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Monday, 23 August 2010

Action and reaction

Behind The Headlines
Bunn Nagara

The continued rise of China takes several turns, with each one prompting revealing reactions abroad.

CHINA’S economic ascendancy is already old hat, stunning as the curve still is. But what is particularly compelling is its international fallout.

How do others react to China’s soaring trajectory? A glimpse was available during the week, when GDP figures for the second quarter surpassed Japan’s to make China the second-biggest economy in the world.

China’s number two status had been known for weeks already and previously its GDP had also overtaken Japan’s temporarily. However, as Japan continues to stagnate and China to grow, the gap between them is now expected to stay in China’s favour, making 2010 the year it becomes the world’s second-biggest economy after the United States.

Japan gave up its title as number two after 42 years in resigned acceptance.

Economic powerhouse: A child playing at a sculpture of a laptop computer merged with an abacus as its monitor in Shanghai on Friday. China has overtaken Japan to become the second-biggest economy in the world. — AP
Academically, this was a foregone conclusion, since both China’s growth and Japan’s stagnation – notwithstanding a brief respite in the first quarter this year – had been evident for years.

Popularly, a sense of lethargy seems pervasive, with little imagination or hope of how to turn things around.
Politically, attention is focused on managing consumption, subsidies and production incentives rather than challenging China.

Japanese businesses could hardly be more bullish on a booming China, particularly when they have been investing so much for so many years there.

Increasingly, Japanese industrialists are acutely aware of the potential of the world’s biggest production house and the most extensive market just next door.

The same sentiments are shared in Taiwan, if anything more so. Official notice of China eclipsing Japan economically came in the same week as approval in Taiwan’s legislature for a landmark Economic Co-operation Framework Agreement (ECFA) slashing tariffs across the Taiwan Straits.

This was a moment, enabled by a Kuomintang majority in the Legislative Yuan, that Taiwanese businesses had been waiting for.

Bilateral trade across the straits, already at US$110bil (RM346bil) annually, is set to multiply much more.
The opposition Democratic Progressive Party tried to block passage of the deal by warning that it would mean excessive dependence on the mainland, to no avail.

Their mistake was in seeing the ECFA as facilitating this dependence, when it is only a symptom of it.
The ECFA includes a host of features for mutual consultation, review and fine-tuning that will enhance and enrich cross-straits relations.

By encouraging Taiwanese businesses to explore and profit from dealings on the mainland, Taiwan’s business community as a whole would soon be convinced of improving bilateral ties all-round.

All of this might seem to prod the United States into self-doubt in the region.
Its decades-old bilateral relations with Japan as “the most important bilateral relationship across the Pacific” had just been eclipsed by its relationship with China.

Now that China’s rising economy has driven the point home by eclipsing Japan’s, what next?

Whither the 1951/60 US-Japan security treaty? And with cross-straits relations swirling into a new configuration, what would happen to the US “security understanding” with Taiwan enshrined in the 1979 Taiwan Relations Act and all its nuances?

A rising China is not doing anything significant to upstage US military dominance of East Asia but some militarists see its hulking economy to be making waves nonetheless.

But in being militarists, they have no proper response to developments in the economic realm.
The day after Taiwan’s legislature passed the ECFA convincingly, Adm Robert Willard, head of the US Pacific Command, said in Manila that the United States opposed the use of force in South China Sea disputes.

This followed comments by Secretary of State Hillary Clinton last month that the United States had a “national interest” in seeing the disputes resolved diplomatically, upsetting China.

The problem was not over disputes having to be resolved diplomatically but about the United States seeing itself as having a national interest in the region.

It could mean that US forces would intervene to defend those perceived interests whenever it deemed appropriate.
That came after officials in Beijing reportedly told a visiting US delegation in March that the South China Sea was a “core national interest” of China.

How far would the United States want to pit itself against China in the region and for how long would the United States want any such conflict to last?

Adm Willard’s talking points were neither new nor ever disputed by any country in the region. But why they were made at the time could bear some examination, particularly when he added that countries in South-East Asia were concerned with China’s military assertiveness.

This outlook contradicts many perceptions in the region, as have been communicated to the latest Pentagon survey.

Its current annual report to Congress, Military and Security Developments Involving the People’s Republic of China 2010, cites China’s military build-up continuing “unabated” but also acknowledges its ability to sustain military power at a distance “remains limited”.

At the same time, US military exercises in the region amount to overt posturing in playing to a Beijing audience.

The more hawkish media in the United States and East Asia then pick up on these events and spin them through their respective prisms.

More of the same can be expected when China’s PLA Navy begins work on its first aircraft carrier later this year.

Other countries in East Asia are unlike the United States not only in terms of size and strength but also in simply being here – which means they cannot end a regional conflict by simply withdrawing troops.

China’s rising economy need not provoke a military face-off with anyone but could instead foster closer ties as Japan and Taiwan have found.

Economic pre-eminence should not have to trigger a military response, least of all the kind of military intervention proven disastrous elsewhere.

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