Fri, 20th January 2017

Anirudh Sethi Report


Archives of “taiwan” Tag

China “Shocked” By Navarro Appointment, As Trump Team Proposes 10% Import Tariff

As the FT first reported yesetrday, in a dramatic development for Sino-US relations, Trump picked Peter Navarro, a Harvard-trained economist and one-time daytrader, to head the National Trade Council, an organization within the White House to oversee industrial policy and promote manufacturing. Navarro, a hardcore China hawk, is the author of books such as “Death by China” and “Crouching Tiger: What China’s Militarism Means for the World” has for years warned that the US is engaged in an economic war with China and should adopt a more aggressive stance, a message that the president-elect sold to voters across the US during his campaign.


In the aftermath of Navarro’s appointment, many were curious to see what China’s reaction would be, and according to the FT, Beijin’s response has been nothing short of “shocked.” To wit:

 The appointment of Peter Navarro, a campaign adviser, to a formal White House post shocked Chinese officials and scholars who had hoped that Mr Trump would tone down his anti-Beijing rhetoric after assuming office.

“Chinese officials had hoped that, as a businessman, Trump would be open to negotiating deals,” said Zhu Ning, a finance professor at Tsinghua University in Beijing. “But they have been surprised by his decision to appoint such a hawk to a key post.”

China will give back seized drone, criticises U.S. “hyping up” the issue

China’s Defence Ministry said on Saturday it had been in talks with the United States about returning an underwater drone taken by a Chinese naval vessel in the South China Sea, but the U.S. was not helping by “hyping up” the issue.

The drone was taken on Thursday, the first seizure of its kind in recent memory, about 50 nautical miles northwest of Subic Bay off the Philippines, just as the USNS Bowditch was about to retrieve the unmanned underwater vehicle (UUV), U.S. officials said.

The Defence Ministry said a Chinese naval vessel discovered a piece of “unidentified equipment” and checked it to prevent any navigational safety issues, before discovering it was a U.S. drone.

“China decided to return it to the U.S. side in an appropriate manner, and China and the U.S. have all along been in communication about it,” the ministry said on its website.

“During this process, the U.S. side’s unilateral and open hyping up is inappropriate, and is not beneficial to the smooth resolution of this issue. We express regret at this,” it added.

U.S. President-elect Donald Trump weighed in to the row on Saturday, tweeting: “China steals United States Navy research drone in international waters – rips it out of water and takes it to China in unprecedented act.”

Without directly saying whether the drone was operating in waters China considers its own, the ministry said U.S. ships and aircraft have for a long period been carrying out surveillance and surveys in “the presence” of Chinese waters.

“China is resolutely opposed to this, and demands the U.S. stops this kind of activity,” it said.

China will remain on alert for these sorts of activities and take necessary steps to deal with them, the ministry said without elaborating.

Earlier, the Global Times, published by the ruling Communist Party’s official People’s Daily, cited an unidentified Chinese source as saying they believed the issue would be resolved smoothly.

The United States says the drone was operating lawfully.

China Newspapers Blast “Diplomatic Rookie” Trump For “Inability To Keep His Mouth Shut”

It seems that Trump’s phone call with Taiwan’s president Tsai Ing-wen as well a recent pair of tweets from the president-elect blasting China for devaluing their currency, taxing U.S. imports and military provocations in the South China Sea have served their purpose of ruffling some feathers in Beijing.

While the “official reaction” out of Beijing to Trump’s “provocations and falsehoods” has been muted, newspapers across China, often viewed as a mouthpiece of the Communist Party, have spent the day lashing out at the “diplomatic rookie.”.  Per Yahoo News, the People’s Daily accused Trump of “provoking friction and messing up China-US relations,” a move they say will not help “make America great again.”

 Donald Trump is a “diplomatic rookie” who must learn not to cross Beijing on issues like trade and Taiwan, Chinese state media said Tuesday, warning America could pay dearly for his naivety.

Trump’s protocol-shattering call with Taiwan’s president and a subsequent Twitter tirade against Beijing’s policies could risk upending the delicate balance between the world’s two largest economies, major media outlets said.

“Provoking friction and messing up China-US relations won’t help ‘make America great again'”, said a front-page opinion piece in the overseas edition of Communist Party mouthpiece People’s Daily.


Brahma Chellaney — Trump could ‘pivot’ to Asia like Obama never did

U.S. President Barack Obama’s strategic “pivot” toward Asia, unveiled in 2012, attracted much international attention but did little to tame China’s muscular approach to territorial, maritime and trade disputes. Indeed, with the United States focused on the Islamic world, Obama’s much-touted Asian pivot seemed to lose its way somewhere in the arc between Iraq and Libya. Will President-elect Donald Trump’s approach to Asia be different?

In his first meeting with a foreign leader since his surprise Nov. 8 election triumph, Trump delivered a reassuring message to Japanese Prime Minister Shinzo Abe who, in turn, described him as a “trustworthy leader.” In a smart diplomatic move, Abe made a special stop in New York on Nov. 17, en route to the Asia-Pacific Economic Cooperation summit in Peru, to meet face-to-face with Trump, who shares his conservative, nationalistic outlook.

 Today, Asia faces the specter of power disequilibrium. Concern that Trump could undo Obama’s pivot to Asia by exhibiting an isolationist streak ignores the fact that the pivot has remained more rhetorical than real. Even as Obama prepares to leave office, the pivot — rebranded as “rebalancing” — has not acquired any concrete strategic content.
 If anything, the coining of a catchy term, “pivot,” has helped obscure the key challenge confronting the U.S.: To remain the principal security anchor in Asia in the face of a relentless push by a revisionist China to expand its frontiers and sphere of influence.

Trump indeed could face an early test of will from a China determined to pursue its “salami slicing” approach to gaining regional dominance. In contrast to Russia’s preference for full-fledged invasion, China has perfected the art of creeping, covert warfare through which it seeks to take one “slice” of territory at a time, by force.

Japan’s Prime Minister Shinzo Abe meets with U.S. President-elect Donald Trump, right, at Trump Tower in Manhattan, New York, on Nov. 17. © Reuters

With Obama having increasingly ceded ground to China in Asia during his tenure, Beijing feels emboldened, as evident in its incremental expansionism in the South China Sea and its dual Silk Road projects under the “One Belt, One Road” initiative. The Maritime Silk Road is just a new name for Beijing’s “string of pearls” strategy, aimed at increasing its influence in the Indian Ocean. Meanwhile, without incurring any international costs, China aggressively continues to push its borders far out into international waters in a way that no other power has done.

Indeed, boosting naval prowess and projecting power far from its shores are at the center of China’s ambition to fashion a strongly Sino-centric Asia. Boasting one of the world’s fastest-growing undersea fleets, China announced earlier in November that its first aircraft carrier, the Liaoning, is ready for combat. Such revanchist moves will inevitably test the new U.S. administration’s limits.

China FDI January – October: +4.2% y/y (CNY terms)

Foreign direct investment (FDI) into the Chinese mainland

  • Up 4.2% year on year (Unchanged growth rate from the January-September period)
  • Reaches 666.3 billion yuan
  • For the first 10 months of the year
China’s Ministry of Commerce announcement

China & US Elections: Trump May Start a Trade War, But Clinton Could Begin WWIII

China, like the rest of the world, is keeping a close eye on the US presidential race, knowing full well that the outcome of the election will have a serious impact on every country in world. But which candidate would Beijing prefer to deal with?

Unlike Russian analysts, who have indicated that Moscow would probably prefer to deal with an American president with a pragmatic, rather than an ideological, approach to foreign policy, the choice for Chinese experts isn’t as simple. Their choice is further complicated by the knowledge that while pre-election talk is one thing, actual policy, backed by the behemoth that is the US foreign policy establishment, is something else entirely.

Commenting on China’s dilemma, PolitRussia contributor Ilya Novitsky suggested that at first glance, it may seem that China would prefer to deal with anyone except Donald Trump. “It’s generally accepted to consider Trump as Beijing’s traditional foe,” the analyst noted. “In the course of his campaign, Trump has repeatedly made harsh statements about the nature of the trade relationship between the US and China.”

“Specifically, Trump’s main gripe with the structure of US-China trade relations comes down to the fact that China enjoys favorable customs conditions, which give Chinese producers a privileged position in the US market. Trump quite rightly believes that the Middle Kingdom is putting ‘economic pressure’ on the US, simply forcing US producers out of the Chinese domestic market.” In response, the Republican candidate has effectively “promised to declare a trade war against China, and to completely revise the majority of existing trade agreements between the two countries.” In this situation, Novitsky noted that “it’s no wonder that political scientists around the world, almost in unison, have figured Trump as Beijing’s enemy, which creates a privileged position for Hillary Clinton in the Chinese context. However, this is not quite the case…”

In fact, the analyst explained, “if Clinton wins, China will find itself in a very unenviable position. She may not revise trade policy as radically as Trump proposes, but the military threat to East Asia created by the Democratic candidate is quite serious.”

With Clinton making little mention of her strategic plans in public, the analyst pointed to the treasure trove of information released by WikiLeaks, which has been publishing the leaked emails of Clinton campaign manager John Podesta all this month. In one such email, featuring a transcript of a private Clinton speech about North Korea in 2013, the former Secretary of State made her position on China very clear, saying that “we’re going to ring China with missile defense. We’re going to put more of our fleet in the area. So China, come on. You either control [North Korea] or we’re going to have to defend against them.” In a separate speech, Clinton slammed Beijing over its position in the South China Sea dispute. “I mean you claim [the South China Sea] based on pottery shards from, you know, some fishing vessel that ran aground in an atoll somewhere,” Clinton quipped. By this logic, she added, the US could have labeled the Pacific Ocean the “American Sea” following the Second World War.

Chinese ships sail by Senkakus for third straight day

Chinese government vessels entered the waters surrounding the disputed Senkaku Islands for a third consecutive day Tuesday, in an apparent provocation designed to bolster President Xi Jinping’s standing at home following recent diplomatic disappointments.

Up to 13 coast guard vessels sailed through the contiguous zone beyond the territorial sea around the Senkakus, according to the Japanese coast guard. Four made a total of 10 entries into territorial waters around the islands, which they left by 7 p.m. that night.

 Chinese government ships have now entered the waters on four separate days this month. Tuesday’s incident also marks China’s first time entering the area three days in a row since the end of 2012, right after Japan nationalized the islands, which China claims for itself as the Diaoyu.

Japanese Foreign Minister Fumio Kishida summoned Chinese Ambassador to Japan Cheng Yonghua to the ministry that day to protest the incursions.

Chief Cabinet Secretary Yoshihide Suga also promised a fellow member of the ruling Liberal Democratic Party that he would put every effort into the Senkakus issue.

China seeks tighter rein on yuan-selling, capital flight

China is imposing new reporting requirements and other restrictions on currency transactions across its borders in an effort to curb capital outflows that could lead to volatility in the yuan.

It is not new for the People’s Bank of China to provide “window guidance” to the country’s financial institutions, particularly commercial and foreign banks, in such areas as lending practices. The advice does not always have a legal basis but effectively dictates how the institutions do business.

 The central bank has been taking an especially hard line on capital outflows since June. One Chinese bank said it was pushed to abide by the central bank’s guidance in July, around when the yuan began weakening against the dollar and reignited fears of capital flight.

Closing the gates

The PBOC provides different guidance by region, including in the cities of Tianjin, Dalian, Qingdao, Hefei, Wuhan and Shenzhen. In Guangzhou, banks are expected to report at the end of each month planned purchases of foreign currency by clients in the following month. They must also submit weekly purchase records at the start of the following week and check for errors when foreign companies transfer funds from China overseas.

Depth of Chinese anger over sea ruling bodes ill for Japan

The international tribunal rejection of Beijing’s South China Sea claims unleashed a torrent of online comments from angry Chinese. Some of these remarks, to this reporter’s surprise, came from business and personal acquaintances who had never shown much passion about politics.

With the government seeking to deflect anger away from itself, the ruling could have economic implications for a country with no territorial stakes in the South China Sea — Japan.

 “I’m not going to allow an inch [of the territory] to be lost,” one local friend of this reporter wrote on the WeChat messaging service on the night of July 12, just after the United Nations-backed tribunal handed down its ruling. Another friend said: “We’re going to defeat anyone who intrudes on our China, wherever they are.”

The people who made these and similar comments are company managers, corporate sales representatives and Chinese language teachers. All are well-educated; many have frequent contact with foreigners, through relationships forged at work and while studying abroad.

Knowing this made their outbursts that night more chilling. 

Xi turns to mind games after arbitration setback

The atmosphere was less than cordial when Chinese President Xi Jinping and European Council President Donald Tusk met at the Diaoyutai State Guesthouse in Beijing on the evening of June 12. Earlier that day, an international tribunal in The Hague had denied China’s territorial claims over much of the South China Sea.

Wearing his usual dark blue suit and red necktie and speaking in his typical detached tone, Xi made China’s position clear: “Islands in the South China Sea have belonged to China since ancient times.”

 China, he added, “would not be affected by the ruling or accept any action or claim based on it.”

Sitting opposite the Chinese president, Tusk expressed displeasure of his own, pressing an index finger into his temple as Xi, occasionally raising his voice, continued rebuffing the humiliating arbitration decision.

State-run China Central Television reported Xi’s remarks as a headline story during that day’s 7 p.m. news program but omitted Tusk’s statement that the EU trusts the tribunal’s findings.

Following Xi’s lead, Chinese Foreign Minister Wang Yi, who also attended the meeting, stood before TV cameras and stressed that the ruling was unacceptable.

The Philippines, which brought the case to the Permanent Court of Arbitration in The Hague, and neighboring countries praised the “historic” ruling and have called on China to respect international law.

At the Asia-Europe Meeting summit, the first major international conference following the tribunal’s decision, Japanese Prime Minister Shinzo Abe called for the ruling to be used as a basis for resolving tensions in the South China Sea. Japan has its own territorial dispute with China in the East China Sea.

Beijing has continued to turn a deaf ear to these urgings.

On the offensive