A 'Powder Keg' in Asia Between China and Japan? (Agenda)
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Editor’s Note: Transcripts are generated using speech-recognition technology. Therefore, Stratfor cannot guarantee their complete accuracy.
Video Transcript:
Colin Chapman: There is growing apprehension in some Asian capitals about Chinese intentions in the East and South China seas. Half of world trade by tonnage and a third by value passes through the shipping lanes between China and Japan, and there is no sign of an end to the friction between these old foes.
This week, the outgoing U.S. Undersecretary of State for Asia Kurt Campbell described to dispute over the group of islands off Japan as a "powder keg." Japan's prime minister, Shinzo Abe, returned from America and what seems to have been a successful meeting with President Barack Obama, saying that, like him, Washington was losing patience with Beijing. He seems to have been persuaded by Obama to join negotiations for a Trans-Pacific Partnership -- a move that won't please China.
Welcome to Agenda. I'm Colin Chapman and joining me to discuss the political and economic tensions in North Asia is Stratfor's Vice President for East Asia Analysis Rodger Baker. Rodger, a "powder keg"? Strong words from Kurt Campbell. Are they justified?
Rodger Baker: Certainly the situation around the Senkaku/Diaoyu Islands is fairly tense, not necessarily from the idea that either Japan or China intends to start a conflict, but more from their sparring, their pushing back and forth to demonstrate that that's their territory. And I think where that leads is really a high likelihood of an accidental event that can trigger greater stress. So we see the ships moving in closer, but more in particular, we see aircraft starting to fly over and as we saw back in 2001 along the Chinese coast with the United States, once you start doing those flights, you start moving closer and closer, the chances for an accident greatly increase.
Colin: One point Mr. Abe made in a much-quoted interview with The Washington Post was that China's tactics at sea are yielding strong support domestically. The fear is this may tempt Beijing to gain control of key shipping lanes, mineral resources and fishing territory.
Rodger: I think the Chinese are sort of caught in their own trap with this. One the one hand, they've needed to expand their maritime activity to be able to protect their sea-lanes. They're very concerned about the capability even if not the intent of the United States and its allies to be able to shut down China's access to its raw materials. On the other hand, while they do this, they use it domestically as a way to play up patriotism, to play up nationalism, to keep the population focused on the Japanese or at times the Filipinos or on the Vietnamese or on the United States to try to keep them from focusing their attention on some of the internal problems that the party is facing both with the economic downturn and with its current anti-corruption drive. And so for the Chinese to be able to pull back if tensions start to get too high, they're in some ways a little bit trapped by their own population now that is starting to rally behind this.
Colin: Another fear I've detected, particularly in Southeast Asia, is that former Secretary [of State Hillary] Clinton's so-called "pivot" to Asia may not be quite as strong as they first thought it would be. They have in mind Secretary [of State John] Kerry's first overseas trip to Europe, not Asia.
Rodger: Well I think the United States, on the one hand, had to kind of balance all of its foreign relations so the sense at some point that Asia was going to be the main focus of U.S. relations certainly let the Europeans feeling left out, the Middle East somewhat set aside. On the other hand, if you look at the concept of the pivot to Asia, really it's not necessarily something that was put forward by Clinton although she certainly articulated it. It's something that's happened naturally based on the changing dynamics of global trade, based on the changing dynamics of global balance of power, and that is that Asia and the trans-Pacific trade is larger than trans-Atlantic trade. It's a more dynamic region to region that has a greater potential for increases in economic activity. And therefore there's a natural reason for the United States to be moving there and from a security perspective, the U.S. has many of its strong allies there. Those allies are looking at China and being concerned about China potentially trying to change the status quo in the region. And so the United States will have to be there to back up its allies as well. The Southeast Asian countries and the East Asian countries may grow a little concerned that Kerry didn't come to Asia first, and that's more of a management issue for the United States than the realities of the so-called pivot.
Colin: Another issue relevant to this is sequestration in the United States. Kurt Campbell had something to say about this. He said, "Most Asian nations want sustained diplomatic, academic and economic engagement [from the U.S.], and these are things that will be hurt by budget cuts."
Rodger: Well I think that certainly things like academic exchanges, person-to-person exchanges, will be hit fairly quickly by budget cuts. They may not be long-lasting budget cuts, but those are the types of things that can be disrupted fairly easily. On the economic front, as the U.S. continues to negotiate with the region on the TPP [Trans-Pacific Partnership], there may be opportunities down the road for increased economic cooperation. But in many ways, the U.S. government doesn't really have the ability to force its companies to do business in this part of the world, although if the rest of the world's economy goes in the direction it is going right now, it would seem that this is a place that people want to go anyway.
Colin: Lets turn to economics. We've had the installation of South Korea's first woman president. Perhaps not quite as happy an event as it might have been given the overhang of the North's nuclear test, slowing growth, doubts about her election promises and competition from the lower Japanese yen.
Rodger: [South Korean President] Park Geun-hye comes in at a very difficult time for South Korea. You have the rising tensions in the region between Japan and China, you have the overall economic slowdown that's continuing to drag not only on the South Koreans but on the Chinese, on the Japanese, throughout the world. In addition, though, she also struggles domestically because there's a large percent of the population that really has no support for her at all, that views her as an extension of the dictatorial regime of her father, and that sees her as someone who's going to give all of the benefits to South Korea's large corporations and none of the benefits to the small and medium industries. And for her, that means that she's going to have to try to change the focus economically to focus on the small and medium industries, but that may not be the best thing for the macro economy at this particular moment.
Colin: Before we go, what about the Trans-Pacific Partnership. Until now, Japan has been cool about the idea of joining, despite being urged to do so by the IMF. But now Mr. Abe, strengthened by rising popularity -- as high as 70 percent according to some polls -- seems to be quite ready to talk about it.
Rodger: Well, Abe looks at the TPP as part of the overall package both of trying to find ways to stimulate the Japanese economy and ways to strengthen the U.S.-Japan alliance structure, also as a way to kind of send a signal to the Chinese. So the TPP unofficially excludes China from this new regional economic grouping. The United States has been pushing the Japanese to join in on this because that's what will make it really a large and substantial block. And Abe, even before coming to the United States, had sort of made it clear that he was going to push forward with the TPP after he got back to Japan, he was just looking for some concessions from Obama that he could take back home and say, "See, we're not going to have to give up everything when we go into these negotiations. We'll be able to actually negotiate and gain some protection for some of our industry." So for Abe, I think that he does have a strong position right now in popularity. He has the ability to push this forward. And in reality it's really only the negotiation stage anyway, so I think that he'll definitely be moving on that within even within the next couple of weeks we may see some further action.
Colin: Rodger Baker, thank you. And you can read Rodger's analysis on how China is testing Tokyo and Washington's patience on our website at Stratfor.com. Thanks for your company today. Until the next time, goodbye.
