Washington Insights Vol. 6, No. 6

North Korea had slipped into the background, US-Japan ties had lost some significance, and China loomed ever larger as the fall began in DC. Concern was raised that as trade and security tensions escalated, a wholesale evaluation would occur on both sides, leading to a cold war. What had been engagement laced with hedging was shifting to hedging verging on balancing. For various reasons related to a lack of trust in Trump and doubt that a sharply divided polity could replicate the forty years of bipartisan consensus on China, few had confidence in a policy review even if one could be launched. The prospect of returning to the status quo prior to 2017 appeared dim, leading to either some sort of deal to share power while competing or a path of separation despite the risks given the high level of bilateral interdependence. The latter choice is made more likely by Chinese overconfidence that the United States is in decline in Asia even if they have been surprised by a recent strategic resurgence and new economic vitality; by their zero-sum reasoning often masked by claims to the contrary; and by US unpreparedness to talk about sharing strategic power if they could find Chinese counterparts with pragmatic thinking.

As observers awaited the late November meeting of Trump and Xi Jinping in Argentina, there was confusion about whether a deal could be reached on trade, which Trump would be eager to claim as a “victory,” and Xi could accept as a way to stem the flood of bad news about the expected slowdown in China’s economy. Even if a deal were concluded, few expected that a reset of relations was in store. Trump had helped to raise consciousness in the United States of a large set of grievances toward China, and he was not trusted to serve his country’s interests rather than his own political and economic fortunes. Xi had given no indication of a major shift in course.

Trump is Both an Impetuous Disrupter and the Catalyst for a Showdown in East Asia

In 2018 danger lurks behind nearly every corner of East Asia. Sino-US relations are as troubled as they have been since 1971. The Sino-Russian challenge to the world order is more ominous than at any time since the 1950s. A façade of diplomacy does little to conceal the irreconcilable divide over how to manage a North Korean threat greater than at any time since 1953. ASEAN has been exposed as incapable of managing tensions over the South China Sea, Japan as futile in its diplomacy toward Russia, and South Korea as on the verge of opening a giant rift with the United States. Donald Trump has handled each of these situations with characteristic disdain for expertise, coordination, and truth. There is a lot for which to blame him, but the reality is many ticking timebombs were poised to go off even if Hillary Clinton had won the election. In DC such alarmist thinking has been gaining ground, given unprecedented distrust in the president.

The focus should not be on how we got into these messes but how we might manage them so as not to kick the can down the road, as some would prefer, and improve the likelihood of finding long-term resolution of challenging problems. Trump is unlikely to have the answers: diplomats cringe at how he is handling his “love-fest” with Kim Jong-un; economists tremble each time he speaks about the “trade war” with Xi Jinping; strategists find it hard to believe his admiration for Vladimir Putin; and allies are left at a loss by his interpretation of “America First” with no consideration for sustaining long-nurtured relationships. Bullying by the more powerful country holding more of the economic cards can sometimes force the other side to capitulate, but it will leave problems to fester. At the same time, if critics of Trump pretend that the problems do not exist in the first place, then they only exacerbate these challenges. In DC there seemed to be little appetite for either trusting Trump’s “tweet” diplomacy or his staff in a period of turnover, removing steadier hands and embracing officials viewed with alarm.

It has become clear that little can be done to persuade Trump to change course. The best that outsiders to the US decision-making process can do is to work across national lines to prepare to pick up the pieces once Trump is no longer in command. A first step is to try to predict the Trump legacy for each issue since there is no way to go back to the pre-Trump situation. This will require recognizing that managing North Korea will be harder now that Trump has broken with the “maximum pressure” and eased the way for sanctions to be relaxed. Unilateralism toward China on trade makes it more difficult to rally other states for a joint strategy. Issues remain to be reconceptualized without starting afresh when Trump leaves the scene. This is a task not for those who concentrate on exposing the faults of Trump but for the cross-national community of those analyzing the dynamics across Asia, cognizant of each of the major players in the region. In this light, we should take note of three promising lines of debate, which have been heard recently in DC, as analysts look to the second half of Trump’s term with Democrats in charge of one chamber of Congress and transparency expected to increase.

The think tank environment in DC is throbbing with carefully prepared reports and lively exchanges in the fall of 2018. One is on Sino-Russian relations, including some attention to their impact on the contours of Eurasia. Another theme attracting close attention is the dynamics of diplomacy over the Korean Peninsula and their impact on ROK-US relations. The third important theme in DC reports and seminars is the prospects for the Belt and Road Initiative (BRI) and what should be done by the United States, Japan, and their partners in response. This leads to more focus on economic issues, linking to the growing interest in trade tensions. Such exchanges are just the beginning of what needs to be a concerted effort in 2019-2020 as we assess the American people’s verdict on Trump’s presidency and a possible new direction. This is the prevailing message from exchanges heard in DC.

Sino-US Relations

In mid-summer Chinese officials were still looking for a deal with Trump, willing to follow the usual path of boosting imports. A few months have since passed, and Chinese are now bracing for the worst: They are considering the economic price they can exact to alter Trump’s calculus but worrying that the effect would be too costly with no recovery in sight. Meanwhile, there is no clarity on the plan Trump has in mind and no go-betweens, even in the US financial world, to narrow differences. If some had counted on waiting Trump out—as some in the United States had grasped for signs that Xi Jinping was facing mounting opposition that could force him to back down at a time of growing economic problems—the reality, a DC audience was told, is that US business is impatient with China’s policies and a US consensus has taken root demanding structural reform in China that Xi is unwilling to undertake, as he is driven by a sense of past victimization of China and a thirst for concentrating power to right them, not yield to new pressure. Both Trump and Xi are blaming their predecessors for a weak foreign policy; at the same time, they are obsessed with reconstructing national identity for the long term, which makes them less likely to find common ground for a long-term solution but possibly inclined to reach an accommodation for short-term gain.

One arena of Sino-US competition is trade across the breadth of Asia, which is boosted by BRI and would have been by TPP. Rather than reacting to reports that countries are pulling back from BRI due to fear of a debt trap, one should see setbacks as secondary, a DC audience was told, and recognize that, in light of Trump’s actions, countries see BRI as the only game in town, and even many Western companies are eager to join. While Washington bilateralizes its Asian policy without a vision (the free and open Indo-Pacific stays vague) and a unidimensional military focus, China continues to put trade in the forefront. This gives China the edge, but as the Sino-US trade war intensifies, both are likely to lose, as is the international order, which neither leader is inclined to defend. Many concluded from this that a domestic reorientation will be needed on both sides if the downward slide is to be halted.

Another discussion of BRI described it as China creating its own international economic order of strategic significance. Through transportation projects, power plants, and other hard and soft power initiatives, China is pursuing the most ambitious geo-economic vision in all of history. On the soft power side, one sees educational, tourist, and people-to-people exchanges. BRI keeps expanding, now reaching the Arctic as well as cyberspace and outer space; yet the bulk of the projects that have been funded are in Pakistan, Southeast Asia, and Central Asia with the first of these ahead in completed projects. Other corridors, including China-Mongolia-Russia, lag behind. BRI is appealing for its promises of connectivity, both internally for some countries and externally, as hopes are raised for becoming the next Singapore or Dubai. This promotes what is called a connectivity bandwagon, albeit one where a significant amount of money is dangled, much less spent.

One speaker claimed that Trump is acting toward China within the consensus that has existed since at least 1989 that it should be treated with wariness and tested without idealism about its intentions. Although leaders strayed at times in their language optimistically anticipating both reform and convergence, the security community was skeptical. Its attitudes have hardened, the business community has shifted, and the academic community has largely decided that the time has come to toughen policies toward China. Thus, Trump is not finding much backlash to his more confrontational approach, rejecting China’s calls for sustaining the status quo, notably in Congress. Many are ready to assume that Trump is wrong, given their overall animosity and his off-putting ways of unfolding policies, but on China the resistance is remarkably limited.

Sino-Russian Relations

In the discussion of a report on this relationship, a consensus was reported on the severity of the challenge for the United States and the West but there was more divergence on the right response. If there was talk about these ties being flashier than in reality, there was also recognition of an extraordinary level of strategic cooperation. The consensus was clear on both the US need to strengthen itself economically and militarily and the urgency of reinforcing US alliances. Where it faltered was on how to manage relations with Russia and China. How much was US policy contributing to the Sino-Russian closeness? How much room is there for a policy correction to impact this relationship? Will the cost to US interests be greater than the expected benefits? It seemed apparent that there is no easy response; this requires a long game. While there were no expectations of splitting China and Russia, some held that opportunities would arise to take advantage of Russian wariness of China, aware that China poses the greater, long-term danger even if Russia appears more threatening now. Some of the comments on the report suggested that Sino-Russian relations are more fragile than some think, underestimating the historical trajectory, minimizing the impact of overlapping national identities in at least some dimensions, and not focusing enough on the most immediate test cases such as North Korea. An alternative response is that economic ties have been slow to improve and there may be no room for growth in this relationship, given the constraints and how little Russia has to offer China. In response to some who bemoaned the absence of a US strategy, one response is that a strategy can be detected, leading to allies resolving disputes with the United States, then a multilateral framework taking shape, and finally a coordinated approach to press China to shift away from its industrial policy that violates WTO principles. Others feared that Trump’s bullying cannot achieve these results. Finally, listeners heard that US strengths are still formidable, alliances are resilient, and despite self-inflicted wounds, the United States is likely to prevail while the Sino-Russian strategic partnership will not be strong enough to weaken the United States much.

A contrary set of opinions reflected thinking in Russia and China on the continued, growing strength of bilateral relations. Trade from Russia is shifting from the EU to China; so that within five years China’s share of the total will reach half of the EU’s.  FDI from China is reportedly more than the figures show since some comes through other countries such as Singapore. The two countries remember not so much historical issues that divided them during the Cold War but the worst disaster of that era for Russia when China switched to the US side. China’s rise, rather than alarming Russians, has emboldened them to ride China’s tail to a pole in world power. Russians take for granted that the Sino-US relationship will deteriorate into a kind of cold war and welcome signs of this in 2018 with expectations that they can get more support from China, not draw closer to the United States. The Ukraine developments of 2014 were not a turning point in Russo-Chinese relations, just an accelerant. Yet, Moscow will continue to cultivate ties to other major players in Asia independent of China’s plans, while it understands that China has the same approach in Eastern Europe. This outlook is optimistic about the future of relations.

Defenders of the justice of Sino-Russian alignment against the liberal international order had their voices hear in Washington. One of them insisted that US policies had been destroying this order in the Iraq War, the pullout from the ABM treaty, and the “color revolutions.” In response, Beijing and Moscow have established normal balancing relations, relying on each other. Each has a somewhat independent foreign policy in the other’s backyard, but they remain careful not to suggest any balancing versus each other. On the Russian side, one hears that it is not only Russia that needs China, but the other way around too: for oil and military power—nuclear, air defense, missile defense, underwater force, to mention a few—as well as political support.

Sino-Japanese Relations

The Abe-Xi summit was seen in a DC seminar as a modest but long desired goal of Abe to go to Beijing and improve a heretofore negative relationship into at least a neutral one. Abe had failed with Putin, could expect little more than was taking place with Moon Jae-in, and was now striving for a legacy with Xi Jinping, linked to his passion for foreign policy and security. Yet, given the latter focus, he was in no mood to expect any breakthrough with Xi. While Trump anxiety may have moved Xi to agree to a “fresh start” with Abe, including an upbeat exchange in Vladivostok between the two just a month earlier and two long consultations between Yachi Shotaro and Yang Jiechi in four months boosting the atmosphere, Abe was not inclined to distance Japan from its ally.

Three questions for Japan were on people’s minds on the eve of the summit. First, were signs of agreement on joint infrastructure projects a sign of acceptance of the BRI and lessened enthusiasm for a Free and Open Indo-Pacific (FOIP) to the point it might even have room for China? Listeners were told that a debate is under way in Tokyo over whether BRI and FOIP should be described to China as complementary or if that compromises Japan’s position. A qualified endorsement of joint projects conditioned on transparency and other non-BRI elements does not mean reduced commitment to FOIP, it was asserted.

Second, is Japan driven by developments in North Korea and US-North Korean relations to turn to China? The response was that Abe was not expecting this to be a major theme at the summit and that he may be separately preparing for possible change in US-ROK relations, even to the point of a cutback in US forces in Korea, by separating the US-Japan alliance from the US-ROK alliance each with its own mission at the narrative level, but not at the operational level.

Third, was Pence’s October speech, which some interpreted as the launching of a cold war with China, an indication that US and Japanese approaches to China were diverging? The surprising answer was that except for some in the business community the speech was mostly welcomed in Japanese policy circles as a relief that after a decade when the main Japanese concern was US abandonment and insufficient arousal over China’s threat, the Trump administration had reached a consensus: security hardliners teaming with economic ones, and Pence adding the coup de grace as a religious or human rights hardliner. Turning the usual argument on its head that China’s closer economic ties to the United States and its allies make it less of a threat than the Soviet Union was, Japanese appear to agree with the growing US consensus that this makes China more of a danger as an all-around threat capable of using economic hard power and aspiring to a technological edge in ways the Soviets could not. It is now assumed that Washington’s priority will be a trade coalition with Japan to contain China as at last the United States competes, lessening pressure that it might apply in trade talks with the Japanese.

The Abe-Xi summit went roughly as anticipated in DC, as the tone was upbeat on economic ties but little was achieved to alter distrust on other matters. Both sides went into the meeting with low expectations but eagerness to create a positive outcome and exploit the other’s newfound willingness to shift ground, especially on economic matters, and to declare a “fresh start.” For the audience questions focused on the impact on triangularity: would Trump in bilateral FTA talks with Japan try to scuttle Sino-Japanese cooperation? It was assumed that Abe would hold back on bilateral concessions, insisting that they would not go beyond what was decided earlier in multilateral negotiations, until the summer 2019 Upper House elections, not to jeopardize the LDP vote needed for constitutional revision. It was made clear that 2018 is not 1991-92, when Japan took the lead in improving ties with China and lifting sanctions, while the United States was wary. The Japanese public is more suspicious, Japan is less confident and focused more on keeping US support, and Japan sees China as much more of a threat and much less of an opportunity. The new summit is a holding operation as Tokyo awaits clarification by the United States.

Chinese Sharp Power

Australians have discovered the effectiveness of Chinese influence activities. These techniques have been practiced in the United States too, a DC audience was informed, but they have not been noticed as much as in some other cases. Funding a think tank, choosing its director, and making sure that it is supportive of Beijing is one example of these influence activities. Weaponizing business links with warm personal relationships serves as a way to apply pressure. The PRC is the master of diplomatic blackmail and has powerful weapons to subdue other nations, eroding resistance from within—infiltrating political, business, social, and academic institutions. This is far different from normal diplomatic pressures from without. Is this argument overstated for its ability to affect Australia or was the pushback just in time? Is Canada 3-4 years behind Australia and nearing the point of no return? Some in Australia think it has been too late in acting. How is this different from public diplomacy, one asked. Interference is covert, uses money, and is corrupt, one was told, and have been criminalized. Influence is not interference and is done in accordance with law and is transparent. The goal of reciprocity to oblige China to follow the same principles is unlikely since it forces countries to change their own system.

Free and Open Indo-Pacific Strategy

What is its relationship to the BRI? One panel called it an alternative yet complementary path, connected to China’s BRI but not containing China. The aim is to steer China toward freedom of navigation, the rule of law, transparency, and refocusing BRI on coordination with international entities. At the September 26 Abe-Trump summit, examples of cooperation to promote this were noted, including LNG energy cooperation. A month later Abe and Xi discussed BRI projects consistent with Japan’s principles, which China has accepted. Yet, there was recognition of the security dimension of both the BRI and the Free and Open Indo-Pacific strategy and that the latter has been pushed as a counterinitiative to China’s, even if the sums are less substantial. It is clear that most countries in Southeast Asia and beyond do not want to be pressured to make a choice between the two initiatives. Co-financing with the ADB is appealing, working with states to avoid debt extremes is helpful, and recognizing that China’s hype obscures its reliance on loans with terms that are often problematic avoids overreacting.

Japan’s important role in initiating the Free and Open Indo-Pacific strategy is recognized—first in Abe’s 2007 speech in India, when India and Australia were not ready and the US side stayed hesitant as its focus on better relations with China had peaked; and then in 2016-17 when less stress was put on democratic values in recognition of the retreat of democracy in the interim and in awareness that in light of China’s appeals financing could not be conditioned on a state’s democratization. Trump gave his assent in late 2017, as trilateral ties were advancing with both Australia and India. Even so, the strategy is clear militarily than economically.

Some wonder what signs of the delinking of the US and Chinese economies will mean for links between the two regional initiatives. If Washington insists with Tokyo and Seoul on what are called poison pill clauses directed against FTAs with China, what will be the result? A Japanese response was that already there is a US-Japan-EU proposal for WTO reforms dealing with SOEs and other issues sensitive to China and that could resolve the issue, especially since these are good for Chinese reform and can be discussed with Beijing. US-Japan coordination on the BRI was in some doubt after the Xi-Abe summit, but Japan’s conditions largely reassured the US audience.

US-ROK Relations

In DC exchanges South Koreans were more inclined to view the Trump-Kim summit in June as a turning point for the peninsula, ushering in a new era after 65 years, and Americans doubted that much had changed. One side spoke of forging a lasting peace and altering the alliance accordingly, and the other of the continued priority of deterrence and pressure to achieve denuclearization and other true measures of peace. Some Koreans saw the peninsular shift as leading to peace and stability in Northeast Asia as a whole, while Americans were pessimistic about the regional outlook. In the short-term, US calls for keeping sanctions without unilateral ROK moves were not echoed. Trust in China’s role on the peninsula differed. The US position is that maximum pressure worked, and it is essential to further progress. Yet, there is awareness that North Korea may think that its successful testing of nuclear weapons and missiles gives it leverage, making talks difficult. Even if pressure was critical, much of it came from China, and it will likely modulate future pressure to achieve its ends, also complicating talks with the North. Another variable is how the spread of markets in North Korea affects domestic pressure for a deal to remove sanctions—does it insulate the regime more or ramp up the pressure? Trump understood that an early summit with Kim Jong-un was the only way to affect change in this top-down system; so even if Hillary Clinton would have sought maximum pressure, she would likely have missed this bold move. The summit statement’s brevity and vagueness may have left some concerned, but the true test is at the working level. Until we see seriousness on the part of North Korea, it is premature to offer more concessions was the US response to the optimistic South Korean appeals.

DC audience also questioned whether Trump’s approach had led to sanctions being relaxed, as China, Russia, and South Korea have urged and as Kim Jong-un continues to enjoy summits with their leaders. The answer that China is still abiding by the UN resolutions, those cannot be reversed without US support, and US unilateral sanctions also operate reassured some. South Koreans appeared more concerned that Kim Jong-un may halt his diplomacy if not rewarded soon. A clear divided exists on the right strategy toward the North.

US-Japan Relations

Despite a bit of a commotion when Abe met with Xi Jinping in late October at a nadir in Sino-US relations, DC think tanks were confident that the US-Japan relationship remained strong. On the whole, Japanese are reassured by Trump’s tougher stance toward China and do not worry that the US side will misconstrue what is a modest correction in troubled Sino-Japanese relations. The October Pence speech about China, which one Japanese compared to the Truman Doctrine that kicked off the Cold War, did less to arouse shock waves in policymaking circles than it did to assure the Japanese that there would be no abandonment. Meanwhile, Abe had scored a long-sought triumph, which should, along with an expected Xi visit to Japan in 2019, help him in his final legacy-shaping agenda. If he could meet with Xi Jinping, there is less reason to be concerned about his push to amend the Constitution, perhaps before the June Upper House elections. The G20 summit in June could also give Abe a boost just after the Emperor’s abdication and the ceremony for installing a new emperor take place. Unknown is whether Abe can succeed in holding off US pressure to agree to a bilateral FTA—which Japan refuses to call by that label as it tries to steer Trump back to a version of TPP—until the June elections. Unknown too is what will happen in US-North Korea talks, where Japan now fears a bad deal more than a resumption of confrontation.