Sunday, August 15, 2010

Great game in East Pacific - US vs China at sea

Asia is beginning to stand up to China — with US help
Interview with Gordon Chang
By Venkatesan Vembu
DNA, Daily News Analysis, Saturday, Aug 14, 2010

Mumbai - This week, US aircraft carrier George Washington sailed into the South China Sea for military drills with Vietnam, which has recently been badgered by China over territorial disputes in the South China Sea. The US decision was a symbol of its power projection in east Asia, and a “push back” to Chinese muscle-flexing in the region for months, says Gordon Chang, noted China-watcher and author of The Coming Collapse of China. In an interview with DNA in Hong Kong, Chang points to an emerging grouping of states in east and south-east Asia who “don’t want to be dominated by Beijing” and are “standing up to China”.
India’s move to prospect for oil off Vietnam, in an area that China claims as its own, could create friction with China, but India shouldn’t flinch from defending its interests, he adds.

China and the US are testing the waters in the South China Sea with rival ‘war games’. What’s going on?
It started with the sinking of a South Korean naval vessel in March by North Korea, and China’s unwillingness to have Pyongyang brought to account. It also relates to territorial disputes in the South China Sea, and China’s attempts to restrict sea lanes. Countries in the region are, for the first time, standing up to China. They don’t want to be dominated by Beijing, and have asked the US to exert leadership. The US is doing that.

In a speech in Hanoi in July, US secretary of state Hillary Clinton declared that peaceful settlement of disputes in the South China Sea is in the US’ “national interest”. It was a striking departure in US foreign policy, and China felt ambushed. Foreign minister Yang Jiechi said Clinton’s words were “an attack” on China.

When US president Barack Obama visited China last year, he was seen to be soft on China. Has that changed?
The Obama administration tried to be accommodating to China, but it didn’t work. Starting with that disastrous summit in Beijing in November, 2009, there were a series of hostile events. People in Washington decided they’d had enough. I think Obama still wants to be nice to China, but he finds his policy isn’t working. Various elements in Washington want a change in China policy, and it’s happening — fast!

Is the Obama administration signalling that the US is ‘back in Asia’?
It is, or at least Hillary Clinton is. There are two foreign policies in Washington: the Clinton policy and the Obama policy. Her policy seems to be working, and his is not. But in general, people in Washington are fed up of the arrogant Chinese.

China argues that it’s in fact the US that’s overreaching into China’s neighbourhood and ‘provoking’ it…
The US has been there since the end of World War-II. It has guaranteed freedom of sea lanes, which China is trying to restrict. The US has adopted a very low profile in Asia. It certainly isn’t overreaching.

If that’s the case, what’s China signalling, and to whom?
China is signalling that it won’t back down. You’d think that faced with a united coalition, Beijing would step back and divide the coalition. Instead, the Chinese are becoming more hostile. The reason: there’s been a militarisation of Chinese politics. The People’s Liberation Army had been losing ground in the political system in the last three decades; fewer and fewer generals and admirals were holding posts in top Communist Party organs. But since the middle of this decade, flag officers are gaining ground, and they’ve been pushing

China to adopt tougher positions. That’s created resistance in the region. China’s civilian leadership probably realises that the tack they’re on is wrong, but they can’t change because the generals and the admirals have a big influence. The forces that pushed China into a more assertive direction are preventing the country from adjusting and doing what should be done.

India is bidding for oil assets in Vietnam, and China has warned oil companies against operating in what it claims is disputed territory in the South China Sea. Could this spark tension between India and China?
There could certainly be friction, but if there’s going to be a conflict, it’s going to be in the contested border areas.

But hasn’t the Sino-Indian border tension died down since 2009?
Neither country is willing to admit what’s going on, but the Chinese are becoming much more aggressive in their border patrols of Indian-controlled territories.

India, like many other countries, doesn’t want to have a conflict with China; its response is very mild, and that’s understandable; but Beijing realises this and presses its advantage. Yet, it will eventually overstep, and push India too far.

When India objects to Chinese projects in Pak-occupied Kashmir, China claims they’re commercial interests, not strategic. Can’t India take the same line in Vietnam?
India wants oil and gas, and it really is a commercial project in Vietnam. It hasn’t been using it as a strategic lever on China. But Beijing’s relations with Islamabad are strategic. When China helps Pakistan develop nuclear weapons, it doesn’t have ‘commercial relations’; it has a long-term strategic plan to keep India off-balance.

Critics of your book say that China hasn’t ‘collapsed’ in the time frame you set, and you’ve been proved wrong. How do you respond to that?
We’ve to wait until August, 2011, to say for sure. But right now, it’s hard to be optimistic about China’s economy or its political system. I know many people have a bullish view of China, but you also see a lot of investors — Jim Chanos, Marc Faber — who are figuring out how to short-sell China. They’re not political persons, they have no incentive to upset Beijing. They’re like me: they call them as they see them. People are becoming concerned about the Chinese economy, and there are signs that things won’t turn out the way the optimists read it. I’m deeply sceptical: the closer you look at it, the worse it looks.

What do you expect to happen between now and August, 2011, that hasn’t happened until now?
What we will see in China is a prolonged, sharp economic contraction; for a couple of quarters in end-2008 and early 2009, we did have zero growth in China — and probably even negative growth. What we’ll see is a more prolonged contraction.

The Chinese think they’ve solved their economic problems. They temporarily bridged a difficult period, but they did so at the cost of creating problems that are more difficult to solve. They’re going to pay an enormous price. They can postpone the inevitable, but they’re going to make the final reckoning even worse. A year from now you’re going to see a very different economy in China.

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