China’s South China Sea Fishing Fleet: How Far Will It Go?

The picture above shows two of the 30 vessels that comprise the largest fishing fleet dispatched from Hainan to Zhubi Reef, or Subi Reef, in the Spratly Islands (Nansha to China) in the disputed waters of the South China Sea. The 3-story domed building in the background contains a newly installed radar station and a helipad. It towers over the old wharf that China built to establish its claim to the reef. Vietnam, the Philippines and Taiwan all say the reef lies within their territorial waters. The reef surrounds a lagoon and is above water only at low tide, which is why the building appears to be in the middle of the sea. The sharp eyed may detect the band of lighter blue looking water above the reef itself. The fleet is being protected by the Yuzheng 310, one of the most advanced patrol ships of the Chinese fishery administration.

The 20-day fishing mission is the latest display of assertion of sovereignty by Beijing in the South China Sea. It comes in the immediate wake of a meeting in Cambodia of foreign ministers of the Association of Southeast Asian Nations (ASEAN), also attended by U.S. Secretary of State Hilary Clinton, that failed to reach consensus over how to deal with China over its territorial claims in those waters. Beijing successfully divided to conquer ASEAN on the issue, leaving its fishermen free to sail ahead (and its oil drillers to drill), further testing the diplomatic limits of the Philippines and Vietnam in particular.

Footnote: The new city that China is creating to administer its South China Sea specs of rock and reef is preparing to elect a 60-member city council and mayor later this year, according to the Southern Metropolis Daily.

More Bad Burmese Days For Beijing

This Bystander noted last month that Beijing had moved additional troops and armed police to Yunnan on its side of the border with Myanmar’s Kachin state as Myanmar government forces pushed their new offensive against the Kachin Independence Army (KIA). Latest reports say the fighting has again flared up, sending a trickle of refugees into China, unwanted as they may be. Most of those displaced by the fighting, estimated to number 30,000, are in makeshift refugee camps on the Myanmar side of the border. Part of the purpose of Beijing beefing up its armed presence was to deter the trickle turning into a flow.

Beijing’s sympathies lie with Naypyidaw not the KIA, which has led the campaign to disrupt the expansion of China’s commercial interests in Kachin. The 17-year ceasefire between the KIA and the government had allowed Chinese companies to start logging, mining and hydropower projects in the region, such as the controversial and now suspended construction of the Myitsone Hydoelectric Dam on the Irrawaddy river. These interests are now at considerable risk.

Yet, Beijing’s close relationship with Naypyidaw that carried Myanmar’s military rulers through years of international isolation is now in flux following the installation of a civilian government, albeit one backed by the Army. The new government has been making reformist noises, for which it has been rewarded with the chairmanship of the Association of Southeast Asian Nations (ASEAN) in 2014, suggesting it is looking south and west as well as northeast. The country’s new Army chief, Gen Min Aung Hlaing, chose to make his first overseas trip to Vietnam this week, not to China like his predecessors, a decision that will readily be seen as a snub to Beijing, especially as Hanoi is embroiled in a maritime dispute with China over the South China Sea.

Update: Beijing will not have been too pleased, either, to read the plea by U Kyaw Hsan, Myanmar’s information minister, for Washington to lift U.S. sanctions against his country, which he said was making it more reliant on Chinese companies. The minister’s comment came during an interview with the Wall Street Journal. We don’t think lifting of the sanctions is imminent, regardless of the Obama administration’s decision to send Secretary of State, Hillary Clinton, to visit the country. That fits more with the series of moves by Washington to deepen its engagement with China’s neighbors.

China And The U.S. Play Free Trade Chess

Free trade agreements (FTAs) are easier said than done. U.S. President Barack Obama acknowledged as much when announcing an outline agreement to expand the TransPacific Partnership from four to nine as a basis for a regional FTA. There is much detail to be negotiated. It will take years, not months. Many devils must be confronted.

For one, Obama’s domestic opponents are not going to hand him a political and economic victory with a general election barely a year away. Even in the highly unlikely event a final TTP agreement could be reached quickly, a Republican-dominated House of Representatives could block a vote for Congressional approval before the election. Nor are Republicans likely to allow an agreement containing what Obama called ‘high standards’, code for among others environmental and labor protections and local sustainability rights that are an anathema to many of Obama’s opponents.

All those are the quick and dirty domestic political battles. Japan’s decision to join promises a hundred years war. Japan’s new prime minister, Yoshihiko Noda, has risked splitting his party in doing so. He will now need to turn the country’s three most powerful and insular domestic political constituencies, farmers, doctors and the construction industry. Doing so would mean a deep structural change to Japan’s political system. That may be long overdue, but it will not be quick in coming. That alone should not imbue supporters of the expanded TTP FTA with great confidence. Nor should the rapid turnover of recent Japanese prime ministers. Noda is the sixth in five years.

It is already two years since the U.S. applied to join the four-member TTP and started to orchestrate its expansion to nine, including bringing in its two most important treaty partners in the region, South Korea and Japan, as well as regional allies such as Thailand. There have already been nine rounds of TTP expansion negotiations. These are painstaking processes.

The Obama administration’s move was part a a bigger game of FTA chess that it is playing with China for influence in the region. Washington is playing the APEC side of the board while Beijing is playing the ASEAN side. (The side story for those choices is that the Asia-Pacific Economic Community is a group of economies, so can include Taiwan, whereas the Association of South-East Asian Nations comprises countries, so does not. Taipei has expressed interest in joining the TTP FTA, and while Washington has been scrupulously silent on the point, the absence of any outright rejection is being taken in Beijing as unacceptable tacit support.)

Beijing, meanwhile, has been doing what it can to slow up the TTP expansion, and pushing a series of bilateral trade agreement with ASEAN nations and the concepts of regional trade pacts between ASEAN plus three (itself, South Korea and Japan) and ASEAN plus six (adding Australia, New Zealand and India). The U.S. is notable by its absence. Hence Washington’s attempts to involve all the same countries, with the one obvious exception, to much the same purpose but under the aegis of APEC.

This is not necessarily disliked by most Asian countries as it allows them to keep both regional superpowers from being too dominant as they jockey for supremacy. The most extreme example of this is that both China and the U.S. are trying to create trilateral free trade agreements with South Korea and Japan. Two tracks. Double the trouble. And any end game still a long way off.

The China-ASEAN-U.S. Triangle

The U.S. has a new ambassador, one whose post reflects the changing nature of Washington’s relations with Beijing. David Lee Carden, a lawyer who was a fundraiser for U.S. President Barack Obama during his presidential election campaign, presented his credentials today to Surin Pitsuwan, secretary-general of the Association of South-East Asian Nations (ASEAN) in Jakarta. The U.S. is the second non-member nation after Japan to establish permanent resident diplomatic representation to ASEAN and it follows Obama’s visit to Indonesia last year.

Both Washington and Tokyo want to develop strategic and economic ties with ASEAN as a counterweight to Beijing’s growing influence in the region, and specifically its military power in the waters of the South China Sea. ASEAN members welcome the interest for the same reasons, as well as hoping, in the U.S.’s case, that it will bring a more uniform approach to trade. But on both the economic and strategic fronts, all parties need to move judiciously so as not to complicate their links with China, whose Prime Minister Wen Jiabao is also due to visit Jakarta this week.

Unvisited China The Common Point Of Obama’s Asia Trip

U.S. President Barack Obama’s current Asia trip isn’t taking him to China but China will be its recurring theme. The country sits at the heart of Washington’s Asia policy. President Hu Jintao will anyway meet his American counterpart twice, at the APEC and G-20 summits in Yokohama and Seoul respectively. Significant security and economic issues will be on their agenda, with China’s neighbors now seeing the U.S. as a more necessary counterweight to Beijing’s increasing regional assertiveness in both realms.

Free-trade is one area in which this will most immediately play-out with the U.S. seeking to advance its four proposed bilateral free trade agreements in the region, particularly the one with South Korea, which has the most chance of happening. The U.S. is also fiddling around with expanding the amorphous Trans-Pacific Strategic Economic Partnership Agreement (TPP) under its leadership. The TPP has a long-term aim of bringing all countries with a Pacific coast  into a free-trade zone, and is emerging in the eyes of some in Washingtonas an alternative to the pan-regional free-trade proposal of the APEC forum. America has a strong voice in APEC, but the grouping is informal and lacks an institutional mechanism to bring about any free-trade agreement.

Meanwhile, Beijing is looking closer to home, where its own voice carries more weight. It has thrown its lot in with the 10-member Association of Southeast Asian Nations (ASEAN) and its free trade plans that would include its members plus China, Japan and South Korea (who are also working on their own free-trade agreement). The so-called 10+3 will be up and running before any grander pan-Pacific arrangements, and possession, as they say, is nine-tenths of the law.

The counties of the Asia-Pacific account for 44% of global trade and 53% of global GDP so any free-trade initiatives in the region have global ramifications. Beyond the geo-politics, Obama needs more free-trade agreements in the region if he is to have any hope of meeting his promise to double U.S. exports by 2015. However, as the North American Free Trade Agreement (NAFTA) showed, free-trade agreements run readily into the realities of domestic American politics, too.

However this will all play out, it will do so against the backdrop of continuing trade and currency tensions between Washington and Beijing. While they may not get much worse they are unlikely to get much better in the coming months. Beijing is proving adept at shaking off Washington’s attempts at arm twisting over the revaluation of the yuan. Witness U.S. Treasury Secretary Timothy Geithner’s failed effort to get the G-20 to set targets for current-account balances. A lame-duck Democratic Congress might try to pass the Currency Reform for Fair Trade Act, which is aimed squarely at China. However, if it succeed, the U.S. Senate is unlikely to pass it and even if it did President Obama would most likely veto it ahead of the planned state visit of President Hu Jintao in January. The incoming Republican-controlled U.S. House of Representatives would likely let the legislation die on the vine, but not necessarily without some noise from some of its newcomers. Neither outcome provides balm for Sin0-American tensions.

Nor is there much to suggest that tensions over security issues will lessen with China even as they improve with some of the countries Obama is visiting. Beijing’s recent forthrightness in word and deed in the East and South China Seas has made its neighbors more appreciative of having the U.S.’s military presence in the region and heightened Washington’s awareness of the potential importance of that role to countries not always immediately seen as allies. Backing India to join China as a permanent member of the U.N. Security Council is another example in which Washington is bolstering the counterweights to Beijing. (India is due to take is seventh one-year term as a non-permanent member next year.)

Such a move won’t endear itself to Beijing, any more than did U.S. Secretary of State Hillary Clinton’s recent offer to broker a settlement of some of the regional maritime disputes. The brusque refusal by Beijing to take up Clinton’s offer and its extension of aid to Indonesia ahead of the U.S. president’s visit there indicates that it is fully aware of the shifting balance of influence in its backyard.

There is also a risk it will become more upset over Taiwan, always a potential flash point in Sino-American relations, after January if Ileana Ros-Lehtinen, a refugee from Fidel Castro’s Cuba and who supports increased arms sales to Taiwan, becomes, as seems likely, head of the Foreign Affairs Committee in the U.S. House of Representatives. She is partial to poking authoritarian regimes with a stick even symbolic ones.

While Obama plays his various parts as salesman and statesman on this trip, it is America’s relationship with China that shapes America’s relationships with his hosts.

More Talk About An East Asian Community

More wind in the sails of the creation of an East Asian Community, but turbulent wind. The idea is being much discussed at the ASEAN heads of government meeting in the Thai resort of Hua Hin, at which China, Japan and South Korea are in attendance. Japan’s new prime minister Yukio Hatoyama was pushing the idea hard but also calling for an albeit undefined role for the U.S. China was making nice to Japan, which is now being nicer to it under Hatoyama, but there was no disguising the fact that Japan wants the U.S. involved as a counterweight to China’s influence in the region, much the same reason China doesn’t. ASEAN was talking about creating an EAC by 2015, a date Hatoyama would be happy to latch on to. Beijing will doubtless be equally happy to wait it out. Xinhua‘s report from Hua Hin noted that the creation of an EAC “is a long-term objective of East Asian cooperation”. The community will coalesce as a trading block long before it does as a political union.