Asia Pacific Geopolitics – January 20, 2022

| January 20th, 2022

It was a fairly light day in Geopolitics, with the only news coming from Kim Jong Un hinting at more nuclear tests, Covid-related articles and Amnesty International reacting to reports regarding the Olympics. While those are not insignificant, it allowed for more opinion pieces regarding certain previous events. Some key ones are about the lack of a Chinese strategy from the Biden administration, Kazakhstan showing one of the Chinese main weaknesses, and the effects of China in the South China sea, as Indonesia is seriously upgrading its Navy.

  1. CHINA

1.1 Amnesty warns over ‘sportswashing’ at Beijing Winter Olympics – CNA

Amnesty International warned on Wednesday (Jan 19) that the international community must not allow China to use the Winter Olympics in Beijing as a “sportswashing opportunity” and must avoid being “complicit in a propaganda exercise”.

The organisation fears China will use the Games to distract from alleged human rights violations against Uyghur Muslims and in Hong Kong, arguing that the situation in the country is worse now than when it hosted the Summer Olympics in 2008.

Amnesty’s China researcher, Alkan Akad, said: “The Beijing Winter Olympics must not be allowed to pass as a mere sportswashing opportunity for the Chinese authorities and the international community must not become complicit in a propaganda exercise.

“The world must heed the lessons of the Beijing 2008 Games, when Chinese government promises of human rights improvements never materialised.

“Amid the severe restrictions in place at Beijing 2022, the International Olympic Committee (IOC) must do better at keeping its promise to protect athletes’ right to voice their opinions – and above all to ensure it is not complicit in any violations of athletes’ rights.”

[…] The Amnesty report comes after US lawmakers on Tuesday called on the UN human rights chief to release a report on Xinjiang, where Washington accuses China of perpetrating a genocide against minority Uyghur Muslims, before the start of the Olympics.

UN High Commissioner for Human Rights Michelle Bachelet, the former Chilean president, has been asking Beijing for “meaningful and unhindered access” to Xinjiang for years, but no such visit has so far been made possible.

Comment: A continuation of yesterday’s primary article, with Amnesty International criticising the severe restrictions put in place. Outside of them, and a few others, the silence has been deafening.

1.2 Trump negotiated a bad China deal. It has expired — yet perplexingly, Biden isn’t abandoning it – AEI

Among the abject failures of U.S. foreign policy in recent years, a notable one is the so-called U.S.-China Phase One trade deal, which quietly expired on the last day of 2021. Perplexingly, it appears the new administration is still trying (unsuccessfully) to convince China to meet its commitments even though the flawed deal has expired.

The Phase One trade agreement is a textbook example of how the U.S. managed to create leverage, lost it, muddled along, and ended up worse off. It’s time for the U.S. to abandon the deal and determine how to rebuild leverage with China and other trading partners through a strategic trade policy geared at supporting U.S. competitiveness.

When the U.S.-China Phase One deal was inked in January 2020, the agreement served a single purpose — to fulfill the Trump administration’s desire to simply have a deal.

It was not structured to yield the massive structural changes needed in China’s trading posture with the U.S. and the world, nor in its economic model. In fact, China was given the luxury of reaffirming prior commitments such as intellectual property and forced technology transfer, of which China in the end barely met 60% overall.

[…] One year in, the Biden administration remains unable to articulate a coherent China policy and its trade policy is hamstrung by U.S. political dynamics. Only recently have U.S. Trade Representative Katherine Tai and others in the current administration mentioned holding China to the deal.

This disastrous outcome has given China the upper hand in future bilateral dealings and has left the U.S. weakened. It confirms that, no matter how big the U.S. is, it cannot deal with the challenges that China poses to the international trading system alone. It has shown also that creating the unfortunate precedent of managed trade is not a winning strategy.

Comment: The whole saga of this deal has been bad for the US:

  • Trump desired to have something on hand for political purposes, with the pandemic throwing a wrench in his plans
  • Biden has been on a downward trajectory in popularity, with many issues hitting in in short order. All that has had an impact on the fabled China policy, which was promised but still not delivered

Another victim has been the also fabled strategy for the broader region, which was promised but not delivered. As stated here, it would be crucial for Washington to get something concrete out, especially given that China is not sitting idly by. Australia and Japan have managed to keep the CPTPP, and overall a Western-style system, alive even without the US, but they can only do so much.

1.3 Kazakhstan crisis challenges Beijing’s reticence to interfere abroad – FT

The last Russian troops returned home from Kazakhstan on Wednesday, having quelled violent protests in the central Asian country. But for Kazakhstan’s other big neighbour, the trouble has only just begun.

For China, the crisis in Kazakhstan presented the latest challenge to its cautious approach to foreign interventions. A principle of Beijing’s foreign policy is non- interference in other countries’ internal affairs — a stance that has repeatedly come into conflict with the need to protect its growing global interests. In Kazakhstan, China is an outsized economic presence as the country’s largest trading partner and a big investor in infrastructure projects. But when a political crisis erupted on January 2, with demonstrations that soon turned violent, Beijing seemingly stood aside.

It was not until a week later, after the bloody suppression of the unrest, that Wang Yi, China’s foreign minister, publicly announced that Beijing was ready to increase “law enforcement and security co-operation” with Kazakhstan and help oppose external interference.

Comment: Kazakhstan, together with the recent diplomatic forays in the Middle East, are great examples of how China functions. It may wield economic influence, especially when it comes to resources (of which both Kazakhstan and the Middle East have plenty), but it lacks the ability to project power.

On the other hand, Russia, which is economically orders of magnitude smaller, has been able to preserve the vestiges of the Soviet Era, having sent some of its best to deal with the situation and assert Moscow’s de facto dominance.

This shows that Beijing is very much reticent in sending boots on the ground, especially considering the Chinese track record when it comes to troop deployment. Aside from the wars, the last of which has been with Vietnam in the late ‘70s, there have been peacekeeping missions (the latest being Mali and South Sudan) which reinforced Beijing’s risk-averse nature. After all, with almost 80% of the PLA being from one-child families, the risk of combat losses impacting morale at home is severe. This problem has been long standing and there is no indication suggesting any changes on this front.

2. SOUTH CHINA SEA

2.1 Eye on China, Indonesia launches naval spending spree – Asia Times

Indonesia is embarking on a program to modernize its navy and build up a more effective deterrent to confront future incursions by Chinese ships into the 200-nautical-mile economic exclusion zone (EEZ) along its northern maritime border.

Maritime  Coordinating Minister Luhut Panjaitan has often stressed the need for what he calls “ocean-going” surface combatants to protect fishery resources from intruding Chinese and other foreign trawlers in the North Natuna Sea.

But the brazen seven-week incursion by a Chinese survey ship and two armed coast guard cutters near a gas exploration rig 20 kilometers inside Indonesian waters last year has upped the stakes and left the Indonesians scratching their heads over what comes next.

Indonesia’s two home-built Sigma-class and five 1960s-era Van Speijk-class frigates have a limited range of 6,000-9,000 kilometers, only slightly more than most of the navy’s core fleet of 24 corvettes, 14 of which were acquired from the former East German navy in 1993 and are nearing retirement.

Comment: The Indonesian Defence Ministry has several deals in place to considerably improve its Navy:

  • two British Arrowhead 140 frigates, which will be built at state-run PT PAL‘s Surabaya shipyard
  • eight Italian frigates (six new FREMM, the design on which USS Constellation is based on, and two ex Italian Navy which will be upgraded by Fincantieri)
  • Eight Mogami-class frigates from Japan (four to be built in Japan and four in Indonesia).

Not only would Indonesia improve its capabilities, which is a concern for China and its efforts in the South China Sea, but it would also improve relations and compatibility with Western Navies, as the ships would be very similar if not identical.

The deal with Japan is important, more for what it represents rather than the monetary value (although being valued at $3.6 billion is not an insignificant amount).

2.2 Abe’s Indo-Pacific vision is finally coming to life – Asia Times   

This is a transitional moment for the Indo-Pacific. Regional governments are forging new security relationships – the Japan-Australia partnership is the leading edge, as various European governments jostle for inclusion.

New institutions are emerging, from AUKUS to the Quad in the security sphere. At the same time, economic configurations include CPTPP and RCEP.

How did we get here? There are several explanations. Realists insist that rising powers create instability, triggered either by their ambition or the hegemon’s insecurity. For others, the unraveling of the architecture of coexistence, in which China provided markets and the US provided security, was the problem.

To my mind, there are still more basic explanations.

First, you need a threat, a source of instability big enough to motivate states to act. With all due respect to John Mearsheimer, China doesn’t fit the bill – at least it hasn’t until recently.

China has been rising for decades. While that created concern, there wasn’t concerted action to balance against it until Xi Jinping took power. He inherited a powerhouse economy and a modernizing military and married them to ambition and vision – a Belt and Road Initiative that girdled the globe – to pursue the China dream.

His ascension and his muscular foreign policy unnerved governments worldwide. If the dream belonged to the nation, it is Xi who acted to make it real: The elimination of rivals, the consolidation of power, and efforts to entrench himself in office make plain that he is a singular world-historical individual who drives decision making in Beijing.

That security threat has been magnified by perceived unreliability on the part of the United States. It’s tempting to blame Donald Trump for this. He created considerable unease with his disdain for alliances, contempt for multilateralism and his narrowly defined view of US national interests.

But concern predates Trump’s administration. The US refusal to ratify the Trans-Pacific Partnership, a strategic agreement masquerading as a trade deal that Washington was instrumental in negotiating, is the most glaring example – and that was president Obama’s fault.

Comment: As far as foreign policy, Abe was monumental for both Japan and the region as a whole. Japan has, since WWII, been inward-looking, but that changed with his tenure as Prime Minister. The US mistakes, from Obama onwards, definitely played a role in this but this does not detract his effort to radically change Japan.

The process is still ongoing and it has many pitfalls, especially considering the risk of the prime ministerial revolving door period being back, but the reconfiguration started under him has already born fruit.

3. KOREA

3.1 North Korea hints at resuming nuclear, ICBM tests to counter U.S. – Kyodo News

North Korea on Thursday hinted at resuming nuclear and intercontinental ballistic missile tests, saying it may restart “activities” that it had temporarily suspended to build trust with former U.S. President Donald Trump.

A key ruling party gathering held Wednesday concluded that North Korea should take “practical action to more reliably and effectively increase our physical strength” to counter the United States, the official Korean Central News Agency reported.

North Korean leader Kim Jong Un, who held talks with Trump three times, presided over the meeting of the Political Bureau of the Central Committee of the Workers’ Party of Korea, according to KCNA.

The party also decided to “significantly” celebrate the 110th anniversary of the birth of North Korea’s late founder Kim Il Sung on April 15 and the 80th anniversary of the birth of his son, the late former leader Kim Jong Il, on Feb. 16.

Foreign affairs experts warn that North Korea might conduct an ICBM or nuclear test on the occasion of the anniversaries. Kim Il Sung and Kim Jong Il were current leader Kim Jong Un’s grandfather and father, respectively.

Comment: Further signs that peace is nowhere in sight, although it may very well be posturing to hide the current troubles North Korea is facing economically.

4. COVID

4.1 Japan decides to put Tokyo, 12 more areas under COVID quasi-emergency – Kyodo News

Japan decided Wednesday to place Tokyo and 12 other areas under a coronavirus quasi-state of emergency, with a record 41,487 new infections reported nationwide as the highly transmissible Omicron variant spreads rapidly across the country.

The decision will allow the governors of Tokyo and the dozen other prefectures to ask restaurants and bars to close early and stop or limit the serving of alcohol. The measure will be implemented from Friday to Feb. 13 in an effort to curb what has become the “sixth wave” of COVID-19 infections in Japan.

“This has been a fight against an unknown virus, but we hope to overcome this situation by preparing sufficiently without fearing excessively,” said Prime Minister Fumio Kishida at a meeting of the government’s COVID-19 task force.

Along with Tokyo, which reported a record 7,377 new infections Wednesday, the targeted prefectures include its neighbors Chiba, Saitama and Kanagawa in the metropolitan area. The region saw a full state of emergency lifted about three months ago.

The metropolitan government said Wednesday that while it will request dining establishments to shorten their business hours, it will make the suspension of serving alcohol optional.

Nine other prefectures subject to the new quasi-emergency are Aichi, Gifu and Mie in central Japan, Nagasaki, Kumamoto and Miyazaki in the country’s southwest, Kagawa in western Japan, Niigata in north-central Japan and Gunma in eastern Japan.

Fukushima and Shimane prefectures are set to request that the central government impose emergency measures, their respective governors said Wednesday.

Comment: The number of cases, and the subsequent restrictions, may put the Japanese economy into jeopardy once more. This will render the BOJ action even more crucial, especially in light of the mounting debt servicing costs (more on this in today’s Macro).

4.2 Xi’an restarts some public transport after coronavirus lockdown – CNA

The Chinese megacity of Xi’an has partially resumed public transport, according to official announcements, after millions were confined to their homes for weeks because of a coronavirus outbreak.

The easing of transport rules – including the resumption of some inter-city train routes – comes just before the Chinese New Year holiday later this month, traditionally a period of mass travel.

Chinese officials have pursued a strict “zero-COVID” approach to containing the virus, with tight border restrictions and targeted lockdowns, a strategy that has come under pressure as multiple clusters have flared across the country ahead of next month’s Winter Olympics.

Some 13 million Xi’an residents were placed in lockdown in mid-December as cases spiked, but the historic city reported no new local cases on Wednesday for the first time in weeks.

Local authorities said public transport had resumed in “low-risk” areas from Tuesday (Jan 18).

Trains from Xi’an to popular destinations such as Beijing, Shanghai and Guangzhou have “basically resumed operations” as well, state broadcaster CCTV said on Wednesday.

CCTV added that the number of commuters at the city’s train stations – mainly students and migrant workers – was increasing as well.

Comment: While this is a good piece of news, it also exemplifies very well the Chinese policy. For over a month, a city of millions has been for all intents and purposes isolated from the rest of the world and this for a handful of cases. Given what we know about Omicron, it may become increasingly costly for China to follow this strategy (especially in light of this variant breaching the most common Chinese vaccines).

Meanwhile, Hong Kong is seeing a rather peculiar side effect of the air traffic disruption: people chartering planes to ferry their animals out of the city. As cargo traffic has essentially ceased, and as the city authorities have started culling certain animals, the richest are willing to pay some $25,000 to fly their furry loved ones to safety.

Another culprit for transmission has been, according to the Chinese authorities, international mail. After two cases, reported to have been caused by mail, China has ramped up testing for all people receiving packages from outside of China. This follows the previously reported requirement of wearing a mask and gloves when opening packages, which may be one of the most baffling applications of Zero Covid.

4.3 Morrison’s jobs boom swamped by omicron wave – AFR

Prime Minister Scott Morrison would have wished he was fielding questions about the historically low 4.2 per cent unemployment rate, instead of being hounded about the government’s management of COVID-19.

The jobless rate has not fallen this low since the mining investment boom during the John Howard and Kevin Rudd prime ministerships more than 13 years ago, and rarely at all in the past half century.

Now, just as the pandemic challenges Australia’s supply chains, workforce and health system, the labour market has been shown to be in rude health in December, on the eve of the omicron outbreak.

Approaching a May election, the jobs story is perhaps Morrison’s only remaining trump card as the government takes a battering over the shortage of rapid tests, empty supermarket shelves and the isolation of thousands of frustrated voters.

Comment: The current Omicron wave sweeping Australia may play a crucial role in the upcoming elections, especially if data regarding unemployment (and more broadly the economy) get a turn for the worse (which is somewhat expected, given the news coming from its economy).