New Asia Security Initiative Policy Research

ASI participants have published two new policy research papers this week, on the effect of trade on East Asian alliances and on the impact of upcoming elections in Burma on ceasefire groups.

A new East Asia Institute Working Paper, “Ties That Bind? Assessing the Impact of Economic Interdependence on East Asian Alliances,” by Dong Sun Lee and Sung Eun Kim of Korea University, questions whether “increasing economic interdependence markedly strengthens East Asian security alliances.”

A new Centre for Security Analysis Security Watch, “Going to the Polls: Opportunity or Setback for Myanmar’s Ceasefire Groups?,” finds that groups that have agreed to ceasefires with the Burmese junta are “divided in the run up to Myanmar’s first elections in twenty years ...”

Posted by Matthew Shannon Stumpf on March 2, 2010. Respond »

Special Report: Chicago Council on U.S. and Chinese Soft Power

The Chicago Council on Global Affairs has posted on their web site a new report by Executive Director of Studies Thomas J. Wright on the “Implications of the Financial Crisis for Soft Power in East Asia.” This report draws conclusions from a conference convened by the Council and South Korea’s East Asia Institute in October.

Read the report here.

The report finds that:

—American soft power has taken a hit because of the financial crisis but the United States retains significant advantages over China, including its values and ability to accept international criticism.
—Differences between a U.S. model and a Chinese model of economic growth are overblown.
—The American worldview and philosophy of international order remains popular; the doubts about the United States have to do with its competence.
—The soft power of multilateralism has increased. The countries that can lead effective multilateral solutions will benefit.
—Japan and South Korea will remain key players in the region.

Posted on November 16, 2009. Respond »

Special Report: Zhu Feng on Economics, Trade and the U.S.-China Relationships

President Obama Visits China Amid an Economic Storm

U.S. President Obama arrived at Shanghai on Sunday night for his first visit to China. Not marred by the cold rain, he walked down the gangway, smiling and waving, while wearing a black overcoat and holding a black umbrella. This debut of a three-day China tour started off in a slightly surprising way. Rainy days are usually perceived as bringing a sort of heaviness in mood—not in keeping with Obama’s image of energy, brightness and passion, but fitting with the lingering complexities of contemporary U.S.-China relations.

China is definitely America’s most important bilateral economic partner, because of China’s growing role in the world economy and its cumulative investment in U.S. treasuries, which as of August amounted to $800 billion. The U.S. is also the most significant trading partner of China, given the fact that America is the biggest exporting market for Chinese goods. China exported nearly $338 billion worth of merchandise to the United States last year, at least half of which are the products of American investment in China. The magnitude of the U.S.-Chinese economic relationship is stunning.

However, growing trade frictions that have perked up in the past few months and even displayed the deteriorating increase of each country’s self-proclaimed anti-dumping and special protection investigations. The main officials of both countries exchange verbal fire,  blaming their counterparts for increasing concerns. American officials ask China to revalue its currency to undercut the cumulative trade surpluses. On contrary, China’s main financial official, Mr. Liu Mingkang, chair of China’s Banking Administrating Committee, condemns the U.S. for loose monetary regulations and weak dollar interest rates. There has been no sign, in advance of President Obama’s steps on China’s territory, that Beijing would compromise over a variety of contending economic issues. The basic estimate in China is that President Obama, submitting to his domestic audiences, has been inclined to provoke trade protectionism against China, while actually losing international support for this trade policy. His decision to initiate escalating trade tension between the two countries doesn’t comply with the movement toward global free trade, and instead violate his commitment at G-20 occasions to not promote anti-trade protectionism globally. For its part, Beijing is rarely convinced that China should abandon the moral high ground on a given issue to improve bilateral ties.

During President Obama’s tour in China, the formal agenda with his Chinese counterparts includes trade relations, security issues, human rights and climate change. He’s hoping to win China’s help in efforts to stop nuclear programs in North Korea and Iran. The huge trade imbalance between the two countries is also likely to be a topic. Now, the crossfire between two countries on trade and financial issue has never been greater, while the urgency to coordinate economic and financial policies has never been more imperative or thornier. Without coordination, trade frictions could turn into a dangerous “game of chicken” and stoke contentious feelings and sentiments in one or both countries. In China, there is an increasing wariness that U.S. accusations of Chinese currency manipulation are a perennial attempt to scapegoat China for the global financial imbalance and crisis.

It’s unlikely that two countries will resolve their trade disputes during President Obama’s visit. At least, their basic policy proclamations could be regarded as a test balloon for the future. Simultaneously, their bargaining strength has never been harder tested.

Posted by Zhu Feng on November 16, 2009. Respond »

New EAI Reports Available: N. Korea, ROK-Japanese Relations, and Asian Financial Regionalism

The East Asia Institute in Seoul has an abundance of new reports available now on their website.

EAI Asia Security Initiative Working Paper #1 by Korea University’s Yong Wook Lee describes “Regional Financial Solidarity without the United States.”

An Issue Briefing by Chaesung Chun asks “How Comprehensive Is Comprehensive Enough?: Dealing with the North Korean Nuclear Problem.”

A Security Net Commentary on “the Future of ROK-Japan Relations” features the views of EAI President Sook-jong Lee and Won Deog Lee.

We’ll profile each in our News over the next three days.

Posted by Matthew Shannon Stumpf on October 20, 2009. Respond »

If the G-2 Is Not the Answer, What Will Be?

G-2, an idea of Fred Bergsten, the head of the Washington-based Peterson Institute, specifically refers to the significance of U.S.-China cooperation in fostering the rapid recovery of the world economy from the daunting contraction brought on by the global financial crisis. Yet, in official channels, there is—and likely will not be—a real establishment of a G-2, now or any time soon. So, why has this idea become such a popular topic for media and academic debate?

That an idea like the G2 should become so quickly recognized by the media and experts highlights the great necessity of collaboration between Washington and Beijing. In many ways, the two powers have formed a symbiotic relationship: China is the biggest creditor while the U.S. is the biggest debtor; China is a big exporter while the US is a big importer; the U.S. and China are the world’s two biggest emitters of greenhouse gases and its two biggest consumers of oil.

As the global financial crisis is felt around the world, the hope for a way around a Great Depression-like economic slump drives enthusiasm for closer U.S.-China relations. The G-2 idea recognizes that their cooperation is required in order to stabilize the world financial market and economy, and to begin discussing emission cutting and energy efficiency. Thus, in India’s Businessworld, Nayan Chanda argues:

Each period in history brings new terminologies and acronyms that capture the essence of the time … However, in spite of the excitement about the new constellation, it has become clear that G2 is less than meets the eye …The fact is that the world has become too intertwined with myriad interests to be run by a duopoly.

The U.S.-China relationship too is not economic only, but multi-dimensional. The tensions on economics and security in this relationship might not easily allow the two countries to even informally constitute G-2-like cooperation. Fred Bergsten confesses that the economic downturn “is an ideal issue for China and the US to develop the informal G-2 partnership that is needed to provide global economic leadership to pass needed reforms at the existing multilateral institutions.”

Yet, considering their contending values and ideology as well as the hard-to-curb effects of the U.S.-China security dilemma, the extent to which the two giants could join hands to get through global financial storm and establish a strategic tie-up is likely to remain limited in the short run. The power relationship between the U.S. and China is destined to be difficult in light of their dyadic configuration as the world’s dominant power and its rising power. The U.S. is highly skeptical of China’s strategic intent. For its part, Beijing is wary of the deep gulf in conceptions of strategy and security between itself and Washington. China has been very sternly denied the purchase of high-tech American goods that may have military dual uses. A strict export control system barring Chinese access to American high technology has been perceived in China as the telling evidence of American egoism in the commercial domain.

With this in mind, China might hesitate to buy high-minded rhetoric on the possibilities of a G-2. For one, any G-2 format of the bilateral relationship would require Beijing to take on a much bigger role in the international arena. Yet, the power disparity between Beijing and Washington will not notably change in future. As a result, it’s likely that the US will remain reluctant to welcome China as a “rule-maker” in international affairs rather than as a “rule-follower”. Moreover, Beijing appears to be much less ready to adopt a rule-maker position in the world affairs as long as it is preoccupied by its challenging domestic agenda.

Beijing delights that its international ranking is being promoted through discussions about a G-2, but it does not take the idea seriously. On May 21, Premier Wen Jiabao openly dismissed the claim by saying that the G-2 is “groundless.”

Likewise, from the international perspective, the G-2 is an idea whose time hasn’t come yet. After the Bush Administration gave rise to many critics of American unilateralism, few would like to see the emergence of U.S.-China manipulation of international relations. Of course, given divergent U.S. and Chinese interests, the G-2 could not become a condominium by the U.S. and China, but that fact would not diminish the suspicions of other powers. Even enhanced U.S.-China cooperation will be somewhat scary to other nations. As the converging interests simultaneously grow between China and US, a closer relationship is much expectable.

It’s wise that Beijing has no desire to add to its international clout through a G-2. However, putting aside the G-2 idea doesn’t mean that closer U.S.-China collaboration is impossible. This world will increasingly feel the benefits of a Washington-Beijing caucus. In fact, the high-level US-China Strategic and Economic Dialogue held in late June strengthened the impression of an emergent G-2 in action. The international community may wish to see the product of greater cooperation between the two capitals. So, if the G-2 is not the answer, what will be?

Posted by Zhu Feng on August 19, 2009. Respond »