang, and left scratching its head for a way to remove the Kim dynasty that throws the North into neither chaos nor the hands of the South. That it is saying publicly that it is the responsibility of the United States not itself to solve the problem, is a sign of how far from a Plan B it is.

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Xi, Park And Abe: Neighbours Who Have To Get Along

PRESIDENT XI JINPING and his South Korean counterpart, Park Geun-hye, chose an opportune moment to announce their two nations would hold a summit with Japanese Prime Minister Shinzo Abe. Date and location are to be determined but Seoul in October or November this year is likely. Prime Minister Li Keqiang would probably attend for China.

The backdrop to the announcement was the parade in Beijing to mark the 70th anniversary of the end of the Chinese People’s War of Resistance Against Japanese Aggression and the World Anti-Fascist War, or the Second World War in Asia as it is known in the rest of the world. That let both Xi and Park point up their anti-Japanese credentials with domestic audiences, while still setting out to resume the trilateral summits that had occurred until 2012 when Chinese-Japanese relations took a decided turn for the worse over territorial claims in the disputed waters of the South China Sea.

Such a resumption serves to reassure both Beijing, that it is not being ganged up upon by two U.S. allies and Washington that one of its allies isn’t moving closer to the Chinese camp. This Bystander does not expect the meeting to yield any concrete results beyond a commitment from all parties to hold the summits annually. A mooted trilateral free-trade agreement remains a distant prospect.

Two other aspects of Park’s visit to Beijing caught this Bystander’s eye. One was her choice of a striking yellow jacket for her appearance at the Beijing parade, where she flanked Xi with Russian President Vladimir Putin on the other side. Yellow was the emperor’s colour in imperial times and retains a superior status to other colors to this day.

Second was her expression of gratitude to Beijing for its “constructive role in defusing recent tensions on the Korean peninsula.” This, we understand, was sending a PLA mechanized brigade close to the border, a strong signal to Pyongyang to quieten down.

One thing that did not catch this Bystander’s eye at the parade was Kim Jong Un. He has still to visit China since becoming North Korea’s leader.

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Drought Diplomacy In North Korea

North Korean leader Kim Jong Un visits Farm No. 1116, under KPA (Korean People's Army) Unit 810, in this undated file photo released by North Korea's Korean Central News Agency (KCNA) in Pyongyang on June 1, 2015. KCNA

CORN AS HIGH as Kim Jong Un’s thigh. That, at least, is what the picture above released by North Korea state media on June 1 shows.

The reality is likely to be different.

The isolated regime is suffering its worst drought in a century — probably its fourth ‘worse drought in a century’ of the past decade. Pyongyang’s news agency, KCNA, reported last week that paddies in the main rice-farming provinces of Hwanghae and Phyongan were drying up for lack of rain. Food supplies, never plentiful, are now at risk of falling — again — to the level of famine.

The devastation wreaked on the economy by the drought s compounded by the fact that 50% of the country’s electricity is generated by hydropower. Reports finding their way to this Bystander suggest that most parts of the economy are already feeling the effect of power shortages.

North Korea was hit by severe and fatal famine in the 1990s and relied on international food aid to get through. However, Pyongyang’s suspicion of humanitarian workers and reluctance to allow independent monitoring of food distribution, makes international agencies reluctant donors.

Relations between Beijing and Pyongyang are arguable at their lowest ebb. China even rebuffed North Korea’s putative interest in joining the Asian Infrastructure Investment Bank. Nonetheless, China’s foreign ministry said last week that the country was willing to help its drought-stricken erstwhile ally avoid a humanitarian disaster.

One set of questions is what price, if any, Beijing can extract from Pyongyang in return over its controversial nuclear program, and whether Pyongyang is ready to grasp an excuse providently offered to it by nature as an opportunity to back down from the nuclear tests and missile launches that have brought international sanctions down on it.

Another is whether Pyongyang can get food aid from Russia or Cuba, both places recently visited by senior North Korean officials, as an alternative to China, and even whether the regime is over-egging the pudding in regard to the severity of the drought. Last year, according to North Korea’s news agency, food production increased by 48,700 tons compared to 2013 — regardless of reports of severe drought.

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