China Gripes, but Stuck with US Debt

BY MARK A. GROOMBRIDGE | DECIDE AMERICA

Wednesday, August 10, 2011

This article originally appeared on Newsmax.  Click here to see the article as it originally appeared.

China, the world’s No. 2 economy, has sharply rebuked the United States for spending beyond its means and what state-run media outlets have called an “addiction to debt.” However, with the rest of the world economy struggling and until China reorients its economy away from exports, it is not feasible for China to unload its $1.1 trillion in U.S.-government debt.

Over the course of the past few days, China has issued stinging criticisms of the United States for its failure to bring down spending and resolve its structural debt problems. In demanding that the United States take action to protect Chinese assets, official media outlets run by the state, such as the Xinhua News Agency, lambasted the United States for its failure to get its economic house in order and holding the world’s economies “hostage.” The reaction to the debt ceiling deal was also cool, with Xinhua noting that the 11th hour deal “failed to defuse Washington’s debt bomb for good, only delaying an immediate detonation by making the fuse an inch longer.”

As is customary in China, the response by the senior leadership in Beijing was more restrained. Chinese Premier Wen Jiabao, in a statement issued by the State Council, commented on Tuesday that “China urges nations to coordinate and implement concrete and responsible fiscal and monetary policies to secure the safety of investments.”

Currently, China has $3.2 trillion in foreign exchange reserves, two-thirds of which are estimated to be invested in dollar assets around the world. According to official figures, China holds $1.16 trillion in U.S-government debt instruments. It is well-known, however, that China also buys U.S. Treasuries through intermediaries in places such as Hong Kong and London. When those estimates are included, some analysts conclude that China holds closer to $1.6 trillion, or roughly 17 percent of the federal debt in public hands.

Earlier in the week, Zhou Xiaochuan, the Governor of the People’s Bank of China (China’s central bank) remarked that China would “closely observe” the situation in the U.S. and that China would continue to diversify its foreign currency investments. While China has routinely issued statements on the need to diversify its holdings, it has taken few steps to do so.

The factors most often cited for China’s refusal to stop buying U.S. Treasury bills and other securities include the lack of suitable alternatives, and that a large-scale sell-off would jeopardize China’s economy, particularly its policy of export-led growth. China intentionally keeps the value of its own currency, the yuan, low against the dollar in order to artificially promote exports. A sudden and massive selling of U.S. debt holdings would mean that the dollar would weaken further and the yuan would appreciate. The consequence of such a sell-off would be a further erosion of China’s assets and more competition for Chinese exports, something it has not been willing to tolerate.

Analysis

Despite the enjoyment the Chinese officials no doubt got from zinging Washington for its inability to cure its “addiction to debt,” they are stuck for a straightforward reason – there is nowhere else to go. Neither Europe nor Japan offer an attractive alternative, since both have their own share of economic problems, and neither offer asset markets deep or liquid enough. While down ten percentage points to 60 percent, compared to 70 percent a decade ago, the U.S. dollar is still the dominant foreign exchange reserve currency. Moreover, if China did attempt to diversify more into Europe or Japan through, for example, buying sufficiently large quantities of euros or yen, they would likely risk a protectionist backlash. Increasing the gap in value between the yuan and the euro and yen, respectively, would make Chinese exports against European and Japanese goods more competitive. Neither Europe nor Japan are as accommodating and willing as the United States is to run a long-term, artificially created trade deficit with China.

More broadly, though, China’s ‘addiction to U.S. debt’ is a direct consequence of their own domestic economic policies. For several decades now, China has encouraged exports and done little to encourage domestic consumption at home. They have essentially starved the middle-class of resources by having the People’s Bank of China borrow from the Chinese people and keep the value of the yuan low in order to subsidize exports. With massive amounts of state-led investment, they relied on world markets to absorb excess capacity. The result of this policy is that China has accumulated massive foreign exchange reserves to the tune of $3.2 trillion.

For years now, Chinese leaders have said they will take steps to increase domestic consumption at home and try to wean the country off what even they acknowledges is an over-dependence on exports. Beijing has been reluctant to do so, however, given its paranoia about social unrest. It is well-known that many of the state-led investment projects have been questionable, particularly in areas such as construction. Some economists estimate that roughly up to a quarter of all loans issued by Chinese banks in recent years could sour. The government is fearful that if it adopts much-needed market-oriented reforms too quickly, there will be massive unemployment and widespread protests, threatening the stability of the government.

The Chinese government knows its export-led growth policy is increasingly unsustainable and cannot continue indefinitely. A growing number of countries, most notably India and Brazil as of late, have made clear their impatience with the slow pace at which China has allowed the yuan to appreciate. They have so far, however, only taken minimal steps to reorient the economy away from exports. Many analysts, including this author, believe that the yuan is still undervalued by some 25 percent.

China may not like Washington’s economic policies, nor like its dependence on economic developments overseas more broadly, but they have no one to blame but themselves. Until China reorients its economy away from one based largely on exports, its criticism of U.S. economic policy will fall on deaf ears and its threats to diversify are largely empty. There simply is no place else for China to go.

Mark A. Groombridge has worked on a wide range of international security and trade issues for the U.S. Department of State, the U.S. Mission to the United Nations in New York, and the U.S. Commerce Department. He is Executive Director of Decide America, an organization dedicated to generating discussion on national security. Dr. Groombridge holds a Ph.D. in Political Science from Columbia University and a B.A. in Chinese and International Relations from the University of Minnesota.

 © 2011 Newsmax. All rights reserved.

China’s Two-Pronged Maritime Rise

 
July 24, 2011 

 

China is following a two-prong strategy with its impressive maritime build-up. The West is making a mistake if it underestimates the implications.

 

For the past decade, while the West has been consumed battling Islamic extremists in the Middle East and Central Asia, China has been engaged in a rapid and impressive effort to establish itself as the supreme maritime power in the Eastern Pacific and Indian Oceans. 

For years, China focused its military spending on the People’s Liberation Army, while the Air Force and Navy served as little more than adjuncts to the Army. But with the launch of its first aircraft carrier next month, the rest of the world – and especially the United States’ Asian allies – is taking note of how dramatically things have changed. China has big maritime ambitions, and they are backed up by a naval build-up unseen since Kaiser Wilhelm II decided to challenge British naval power with the building of the High Seas Fleet at the turn of the last century.    

China’s build-up is driven by a two-pronged strategy. First, China seeks to deny access by the United States and other naval powers to the Yellow, East China and South China Seas, thereby (1) establishing its own equivalent to the way the United States saw the Caribbean in the 20th century, from which its blue water navy can operate globally; (2) dominating the natural resources and disputed island chains such as the Spratly and Senkaku Island chains in those seas; and (3) giving it the capacity to reunify Taiwan with the mainland by force and without US interference, if necessary. China’s assertiveness in confronting and harassing Asian and US civilian and naval ships in the region over the past decade shows a sustained level of determination on this front.

Second, China seeks international prestige and a power projection capacity in the Pacific and Indian Ocean sea lanes by deploying multiple aircraft carriers and fifth-generation stealth fighter-bombers. The booming Chinese economy has become ever more dependent on imported minerals and oil from Africa and the Middle East, and the ability to protect its Indian Ocean and Strait of Malacca sea lanes is a responsibility that China is no longer willing to delegate to other powers.

The officially reported Chinese military budget for 2011 is $91.5 billion, a massive increase from its $14.6 billion budget in 2000.  China acknowledges that a third of its spending is now devoted to its Navy, yet even this big leap is almost certainly understated. China is notoriously non-transparent with its military expenditures, and most analysts believe that it spends significantly more on its armed forces than the publicly reported number. Further, Chinese military labour costs for its soldiers, sailors and airman is a fraction of what Western governments spend, where salaries, benefits and pensions are usually the largest share of defence budgets. This allows China to devote more of its budget to building weapons systems than its competitors. Unlike Western governments, which are slashing defence spending, China will continue to increase spending in coming years. 

A key goal of China’s maritime build-up is access denial. While multifaceted, China is building its access denial strategy around two backbone platforms: the DF-21D (Dong Feng) anti-ship ballistic missile (ASBM), described as a ‘Carrier Killer,’ and an ever expanding and modern attack submarine fleet. US Navy Pacific Commander Adm. Robert F. Willard has characterized the DF-21D as already having reached the Initial Operational Capability stage of development, meaning that they are operable, but not yet necessarily deployable. Taiwan sources report that China has already deployed at least 20 ASBMs.  Whether deployed now or in the near future, the US Navy believes China already has the space-based intelligence, surveillance and reconnaissance, command and control structure, and ground processing capabilities necessary to support DF-21D employment. China also employs an array of non-space based sensors and surveillance assets capable of providing the targeting information necessary to employ the DF-21D.  With a recently reported range of 2,600 kilometres, these missiles will give naval planners real concern when operating anywhere nearby the Chinese mainland. 

The Chinese submarine programme has been especially vigorous. For most of the Cold War, China operated outdated Soviet-era coastal submarines. In the 1990s, China purchased Russian Kilo-class diesel-electric attack submarines, and has been launching two indigenously-built Song-class diesel-electric attack submarines per year for the past decade. It has also developed and launched the high tech Yuan-class diesel-electric attack boat, which may have the silent air-independent propulsion system. Analysts believe that China will in the coming years also launch the Shang-class nuclear-powered attack submarine, further strengthening its already robust submarine fleet. It has surely not escaped China’s notice that US anti submarine warfare capability has atrophied significantly since the end of the Cold War. 

 

But China’s maritime capabilities are set to extend beyond access denial, into power projection. The systems that have gained most international attention are China’s planned aircraft carriers and its new fifth-generation fighter bomber. Anytime now, the PLA Navy will commence sea trials for its first carrier, the ex-Ukrainian Varyag, which has been renamed Shi Lang. The former Soviet ship is larger than European carriers, but one-third smaller than US Nimitz class carriers. Moreover, China has publicly confirmed it has a second, larger, conventionally powered carrier under domestic construction that will likely be launched in 2015. China has planned or is constructing a third conventionally-powered carrier and two nuclear-powered carriers are on the drawing board, with a planned completion date of 2020. 

Equally important as the warships, are the aircraft China plans to deploy on its flat tops. The main fighter-bomber in the PLA Navy carrier air wing will be the J-15 Flying Shark, which under current configuration is comparable in size and capability to the US Navy’s retired F-14 Tomcat. The jet will have limited range given its weight taking off from the ski deck-configured Shi Lang, however, it’s believed that advances in Chinese aeronautics and avionics, as well as a catapult launch system on forthcoming carriers, could put the J-15 in the same performance class as the USN F-18 Super Hornet in the future. China may also have developed a carrier-based airborne warning and control systems (AWACS) aircraft, which would be a major development. An Internet-sourced photograph that appeared in mid-May, meanwhile, shows a corner of a model of what is clearly a small AWACS aircraft inspired by the E-2 Hawkeye and the unrealized Soviet Yak-44 designs.   

To put China’s carrier programme in perspective, with the retirement of the USS Enterprise this summer, the United States will have only ten carriers to meet worldwide commitments; China will likely have five carriers devoted to the Asia-Pacific region alone. 

China’s build-up is being noted even in the popular Western media, which has given significant coverageto China’s prototype fifth generation twin-engine stealth fighter-bomber, the J-20 Black Silk. The jet is larger than the USAF F-22 Raptor and could prove to be comparable in capability (although some US observers claim it is more similar to the slightly less sophisticated US and allied F-35 Joint Strike Fighter, which will be the frontline US carrier fighter). 

The J-20 prototype took off on its ‘maiden’ test flight in January from an airfield in the southwestern city of Chengdu, flying for about 15 minutes on the same day then-US Defence Secretary Robert Gates was in Beijing meeting with Chinese President Hu Jintao, sending a strong political message and earning the jet a spot on evening news programmes worldwide. 

China is believed to have received a major assist in developing the J-20 by obtaining materials from a downed US F-117 Night Hawk from Serbia, as well as from the believed cyber theft of JSF plans from US defence contractors. (With this in mind, US planners should also assume that Chinese engineers have had access to the rotor tail of the stealth helicopter that was ditched in the Osama bin Laden raid in Pakistan).   

These rapid and high-level technical achievements have apparently surprised many Western observers, and the consensus is that the West has consistently underestimated the strength of China’s military industrial capability and its determination to expand and modernize its armed forces, especially the PLA Navy. But it should now be more than clear that the world is facing a significant challenge to a maritime system that has been dominated for the past 200 years by Anglo-American navies. How the United States responds to China’s challenge will define the balance of power in the Asia-Pacific for the rest of the century.  

Robert C. O’Brien is the Managing Partner of Arent Fox Los Angeles. He served as a US Representative to the United Nations. He can be followed on Twitter @robertcobrien.

Click here to see this article as it originally appeared in The Diplomat.

North Korea Edges Toward Next Nuke Test

By John R. Bolton |   Washington Times

Obama takes little notice of menacing developments in Pyongyang and Tehran.

You wouldn’t know it from the Obama administration, but North Korea’s global threat continues to metastasize. South Korea recently concluded that extensive cyber-attacks against civilian and military targets in the South emanated from the Democratic People’s Republic of Korea (DPRK). Following China’s lead in information warfare, the North is creating yet another asymmetric military capability it can deploy against its adversaries and also peddle for hard currency to other rogue states and terrorist.

Although Pyongyang limited its targeting of this particular sortie to South Korea, the potential cyberwarfare battlefield is global and includes the United States, which already is the subject of extensive cyberprobing, exploitation and espionage by China. For a country perennially on the brink of starvation, North Korea’s military foray into cyberspace demonstrates its continuing malevolence.
The DPRK’s nuclear-weapons program has not rested on its laurels, either, with widely observed surface-level preparations for a possible third underground test well under way.

The North’s development of ballistic missiles capable of delivering nuclear payloads is also advancing apace, as Russian missile designer Yuri Solomonov highlighted last month in a Kommersant interview. This is hardly surprisingly given Iran’s increasing long-range capabilities, the extensive Tehran-Pyongyang collaboration, and their programs’ common base in Soviet-era Scud missile technology.

Meanwhile, Pakistan’s A.Q. Khan has released documents purportedly showing prior North Korean bribery of senior Islamabad officials to grease the transfer of nuclear or ballistic-missile technology. While their authenticity is disputed, the documents are part of Mr. Khan’s continuing campaign to prove he did not act solo in the world’s illicit nuclear-weapons bazaar.

He long ago admitted supplying North Korea and Iran with critical nuclear technology. Pyongyang’s unveiling in November of impressive new uranium-enrichment facilities at Yongbyon and recent construction there show the continuing fruits of Mr. Khan’s entrepreneurship. His documents – and the many others he undoubtedly has in a shoebox somewhere – are worth verifying and actually might help Islamabad and Washington work together to repair their fractured relationship and prevent China from exploiting their current differences.

Clearly, North Korea’s weapons programs are not decelerating even amid intensive preparations for a possible transition of power, following Kim Jong-il’s death, to a third member of the communist Kim dynasty. But faced with these challenges, the Obama administration has been not only publicly silent but essentially passive both diplomatically and intellectually. Only the Pentagon and the intelligence community, fortunately still implementing the Proliferation Security Initiative, have done much beyond noting pro forma that the troublemaking DPRK is still at it.

Public silence is not necessarily inappropriate, although the failure to comment on a wide range of global threats posed by U.S. adversaries is par for the course under President Obama. Based on presidential attention levels, one would think Iran’s nuclear-weapons program was withering away, Russia’s active military penetration of the Arctic was of merely scientific interest, and China’s aggressive territorial claims in East Asia were mere legal technicalities to be resolved by low-level functionaries.

Far more dangerous than mere silence, of course, is the manifest absence of a behind-the-scenes determination to stop the North’s nuclear-weapons and missile programs (not to mention the other threats detailed above and many more). Mr. Obama’s deliberate silence and near-palpable lack of interest have helped drive North Korea into media obscurity while simultaneously symbolizing our failure to contain – let alone eliminate – the DPRK’s threat.

Through the “strategic patience” policy, the president has at least not been scurrying to revive the failed Six-Party Talks or willfully denying the North’s weapons-related progress, as many did in the George W. Bush administration’s final years. But however politically self-satisfying “not Bush” might be, strategic patience is a thoroughly inadequate response to North Korea and has been from its inception.

A real strategy, which we need much sooner than later, would require understanding that the DPRK and Iranian threats, including cyberwarfare, are two sides of the same coin, not unrelated outbreaks of nuclear contagion. The United States must take both seriously, reversing our present course of ignoring both.

Waiting passively for a third DPRK nuclear test is unacceptable, although that might be the only event to motivate Mr. Obama to pay at least lip service to combating Pyongyang’s continuing threat. By removing the public spotlight from the North – and its customers and suppliers – his administration has made it easier to evade existing sanctions and harder to impose new constraints absent another attention-riveting underground test. Moreover, Seoul is keenly aware of the North’s impending succession crisis and is likely prepared to take a much tougher line than in recent years.

At a minimum, therefore, we must press China and Russia far harder to quarantine North Korea’s trafficking in nuclear and missile technologies and materials. Unfortunately, the administration’s startling passivity means missing opportunities, which we will all regret very soon.

John R. Bolton, a former U.S. ambassador to the United Nations, is a senior fellow at the American Enterprise Institute and author of “Surrender Is Not an Option: Defending America at the United Nations and Abroad” (Simon & Schuster, 2007).
 

 

 

Top Strategist Says N.Korea Will Be Able to Nuke U.S. in 2012

STAFF WRITER | English Chosun

Top Strategist Says N.Korea Will Be Able to Nuke U.S. in 2012

North Korea will by next year have developed a downsized nuclear warhead that can be attached to ballistic missiles and fired onto the U.S. mainland, a senior U.S. strategist predicted this week.

The rogue state will continue experimenting with intercontinental ballistic missiles that put the U.S. within striking distance until it succeeds in 2012, said Larry Niksch, a senior associate at the Center for Strategic and International Studies.

His prediction came during a seminar on North Korean affairs hosted by the Korea Economic Institute in Washington D.C. on Wednesday. It was reported by the Voice of America on Thursday.

Niksch said that if Pyongyang secures the appropriate technology, it will never abandon its nuclear program, thereby rendering the six-party talks aimed at denuclearizing the country ineffective. He said the U.S. needs to fundamentally rework its policies regarding the North’s nuclear weapons programs in order to make progress.

He went on to say that the U.S. strategy of trading denuclearization for the prospect of establishing diplomatic ties with Washington will continue to depreciate in value as the North becomes stronger militarily.

Niksch envisaged a future scenario in which the U.S. would need to station an ambassador in the North Korean capital to manage the nuclear weapon risks in the Korean Peninsula. At the same time, the U.S. would be compelled to recognize the communist state as a de-facto nuclear power.

See full article at www.englishchosun.com

Kissinger: China Poses ‘Big Challenge’ for United States

STAFF WRITER |  CNN
Given China’s increasing power and economic security, dealing with the Communist nation poses a “big challenge” for the United States, former U.S. Secretary of State Henry Kissinger said Sunday.

Kissinger was national security adviser in President Richard Nixon’s administration, and almost 40 years ago he made a secret trip to confer with the Chinese, a voyage that paved the way for the normalization of relations between Washington and Communist China. He recently has written a book, “On China,” and appeared Sunday on CNN’s “Fareed Zakaria GPS.”

Asked whether he had any inkling four decades ago that China would become the global power it is today, competing with the United States economically and technologically, Kissinger said, “It would have been inconceivable. Nobody had any such perception or expectation.”

Since those talks, relations between China and the United States have remained stable, Zakaria noted. In recent years, China has tried to get America’s help in modernizing its economy, tacitly supporting a lot of U.S. foreign policy, Zakaria said. But some believe that may be changing now and that a new chapter of Chinese foreign policy may be beginning.

“There are elements in China who, particularly after the financial crisis, feel that there has been a fundamental shift in the balance of power and that the international conduct of China and the results of its conduct should reflect this,” Kissinger said. “But one shouldn’t think that all of this is America’s fault, because the Chinese – we have been dominant in the last 50 years – they’ve been dominant in 1,800 of the last 2,000 years.

“And you know, I think America is entering a world in which we are neither dominant nor can we withdraw, but we are still the most powerful country,” he said. “So how to conduct ourselves in such a world – it’s a huge test for us. And China is the most closely approximate country in terms of power. And one with such a complex history. It’s a big challenge.”

Read the rest of the article and see the video at www.cnn.com

U.S. Intercepts North Korean Ship Suspected of Carrying Missiles

DAVID E. SANGER | The New York Times

SEOUL, South Korea — The United States Navy intercepted a North Korean ship it suspected of carrying missile technology to Myanmar two weeks ago and, after a standoff at sea and several days of diplomatic pressure from Washington and Asia nations, forced the vessel to return home, according to several senior American officials.

Washington made no announcement about the operation, which paralled a similar, far more public confrontation with North Korea two years ago. But in response to questions about what appears to be a growing trade in missiles and missile parts between North Korea and Myanmar — two of the world’s most isolated governments — American officials have described the episode as an example of how they can use a combination of naval power and diplomatic pressure to enforce United Nations sanctions imposed after the North’s last nuclear test, in 2009.

Obama’s Reckless, Ridiculous China Policy

John R. Bolton |  Daily Beast

President Obama’s disinterest and inexperience in foreign and national security affairs are nowhere more evident than in his China policy. Consider his administration’s record in just one year:

  • We have lurched from Secretary of State Clinton dismissing any possibility of progress on human rights, just before her visit to China last year, to the president planning to meet with the Dalai Lama this month.
  • We announce major new U.S. weapons shipments to Taiwan even as we eagerly look to China to fund major portions of President Obama’s massive U.S. government budget deficits.
  • We avoid pressuring China for cyber attacks on American companies, its tolerance of intellectual property theft, and other rule-of-law violations, and instead lean on China to reduce its carbon emissions to combat global warming.
  • We allow China to evade taking serious responsibility for North Korea’s nuclear weapons program, while we simultaneously seek China’s support for additional Security Council sanctions against Iran’s program

Pursuing competing or inconsistent priorities is hardly new or unusual for the United States, given our global commitments and obligations, which make it nearly impossible to pursue any single priority to the exclusion of others. Indeed, one real metric of foreign-policy success is juggling these varying interests. Obama’s China policy is different–and potentially quite deleterious for the United States–because it unfolds in almost random fashion.

The secret of what’s wrong with his foreign policy is what’s wrong with his domestic policies. Obama’s central focus is domestic, and neither his inclinations nor his experience afford him the judgment required for serious foreign-policy decisions. Accordingly, having proposed $8.5 trillion in deficits over the next decade, and lacking enough gall to propose the requisite taxes to fund such extraordinary spending, Obama has only the alternatives of printing money or issuing debt. Both are harmful, but the debt route is a less visible way to debase the currency. Implicitly, Obama expects China to purchase a major portion of this debt, adding to its existing enormous share of Treasury obligations. Unfortunately for the president, however, China appears unwilling to play. In particular, China worries about the potentially devastating effects these mountainous additions to the national debt will have on the U.S. economy, and thus our ability ultimately to repay all or even most of it.

Of course, this is precisely what Washington should be worried about, not Beijing. It is little wonder that Chinese leaders now question not only America’s grip on its own economy, but its grip on international politics as well. This U.S. implosion is mirrored in Obama’s fascination with the multilateral regulatory regimes favored by the Kyoto/Copenhagen global-warming negotiating process. Assuming both the seriousness of global warming, and its anthropogenic causation, however, does not dictate self-evident solutions. In fact, many Copenhagen advocates would favor the same government-imposed “solutions” even if the problem were global cooling, or if there were no earth-temperature issue at all. Ironically, China is the world’s one large economy that could easily adopt the near-authoritarian, command-and-control economics favored by the Copenhagen crowd, and yet it refuses to do so. Beijing argues, not unreasonably, that drastic limitations on carbon emissions will thwart its plans for economic growth, which it simply has no intention of doing. China must also wonder why a purportedly free-market country like America is following this decidedly statist path.

Not only are Obama’s domestic priorities driving him in the wrong direction with China, perhaps even worse, he seeks the wrong answers from China even on strictly national-security issues. U.S. policy on Iran’s and North Korea’s dangerous nuclear-weapons programs highlights this anomaly most clearly. In both the Bush and the Obama administrations, we have allowed China to escape responsibility for stopping Pyongyang’s nuclear program, something it has the unique capacity to do, given the North’s reliance on China for energy, food and other critical resources. Although China says it opposes a nuclear North Korea, it is unwilling to take tough measures because it fears even more the collapse of the Pyongyang regime and the possible reunification of the Korean Peninsula. While eliminating North Korea would end Northeast Asia’s nuclear problem and lead to regional and international stability, China will not act for fear of enhancing the U.S. position in the region. Our response for eight years has been to allow China to pursue its interests aggressively, while forfeiting our own.

By contrast, on Iran, we face a regime determined to acquire deliverable nuclear weapons, and resolutely undeterred by three existing UN Security Council sanctions resolutions. Nonetheless, the Obama administration proclaims that a fourth set will somehow achieve what the first three have failed to do, despite China’s repeated and very public statements that it does not support such an approach. Of course, even if another resolution is adopted, the real question is whether it will have the slightest impact on Iran’s decision making. The near-certain answer is “no.” Instead of practically begging China for support, therefore, America should be making its own hard decisions to do what is necessary to prevent what now looks almost inevitable absent an Israeli military strike: Iran with nuclear weapons.

Many people blame China for pursuing its national interests in such a bold and unembarrassed fashion. They are mistaken. China is just doing what comes naturally. The real question is why the United States is not doing the same.

Google Didn’t Kowtow and Neither Should You

By John R. Bolton |  Wall Street Journal Asia

Google’s threat to withdraw from China has attracted considerable attention in business circles and the critical but arcane world of cyber warfare. But the unfolding story also has far broader implications for how U.S. businesses approach the Chinese market and for the U.S. government, which has often failed to vigorously assert U.S. political and economic interests. Far from being a retreat, Google’s move may represent an aggressive corporate step forward in insisting on reciprocal fair dealing.

Although there have been prior examples of corporations leaving China, Google’s is the most noteworthy potential precedent because of its global prominence. China’s apparent hacking into Google’s email system also raises broader questions about the country’s inadequate protection of intellectual property and what place the rule of law actually has among Chinese policy-making priorities, political as well as economic. Human rights, freedom of religion and ethnic discontent all cloud China’s reputation as a “responsible stakeholder” in world affairs.

Nonetheless, the lure of China’s market has quieted many complaints by foreign businesses loathe to provoke Beijing or cede such a potentially huge market to competitors, either domestic or foreign. Inevitably, the refrain is that “China will soon be the world’s largest economy,” and firms are simply expected to bite their tongues and plow ahead.

For years, U.S. administrations of both parties have held much the same view. Analysts and “experts” repeatedly advise not to “press too hard” on China on (a) currency manipulation; (b) North Korea’s nuclear-weapons program and proliferation generally; (c) domestic human-rights policy; (d) Tibet; or (e) [fill in the blank] because “China will not be pleased.” Of course, this is a prescription for doing nothing to change undesirable Chinese policies, and indeed implicitly encourages Beijing to continue them.

These widespread strategies of appeasement simply give China what it wants for free. Bringing China appropriately to diplomatic battle on any given issue can hardly be worse than surrendering without a fight, which has occurred all too often in recent years. If fear of retaliation over the immediate issue in dispute—or in a perhaps completely unrelated area—inhibits the U.S. from objecting to unsatisfactory Chinese policies, China will simply proceed to have its way. This analysis is not a criticism of China, which forthrightly does what it can get away with, but of limp-wristed American policy.

Take, for example, China’s massive store of U.S. government debt, the current all-purpose reason not to rouse the slumbering Chinese dragon. China’s holdings should not inhibit Washington from strongly asserting U.S. views, whether on North Korea, human rights or trade. If Beijing actually acts in a way that exacerbates the looming debt problem, it would only be making concrete what we already know, and should already be resolving on our own—which is that our growing public debt is unwise and unsustainable. China already runs its own considerable economic risks as a U.S. creditor. It may be China that is the paper tiger—but how will we know, if we never test it? (Ironically, the U.S. should be delighted that China worries about exploding U.S. government budget deficits and the risks of massive inflation. Too bad the Obama administration doesn’t have Beijing’s acuity, but perhaps China will save us from our own misdirection.)

China’s advocates make a critical mistake trying to justify the country’s aberrant commercial behavior. Businessman Tang Jun, for example, recently questioned Microsoft’s position against piracy of its intellectual property by telling the Washington Post that “in a lot of other countries that can work. But China is a very unique country.” Unique in saying that stealing intellectual property is the norm in China and must be accepted? Hardly an “open for business” sign or the reputation that any country, no matter how large its market, should want.

Supineness only convinces Beijing that a “take it or leave it” approach will work in more and more circumstances. Here, Google’s conduct in the immediate future is critical: If Google can negotiate satisfactory protections for its operations in China and decides to remain, then its hard line will have proven successful. But if Google cannot get essentially what it wants, and nonetheless remains in China, that will be the worst signal of all. Google must remember never to make threats unless the company is fully prepared to carry them out.

The U.S. government and American businesses should do what they naturally do elsewhere: defend their own interests vigorously. Make deals in or with China when they meet the tests of satisfying those interests, not out of generalized fear of retaliation or lack of cooperation from Beijing down the road. In reality, Beijing is more likely to respect a determined interlocutor, business or government, than a weak-willed one. It is incomprehensible that Americans have not appreciated and acted upon this lesson in recent years. Perhaps Google is about to educate us.

President Obama Didn’t Impress Asia

John R. Bolton |  Wall Street Journal

Barack Obama’s first visit to Asia since his inauguration was one of the most disappointing trips by any U.S. president to the region in decades, especially given media-generated expectations that “Obamamania” would make it yet another triumphal progression. It was a journey of startlingly few concrete accomplishments, demonstrable proof that neither personal popularity nor media deference really means much in the hard world of international affairs.

The contrast between Asia’s reception for Obama and Europe’s is significant. Although considered a global phenomenon, Obamamania’s real center is Europe. There, Mr. Obama reigns as a “post-American” president, a multilateralist carbon copy of a European social democrat. Asians operate under no such illusions, notwithstanding the “Oba-Mao” T shirts briefly on sale in China. Whatever Mr. Obama’s allure in Europe, Asian leaders want to know what he means for peace and security in their region. On that score, opinion poll ratings mean little.

What the president lacked in popular adulation, however, he more than made up for in self-adulation. In Asia, he labeled himself “America’s first Pacific president,” ignoring over a century of contrary evidence. The Pacific has been important to America since the Empress of China became the first trading ship from the newly independent country to reach the Far East in 1784. Theodore Roosevelt created a new Pacific country (Panama) and started construction on the Panama Canal to ensure that America’s navy could move rapidly from its traditional Atlantic bases to meet Pacific challenges. William Howard Taft did not merely live on Pacific islands as a boy, like Obama, but actually governed several thousand of them as Governor-General of the Philippines in 1901-1903. Dwight Eisenhower served in Manila from 1935 to 1939, and five other presidents wore their country’s uniform in the Pacific theater during World War II—two of whom, John F. Kennedy and George H.W. Bush, very nearly perished in the effort.

But it was on matters of substance where Mr. Obama’s trip truly was a disappointment. On economics, the president displayed the Democratic Party’s ambivalence toward free trade, even in an economic downtown, motivated by fear of labor-union opposition. On environmental and climate change issues, China, entirely predictably, reaffirmed its refusal to agree to carbon-emission limitations, and Mr. Obama had to concede in Singapore that the entire effort to craft a binding, post-Kyoto international agreement in Copenhagen had come to a complete halt.

On U.S. national security, Mr. Obama came away from Beijing empty-handed in his efforts to constrain both the Iranian and North Korean nuclear weapons programs, meaning that instability in the Middle East and East Asia will surely grow. In Japan, Mr. Obama discussed contentious issues like U.S. forces based on Okinawa, but did not seem in his public comments to understand what he and the new Japanese government had agreed to. Ironically, his warmest reception, despite his free-trade ambivalence, was in South Korea, where President Lee Myung-bak has reversed a decade-long pattern by taking a harder line on North Korea than Washington.

Overall, President Obama surely suffered his worst setbacks in Beijing, on trade and economics, on climate change, and on security issues. CNN analyst David Gergen, no conservative himself, compared Mr. Obama’s China meetings to Kennedy’s disastrous 1961 encounter with Soviet leader Nikita Khrushchev in Vienna, a clear indicator of how poorly the Obama visit was seen at home. The perception that Mr. Obama is weak has already begun to emerge even in Europe, for example with French President Nicholas Sarkozy, and if it emerges in Asia as well, Obama and the U.S. will suffer gravely.

Many media analysts attributed the lack of significant agreements in Beijing to the “rising China, declining America” hypothesis, which suits their ideological proclivities. But any objective analysis would show that it was much more Mr. Obama’s submissiveness and much less a new Chinese assertiveness that made the difference. Mr. Obama simply seems unable or unwilling to defend U.S. interests strongly and effectively, either because he feels them unworthy of defense, or because he is untroubled by their diminution.

Of course, most Americans believe they elect presidents who will vigorously represent their global interests, rather than electing Platonic guardians who defend them only when they comport with his grander vision of a just world. Foreign leaders, whether friends or adversaries, expect the same. If, by contrast, Mr. Obama continues to behave as a “post-American” president, China and others will know exactly how to take advantage of him.

This Is No Time to Kowtow to China

John R. Bolton |  Globe and Mail

Barack Obama approaches his first official trip to China with his Asia policy unclear. Much depends on his view of China’s future and what he thinks America’s priorities should be.

Too many Americans, particularly business leaders, see China as a monolithic economic power, inexorably growing until its aggregate economy shortly surpasses America’s. China’s large U.S. debt holdings, its substantial foreign currency reserves and trade surpluses, its population size and its rapacious global search for raw materials, combined with the long-standing (if usually unfulfilled) allure of its domestic market, all have their impact in the United States.

Understandably, the hope is that China will be a “responsible stakeholder,” which would befit a major global economic power. Where many err, however, is in transforming this hope to current reality and believing, therefore, that propitiating China will ensure it acts responsibly. Thus, neither the Bush nor Obama administrations have pressed China enough to do what it can uniquely do to end North Korea’s nuclear weapons program.

Moreover, Mr. Obama has been unwilling to oppose China even on so basic an issue as the U.S. dollar’s remaining the world’s reserve currency. Secretary of State Hillary Clinton, flying to Beijing, famously announced that China’s human-rights record would not impede broader dialogue. Her remark may or may not have been wise, but one can at least ask whether Washington shouldn’t have got something back for throwing human rights under the bus.

Pre-emptive concessions rarely convince another important power that the United States is serious about asserting and defending its own vital interests. Nor is the reflexive inclination of some analysts to resolve essentially all Asia-related policies with Beijing, rather than balancing China by relying on traditional U.S. allies. But, more fundamentally, the model of China on which the deferential, Sino-centric policies of the past several administrations have been based is badly flawed.

We cannot know China’s future course, disturbing but for the reality that China itself does not confidently know its way ahead. The paradigm of continued economic growth, a straight line from Deng Xiaoping’s economic reforms, is one possible future, but far from the only one.

Rather than just the past few decades, look at China’s previous century: the collapse of the last imperial dynasty, the rise and repeated fall of the Republic of China, internal chaos among belligerent warlords, invasion and subjugation by Japan, civil war between Communists and Nationalists, Mao’s dictatorship–which brought two of world history’s greatest tragedies, the Great Leap Forward and the Cultural Revolution–and then the 1989 repression at Tiananmen Square, just for starters. This is a hundred years of radical discontinuity, and straight-lining that century rather than just the most recent decades predicts a very different future.

We also cannot ignore that the Communist Party remains China’s dominant political force, and that the People’s Liberation Army is the party’s hardest of hard cores. China is upgrading and expanding its strategic nuclear missile capabilities and its air force, implicitly threatening Japan and other Asian countries–and which should be of growing concern to the United States itself.

China is modernizing its huge but technologically immature ground forces, and rapidly building blue-water naval capabilities that could undermine U.S. pre-eminence in the western Pacific for the first time since the Second World War. No wonder China’s neighbours are worried, and worried also about the Obama administration’s response.

And China’s internal situation is far from rosy. The “one child per family” policy has left tens of millions of Chinese men with no realistic prospect of marriage, ever. China’s creatively derived economic statistics conceal huge unseen armies of unemployed, both in coastal cities and deep in the interior, with only remote job prospects. These and other factors portend potentially enormous social and political instability.

An effective U.S. Asia policy, therefore, should not assume an economically omnipotent China or ignore or understate the still-critical role of close allies such as Japan. Nor should we shrink from imposing intense pressure on issues important to the United States, such as North Korea’s nuclear threat or substantial trade barriers and internal rule-of-law problems China poses on issues such as intellectual property. If we simply assume it is too risky to be firm with China, Beijing wins by default, and American interests suffer.

China is frailer internally than its propaganda admits, and other Asian nations are far from ecstatic about a rising China and a declining America. We need a U.S. policy that does not uniformly defer to China but that asserts U.S. interests unapologetically. China would respect such an approach, because it appreciates how great powers routinely treat each other on vital national interests. The question for Barack Obama is whether he understands that it is not a strong American policy that could provoke China, but a weak one.