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America feeling missing out in Asia

November 14th, 2011 Leave a comment Go to comments

With Obama meeting other East Asian countries in Hawaii these few days, the “American re-engagement with Asia” story is all of a sudden in vogue again. This new way of thinking actually started with President Obama’s promise couple of years ago to double America’s exports in the not too distant future. The goal itself is worthy and is an excellent way to channel America’s energy. Unfortunately, the simple gist of that U.S. ‘re-engagement’ has instead been couched by the U.S. media into some sort of militaristic furtherance, with a suspicious eye casted at China. Such ploy is to dramatize and sell ads (and, sure, by politicians to garner votes). I am happy that the Obama administration still publicly reaffirms the idea that a richer China bodes well for American exporters, because that is the simple truth. Ask Intel, Apple, GM, and Caterpillar.

If we look at the trade volume within Asia, it is clear U.S.’s proportion has been falling. China is already Japan’s largest trade partner for some time now. During the 1997 Asian Financial Crisis, it was China who acted responsibly to keep the RMB value steady which helped stemmed further deterioration of other Asian country’s currencies. It was precisely massive capital flight (an act of irresponsibility by the developed countries) that exacerbated the problem. The Asians have not forgotten that.

If China is only interested in keeping all benefits to herself, she wouldn’t pass along sizable growth to her neighbors by maintaining a trade deficit with them. To show commitment to the FTA, China in fact lowered tariffs ahead of agreed schedule.

As I predicted in this August 2010 post, ASEAN + China trade would exceed $250 billion. In 2010, it reached $292.78 billion. This number is significant, because that is precisely the trade volume between China and U.S. for 2009. With the FTA in place since 2010, I expect this growth to continue to roar; and undoubtedly push the volume higher than America’s. More details from the recent 8th ASEAN+China Expo here:

The trade volume between China and ASEAN has increased substantially in the past twenty years. According to the statistics from China Customs, the trade between the two sides in reached US$292.78 billion 2010, up from US$7.96 billion in 1991, with an average annual growth rate of more than 20 percent.

Another example of China’s constructive engagement is in her assistance to ASEAN in projects like the high speed rail linking Kunming all the way south to Singapore. (Click here to see a rough sketch and of the scale of this project.)

Recently, America signed a FTA with South Korea. I absolutely applaud that.

You see, China has been much better at this game than America as of late. America has lost her sight of it, because the wars in Iraq, Afghanistan, and now Libya have totally distracted her.

The real re-engagement is in fact about trade expansion. To lower trade barriers. To find more avenues for American products. Does doubling the 50,000 troops in Japan to 100,000 sell more iPhones? Does placing 50,000 troops on Philippines deter any pirates? With all of America’s might, she couldn’t muster enough resolve to decisively deal with the Somalian pirates! There is really not much of a pirate problem in South East Asia anyways.

The U.S. media might make Americans feel ‘good’ about America’s might. But, that is wrong-headed. Americans need to focus on what their president tells them – to double America’s exports to help with the unemployment crisis.

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  1. silentchinese
    November 15th, 2011 at 03:51 | #1

    American industry’s true competitors are Gemany, Japan, to some extent SK. Britian, France, Nordic states.

    Germany, Japan, and SK all ran healthy trade surplus with china. sometimes proportionally bigger than US trade deficit with china, . does that mean euro, yen, won are all greatly undervalued vs Yuan!? no.

    that above fact along would tell you what the situation today is. and how hollow the currency manipulation argument is.

    RMB appreciation actually is not helping American job situation. as RMB appreciate chinese industries are getting more and more into higher tier industries, with more value added goods. some of them are hyper competitve.

    Germany Japan SK can offset the challenge by Chinese industries because 1) they still retain the technological and industrial commanding heights and 2) they offset their cost with a chinese manufacturing base.

    Americans are directly in line. because they are actually at a slight lower in technological ladder.


    in short term if one really wants to protect american jobs, don’t ask the chinese to appreciate their currency vs Dollar.
    in longer term, the job you think cjhinese work took from you? well it is actually in the Samsung TV you brought that is assembled in china and that corolla you drove home, all made with help of german machine tools

  2. raventhorn
    November 15th, 2011 at 05:48 | #2

    If China is the “currency manipulator”, then the West is the “Sovereignty manipulator”.

    In the past 50 or so years, it is evident that the West has used imperial ambitions to artificially cheapen the value and definition of “sovereignty” for non-Western nations, in the name of maintaining a Western-centric power-based Ponzi scheme.

  3. November 15th, 2011 at 09:28 | #3

    There’s actually a pretty serious pirate problem in the Strait of Malacca. It is just not widely reported out of SE Asian press. Both the Indonesian and Malaysian authorities dislike any outside interference be it from the US or other nation (China has expressed no interest in stationing troops).

    However, last month 13 Chinese sailors were murdered and robbed in the Mekong River by Thai military personal who moonlighted as pirates. This incident prompted China to send river petrol to this area after discussion with Myanmar, Laos and Thailand. The area also have significant pirates present.

  4. zack
    November 15th, 2011 at 10:18 | #4

    good post, yinyang;
    i think we ought to focus on the US’ proposed FT Area at ASEAN-all of which is centred on the US of course; notice how all the other countries who said they’d take part have such tiny markets vis-a-vis the US? it’s obvious that in such a grouping, only the US will benefit.
    i can tell you right now, based on the FTA signed between Australia and the US, that it’s only the US that will benefit.

    what i think should happen is that the SCO should become a FT Area akin to the China-ASEAN FTA; i note with mirth at how many western commentators pooh-pooh the SCO because they do see it as a credible threat to Western hegemony.

  5. November 15th, 2011 at 11:08 | #5

    Very true, America’s more direct competitors are Japan, Europe, and other developed countries. Look at Toyota vs. GM. Look at Samsung vs. Apple. Look at Airbus vs. Boeing. Look at French wine vs. California wine.

    All countries are “currency manipulators” if people want to throw that label around. Look at the amount of USD the Fed has printed in the last 3 years. It is staggering.

    The truth is that the U.S. is exporting inflation to the world by diluting the USD, and the world doesn’t like it. Japan, Europe are all very upset. The truth is the world would like China to valuate even more to soak up exports from around the world to further drive the global economy.

    The truth is currency policy is a sovereign issue. Nobody else is whining about the U.S. as a currency manipulator. The truth is the world for relying on the USD as the global currency is realizing how that dependence can also hurt at times like this. Americans will get confused in the future as the RMB becomes more widely used around the world, perhaps reducing the importance of the USD. They only need to look at the period from 2008 through now.

    Interesting – I should look into the Strait of Malacca more.

    Right. And, also, I’d add, the strength of China’s relationship with her neighbors will have to be built upon true merits, not by some false sense of whatever. The U.S. want more leverage with the region means that the U.S. simply has to be a more constructive player for the region. If so, that ought to be welcomed by all. And I truly believe the U.S. can.

  6. November 15th, 2011 at 11:48 | #6

    Piracy in Straits of Malacca accounted for nearly 40% of world total. They hide in the many thousand of islands which is unpatroled.



  7. zack
    November 15th, 2011 at 12:30 | #7

    even the darling of the Western press, the Global Times’ op-eds are fine with the US being in Asia, so the only one with the existential crisis is actually the US military; needing to justify all of that continued military spending especially with the drawdown of troops in Iraq and continued funding for pentagon toys means the US is-as Peter Lee of ChinaMatters and ATimes has said- is “A solution looking for a problem”.

    let’s look at this in terms of economics; the US can no longer compete with China in any field; its superiority in technology is fast being eroded as China catches up and it is no longer the largest market for cars/other goods, so that means its leverage of having a large market is being steadily diminished. not to mention with the level of private debt held by most middle class Americans, the outlook for the consumer market in the US is pretty bleak.

    solyndra’s collapse is but one symptom of this dynamic; of course solyndra collapsed for various internal reasons but the way things are looking now, China has an edge in green technology and have a view towards cornering the green tech market, and since US firms can’t compete on a level field, they’re playing dirty by crying to Congress over “unfair trade practices” by the Chinese as a way to excuse their own incompetance or inability to compete.

  8. November 15th, 2011 at 14:46 | #8

    I have similar views about the ‘a solution looking for a problem.’ This is precisely what Eisenhower warned America on his departure – of the military industrial complex.

    Ever wonder why U.S. weapons manufacturers advertise to the public, and then on the grounds of “freedom” and “democracy?”

    We all have a ‘negative’ view towards this phenomenon, but we should bear in mind too – people in that industry are people too. Their jobs depend on it. Obama has been trying to trim about $45 billion a year off the military budget. And I think that’s a wise move – not an easy thing to do given America’s political climate.

    Agreed too on Solyndra – they made a wrong business decision and a wrong gamble. End of story. Instead, a veil has been pulled over the American public eye and it’s ‘bad’ China again. It’s truly ridiculous.

    The point where I disagree though is U.S. competitiveness vs. China’s. I think the U.S. is still pretty far ahead in many fields. Despite COMAC making great strides, it is still a decade or two behind Boeing (and Airbus). There is no Intel equivalent. Huawei is catching up to Cisco. There is no Apple equivalent yet. There is no car manufacturer the scale of international reach like GM or Ford yet. There is no pharmaceutical company like some of the giants in the U.S.. Tencent and Baidu have some international reach, but is not near the scale of Google. There’s Microsoft, and the list goes on and on.

    Agree the U.S. have spent to the hilt, and in times of trouble, options are much more limited.

  9. November 15th, 2011 at 16:53 | #9

    The military industrial complex is killing the US economically and politically as well. I don’t have the exact figure but $100 billion spent on education or infrastructure project will easily create a few times more jobs than the same spending on defence. In my view, China matches about 85-90% the defence R&D of the US, but only match about 15% the amount spend on deployment. Basically, the US spent 7 times more than China but what the former got is worldwide capability and string of bases worldwide which does not help US in anyway. The neo-con will argue that it makes the US safer but that’s stupidity at its extreme. China and Brazil has no overseas bases but have less overseas threat than the US!

    I agree with you that the US is way ahead in term of its MNC and industries developement. The biggest threat to the US companies has actually come from the European and the Japanese. You have mentioned Boeing, there’s Airbus (Japanese companies got around 15% of Boeing manufacturing contract); Ford and GM are being defeated in the overseas market by the Japanese and German. Biggest competitor to CISCO is Ericsson. The biggest problem with the US press is that they keep trumpeting China and its industries as threat but the reality is China’s market is the only bright spot for US companies anywhere from Apple, Intel, Boeing, Caterpilar, GE, GM all the way down to KFC, MacDonald, Procter Gamble etc.

    They refused to report that US companies reapt enormous amount of profit from the Chinese market while facing stiff competition in Europe and Japan. Intel and Microsoft have repeatedly faced anti trust law suit in the EU. Putting a tariff on Chinese made product contracted by US and MNC will destroy the US economy. Tariff will only create jobs in the US if it is applied on EU or Japanese products which is actually comparable. However, we see almost no US politicians espousing this view!

    The biggest threat to US actually comes from within, same as China. Blaming outsiders will lead to nowhere. Doesn’t people like Krugman know that? By refusing to see this problem, the financial mess the various US administrations have dig into will never be solved.

  10. zack
    November 15th, 2011 at 20:52 | #10

    the mentality of the leadership in the US right now is that China is expected to overtake the US’ economy in about 4 yrs according to IMF estimates and at current rates of growth. This means that pretty much everything the USG has done can be construed as “delaying actions” until that day because they probably believe that in a zero sum game, if China loses, perhaps they themselves are somehow gaining in some other area somehow. well they’re wrong and as Ray has kindly pointed out, it’s actually the German and Japanese firms who benefit and win.

    y’know, all this is going to come to a head one day, when enough Chinese people decide that enough is enough, that perhaps they don’t need the latest apple product to be chic or hip and decide that they don’t appreciate US’ interference in Chinese affairs or creating insecurity on China’s borders (such as the SCS and ECS), that one day these Chinese consumers decide that in order to convey their displeasure to th eUS, they decide to stop buying American products for about a couple of months. How does that pan out for the US? the only thing keeping most US companies afloat atm, is the Chinese market.

    The consensus in China and in Beijing is that China wants to be friends with the US, not a “little brother” like the US-Japan relationship, but for a hegemon that’s been a hegemon for as long as it can remember, there is no other relationship the American leadership can or is willing to accept. A while back, a writer opined that the US must manage its decline

    however, for a politician in the US to address its decline publicly, it must admit they are in decline and to do so is political suicide.

    btw, perhaps China ought to start courting Mexico with a view towards helping the Mexicans “counterbalance” the US

  11. November 15th, 2011 at 21:12 | #11

    China need not worry too much about Obama’s push for a US-centered trans pacific pact to displace or marginalize existing trade agreements such as China-ASEAN FTA.

    First of all, the US govt will not even begin to vote on the TPP until after the 2012 elections, so at the earliest, TPP won’t be signed until 2013; by which time, China-ASEAN trade will become even more integrated. (China has separate FTAs with north east Asia and Australia)

    Secondly, while Obama may be pro free trade, it’s unlikely his plan will be as welcomed in Congress, at least not under the present political environment. Even Republicans these days have turned against free trade. The politically popular thing to do now is to attack free trade and embrace protectionism.

    Thirdly, the devil is in the details. The existing ASEAN FTA took years to hash out, and East Asian nations are not novices in this endeavor. They know that large countries like the US have tremendous advantages in negotiating free trade agreements. All things being equal, small countries like Singapore can easily lose out because its harder for them to satisfy the rule of origin requirement in FTAs. So unless the US is willing to compromise like China did, it won’t be a level playing field. And why should they sign a document that won’t benefit them?

    And on this point, the US is unlikely to be as compromising as China was because of its economic condition and political environment. China signed on knowing well in advance that it would lose out to ASEAN for years. She still runs a trade deficit with most of East and Southeast Asia. The US won’t be able to afford that.

    Lastly, China is not going to sit idly by while Obama tries to edge her out of the region economically. It’s still early to guess what kind of measures the Chinese government will take as a result, but I’m certain that they will try to internationalize the RMB and make it tradable soon.

  12. zack
    November 15th, 2011 at 22:41 | #12

    good points; just wanting to point out that atm, China doesn’t have a FTA with Australia or South Korea or Japan, all of whom are fairly protectionist in their own respects. The fact that the Australian PM is talking up the FTA strikes me more as politicking rather than substance; her government is on the decline and she needs to have something to show for it and spruiking up this FTA might please Washington but it won’t please the electorate at home. The recent Aus-US FTA landed a lot of Australian industries on the losing side whilst US companies were allowed free access to the Australian market.

    i wonder, i mean China has been working quite assiduously these past 3 decades on developing peacefully only to have it endangered by the paranoia of a few in ASEAN (ahem philipines and vietnam and singapore) and the US; and at the same time greedy American corporations keep pressing for more and more market access to the Chinese market but they whine at the terms the Chinese government sets them. tech transfer for access to the largest market in the world.

  13. November 16th, 2011 at 12:27 | #13


    This may be of interest, from the NYT, “explaining” to some extent the American position.


    The United States has had military bases and large forces in Japan and South Korea, in the north Pacific, since the end of World War II, but its presence in Southeast Asia was greatly diminished in the early 1990’s with the closure of major bases in the Philippines, at Clark Field and Subic Bay. The new arrangement with Australia will restore a substantial American footprint near the South China Sea, a major commercial route — including for American exports — that has been roiled by China’s disputed claims of control.

    Like Australia, China’s neighbors in Southeast Asia have looked to the United States to increase its military presence as a counterweight to Beijing. Mr. Obama has sought to provide that assurance, but the Asia-Pacific allies are well aware of the intense pressure for budget-cutting in Washington, and fear that squeezed military spending and other factors may inhibit Mr. Obama’s ability to follow through.

    The United States and other Pacific Rim nations are also negotiating to create a free-trade bloc that does not include China, the Trans-Pacific Partnership. The tentative trade agreement was a topic over the weekend in Honolulu, where Mr. Obama hosted the annual Asia-Pacific Economic Cooperation forum, and it will be discussed again later this week when he becomes the first American president to participate in the East Asia Summit, on the Indonesian island of Bali.

    For China, the week’s developments could suggest both an economic and a military encirclement.


    Analysts say that Chinese leaders have been caught off guard by what they view as an American campaign to stir up discontent in the region. China may have miscalculated in recent years by restating longstanding territorial claims that would give it broad sway over development rights in the South China Sea, they say. But they argue that Beijing has not sought to project military power far beyond its shores, and has repeatedly proposed to resolve territorial disputes through negotiations.

    The United States portrays its newly aggressive stance in Asia as a response, urged on by regional powers, to China’s own aggressions. Hillary Rodham Clinton wrote a recent article in Foreign Policy laying out an expansive case for American involvement in Asia, and Defense Secretary Leon Panetta characterized China’s military development as lacking transparency and criticized its assertiveness in the regional waters.

    The new American focus on Asia, analysts said, threatened to sour relations with Chinese leaders.

    “I don’t think they’re going to be very happy,” said Mark Valencia, a Hawaii-based senior researcher at the National Bureau of Asian Affairs, who said the new policy was months in the making. “I’m not optimistic in the long run as to how this is going to wind up.”

    Of course, the official U.S. (double-speak?) response is that this is not about containing China.

    Mr. Obama took steps on Wednesday to signal that the new deployment, and the recent push to set up a new trading bloc, are not meant to isolate China.

    “The notion that we fear China is mistaken; the notion that we are looking to exclude China is mistaken,” he said.

    The president said that China would be welcomed into the tentative trade pact, the Trans-Pacific Partnership — nine nations, including the United States, agreed in Honolulu to finalize a framework in 2012 — if Beijing is willing to meet the free-trade standards for membership. But such standards would require China to let its currency rise in value, to better protect foreign producers’ intellectual property rights and to limit or end subsidies to state-owned companies, all of which would require a major overhaul of China’s economic development strategy.

  14. November 16th, 2011 at 12:31 | #14

    @zack #12

    greedy American corporations keep pressing for more and more market access to the Chinese market but they whine at the terms the Chinese government sets them. tech transfer for access to the largest market in the world.

    I’ve been meaning to do a post on that topic for some time: what is wrong is China stipulating tech transfer for market access? If we can only point to the WTO, then I say, fine: let’s resolve within WTO and let’s not politicize it too much.

    If we want to politicize: we should remember WTO is a give and take anyways, it doesn’t set anything normatively. Even as countries subscribe to the WTO, they may also change it. The WTO as it is is nothing but a condition for trade, currently and historically set by a dominant West. Just because something is compliant or non-complaint with WTO says nothing about whether it is fair.

    So what’s wrong with China demanding tech transfer for market access?

  15. November 16th, 2011 at 13:54 | #15

    I think the bottom line is the U.S. feel missing out on the ASEAN+1 and soon ASEAN+3 FTA. U.S. has basically bilateral trade agreements of sorts with South Korea, Japan, and China separately. What the U.S. is missing is a coherent strategy with ASEAN.

    There’s a lot of talks about security, but I believe that’s all propaganda to simply signal America’s bigger involvement in Asia. That bigger involvement is in fact this TPP – which is economics. My sense is that with the stupid and twisted nature of domestic politics in America, the only hope of the U.S. achieving a TPP (i.e. the U.S. actually given out some concessions to ASEAN) deal is to get the American public to support a ‘security’ package.

    An example concession would be to give tax breaks to American corporations to invest in ASEAN. That money will have to come from some where. The U.S. government is smart enough to not make this a zero sum thing. Meaning, it would be foolish to cut back expansion in China (at the risk of loosing market share) and divert investment to ASEAN. So, the public would pony up the funds some how for TPP.

  16. November 16th, 2011 at 14:15 | #16

    I should add, the TPP is likely a good thing. I think more trade and less protectionism are generally better. The bizarre thing is that the only thing that could rally American public support seems to be threat and security.

  17. November 17th, 2011 at 11:37 | #17

    @YinYang #16

    I should add, the TPP is likely a good thing. I think more trade and less protectionism are generally better.

    Here is where I’d like to differ a little.

    The TPP “free trade” zone is basically a negotiated trade zone. The “Free” doesn’t mean anything, except to the extent that certain trade rules relegated to individual nations are now replaced by the trade zone rules.

    Whether those zones are truly “free” or not (i.e. fair or not to all participants) depends on the negotiation strengths of the parties.

    The WTO is a trade “zone” if you will that – for many developing nations – favor the “rich.” The requirements of “intellectual property,” capital protection, demand for Western style laws and rules and standards, etc. all can be argued to rob the poor at the expense of the rich (ok, that’s a political statement. Fair or not, it is a statement that many in the 3rd world do subscribe to).

    Same here with TPP. Even if the U.S. does succeed in creating a TPP, and many Asian nations sign up, it does not mean necessarily that it will benefit the Asian nations and U.S. equally. I am not asking for fairness in results, but to note that the system may be biased structurally from the first place.

    If you look at colonialism, it is about creating a sort of trade zones also – for the mother country and the colonies. The opium war is arguably about creating a “free trade” (at least “freer trade”) zone between European powers and China.

    So I will beg to differ. Just because a nation wants more “trade” and less “protectionism” doesn’t mean anything. Now in today’s globalization context, maybe trade is better than protectionism. China’s trade, in particular, has benefited the world tremendously.

    But that context needs to be carefully scrutinized. Western powers have already distorted trade by demanding so much of its rules to be international rules. As the U.S. mixes militarism with trade, if we are not careful, international trade – U.S. style – can yet become (maybe it already is) another tool of global suppression…

  18. November 17th, 2011 at 12:20 | #18

    I agree with your points.

    I guess at this point I mainly don’t think the U.S. having that much leverage so that when the TPP is done, it would be completely stacked against the other members favor. ASEAN could continue to trade more with China or with Japan or EU.

    TPP has to have its own merits in the context of ASEAN+China, WTO, and other ASEAN trade relations.

    China’s trade with Latin America is expanding rapidly too.

    So, I think the U.S. is alarmed and are trying to catch up in the area of trade.

    U.S. already enjoys a big competitive advantage across the board – cheaper oil, and a lot of it through militarism.

  19. scl
    November 17th, 2011 at 12:41 | #19

    More free trade treaty means more outsourcing from the US, not a good thing for US labor, only good for multinationals.

  20. raventhorn
    November 17th, 2011 at 16:15 | #20

    US government officially begin to discriminate against Chinese companies in the name of “national security”.

    Hey, If Corporations are “people”, then Huawei and ZTE might be the next Wen Ho Lee, right?!


  21. zack
    November 17th, 2011 at 22:16 | #21

    China should take the US to the WTO over protectionist policies and discrimination;

    i also note with no small sense of irony that Congress is on the verge of passing internet censorship laws; i wonder where hilary clinton is when she’s on about her bullshit about “internet freedom”?
    you’d think she’d preach to the ppl who need it most-at home.

  22. raventhorn
    November 18th, 2011 at 07:09 | #22


    If we are to follow the line of Ms. Clinton’s “freedom”, then what is US Congress all getting paranoid about?

    Huawei and ZTE don’t work for US national security agencies.

    Bottomline, what is US hiding?

    All the talk of nebulous “national security” with no specifics of what Huawei and ZTE are actually “stealing”, brings in mind “censorship”, Not merely that, but “Preemptive censorship”, the worst kind of “censorship”.

    Ie. not only there is no specific indication of what material US is trying to censor in Huawei and ZTE, but they are trying to prevent Huawei and ZTE from having normal access to information all together, and keep Huawei and ZTE from the market in US.

    Now, Google not wanting to follow Chinese laws on specific information monitoring, is Google’s own choice not to participate in the mainland market.

    In contrast, US (and some European countries) are trying to censor Huawei and ZTE by keeping them out of the market access completely, (via roadblocks and harassment).

    at the very least, it is violation of trade rules. Worst, it is “Preemptive” and blanket censorship.

  23. zack
    November 18th, 2011 at 11:13 | #23

    indeed, and from a legal perspective, it can be even argued that the US government as well as some European governments have indulged in libel against Huawei and ZTE; where’s their proof that Huawei and ZTE are involved in espionage? all they have to base their accusations on are innuendo and the public’s sense of fear. Accusations that since the Chairperson of Huawei has military background are about as ludicrous as saying that since IBM has worked with the US military in the past, that its contracts with other countries are a threat to those countries’ national security.

    no matter, i’ve heard Huawei and ZTE are major players on the African continent and are set to expand around Asia as well.

  24. Charles Liu
    November 18th, 2011 at 12:20 | #24

    This “trade” is probably gonna be the China pretext, like the WMD, Al Qaeda, etc.

    Last time Rumsfeld’s “Pacific Theater Doctrine” redirected to “War on Terror” and China dodged a bullet. Even if this is not it, it’s just matter when.

  25. scl
    November 18th, 2011 at 14:23 | #25

    Interesting take on US’ “return” to Pacific: http://www.atimes.com/atimes/China/MK19Ad01.html

  26. November 18th, 2011 at 15:11 | #26

    Thanks for that link to the Peter Lee article. I am usually more optimistic about the China-U.S. relationship than expressed in his articles. On this TPP and America’s ‘re-engagement’ with Asia, I very much agree with his view.

  27. aeiou
    November 18th, 2011 at 23:46 | #27

    The TPP will make the DMCA look fair and balanced.


  28. jxie
    November 19th, 2011 at 15:00 | #28

    Obama doesn’t have the “fast track” trade negotiation authority that had been granted to his predecessors, so how exactly will the administration go about the multilateral TPP negotiations, which will be a couple orders of magnitude more difficult than the contentious and lengthy bilateral Columbia FTA? This is like a bunch of children playing “grown ups” games (yes, the irony), or more precisely a community organizer whose previous lifetime achievement was writing a couple books about himself, playing a presidential game.

    Trade negotiation is very hard work (compared to making a “great” speech reading off teleprompter). Other than you need a competent leader, a top-notched team working tirelessly, you also need to take political bickering out of the negotiation. Without the “fast track” authority, each item of the negotiation list, will potentially become a political hot-button issue.

    The funny thing is, Obama could’ve easily had the “fast track” in 2009, if he had known then he would need in the future. The US Congress now is far less accommodative. He was in such a high-minded state in 2009 (or rather a clueless state), he just didn’t see the Democrat party line in this specific case would be detrimental to his presidency.

  29. vokoyo
    November 19th, 2011 at 16:36 | #29

    China claim to the Diaoyu Islands is based on the “discovery” of unclaimed territory and derives from a range of Chinese governmental contacts and references going back to 1372.

    Japan claim is also based on the “discovery” of supposedly unclaimed territory, despite the fact that official Japanese documents, several of which were unearthed by Taiwan scholar Han-yi Shaw, demonstrate that the Japanese government was well aware of China historic claim when it began to take an interest in the islets in 1885.

    During the subsequent decade, contrary to the assertions now made by Japan, its officials not only failed to complete surveys of the islets necessary to confirm their alleged unclaimed status, but also recognised that the matter “would need to involve negotiations with Qing China”.

    To avoid China suspicion, Japan chose to conceal its intention to occupy the islets “until a more appropriate time”. That time came in January 1895, when Japan by then on its way to defeating China in their 1894 war, adopted a Cabinet decision that the islets were Japanese territory. Yet even that Cabinet decision was not made public until after the second world war.

    Moreover, if the US were to become an impartial mediator, it would have to note that Japan claim to sovereignty over the islets is based on a distorted version of late 19th century history that does not pass the international smell test.

    It is time for Japan to reassess its views on the international law of the sea. Those of its views that are plainly irresponsible only discredit others that deserve serious consideration.

    Perhaps most insulting to the world community is its claim that the rock called Okinotorishima that constitutes Japan southernmost “land”, a reef system with land at high tide no larger than a king-sized bed, is entitled to an EEZ and continental shelf.

  30. zack
    November 19th, 2011 at 21:19 | #30

    China may have the right of it, but in a world where the US is actively attempting to conjure suspicion and cold war between neighbours, will the US as an impartial adjudicator act justly?

    i doubt it.

  31. raventhorn
    November 20th, 2011 at 09:21 | #31

    Let open the floodgate of “might makes right”.

    The only real reason why some nations fear China is that they have a guilty conscience.

  32. zack
    November 20th, 2011 at 12:17 | #32

    looking at US actions since 2009, i can’t help but wonder if the USG is hoping to catalyse a war with China with a view towards perpetuating anglo-american hegemony via taking out the closest competitor; you have them encouraging all the ASEAN nations and south korea and japan to confront China and create a belligerant atmosphere so as to create a reason for theUS’ continued relevance in the region-and then you have former Australian Prime Minister-now current foreign minister Kevin Rudd being recorded on wikileaks as having encouraged the US to attack China militarily “if all goes wrong”, meaning if anglo-american hegemony is threatened.

    will there be a war?
    hopefully not; the only ones who stand to gain in a war will not be ASEAN nor Japan nor south korea; the net gainer will be the US who’s messing around in China’s backyard, hence the rationale for their actions these past 2 yrs.

  33. raventhorn
    November 20th, 2011 at 12:31 | #33


    US foreign policies have always been “Schizo”, as some Americans have commented in the past, because the 2 party system means, 1 would never agree with the other on such important issues, AND both would try to out-do the other for political mileage.

    Certainly, both parties would at least agree that ANY potential threat to US dominance should be dealt with via “undermining” efforts on all fronts, escalating eventually to whenever an opportunist war can be catalyzed, with the proper moment chosen by US.

    1st and foremost, US does not like to be “blindsided”, so it is best to prepare and trigger wars on its own terms.

    But, US must appear to be the “victim” in all wars, thus, escalate and push the other side, until the other side pulls the trigger, even though US had the finger on the trigger the whole time.

    *However, knowing US’s typical defense strategy, a large country like China can easily manipulate the process to prevent US from going to war with China.

    For one, redirect US attention to War on Drugs, War on Terrorism, until US exhaust its own resources.

    This part, China hardly needs to do anything substantial. US is making enough enemies on its own to last the next 50 years.

    With the Arab Spring, Islamic Extremists will surely find new power vacuums to exploit.

    Then there are the Mexican Drug Cartels, and the Pirates.

    *The trouble with Hegemonies, is eventually they all spread their influences too thin.

  34. zack
    November 20th, 2011 at 18:57 | #34

    we’ll see, Hilary Clinton and some in the USG are quite convinced that America must suck the life out of east asia in order to maintain hegemony; i’ve heard a lot of news stations with the mssage that ‘south east nations agree that they want the US there’, yeah i’m sure they do but have they bothered to conduct a survey? or is it government propaganda masquerading as legitimacy?

    the foundation of US power is its monetary system-the petrodollar system-that’s how they finance their bloated military-industrial-media complex. that must be diluted before we see any meaningful change in US commitment to peace in the asia-pacific

  35. November 21st, 2011 at 17:21 | #35

    @Allen #17

    To follow up with what I wrote earlier:

    The TPP “free trade” zone is basically a negotiated trade zone. The “Free” doesn’t mean anything, except to the extent that certain trade rules relegated to individual nations are now replaced by the trade zone rules.

    Whether those zones are truly “free” or not (i.e. fair or not to all participants) depends on the negotiation strengths of the parties.

    The WTO is a trade “zone” if you will that – for many developing nations – favor the “rich.” The requirements of “intellectual property,” capital protection, demand for Western style laws and rules and standards, etc. all can be argued to rob the poor at the expense of the rich (ok, that’s a political statement. Fair or not, it is a statement that many in the 3rd world do subscribe to).

    Take as an example of the solar splat between U.S. and China. The success of Chinese export in solar products have people , including Obama, accusing China of violating WTO rules.

    This complaint forms but one in a series of complaints the U.S. has about China.

    Many in the U.S. has already used the probes as sounding board that China is cheating again.

    But the thing is:

    1. the U.S. is only alleging. Nothing is proven yet. China has maintained it is trading fairly.

    2. Even if the WTO does finally rule that China has violated rules, it doesn’t prove that China has not been trading fairly. As I wrote in the comment quoted above, the WTO is but a negotiated agreement that reflected the prevailing powers at the time the agreement was negotiated. There is nothing fair or equal or just about it, only a reflection of the power play at the time. Thus as this NY Times article noted:

    Chinese solar panel manufacturers are preparing to shift steps in their production processes to South Korea, Taiwan and the United States in response to the filing of a trade case against them in Washington, and are working on a way to retaliate against U.S. exports to China, Chinese solar industry executives and officials said Monday.

    Preparations to redesign supply chains and retaliate come after the U.S. Department of Commerce opened an anti-dumping and anti-subsidy case against Chinese solar panel manufacturers on Nov. 9, at the request of SolarWorld Industries America and six other U.S. solar companies. The Commerce Department said it was considering anti-dumping tariffs of 50 percent to 250 percent on Chinese solar panels, plus a request by SolarWorld for anti-subsidy tariffs of more than 100 percent.

    After hastily hiring trade lawyers, Chinese solar panel manufacturers are increasingly gloomy about their chances of winning the case, said Ocean Yuan, the president of Grape Solar, a big importer of solar panels based in Eugene, Oregon. Many trade lawyers in Washington have reached the same conclusion because the Commerce Department handles anti-dumping complaints against China under special rules that heavily favor U.S. manufacturers. China accepted the rules as part of its joining the World Trade Organization in 2001.

    Mr. Yuan said that Grape Solar was already in negotiations with several Chinese manufacturers, whom he declined to identify, to do final assembly of solar modules in Oregon as the last step in new supply chains that would start in China then run through South Korea and Taiwan to avoid the likely tariffs.

    Of course, the Chinese side is also learning to do some legal posturing of their own.

    The Chinese solar panel industry is also seeking legal advice on filing its own anti-dumping and anti-subsidy trade case against the United States with China’s Commerce Ministry, Chinese solar industry executives in Beijing said Monday. The most likely target would be U.S. exports of polysilicon, the main material used to manufacture conventional solar panels, said Wang Shijiang, a manager at the China Photovoltaic Industry Alliance based in Beijing.

    The manufacture of polysilicon requires enormous amounts of electricity — so much electricity that it typically takes the first year of operation of the panel to generate as much power as was required to make the polysilicon in it. The United States is one of the world’s largest producers of polysilicon, in states like Tennessee and Washington, because it has access to a lot of inexpensive hydroelectric power.

    I hope this is all worth it. I thought trade is supposed to bind us, to create a tighter world….

    In any case, the point I want to hit home is agreements don’t set norms. We must always avoid deferring to legal technicalities to set our normative pursuasion. I feel sometimes people – including Chinese – do tat…

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