Courcy’s Intelligence Brief

There has been a growing feeling in the past year or so that China under President Hu Jintao has become impatient with Deng Xiaoping’s famous dictum: “Hide one’s capacities and bide one’s time”.  This, in turn, has refreshed talk of the need for a “contain China” policy in which the US forges ever-closer ties with Asian democracies as a counter-balance to China, particularly with Japan, South Korea, and India.  The trouble with this has been American distraction by wars in Afghanistan and Iraq (and now the unrest in the Middle East), and by an apparent early underestimation of the importance of Japan by the Obama administration.

A strong US statement last September that the disputed Senkaku/Diaoyu Islands were covered by the terms of the US-Japan Security Treaty, and the massive US military assistance following the March earthquake, have somewhat redressed the balance.  However, it has been interesting in the past week to observe the efforts of China to build closer ties with Japan and South Korea and to see (as we report in this week’s third biefing) India representing talk of a burgeoning India-China rivalry in Africa as a Western invention for Western interests.

The recent much-publicized evidence for a more assertive China includes:

-  the May 2009 harassment  of the USS Impeccable in international waters in the South China Sea, claiming the US was conducting illegal surveillance

- the March 2010 declaration that the South China Sea is a “core interest”, putting it on a par with Tibet and Taiwan

- the limiting of rare earth exports to Japan following the September 2010 collision between Japanese Coast Guard vessels and a Chinese fishing boat operating in the waters off the Senkaku Islands, which are administered by Japan but claimed by China.

- continued obstruction of Western attempts to prevent Iran acquiring nuclear weapons and to disarm North Korea

- protection of North Korea from the consequences of its aggression against South Korea in the Yellow Sea.

It was against this background that we carefully watched Chinese Premier Wen Jiabao’s performance at the fourth trilateral summit between China, South Korea (ROK), and Japan, held in Tokyo on 22 May.  It is true that on the sidelines of the summit, China’s Foreign Minister Yang Jeichi was unyielding on China’s position over the Senkaku/Diaoyu Islands and on the East China Sea, but Wen’s speech at the summit avoided any controversy and was strongly upbeat about economic ties between the three neighbours.

The three countries account for 70% of Asia’s GDP and nearly 20% of global GDP, and Wen put forward four concrete proposals for deepening ties further.  The first was a major expansion of trade, given that the three-way trade between the countries only accounts for 11% of their combined total trade.  Wen pointed out that China runs a big trade deficit with both Japan and South Korea but is still “ready to promote with the greatest sincerity” progress towards a China-Japan-ROK free trade zone.

Wen’s second proposal was to improve investment cooperation given that mutual investment between the three countries accounts for less than 10% of their total foreign investment.  Talks on an investment agreement have been under way since 2005, and Wen pledged that “China is ready to make the greatest efforts to cooperate with Japan and the ROK to strive to complete talks within this year”.

Thirdly, Wen sees the relative low “per capita possession” of natural resources in all three countries as a major incentive for collaboration in renewable energy.  Wen proposed the establishment of a “new renewable energy production-teaching-research alliance” between the three countries.

Finally, no doubt in part inspired by the sight of the recent massive post-disaster US military assistance to Japan, Wen proposed increased cooperation between the three in dealing with disasters and post-disaster reconstruction.  He proposed joint research on earthquakes, tsunamis, and volcanoes in Northeast Asia with China providing funding.

There is nothing particularly sinister in any of this, and friendly collaboration in northeast Asia is better than the opposite. But it does emphasize two things.  The first is that China under Hu has not completely forgotten Deng’s advice, even if it has at times seemed to overlook it.  The second is that the magnetic pull of China is such that the US cannot expect to maintain its regional influence without constant effort.  Benign neglect is not an option.