China’s Military – Growing Assertiveness

Introduction

People’s Liberation Army

People’s Liberation Army

Over the last two decades, China has been steadily modernizing its military. This push to modernize reflects China’s desire to have military power commensurate with its growing economic and political status. It also reflects the fact that, from the Chinese perspective, the international realm gives rise to as many strategic uncertainties for China as a rising China does for other nations. In particular, many in China view the US as a strategic rival who wants to prevent China from becoming an equal leader on the global stage. The US’s “pivot to Asia” is viewed by many Chinese as example of the US’s containment effort. China is also unsettled by the US’s efforts to provide US allies and friendly states with weapons systems aimed to counter China’s growing military capability, and by the US’s continued arm sales to Taiwan.

Additionally, China considers Japan’s growing nationalism and Japan’s efforts to overhaul its military and security policies as a mounting threat. Its current alliances with North Korea and Russia notwithstanding, China views North Korea as a politically unstable nuclear power on its border, and Russia as a strategic competitor as well as an ally. China is also engaged in territorial disputes with Malaysia, the Philippines, Brunei, Vietnam, Taiwan and Japan in the South and East China Seas and with India on its western border. Additionally, China considers Taiwan, Tibet and Xinjiang to be its sovereign territory, and will fight their any move toward independence.

Other objectives of its military modernization program include improving China’s ability to fight piracy, to protect its shipping lanes and its access to energy and resources abroad, to help ensure the security of its international assets and to safeguard its growing numbers of citizens working and living overseas. From the Chinese perspective, protecting its economic trade and investments is critical to achieving Xi Jinping’s China dream – “achieving the great rejuvenation of the Chinese nation”. Indeed, China’s 2015 Military Strategy Document states: “the Dream is to make the country strong. Making the Chinese military strong is part of the Chinese Dream. Without a strong military, a country can be neither safe nor strong.” China sees the global trends toward “multi-polarity and economic globalization intensifying” which it believes will increase “international competition for the redistribution of power, rights and interests”. China sees a strong military as a competitive advantage as it vies for influence in this changing global landscape.

China continues to emphasize its military modernization is defensive in nature. China states that it will strike militarily only if it has been attacked first. Overall, China tries to play a long game when working to achieve its political, economic and military objectives. For example, while it will quell unrest in Xinjiang by force when necessary, ideally China hopes to overcome Uyghur opposition to Chinese rule through economic development and continued cultural integration. Similarly, before the International Tribunal of the Law of the Sea issues a ruling on Sino-Phillippines territorial disputes in the South China Sea – despite China refusing to participate in the arbitration – China is trying to maximize its facts in the water through the building of islands on contested reefs. By playing this long game in its strategic, multifaceted way, China is working to create a position of power so advantageous that it can accomplish its goals without ever having to use force. That said, China says that a first strike against the country need be military. China has stated that political, economic and strategic attacks could justify Chinese military action even if it means that People’s Liberation Army (PLA) fires the first weapon.

Levels of Military Spending

China’s J-10 airforce jet

China’s J-10 airforce jet

According to the well-respected Stockholm International Peace Research Institute (SIPRI), China’s annual defense spending has grown from approximately $33 billion in 2000 to $130 billion in 2011 compared to the US’s $690 billion in 2011. As a percentage of total GDP, China’s annual military expenditure has remained fairly constant at 2.1% while the US has grown its military spending from 3% to 4.8% of GDP from 2000 to 2011. Applying these percentages to 2014 GDP figures, it is estimated that China spent approximately $217 billion on its military compared to the US’s $836 billion. At current trends, some project China to become the world’s largest military spender between 2025 and 2035.

In fact, SIPRI believes that China’s actual defense spending could be as much as 50% higher than Beijing states since China keeps many of its defense expenditures off book or accounts for them at below market costs.  Indeed, according to Transparency International, China has one of the least transparent military budgets in the world.  Items that may be omitted from its official defense numbers include military research and development, paramilitary expenses, weapons purchased from abroad, expenses for strategic and nuclear forces, subsidies given to state owned industries engaged in defense manufacturing, contributions from regional and local governments, spending on the military-relevant part of China’s space program and PLA-driven fund raising.

People’s Liberation Army (PLA)

PLA fighting the Nationalists during the Chinese Civil War

PLA fighting the Nationalists during the Chinese Civil War

The People’s Liberation Army (PLA) was officially founded on August 1st 1927, more than two decades before the establishment of the People’s Republic of China that it now defends. It was founded by the Chinese Communist Party (CCP) as they fought to win control of the country. The PLA is an umbrella organization overseeing the PLA’s Army (PLAA), the PLA Navy (PLAN), the PLA Air Force (PLAAF) and the PLA Second Artillery Force (PLASAF). The PLA is unorthodox in that does not actually answer to the State, but to the Chinese Communist Party itself.  Thus, whereas the President of the United States is always Commander-in-Chief of the military, it is theoretically possible – although unlikely as long as the Communists remain in power – for the President of the PRC to not command the military. This makes the Head of the Central Military Commission (CMC) both important and powerful. Currently, Xi Jinping is both President of China and Head of the CMC and there has not been a discrepancy between the two posts since Jiang Zemin held onto the post of Head of the CMC for a year after handing the presidency over Hu Jintao. Chinese 2015 Military Strategy Document reaffirms the Chinese Communist Party’s absolute control of the military, “China’s armed forces will unswervingly adhere to the principle of the Communist Party of China’s absolute leadership” and “will work to build themselves into the People’s military that follows the CCP’s commands.”

Chinese Military Goals and Strategies

Map of China and its Neighbors

Map of China and its Neighbors

China believes that increased military power will give it the respect and power commensurate with its growing economic and political clout, will deter rivals from threatening its sovereign territory and national interests, and will allow it to influence international affairs in its favor. In the short term, China considers that its most immediate military threats are likely to occur along its periphery or in its near seas, and much of its recent military investment has been made with these threats in mind. Termed by China as “Local Wars under Conditions of Informatization” China sees any military conflict arising from these regional threats to be limited in scope and duration, and to be typified by the pursuit of political goals through relatively constrained use of rapid force. From a Chinese perspective, ideally these short conflicts will result in a quick return to the negotiating table with China in dominant position. In these “informatized” wars, China expects that the effective use of advanced computer systems, information technology and communication networks to provide China with key operational advantages.

Informatization for China has many facets. Of highest priority is its Computer Network Defense (CND) which it monitors vigilantly even in peacetime. In the event of war, China intends to quickly establish information operations (IO) dominance including controlling the electromagnetic spectrum which would allow it to suppress or deceive enemy electronic equipment. China’s electromagnetic warfare (EW) strategies focus on controlling radar, radio, optical, infrared, and microwave frequencies as well as disrupting adversarial computer and information systems. If necessary, China will use IO warfare preemptively, particularly when confronting information-dependent adversaries such as United States.

As part of this strategy, China foresees calling on millions of civilian Chinese programmers to work with the Chinese military to disrupt enemy technologies. The Chinese military also envisions that Chinese civilians will provide logistical and other support during war. This strategy of mobilizing all Chinese citizens in the case of conflict was reaffirmed in China’s 2015 Military Strategy Document “bring into full play the concept of the People’s war, and persist in employing it as an ace weapon to triumph over the enemy”.

China views improving its anti-access and area denial (A2/AD) capabilities as integral to its Local Wars strategy. A2/AD capabilities are intended to thwart third party intervention – particularly by the United States – into its territory or what it considers to be its spheres of influence which increasingly include the water and land within the South China, Yellow and East China Seas. These capabilities will also be key to preventing the US and other allies coming to Taiwan’s assistance if it moves toward independence.

Other military objectives include an improved ability to protect it economic shipping lanes and its rapidly growing number of citizens working abroad, to offer humanitarian assistance during times of natural and other disasters, and to project greater military authority in the Asia Pacific region and in regions further afield.

Cyberwarefare

Map of China and its Neighbors

Map of China and its Neighbors

Cyberwarfare is a major aspect of China’s informatization strategy. Since 2008, all major Chinese military exercises have had significant cyber information operations components which are both offensive and defensive in nature. Additionally, China runs an on-going cyber warfare program to steal intellectual property, trade secrets and technology from defense contractors, government agencies and research institutions valued at billions of dollars annually. The US government in particular has estimated that 90% of cyberespionage against the United States originates in China.

In 2013, the US computer security firm Mandiant noted that Chinese hackers breached US energy and other critical infrastructure, leaving in place software tools that could be activated to destroy infrastructure components. Mandiant also detailed methodical data theft from at least 141 US organizations over seven years; Mandiant tracked this theft back to a Chinese military unit code named 61398 which is staffed by a large cohort of proficient English speakers with advanced computer security and networking skills. Most of the Chinese targets were US companies operating in aerospace, satellites and telecommunications, public administration, information technology and scientific research fields or in industries identified as strategically important under its Five Year Plans. Unit 61398 also attacked a dozen smaller US local, state and federal government agencies as well as international governmental agencies. On average, the hackers operating within breached computer system for about a year stealing pricing documents, negotiation strategies, manufacturing processes, clinical trial results, technology blueprints and other proprietary information.

China is also the leading suspect in a June 5, 2015 hacking of the US Office of Personnel Management in which over 20 million employees, retirees, contractors and job applicants had their personal data compromised.

Space

Launch of China’s Long March Rocket

Launch of China’s Long March Rocket

China considers the ability to utilize space and to deny adversaries access to space as key to effectively implementing its Local Wars, A2/AD and other military strategies. To this effect, China is procuring a range of technologies to advance China’s space and counter space capabilities. China has developed and continues to develop imaging and remote sensing satellites with dual military and commercial missions, and currently has approximately 100 satellites in orbit. China controls satellites programmed in communications, navigation, Earth resources, weather, intelligence, surveillance and reconnaissance. Even the more commercially oriented satellites can assist the military by delivering situational awareness of foreign forces, critical infrastructure, and political targets. China also has demonstrated direct ascent kinetic kill anti-satellite capability to low Earth orbit. In 2007, for instance, China shot down a defunct weather satellite. Developing dual purpose satellites through commercial platforms has enabled China to access foreign technology through commercial means which it then uses to advance its military defense systems.

China believes that having high proficiency in counter space activities is critical to its being able to establish dominance in informatized warfare as satellites are significant to the communications, navigation and reconnaissance on modern day battlefields. By being able to take out enemy satellites, China aims to “blind and deafen its enemies” and to impede their ability to effectively use their precision guided weapons. As part of this effort, China is investing in a multidimensional program to advance its ability to limit or prevent the use of hostile space-based assets by developing jammers and directed energy weapons for direct ascent anti-satellite weapons used against China. Technologies advanced under China’s manned and lunar programs as well as technologies developed to detect and track space debris have significantly improved China’s ability to track and identify satellites, a prerequisite for ascent anti-satellite weapons attack. China is also continuing its development of the Long March 5 rocket, a next-generation heavy lift launch system designed to carry a load of up to 25,000 kg to low Earth orbits and 14,000 kg to geostationary transfer orbit. The first Long March 5 rocket is expected to be tested in 2016.

As part of China’s space effort, China is developing an independent human spaceflight program, and has a stated goal to construct a 60 ton space station. China’s growing space capabilities provide it with advanced skills which improve all aspects of conventional and nuclear targeting, ground air sea operations, precision conventional strike capacity and missile defense.

The PLA Army (PLAA) and the Arunachal Pradesh and Aksai Chin Disputes

Map of Arunachal Pradesh and Aksai Chin

Map of Arunachal Pradesh and Aksai Chin

Owing to its 9000 mile temperate coastline with many good natural harbors, China is both a land and sea power. For millennia, however, China’s greatest military threat came from the land, particularly from the northern steppes with its fierce Mongol hordes. The large size of the PLAA compared to China’s other service branches reflects this historic land orientation. The PLAA has approximately 70% of total PLA servicemen under its command or 1.6 million ground force personnel, roughly 400,000 of whom are based in the three Chinese Military Regions opposite Taiwan. This personnel is organized into 18 Armies, with 15 infantry division and 16 brigades. The PLAA has an estimated 7000 and 8000 artillery pieces.

Since the 1980s, China has gradually decreased the size of its army while concurrently developing modern capabilities and systems.  In particular, the PLAA is investing in heavy armor, long-range strike artillery, increased-range air defense weapons, and attack and transport helicopters. Its battle tanks, armored infantry fighting vehicles, armored personnel carriers, self-propelled artillery, and air defense weaponry have all enjoyed significant upgrades in the last decades. Today, for instance, approximately 45% of its armored infantry fighting vehicle and armored personnel carriers are modern, 31% of its main battle tanks are third-generation, and 15% of all the artillery is self-propelled compared with 0%, 0.1%, and 9% respectively in 2000.

The PLAA has focused on its armored fleet to improve its ability to move forces quickly within China and to its borders. In the Arunachal Pradesh and Aksai Chin areas, for instance, China is currently in dispute with India over ten separate territories at the Western End of the Tibetan Plateau, although several of the pieces of land are tiny. The two most significant areas of dispute are the 60,000 km² Arunachal Pradesh located in what India and most of the rest of the world consider to be the Indian state of Arunachal Pradesh, and the 37,000 km² Chinese administered Aksai Chin located to the west of Nepal, but claimed by India to be part of Kashmir. China and India have skirmished over these territories in 1962, 1967 and 1987. In 2009, China tried to prevent a $2.9 billion loan to India from the Asian Development Bank arguing that part of the funds would be employed to develop water projects in Arunachal Pradesh.

As well as aiding in border defense, improved military transport allows China to effectively quell domestic unrest particularly in Tibet and Xinjiang, and to have the army assist during natural disasters as it did in the aftermath of the 2008 Sichuan earthquake.

People’s Liberation Army’s Navy (PLAN)

Chinese Naval Ship

Chinese Naval Ship

Since 1990, PLAN has undergone significant modernization and expansion. As China reaffirmed in its 2015 Military Strategy Document, its “traditional mentality that land outweighs the sea must be abandoned, and great importance has to be placed on managing the seas and oceans and protecting maritime rights and interests.” Going forward, it can be expected that China will project hard power abroad primarily by means of its navy and its missile systems.

Today China has the largest naval force in Asia. In 2013, PLAN employed an estimated 255,000 sailors, soldiers, pilots and logistical personnel. Its fleet includes approximately 65 submarines, one aircraft carrier, 14 guided missile destroyers, 62 frigates, 211 patrol and coastal combatants, 238 amphibious boats and 205 logistics and support ships broken into three fleets: North, East and South fleets. PLAN also has an array of increasingly sophisticated aircraft from bombers and fighters to helicopters and transport aircraft. Over the next decades, China’s navy will continue to grow in both numbers and technological capability. Additionally, more of its fleet and fleet technology will be Chinese-built. For instance, the first Chinese-built aircraft carrier is slated to go to sea near 2020. Its current aircraft carrier, the Liaoning, is a refurbished vessel purchased from Ukraine in 1998.

Similarly, China is stepping up the production of its submarines, one of PLAN’s core strengths. Indeed, some predict that China’s submarine force could grow larger than that of the US within 15 years. As part of this submarine expansion program, China is upgrading missile systems and quieting technologies. It JIN-class sub, for instance, now carries ballistic missiles with an estimated range of more than 4000 nautical miles, giving China its first credible sea-based nuclear deterrent. Future submarines will have guided missile attack competence, giving China a submarine-based land-attack capability. Since 1990, China has brought to water six new classes of indigenously built destroyers and four new classes of frigates. These new ships have more up-to-date hull designs, propulsion systems, sensors, weapons and electronics.

China is also rapidly expanding its small combatants such as its JIANGDAO-class corvettes – the first six of which entered service in 2012; China is expected to build 20 to 30 corvettes in total. In 2004, China also introduced its Houbei-class wave-piercing, stealth catamaran missile patrol boats. Both these boats improve China’s operational ability in coastal and near waters. Being able to successfully engage in high intensity conflicts within the South China, East China and Yellow Seas remains China’s highest priority. As part of this effort, China is developing unmanned underwater vehicles and is continuing to upgrade its inventory of an estimated 50,000 naval mines.

Working in conjunction with PLAN, China operates other paramilitary maritime law enforcement agencies including the China Marine Surveillance, The Fisheries Law Enforcement, the China Coast Guard, the Maritime Safety Administration, and the Customs Anti-Smuggling Bureau.

People’s Liberation Army’s Naval Strategy and the Nine First and Second Island Chains

Map of First and Second Island Chains

Map of First and Second Island Chains

In 1982, the architect of China’s modern naval strategy, Chinese Admiral Liu Huaqing, set as a goal for China to control the first island chain by 2010, the second island 2020, and for China to curtail US naval dominance in the Pacific and Indian Oceans between 2020 and 2040. An analysis of current Chinese military expansion, rhetoric and activities reveals that China is making strong efforts to implement this maritime strategy. Specifically, China is stepping up its efforts to exert control within the first island chain. The first island chain is defined as the chain of islands extending out from the East Asian continental mainland coast. In its broadest definition, the first island chain encompasses the Bering, Okhotsk, Japan, Yellow, East China and South China Seas including the Aleutian and Kuril Islands, parts of the Japanese Archipelago, the Ryukyu Islands, Taiwan, the northern Philippines and Borneo ending at the Malay Peninsula.

By demarcating the first and second island chains, PLAN hopes to engage foreign navies in waters as far as possible from China in order to defend its territory and its territorial waters. Other naval military goals include traditional missions such as protecting and evacuating Chinese nationals in foreign countries, providing humanitarian assistance and disaster relief, protecting sea trade from terrorism, maritime piracy and foreign interdiction, prohibiting foreign surveillance and reconnaissance activities near its coast and conducting independent and joint naval sea exercises. China is also using PLAN as a force to discourage Taiwan independence and to defend what it considers to be its land, fish, oil and gas rights in the East and South China Seas.

China also wants to regulate military activities in its exclusive economic zone (EEZ). An EEZ is the sea zone extending 200 nautical miles from a nation’s coast over which it has special rights regarding the exploration and use of marine resources. While the US and most other nations do not regard it as unlawful to be active in foreign EEZs, China maintains that it is unlawful for a foreign navy to penetrate China’s EEZ despite its activities to the contrary. Indeed on several occasions in 2001, 2002 and twice in 2009, Chinese aircraft confronted US Naval ships as they conducted ocean surveillance operations in the South China Sea. China is also creating coastal economic belts and marine economic zones within the first island chain area and is engaging in marine research and development.

The second island chain is a series of island groups that is generally defined to run north to south from the Kuril Islands, through the Japanese archipelago, the Bonin Islands, the Marianas Islands and Palou to the Indonesian archipelago. Over time, China hopes to extend its first island goals into this larger geographic sphere. China’s assertion into the second island chain is made difficult due to the strong presence of the US and its allies including Japan and South Korea who not only have their own significant military forces, but also provide air, naval, logistic and supply bases to the US Additionally, the US Navy dominates in the La Perouse, Tsugaru and Tsushima Straits, allowing it to move quickly to the Korean peninsula and to defend Guam, its main air and naval base in the Western Pacific.

To date, China’s sea experience beyond the second island chain has centered on its counter-piracy mission in the Gulf of Aden where it keeps an on-going, three ship naval presence to defend Chinese mercantile ships from pirate attacks. This is China’s first sustained naval operation outside of Asia. China has also begun to engage in some naval activities in the EEZs of other nations, particularly around Guam and Hawaii. China is also making long-distance deployments a more constant part of its naval training cycle. In 2012, for instance, it sent naval tasks groups beyond the first island chain seven times. Limited logistical support hampers China’s ability to operate its navy more widely. In the coming years, China will work with its allies to create welcoming logistical ports in the Indian Ocean and farther afield. An example would be its assistance in helping Pakistan to construct the deep water port Gwadar. China would also like to develop the capability to project power across the globe for sustained, high-intensity operations similar to those that the United Kingdom engaged in when retaking the Falkland Islands in early 1980. China would also like to displace US influence in littoral and more distant waters.

The Nine Dashed Line and China’s Territorial Disputes within the South China Sea

China’s Nine-Dashed Line

China’s Nine-Dashed Line

Within the first island chain, China has drawn the nine-dashed line by which it asserts that the majority of the South China Sea falls within its traditional maritime boundary line despite the boundary being more than a thousand miles from China’s mainland in several instances. Since November 2012, China has added a map with this line into all its passports in order to reinforce the validity of its nine-dashed claim, and makes increasing reference to the area in its government documents. Not only are islands, reefs and banks within the nine dashed line contested by many neighbouring countries, but there are also competing claims on the area’s fishing, oil and gas resources.  Moreover, the South China Sea is a vital shipping lane for North East Asia. 80% of oil shipped to Japan, South Korea and Taiwan travels through South China Sea waters.

Within the East and South China Seas, China claims sovereignty to many islands also claimed by its neighbours. For instance, the Paracel Islands in the South China Sea are also claimed by Vietnam. The Spratly Islands, wholly claimed by China, are partly claimed by Malaysia, the Philippines, Brunei, and Vietnam, with Indonesia also claiming maritime rights in the area without actually staking a claim to any territory. Additionally, there are disputes with the over the Macclesfield Bank, and the Philippines and Taiwan over the Scarborough Shoal. The Macclesfield Bank, also known as the Zhongsha Qundao, is a completely submerged chain of reefs that does not qualify as territory under international law since it cannot be inhabited by human beings. The Scarborough Shoal, known in Chinese as the Nanyan Dao, is a group of small islets or rocks and thus subject to international jurisdiction. One motivation for China to claim these islands is that it will allow it to expand its EEZ throughout the area.

Disputed Territory in the East China Sea within the First Island Chain

Map of the Senkaku and Diaoyu Islands

Map of the Senkaku and Diaoyu Islands

In the East China Sea, the Diaoyu/Senkaku Islands are also claimed by Japan and Taiwan. At stake in these contested areas vast amounts of natural gas and oil beneath the sea beds as well as rich fishing resources. The East China Sea alone, for instance, is believed to hold approximately 7 trillion ft.³ of natural gas and up to 100 billion barrels of oil. Japan has suggested that the East China Sea be divided into separate EEZ with a line equidistant from each country allowing each to share the offshore oil and gas deposits. Instead, China claims an extended continental shelf reaching almost to Okinawa, giving it effectively exclusive rights to almost all the East China Sea oil and gas. In an effort to create a precedent for its claim and in part to intimidate, China has increased its naval, paramilitary and its joint naval/air force training activities in the sea/air area surrounding Japan.

PLA Air Force (PLAAF)

Chinese Airforce Jet

Chinese Airforce Jet

The PLAAF is in control of China’s territorial air security. It currently commands 398,000 officers and men divided between its seven military area commands in Shenyang, Beijing, Lanzhou, Jinan, Nanjing, Guangzhou and Chengdu. The PLAAF is composed of aviation, ground air defense, radar, airborne and electronic countermeasures arms. As of 2013, it commands approximately 1700 Fighters, 600 Bombers/Attack and 475 transport aircraft. While China increasingly flies modern fourth-generation and early fifth generation aircraft, about 68% of Chinese air fleet are still second and third generation aircraft or upgraded models of these aircraft.

That said, in 2013 China was considered to have over 500 modern fourth generation aircraft, outnumbering most air forces in the Asia-Pacific region. China’s fourth-generation fighters include the J-10, J-11, Su-27, Su-30, JH-7, J-15, J-20 and J-31 aircraft. China is also developing its fifth generation fighter force, slated to take flight around 2020. These new fighters will have significant maneuverability, stealth, internal weapons bays, modern avionics and sensors that offer better situational awareness for network-centric combat theaters, radars with high-level targeting capabilities and protection against electronic countermeasures, and integrated electronic warfare systems with advanced communication and GPS navigation functions.

As it modernizes, the PLAAF is emphasizing the development of new generation aircraft which will be effective in its Local Wars strategy and which can support the other PLA branches along the entire periphery of China and increasingly in the East, Yellow and South China Seas. China is also upgrading it H-6 bomber fleet to achieve greater range and to be armed with long-range cruise missiles. China is also developing a large aircraft likely to be called the Y-20 which will work in conjunction with its smaller fleet of strategic airlift aircraft.

China’s commercial and military aviation industries work together to advance China’s overall aeronautics standards, and share technology and systems. China’s military aviation has benefited from business partnerships with Western aviation and aerospace firms where technology shared for commercial purposes has then been employed to improve China’s military aircraft.

China is also building a state-of-the-art national integrated air defense system.  The air defense system is multidimensional, employing weapon systems, radar and C4ISR- Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance – platforms to counter multiple types of aircraft at various ranges and altitudes. A further goal of the air defense system is to protect China from precision strike ballistic and cruise missiles, particularly those fired from long distances. China is also upgrading its early warning, command and communication networks, and it is improving its long distance airstrike capabilities.

Drones

Chinese Drone

Chinese Drone

China is also developing unmanned aerial vehicles or drones which currently seem to be largely founded upon reverse engineering of foreign technologies. Research indicates that China plans to build as many as 40,000 land- and sea-based unmanned systems between 2014 in 2023. By way of comparison, the Pentagon only operates approximately 7000 aerial drones. In 2013 alone, the Chinese unveiled four drone models – the Xianglong, Yilong, Sky Saber, and Lijian.  The Pentagon believes that the Yilong, Sky Saber, and Lijian are all precision-strike weapons, and the Lijian drone has some stealth capability.  To date, most of China’s drone fleet has been employed in surveillance of China’s domestic population. For instance, China has been flying drones in Xinjiang in order to counter unrest in the province.

In June 2015, China released pictures of its new Divine Eagle, one of the world’s largest twin fuselage drones. Influenced by the Russian designs – there’s speculation that China stole critical design features from Russia – the Divine Eagle is a high-altitude, long-endurance multi-mission platform with both long-range surveillance as well as strike capabilities with some stealth capability. It is reported to carry multiple Active Electronically Scanned Array radars as well as Airborne Moving Target Indicators that are designed to track airborne targets such as enemy fighters and cruise missiles. This large drone platform is ultimately expected to act as an effective satellites to aid in the targeting of missiles and other tactical platforms well beyond the first island chain. When fully operational, it will be harder for the United States and its allies to operate undetected close to Chinese shores.

China has also been progressing its ability to electronically jam US drone flights, especially those flying over the South and East China Seas which are conducting surveillance on China’s island construction and other activities in disputed waters and territories.

PLA Missile Forces – the Second Artillery Force (PLASAF)

Map of range of Chinese Missiles

Map of range of Chinese Missiles

China’s Second Artillery Force (PLASAF) controls China’s nuclear and conventional ballistic missiles. The PLASAF runs missile bases, training bases, specialized support units, academic and research institutions. It has approximately 100,000 men under its command. China has one of the largest, most diverse and rapidly growing missile development programs in the world. It is currently estimated that the PLASAF has command over approximately 1000-2000 short-range ballistic missiles, 50-75 intercontinental ballistic missiles, 75-100 medium range ballistic missiles, 5-20 intermediate range ballistic missiles, 200-500 ground launched cruise missiles. In 2015, it was also confirmed that China now has nuclear missile technology with multiple independently-targetable re-entry vehicles (MIRV) – or the capability to place multiple warheads on a single missile and deliver the individual warheads to separate targets.

The development of China’s missile force has been impressively quick. Even just ten years back, China had a very limited ability to attack targets within or beyond the first island chain. China has modernized its missile force under a strategy of dual deterrence and dual operations. The basic idea behind dual deterrence and dual operations is that both conventional and nuclear missile capabilities will most effectively deter China’s adversaries from starting a war and defend China during wartime. Today, the SAF has the ability to credibly deter adversaries at intercontinental ranges; its DF-3, B-6 and LACM missiles, for instance, can strike targets 3300 km away. It has been a priority for China to extend its strike warfare further from its borders. Other objectives of the PLASAF program include effecting A2/AD operations, and deterring any move by Taiwan toward independence. Indeed, China has an estimated 1100 short range ballistic missiles currently targeted at Taiwan.

China is also developing a missile defense system involving the use of kinetic energy intercept at exo-atmospheric altitudes as well as intercepts of ballistic missiles and other aerospace vehicles within the upper atmosphere. China has already demonstrated an ability to intercept ballistic missiles at midcourse using ground-based missiles. To protect its missile systems, China has developed a 5000 km long network to mitigate the risk that its missile network could be materially weakened by a preemptive strike. For each missile launcher, China also has a large inventory of reserve missiles to ensure its ability to engage in sustained conflict if China were to come under attack.

Nuclear Weapons

An early Chinese nuclear bomb

An early Chinese nuclear bomb

China launched its nuclear weapons program in 1955 and detonated its first nuclear bomb in 1964. China is in a unique geo-strategic situation in that it shares land borders with four nuclear powers – Russia, North Korea, India and Pakistan – and faces the consideration that of the other four nuclear powers, three – the US, France and the UK – all have the ability to reach China with their nuclear weapons. China therefore believes that the maintenance of a nuclear arsenal is of existential importance. It also believes that its risk of being attacked by nuclear weapons declines significantly if an adversary’s initial nuclear strike does not eliminate China’s ability to retaliate. China therefore values secrecy over transparency in regards to its nuclear program.

It is estimated that China has approximately 130-195 deployed nuclear-capable weapons ready to be deployed on a variety of short- and long-range ballistic land- and sub-based missiles systems, although some US experts believe that China is hiding a much larger nuclear arsenal. Improving the range and numbers of its submarine-launched nuclear arsenal is a priority. In total, China’s has a nuclear inventory of approximately 250- 300 nuclear weapons. Additionally, it is also believed that China has a stockpile of about 16 tons of highly enriched uranium and 2 tons of plutonium. China also operates reprocessing spent plutonium fuel plants. These facilities isolate plutonium that is created from the reactor from spent fuel. China also runs an experimental fast breeder reactor and has been is considering purchasing two further fast reactors from Russia. If so compelled, China may be able to use plutonium created in these facilities for military use.

China has conducted 45 nuclear tests. In the 1990s, China accelerated the pace of its nuclear testing in order to complete a series of tests on smaller warhead designs before becoming a signatory of the 1996 Comprehensive Nuclear Test Ban Treaty created to prevent all nuclear explosions in all environments for both military and civilian purposes. China is also a signatory to the 1970 Treaty on the Non-Proliferation of Nuclear Weapons designed to stop the spread of nuclear weapons and weapons technology. In 2002, China ratified the International Atomic Energy Agency’s (IAEA) Additional Protocol IAEA which allows the IAEA to conduct extended inspections of nuclear facilities to verify records maintained by State authorities on the whereabouts of nuclear material under their control, to check IAEA-installed instruments and surveillance equipment, and to confirm physical inventories of nuclear material. China also has a “no first use” policy and a policy to not use nuclear weapons against non-nuclear states.

China’s Reserve Forces, Militia and Paramilitary Forces

Ministry of State Security

Ministry of State Security

In addition to the PLA’s armed forces, China also has approximately 510,000 military Reserve Forces, and an estimated 8 million Militia Members. Reserve officers are recruited from China’s pools of retired servicemen, civil officials, cadre of the people’s armed forces department, cadre of militia and civilian technicians. The Reserve Forces are designed to buttress regular PLA units during times of conflict in areas such as logistics and information warfare. The PLA Militia Forces are under the command of local military district governments, and are dedicated to logistics and technical support, air defense, internal security and stability, counterterrorism, disaster relief and emergency rescue. Each year, approximately 90,000 militia guard the country’s bridges, tunnels and railway, 200,000 join in military-police-civilian defense patrols, 900,000 in emergency response, rescue and relief operation following major natural disasters, and nearly 2,000,000 help to maintain social order in rural and urban areas. Increasingly the militia is being organized into specialized technical units including anti-aircraft artillery, ground artillery, missile, communication, engineering, anti-chemical, reconnaissance and information units. Other units are being developed to serve separately the Navy, Air Force and Second Artillery Force. The Militia is trained to help during natural and other emergencies and to maintain domestic stability. Most Militia hold regular jobs as well as being Militia members.

China’s other security and paramilitary forces include the Ministry of State Security which engages in foreign and domestic intelligence and counter-intelligence collection, and the Ministry of Public Security which is responsible for internal security and oversees the 1.9 million police personnel which in turn provide domestic patrol, traffic control, detective investigations, anti-riot and anti-terrorism services. China’s 660,000 strong People’s Armed Police Force acts as an internal security force, operates as a rapid response force for public emergencies, guards critical infrastructure and resources including gold mines, hydroelectric projects and transportation facilities, combats terrorism and supports national economic development. The People’s Armed Police Force is divided between the Internal Security Forces and the Border Defense Force including the Coast Guard, the China Marine Survey Agency, the Maritime Safety Administration and Fisheries Enforcement.

Upgrading all PLA force

Training Chinese troops

Training Chinese troops

As it reduces the overall troop numbers, China is increasingly recruiting personnel with higher levels of education. The PLA gives bonuses of up to $3500 to college graduates who volunteer for the Armed Forces and tuition allowances to college student deferring university education for PLA service. In 2009, for instance, the PLA recruited 100,000 college graduates. The PLA also grants civilians with particular technical skills NCO rank when they join up. It also supports veterans seeking advanced degrees and provides them with advanced employment opportunities and exemptions from postgraduate entrance exams.  China’s 2015 Military Strategy Document China is also placing more emphasis on training it forces in military theory- “to bring it into place a system of advanced military theory commensurate with the requirements of future wars.”

As part of its training, the 2015 Military Strategy Document reaffirms that all forces in the PLA “always treat ideological and political building as the first priority” so that the PLA will carry forward “the Core Socialist Values, cultivate the Core Values of Contemporary Revolutionary Service Personnel” and will uphold “the Communist Party of China absolute leadership over the military” and “the Armed Forces will resolutely follow the commands of the CPC Central committee at all times and under all conditions.”

Military Alliances and Cooperation

Summit of the Shanghai Cooperation Organization

Summit of the Shanghai Cooperation Organization

China’s 2015 Military Strategy Document states that it is China’s objective to “actively expanded military and security cooperation, deepen its military relations with major powers, neighboring countries and other developing countries, and promote the establishment of the regional framework for security and cooperation.” China participates in a myriad of military alliances, multilateral dialogue and cooperation mechanism such as the Shanghai Cooperation Organization (SCO), ASEAN Defense Ministers Meeting plus, ASEAN Regional Forum, Shangri-La Dialogue, Jakarta International Defense Dialogue, in the Western Pacific Naval Symposium.

Arguably China’s most important current military relationship is with Russia. The US rebalance to Asia and Russia’s involvement in Crimea and Ukraine – sanctioned by the West -have led to an improved relationship between China and Russia. President Xi Jinping’s made his first official state visit to Moscow in 2013 while Putin made his first foreign trip to China after re-assuming the Russian presidency in 2012.  Concurrently, the two countries signed agreements on cooperation in military exchanges, technology, energy and trade. China and Russia also ratified the 2013-2016 implementation guidelines of the China-Russia Treaty of Good Neighborliness and Friendly Cooperation. Additionally, in July 2013, Russia and China’s Navies staged their largest ever joint naval drill, the Joint Sea – 2013 exercises, and the two countries are also conducting anti-terrorism drills together. Bilateral trade between the two countries is expected to reach $100 billion by 2015 and $200 billion by 2020, driven in part by a 2013 $270 billion deal in which Russia will double its oil exports to China.

China is a member of the Shanghai Cooperation Organization (SCO) comprised of China, Russia, Kazakhstan, Uzbekistan, Tajikistan, and Kyrgyzstan. The key objective of the SCO is enhanced regional security focused on combating the “three evils” of terrorism, extremism and separatism; in the case of separatism, the SCO cooperates to ensure that “color revolutions” do not threaten the stability of the region. Annual joint practice operations in various fields of conflict have increased to include a total of more than 5000 participants from all six member states. The majority of these participants come from the China and Russia; closer military and strategic ties between these two states is one of the most significant outcomes of the SCO’s development. In 2015, for instance, China and Russia conducted joint naval exercises in the Mediterranean.

The promotion of closer economic ties is also an objective of the SCO.  China has proposed, for instance, that the Russian led Eurasian Economic Union (EEU) – a trading blocking comprised of Armenia, Belarus, Kazakhstan and Russia – connect with China’s rapidly developing Silk Road Economic Belt – a series of economic initiatives that follow the Old Silk Roads across Eurasia and South Asia. China sees closer economic ties including everything from the increased trade of oil to the expansion of transportation, infrastructure and cultural ties across the region.

Importantly, the SCO is expanding its members to include two of its three observers – India and Pakistan; the third observer Iran is not currently eligible due to international sanctions, although this may change if the Iranian nuclear deal is ratified. Pakistan believes membership in the SCO will provide it with enhanced tools to combat extremism within its borders, will enhance its international prestige, will potentially help improve its relations with India and may help it resolve its dispute with India over Kashmir.  India sees the SCO as a mechanism to improve its relations with Pakistan as well as Russia, China and the countries in Central Asia. From China’s perspective, expanding SCO membership increases the prestige of an organization in which it has a leading position.

Since 2001, when China first became involved in UN backed peacekeeping operations (PKOs), it has rapidly increased its level of commitment. At the beginning of 2012, China had more than 1800 troops involved in PKOs, slightly down from a high of 2100 in 2008, but still more than any other permanent member of the UN Security Council. In 2014, China had over 3000 Chinese soldiers serving with the UN.

Future Trends

Chinese soldiers

Chinese soldiers

China’s 2015 Military Strategy Document sees the world becoming increasingly multi-polar and globally interconnected with “historic changes in the balance of power, global governance structure, Asia-Pacific geostrategic landscape.” It sees increased international competition “in the economic, scientific and technological and military fields” and “for the redistribution of power, rights and interests”. Against this changing landscape, it is China’s goal to achieve “the great rejuvenation of the Chinese nation … by 2049 when the People’s Republic of China marks its centenary”. China sees its military buildup as key to allowing China to benefit from this shifting landscape and as key to reclaiming its positioning as a global world leader.

Given this, it can be expected that China’s military build-up will continue apace. Indeed, it is China’s goal to develop a world-class military in all branches over the coming decades. Thus, as its economic growth rate natural slows from historic blistering rates, it is possible that China’s military spending as a percentage of GDP may increase above its 2% level.

In terms of emphasis, China will continue to prioritize space and other technologies that will give it an edge in “informatized” warfare; China views technology as key to offsetting its deficits in military strength and experience. Continued naval and missile build-up will be prioritize; it sees these arms as being particularly critical to diminishing US military hegemony. Specifically, its paramilitary naval forces are expected to increase by 25% over the next decade; China sees its paramilitary as a way to assert its near seas claims in way that is less confrontational than if the same actions were taken by its navy.  China will also prioritize the development of air force and drone stealth technology as part of its A2/AD strategy. China will also invest heavily in underground facilities to safeguard all branches of its military.

Such upgrades on technology will continue to reduce the need for raw manpower – in line with most modern militaries around the world. To this end, Xi Jinping announced a further reduction in troop numbers of 300,000 during his speech in China’s large military parade on September 3rd 2015. Though significant, this will still leave the PLA as the largest military force in the world.

China will continue to use non-military tools to achieve its objectives.  These include everything from increasing its international media presence to pushing ahead with its build-up of land masses on atolls in the South China Sea to continuing its massive lending, investment and aid programs.

Going forward, China will also place increased emphasis on the quality of its military training with more emphasis being placed on training in difficult weather, terrain and electromagnetic conditions. China will also continue to improve troop skills with its new technologies and weaponry. China will also engage in more joint training between its military branches. Prior to 2000, joint training across branches was very infrequent. China will also continue to participate in joint training organizations with its allies.

Overtime, China will also increasingly develop its own indigenous military equipment and weapons systems so that it can limit its dependence on foreign weapons systems, particularly those of Russia. It will also work to expand its global port and base access so that it can project its forces farther from its shores.

As China develops indigenous weapons, it can be expected that its military exports will continue to grow. From 2009 to 2013, Chinese arms exports totaled approximately $14 billion. To date, these weapons have been less sophisticated than Western and Russian exports. Pakistan is China’s largest arms customer; the two countries also co-develop weapons system such as the JF-17 fighter aircraft and the F-22P frigate. China uses its weapons sales as part of a multi-pronged strategy to promote trade, access natural resources and expand its global influence. From its customers point of view, Chinese arms come with fewer political strings attached which appeals to those who might otherwise have little access to Western weaponry.

China can also be expected to more aggressively assert its claims over contested territory and resources in its near seas, actions which come in conflict with its assertion of a peaceful rise. Interfering with resupply missions to the Philippine outpost on the Thomas Shoal and the deployment of oil rigs to what Vietnam considers its EEZ are recent examples of this greater assertion.

China, Rare Earths and Technological Edge

Introduction

By Jurii (http://images-of-elements.com/praseodymium.php) [CC-BY-3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons

Praseodymium, one of the light rare earth elements

A sign at the entrance of China’s Baotou, Inner Mongolia Pioneering Rare Earth Hi-Tech Zone quotes Deng Xiaoping’s 1992 claim: “There is oil in the Middle East, but there is rare earth in China.” The rare earth elements (REE) are a group of 17 chemically similar metallic elements occurring in the Earth’s crust that are becoming increasingly integral to the production of products ranging from smart phones and LED light bulbs to wind turbines and cruise missiles. Since the 1980s, REE mining and processing has increasingly moved to China. Due to factors such as cheaper labor and less stringent environmental regulations, China has been able to produce the elements at two-thirds the cost of non-Chinese producers. As a result, it now produces over 90% of the world’s REEs. China has also been moving from a supplier of unfinished REEs to a manufacturer of high-end REE products and it believes that mastering high-end REE technology will not only help ensure its safety given REE’s many defense applications, but could also allow it to leapfrog the US and other countries in the production, for instance, of green technologies.

China’s monopoly of REEs came to a head in 2008 when it began restricting the amount of unfinished REEs that it exported while increasing REE export taxes and removing REE VAT rebates. International concern was further increased in 2010 when China was believed to have implemented an unofficial REE export embargo against Japan for two months and the US and the EU for two weeks. A 2012 WTO complaint filed against China by the US, the EU and Japan claimed that the effect of these policies has meant that non-Chinese producers of REE products pay 31% more for their REEs than their Chinese competitors. The US, the EU and Japan also say that Chinese practices are placing pressure on foreign manufacturers to relocate their operations to China in order to minimize the impacts of rising costs and shrinking supplies, as China does not restrict or tax the export of REEs in manufactured products. China counters that its policies are necessary to improve the real environmental degradation that its lax standards have caused and to conserve its finite REE resources.

Rare Earth Elements and the History of their Development

The REEs are a group of 17 chemically similar metallic elements including the 15 lanthanides as well as scandium and yttrium. Scandium and yttrium are grouped with the rare earths as they share similar chemical and physical properties. Despite their name, the REEs– with the exception of the radioactive promethium which is currently synthesized in labs – are quite abundant in the Earth’s crust, although their crustal abundance varies significantly from place to place. The “rare” earth name comes instead from the rarity of the minerals from which they were originally derived. It also comes from the fact that the elements are rarely found in concentrations that are viable to mine.

The REEs are broadly divided into light rare earth elements (LREE) – lanthanum, cerium, praseodymium, neodymium, and samarium (atomic numbers 57-62 on the periodic table)  and heavy rare earth elements (HREE) – gadolinium,  promethium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium (atomic numbers 64-71). Scandium (atomic number 21) and yttrium (atomic number 39) are usually grouped with the LREEs. This division is somewhat random; sometimes the REEs are divided between light, middle and heavy. LREEs are more abundant than HREEs.

Although approximately 200 minerals are known to contain REEs, most REEs are mined from the minerals bastnaesite, monazite and xenotime. While these minerals usually contain the full range of the elements, either LREEs or HREEs tend to dominate one mineral or the other. For instance, bastnaesite, the most commercially productive source for REEs, tends to house a high percentage of LREEs and a small percentage of HREEs. Monazite, the second most common mineral used as a rare earth ore, also contains more LREEs than HREEs, although it typically has a higher concentration of HREEs than bastnaesite.  Xenotime, the third most important rare earth element ore, holds the highest ratios of HREEs. HREEs can also be found concentrated in some soils, absorbed in the form of ions. Bastnaesite, monazite and xenotime all contain traces of the radioactive elements thorium, although the amount varies between the minerals and between ore deposits. The presence of the radioactive element makes REE mining and waste management more difficult.

The first discovery of rare earth materials was made in the late 1800s in Sweden. Given that rare earths occur together and share similar chemical properties, it was a further 150 years until all the rare earth elements were isolated and identified. The last rare earth element to be discovered was the radioactive promethium which was found as a result of nuclear fission research carried out during World War II. In nature, promethium can only be found in trace amounts as it is highly unstable and has a half-life of 17.7 years.

Production of Rare Earth Elements

The periodic table

Until 1948, the majority of rare earths were produced in India and Brazil, followed by South Africa in the 1950s, and the Mountain Pass Mine in California from the 1960s to the 1980s. Since the 1980s, REE mining and processing, and the production of many REE products has moved to China. Between 1990 and 2000, for instance, China increased its REE production from 16,000 to 73,000 metric tons while non-Chinese producers saw their output decline from 44,000 tons to 16,000 tons. In 2009, China produced 129,000 tons while the output from all other countries dropped to 3,000 tons.

China now dominates the REE industry because it can produce REEs and REE products less expensively and with more purity than its competition. Its low cost production is the result of many factors including inexpensive labor, lower environmental standards and a REE industry which has historically been poorly regulated. It is estimated that China’s lower environmental standards have enabled it to produce rare earths at roughly a third the price of its international competitors. China has also made significant investments in REE mining and processing techniques which are now paying off in greater efficiencies. China also mines the majority of their REE as a by-product of their iron ore and other mineral mining, which also reduces their cost basis.

Where Global Rare Earth Resources are Found

The U.S. Geographical Society estimated that in 2008 China held approximately 57.7% of the world REE reserve, the Commonwealth of Independent States (which includes Russia and many former members of the Soviet Union) 13.6%, the US 9.1%, Australia 3.8%, Brazil 0.05%, India 0.84%, Malaysia 0.02% and other countries 14.9%. Additionally, the British journal Nature Geoscience reported scientists led by Yasuhiro Kato of the University of Tokyo, have found huge deposits of REEs in sea mud at 78 locations in international waters east and west of Hawaii, and east of Tahiti in French Polynesia. Japanese scientists have also identified REEs off island of Minamitorishima, an isolated Japanese coral atoll in the northwestern Pacific Ocean.

In China, REEs have been found in 21 of China’s provinces and Autonomous Regions: Fujian, Gansu, Guangdong, Guangxi, Guizhou, Hainan, Henan, Hubei, Hunan, Jiangxi, Jilin, Liaoning, Inner Mongolia, Qinghai, Shaanxi, Shandong, Shanxi, Sichuan, Xinjiang, Yunnan and Zhejiang. In general, China’s REE reserves are distributed in a light north, heavy south pattern. An estimated 75% to 90% of China’s REE output is in LREEs; 50% to -60% of its LREEs comes from its Banyan Obo mine in Inner Mongolia, and another 25% to 30% comes from mines in Sichuan Province. China’s remaining output is HREEs sourced primarily from its ion-adsorption clays located in the provinces of Fujian, Guangdong, Hunan and Jiangxi.Southern China’s ion-adsorption clays are currently one of the most important concentrations of heavy HREEs in the world. Importantly, these clays have extremely low levels of radioactive elements.

Mining and Processing of Rare Earth Elements

Most REEs are mined either by digging in open pits or in underground mines. The ore is then crushed, heated and treated with various chemicals in order to separate first the bastnaesite, monazite and xenotime, and then to separate the REE from the bastnaesite, monazite and xenotime. In order to ensure a high market value, REE needs to be of high purity. This is a difficult process because REEs share such similar chemical properties. Each REE has its own unique extraction steps and refinement processes, and often these elements need to be reprocessed in order to achieve the ideal purity. Once separated, the REEs are in the form of oxides which are then made into metals. It takes an average of 10 days to go from mining to the production of rare earth oxides. China currently leads the world in REE separation processing technology.  Chinese companies can produce REEs of 99.9999% purity compared with French companies at 99.99% purity and Japanese at 99.9% purity.

Outside of China, companies in the US, France, Russia and Japan can complete some of the refining steps, but only China has the industrial capacity to complete the entire REE refinement process for all the elements. Mining companies such as US Molycorp and Australian Lynas which extract REEs outside of China currently find it necessary for technological and economical  reasons to ship their minerals to China for processing despite their respective efforts to move further down the REE processing chain.

Separating REE from bastnaesite, monazite and xenotime is more difficult than separating REE from the ion-adsorption soils. In Southern China, most of its REEs are found in clay deposits. Not only is it easier to separate REEs from the clay compared with the hard minerals, but it is also usually easier to access the clays in the first place. The ion-adsorption clays are near the crust’s surface, and generally require little drilling or blasting to remove. China’s Jiangxi South Rare Earth Hi-Tech Company has reduced the costs of the clay processing further by pioneering in-situ mining. This method involves drilling holes directly in the clay deposits, pumping in ammonium sulphate or salt-based solutions which remove 90% of the REE from the clay and then collecting the resulting liquid from pipes drilled in at lower levels. The liquid is then pumped into tanks where it is treated with further chemicals, filtered and roasted to produce rare earth oxides.

Uses of Rare Earths Elements

Rare earths are essential in the production of X-ray machines

REEs are essential to many products that are fundamental to our modern life. REEs can be found in products as diverse as TVs, plasma screen technologies, microwave filters, ear phones, self-cleaning ovens, flint lighters and computer memories. Because REEs are extremely effective in absorbing ultraviolet light, REEs are used in glass bottles, sunglasses, and camera lenses. Because they allow for the development of powerful permanent magnets – which differ from electrical magnets in that they produce their own magnetic field – REEs create improved magnetic performance in smaller sizes. They are, thus, important in miniaturization technology, and are a key reason why laptops, cell phones and smart pads are becoming increasingly lighter and smaller.

Permanent neodymium-iron-boron magnets are also fundamental to many green technologies, especially wind turbines. Their superior magnetic strength means that they increase the amount of electricity that a wind turbine can produce. REE magnets also have the advantage that they retain more magnetism when heated. These qualities make them ideally suited for the production of hybrid cars. The Toyota Prius, for instance, contains 1 kg of neodymium in each of its electric motors. REE magnets also improve the energy efficiency of many appliances and cooling systems. REE magnets have been shown to reduce the power consumption of air conditioning systems by as much as 50%, and have led to the development of more environmentally friendly refrigeration methods. Energy efficient lighting such as the fluorescent lamp and LEDs are also big users of REEs.

REEs are also employed in other green technology applications. For instance, REEs are essential to the automotive catalytic converter whose job it is to convert pollutants in engine exhaust gases into non-toxic compounds. They also used in oil refineries to process heavy crude oil into lighter gas, jet fuel and petrol. They are also proving essential to the development of solid oxide fuel cells – a low-pollution technology which electrochemically generates electricity at high efficiencies – and other fuel cells which are being developed as power generators for zero emissions electric vehicles.

Besides, the green technology industry, REEs are also found in a wide range of industrial applications. For instance, REEs are employed in many aspects of nuclear energy production because of their ability to absorb neutrons while remaining stable at high temperatures. They are also found in ceramics, glass coloring and in the colors displayed on TV, computer and hand-held screens. They help paint pigment deflect ultraviolet light which makes them less likely to fade. Most finished glass products, such as mirrors, have been shined by REE concentrates and oxides. REEs are also a critical component in the creation of super-alloys or super-metals which are a class of heat resistant alloys used in the aerospace and power industries, particularly in gas turbine engines. REEs are also elemental to the technology that allows for the solid state storage of hydrogen.

REEs are also found in many medical technologies including x-rays and PET scan detectors. REEs not only improve the performance of MRI machines, but they also enable the physical internal scanning space of the machines to be wider, which serves to reduce feelings of claustrophobia for sick patients. Medical lasers produced with REEs are used in the cosmetic industry to remove pigmentation and scarring on skin, as well as in many other surgical procedures. There are also increasingly used in dentistry to remove tooth decay.

REES are crucial for the defense industry. They can be found in disk drive motors installed in aircraft, tanks, and command and control centers, and in radar systems and in reactive armor. They are key to the production of precision guided munitions, helping to guide the direction of the missile once it is launched. They are fundamental to lasers employed in enemy mine detection equipment, underwater mines and other countermeasure weapons systems. REEs are also found in components used in military communication networks including satellite, radar and sonar. They are also used in optical equipment and speakers.

In 2011, the US Geological Society estimated that the global use of rare earths broke down as follows: catalysts 47%, metallurgical applications and alloys 24%, glass polishing and ceramics 15%, permanent magnets 9%, computer monitors 19%, radar, television and x-ray machines 5%.

Environmental Consequences of Rare Earth Mining

The manufacture of REEs poses significant environmental hazards because of the large amounts of chemicals used in processing and because the processing waste often contains toxic gases and traces of the radioactive thorium. In northern China’s Bayan Obo  (Baiyun Ebo) mine in Inner Mongolia, for instance, REEs are mined and then transported 120km south to Baotou to be processed. Dozens of new factories have been built around Baotou’s processing facilities in what has been called Baotou’s Pioneering Rare Earth Hi-Tech Development Zone. A coal-fuelled power station supplies electricity to Baotou’s large and growing industrial complex.

The Yellow River

The Chinese Society of Rare Earths estimated that for every ton of rare earth oxide it produces in Baotou, China generates up to 12,000m³ of waste gas containing dust concentrates, sulfur dioxide, hydrochloric acid and sulfuric acid, and about 2000 tons of mine tailings. Tailings are the ground materials left over once the REEs have been removed from the ore. In northern China, these tailings contain traces of radioactive thorium. In addition, it is estimated that all factories and processing facilities in the Rare Earth Hi-Tech Development Zone create approximately 10 million tons of all types of waste water every year.  Much of this waste water along with an estimated 7-8 million annual tons of mine tailings are dumped into what has grown into an approximately 11km² waste impoundment lake without being effectively treated. A 2006 Chinese report undertaken by local authorities found that the level of thorium in soil near the lake was 36 times higher than in the soil in other areas of Baotou. From the lake, the chemical and radioactive waste has seeped into the ground water. The waste has also found its way into the Yellow River which passes to the south of Baotou before continuing another 1300 miles to the Yellow Sea. The Yellow River is subsequently used as a water supply for a large concentration of China’s population, including the residents of Beijing and Tianjin.

Around Baotou, most fish in the Yellow River have died. Agriculture has also been severely affected as lake wastewater has contaminated irrigation water supplies and the soil. Local farmers say that since the 1980s, fruit trees have either yielded no fruit or that the fruit they do grow is small and foul-smelling. Vegetable plants have stopped producing and many livestock in the area have become ill and died.

Residents inhaling the vapors and drinking the contaminated water have noticed higher incidents of diabetes, osteoporosis, respiratory diseases, leukemia and other cancers, skin and eye irritations, irritation to the gastrointestinal tract, black lung disease and kidney damage.

China’s southern REE mining and processing operations have also caused significant environmental degradation. The in-situ extraction method, which was hoped to be less environmentally damaging, has also resulted in reduced or eliminated crop yields and in fish dying in the rivers in the areas around which it is being mined. One issue in the south has been the extensive presence of illegal mines which are particularly prone to releasing toxic waste into the general water supply.

Until recently, China has never had firm pollutant discharge standards for the rare earth industry. Additionally, it poorly enforces the regulations that do exist. This lack of stringent environmental regulation and enforcement has meant that China’s REE industry produces REEs at roughly a third the price of its international competitors. While some Chinese REE companies have tried to improve their mining processes to make them more environmentally friendly, many have chosen to keep their environmental costs to a minimum in order to maintain a competitive edge in the market. In addition, as the government owns the land on which the factories lie, companies have little incentive to protect it. Additionally, China’s still-developing legal structure means that people and companies cannot easily be held accountable through the country’s judicial system. In Western countries, if employees or residents become ill due to unsafe production methods, those responsible would likely face due process which could result imprisonment and fines. This is not the case in China, unless victims have the support of the government. Yet the government often has a stake in the REE production process which acts as an incentive for the REE processing to continue untouched.

Characteristics of China’s Rare Earth Industry before Government Reform

Fluorescent light bulbs require rare earths

Starting in 2000, China’s government began to re-evaluate its REE strategy in the light of its rapid development, the poor profitability of its rare-earth producers and the rapidly growing demand for REEs worldwide. While its achievements in the REE field since 1978 are undeniable, the government has become increasingly concerned about a number of issues. These issues were outlined in Situation and Policies of China’s Rare Earth Industry published by the Information Office of the State Council of the People’s Republic of China in June 2012 and included: severe ecological damage to the environment, excessive exploitation of REE resources, poor profitability of the REE industry causing what it considered to be a severe divergence between the price and the value of REEs, and the illegal mining and sale of REEs.

While the environmental degradation that has been caused by China’s REE production is quite widely known, part of the purpose of the China’s REE report was to inform on the other challenges that China faces in managing its REE resources. Specifically, China found that 50 years of aggressive mining of its REE resources have significantly reduced its reserves. In Baotou, for instance, the report stated that only about one third of the original volume of REE resources was left in its principal mines. In its ion-adsorption clays, the reserve extraction ratio – the remaining supplies of REE in years – has declined from 50 years of remaining resources 20 years ago to 15 years of REE resources today.

While China publishes the country’s REE data yearly, these reports are not available to foreign researchers. Independently verifying the PRC’s calculation of its reserve levels has thus been difficult. For instance,

s China’s Situation and Policies of China’s Rare Earth Industry paper calculated that China holds 23% of the world’s reserves, while the 2008 US Geological study calculated that China held 58% and a 2011 British Geological Survey Rare Earth Elements paper calculated that China held 44%. That said, there can be no doubt that China has seen a rapid depletion of REE reserves in the last three decades.

China has also expressed concern about the poor profitability of the REE industry. Historically, the Chinese REE industry has been characterized by numerous, relatively small-scale enterprises, particularly in the south, which often engage in cutthroat competition. This has often meant that REE producers have often struggled to maintain profitability. Yet, as many local governments have relied on REE producers to provide employment and revenue, they have continued to encourage local production even it means exceeding national production targets. As a result, China feels that it REE resources have been sold at prices which do not reflect their real value or take into account environmental costs. To support this argument, China cites the fact that between 2000 and 2010 the price of rare earth products increased by 2150%, while the prices of gold, copper and iron all increased by in excess of 4300%.

China’s REE has also been plagued by illegal mining and smuggling. The report states, that from 2006 to 2008, statistics collected from foreign customs offices were 35%, 59% and 36% higher than the volumes that China officially exported over this time period. In 2008, it was estimated that approximately 29,000 tons of rare earth materials were smuggled out of the country, representing an estimated one-third of total REE exports. In 2014, it was estimated that illicit sales rose to 40% of all REE production or as much as 40,000 tons. Illicit REE materials are often hidden as steel composites, then reverse-engineered out when they reach the customer’s home country. It is believed that Japan is the largest importer of illicit REE materials, and may get as much as 20% of its REEs from China’s black market. Smuggling hurts China’s rare earth industry both by depressing prices, more quickly depleting REE resources and by increasing environmental damage as smugglers usually pay scant attention to pollution management.

Rapid Increase in Domestic Demand for REE Products

China has also seen a rapid increase in domestic demand for REEs, and it expects this demand to continue to increase in the future. In 2000, for instance, Chinese REE consumption was about 19,000 metric tons while non-Chinese usage was about 72,000 tons. By 2009 Chinese REE consumption had reached about 73,000 tons while other usage had declined to 59,000 tons. China uses more REEs today as its REE industry is moving higher up the manufacturing value chain. For instance, its 1987 production of products such as catalysts, magnets, phosphors, and polishing powder represented only about 1% of the total REE that it consumed. By 2008, the production of these products accounted for about 53% of the REEs used in China. Going forward, China expects its REE use in the new material technologies to grow faster than in its other traditional industrial sectors.

As an example, in July 2008, China had approximately 600 million mobile phone users; by November 2012 China’s Ministry of Industry and Information Technology estimated that China’s mobile phone owners had exceeded one billion. Similarly, in 1998, the United States, Europe and Japan produced 90% of the world’s permanent neodymium-iron-boron magnets; today China manufactures 76% of the world’s total. In 2009, China produced 12,000 gigawatts of wind power; by 2015, China aims to have 100 gigawatts of on-grid wind power generating capacity, and to be generating 190 billion kilowatt hours (kWh) of wind power annually.

China’s Reform of its Rare Earth Industry

As early as 1990, the Chinese government deemed REEs to be a strategic mineral critical to China’s long-term political, economic and military power and began restricting foreign investors from mining rare earth, or from participating in smelting and separating except in joint ventures  with Chinese firms. By 2000, Chinese scientists and military experts were calling for even greater controls over its REEs. In 2005, Xu Guangxian, China’s leading REE scientist, argued that at the current rate of extraction the Bayan Obo mine would be depleted in 35 years.

As a result, the Chinese government began to implement a number of initiatives designed to reform the industry. Laws regarding REE mining, production and waste management were reviewed, and efforts have since been made to improve enforcement. Additionally, in 2005, the government eliminated the value-added tax rebates for REEs, and taxes on the export of unimproved REEs were raised. The government also reduced the number of REE mining and processing licenses issued. In 2006, 47 domestic REE producers and 12 Sino-foreign rare Earth producers were licensed to export rare earth products from China. By 2011, that number had dropped to 22 domestic REE producers and 9 Chinese-foreign joint venture REE producers. It has also begun to stockpile REE materials with the goal of reaching reserves of 30,000 to 55,000 tons of rare earth concentrates.

Additionally, it created the 2009-2015 Plan for Developing the Rare Earth Industry, and established the Chinese Society of Rare Earths, consisting of 150 members whose aim is to develop a fully integrated REE sector. Part and parcel of this, it has divided the country into large REE districts: Jiangxi, Guangdong, Fujian, Hunan, and Guangxi in the South; Inner Mongolia and Shandong in the North; and Sichuan in the West. Between 2009 and 2015, the government expects Inner Mongolia and Sichuan to be primarily responsible for producing LREE with additional capacity coming from Shandong as needed. HREEs will be produced in Jiangxi, Guangdong and Fujian. Increased inspections by government officials will be carried out in order to ensure that facilities are not exceeding national quotas and that mining and manufacturing are meeting environmental regulations.

Since January 2014, China has pressed aggressively ahead with its efforts to consolidate the REE industry under six large state owned enterprises (SOE)including Inner Mongolia Baotou Iron and Steel Group, China Minmetals Corporaion, Aluminum Corporation of China (Chinalco), Guangdong Rare Earth Group, Xiamen Tungsten, and Ganzhou Rare Earth Group. These SOEs will control the industry by geographic region. An estimated 300 smaller, independent REE producers have been forced to shut down or  to merge  with  the SOEs. These SOEs will invest in all aspects of the rare earth industry chain. Currently, these six companies control 94% of China’s RE resources,  75% of its mines and  60% of the smelting and separating capacity. After consolidation, the six SOEs are expected to have complete control over these sectors. These  conglomerates will be supported by financial subsidies, tax breaks, and other form of government  investments, and will be encouraged  to expand their expertise  in areas such as REE recycling.

China continues to view the REE industry as of strategic importance to the country. Its goal is to have a significant market share of the entire REE supply chain from mining, smelting and separating to manufacture of high-end rare earth technologies. China’s dominance in the middle aspects of the REE supply chain – transforming mined materials into useful ingredients – enables China to draw in related domestic and multinational businesses that depend on the REE materials. This in turn increases China’s importance to supply chains in everything from mobile phones to wind turbines.

Since January 2014, Beijing has also stepped up its campaign against illegal mining. It has forced smaller, wildcat producers to close, and is now conducting helicopter searches in areas where illegal mines are purported to be operating. It is also going after the gangs who are running them as well as local government officials who turn a blind eye.

Beijing is also working to stamp out illegal production by larger, licensed companies which avoid production quotas by exporting RRE under ambiguous labels such as “iron alloy”.  New export license paperwork for the big six will be more onerous and exacting. Beijing is also trying to implement a RE supply chain trace-ability system.

Since July 2014, China has push ahead with its plans to grow  its domestic REE stockpiles.  China plans to use it stockpiles to ensure  adequate resource  supply  in the future, especially in light of growing domestic demand. It will also use it stockpiles as a mechanism  to support REE  pricing.

Export Quotas

Chinese ships loaded with rare earth minerals for export

The government also began to implement quotas on the amount of REEs that it allowed to leave the country. From the Chinese perspective, quotas felt appropriate as foreign countries, particularly the United States and Japan, were seen to be taking advantage of China’s cheap, environmentally-destructive REEs while maintaining strategic stockpiles in their own un-dug mines. Quotas would also help ensure that the Chinese had plenty of REEs for their domestic needs. Historically, separate export quotas have been set for domestic REE producers and for Sino-foreign joint venture REE producers. Between 2005 and 2007, the government authorized domestic REE producers to export 40,000 metric tons and Chinese-foreign joint ventures to export 16,000 metric tons. In 2008 and 2009, China reduced the domestic quota by 21.6% and 2.5% respectively while holding the Chinese-foreign joint venture quota steady. By 2010, China’s overall REE export quota was reduced an additional 37.1%, this time impacting both domestic and Sino-foreign joint venture producers alike.

The government’s new policies are specifically designed to restrain the export of unprocessed REEs, as no quotas have been placed on REEs exported in finished products. Part of the reason for this is that the government wants to encourage foreign REE manufacturers to relocate their production facilities to China, particularly to Baotou’s Pioneering Rare Earth Hi-Tech Development Zone.  It is estimated that approximately 50 foreign companies are already operating within Baotou’s industrial complex. From the Chinese perspective, this would allow them access to new technology and would generate jobs for its citizens. Non-Chinese consumers of REEs have criticized this policy saying that it is pressuring them to relocate to China in order to stay cost competitive. This in turn could put their proprietary REE technology at risk, and it would continue international dependence on China’s REE industry.

Chinese Suspension of Rare Earth Exports

On September 7th, 2010, a Chinese fishing trawler rammed a Japan Coast Guard vessel near to the Senkaku/Diaoyu disputed islands, known in Japan as the Senkaku Islands, and in China as the Diaoyu Islands. The islands are administered by Japan but are also claimed by China and Taiwan. The Japanese subsequently detained the captain, causing a major diplomatic dispute between the two countries.  Despite repeated demands by the Chinese government, the Japanese refused to release the captain, saying that instead his case would be handled by the Japanese courts. In retaliation, the Chinese canceled official ministerial Sino-Japanese meetings, and revoked an invitation for 1000 youths to attend the Shanghai World Expo. (Lin, 2010) Although denied by the Chinese government, on September 21st, it is widely believed that the Chinese also orchestrated an unofficial halt of REE exports to Japan by having its custom agencies prevent the export of REEs, though this has recently been questioned in academic studies, particularly in light of the fact that shipments to Europe and the US were also halted the following month, and given that the Japanese government had expressed grievances over the rare earths issue as early as August 18th. Beijing claimed instead that the export stoppage was a spontaneous, independent demonstration of support by Chinese REE exporters and custom agents. Regardless of its origin, the embargo has enabled China to exert political pressure on Japan. The unofficial nature of the embargo also made it more difficult to challenge in the World Trade Organization (WTO) which bans most unilateral export stoppages.  On September 24th, Japan released the Chinese captain, with the Chief Prosecutor citing “Japan’s national interests”.

By mid-October 2010, China was also blocking some shipments to the United States and Europe after the Obama administration opened an investigation into whether China was violating free-trade rules with its green energy policies including its restrictions on REEs. China resumed shipments to the U.S. and Europe at the end of October, but did not resume shipments to Japan until the November 24th. Part of its decision to resume shipments to Japan might have been due to the fact that many Chinese assembly factories, employing hundreds of workers, were running low on Japanese-made components when suppliers began to face shortages of some of the REEs needed in their manufacture.

Consolidating the Industry and Ending Illegal Mining and Smuggling

Since 2006, the government has stepped up its efforts to shut down illegal mines in the provinces of Guangdong, Jiangxi and Sichuan. Over the last two years, China has investigated and rectified 600 cases of illegal mining, has identified an additional hundred cases against which further action will be taken, and has closed 13 mines and 76 processing facilities. Similarly, in 2011, China launched a campaign to crack down on REE smuggling, retrieving 769 tons of smuggled REE metals and prosecuting 23 criminal suspects in eight cases.

China has also been urging its REE producers to merge together. Ultimately, the government envisions that the REE industry will be eventually controlled by a few, state owned enterprises. Surviving Chinese producers have seen advantages to this consolidation strategy as it has helped to reduce unnecessary competition and increase profitability. For instance, Dingnan Dahua New Materials Co., Ganxian Hongjin Rare Earths Co. Ltd, Minmetals Nonferrous Metals Co. Ltd have all joined together to form Minmetals Ganzhou Rare Earth Co. Ltd to process REEs in Ganshou, Jiangxi Province. Their operations are expected to slowly subsume the majority of the production of the 88 smaller REE producers that have historically been operating in the area.

Improving Environmental Regulation

Rare earths are crucial for wind turbines

China also plans to implement stricter environmental standards. The Ministry of Environmental Protection has now set discharge standards for six types of atmospheric pollutants and for 14 different types of water pollutants. China will aim for its new REE facilities to be built to ISO 9000 and ISO 14000 certificate standard. It may also force its dirty mining and processing facilities to halt operations until they are also able to secure the ISO accreditation. The ISO 9000 and ISO 14000 are internationally recognized accreditations that look at how a product is produced rather than the product itself. The ISO 14000 standards help organizations establish procedures that minimize negative effects to the environment. If China enforces its tougher environmental standards, it is estimated that it could add between $145 and $220 to the production costs of every ton of REE products. These higher costs would significantly erode China’s cost advantage in the industry.

Additionally, China intends to increase the recycling rate of both REEs in discarded electronic products as well as recycling an estimated 12.6 million tons of REE oxides that had been deposited in its Baotou tailings pond. Currently there are no cost-effective ways to recycle rare earth elements from old equipment such as computers, electric motors and cell phones. Similarly, technology to extract residue REEs in tailings ponds is also in need of further development. China is also working on technology that will reduce the amount of REEs that are flushed into tailings ponds in the first place.

China’s Rare Earth Industry Research and Investment

As China considers its REE industry to be of critical strategic importance, it is heavily investing in REE research and development. It hopes breakthroughs in REE technology will help ensure its national security, and could enable China to leap-frog the West to lead in the development of many new advanced technologies such as those found in the rapidly emerging environmental sector. Indeed, in 1999 President Jiang Zemin noted that if China could master REE technology, its REE resource advantage could then help lead China to economic superiority.

Much of China’s REE investment has been funneled through the State Key Laboratory of Rare Earth Materials Chemistry and Applications, affiliated with Peking University in Beijing, and the State Key Laboratory of Rare Earth Resource Utilization, affiliated with the Changchun Institute of Applied Chemistry which is run under the direction of the Chinese Academy of Sciences. Between the two labs, there are approximately 70 faculty members, 35 professors and 75 graduate students dedicated to REE research. Additionally, China also conducts REE research through the Baotou Research Institute in the General Research Institute for Nonferrous Metals. Each of these institutions run complementary but independent research into the efficient and environmentally friendly mining and processing of REEs, the development of technology employing REE materials, the recycling of REEs from already existing products and the reclamation of REE materials in its extensive waste ponds.

China is not only investing in REE domestically, it is also purchasing stakes in rare earths natural resources abroad. For instance, China has purchased a 25% date in Arafura Resources Ltd, an Australian Rare Earth developer.

World Response to the Reform of China’s Rare Earth Industry – WTO filing

In March 2012, the United States, European Union, and Japan filed a complaint with the WTO against China’s REE trade practices in response to export restrictions, restrictions in export licensing, higher export taxes, and the withdrawal of the 16% refund of value-added tax on exports of unimproved REEs. They argued that the effect of these policies has been that non-Chinese producers of REE products pay 31% more for their REE materials than their Chinese competitors.  The US, EU and Japan are also challenging aspects of the allocation and administration of export quotas, export licenses and the manipulation of export prices. They contend that Beijing aims to satisfy domestic REE demand first, and to control the international price of REEs abroad. They also say that Chinese practices are placing pressure on foreign manufacturers to relocate their operations to China in order to minimize the impacts of rising costs and shrinking supplies. It is expected that the complaint will take between one and three years to resolve.

WTO ruled against China's REE export restrictions

WTO ruled against China’s REE export restrictions

China has countered that its policies are intended to improve the environmental standards of its REE mining and processing facilities as well as to promote the long-term economic sustainability of its REE resources. It has rejected a call for the establishment of a WTO panel. China has also countered that foreign suppliers have not complained of China dumping low-cost REEs as they previously had with China’s export of low-priced steel and textiles.

The US, EU and Japan feel that a WTO ruling made in January 2012 supports their case. In that ruling, the WTO decided that price and quantity controls primarily targeting foreign entities were not a reasonable implementation of a resource conservation policy. It also stated that trade restriction measures for the purpose of environmental protection can only be applied in conjunction with restraints on domestic production or consumption.

In June 2014 the WTO ruled against China and in August 2014 China lost its appeal. The WTO stated that China’s efforts conserve its limited REE resources and to protect its environment by restricting foreign access to REE tungsten and molybdenum through export duties, export quotas, minimum export pricing requirements and additional requirements and procedures constitute a breach of WTO rules. Instead the WTO found that the China’s REE restrictions were designed to achieve industrial policy goals rather than REE resource conservation or environmental protection. The WTO ruled this because no measures were put in place to restrict domestic access to REE supplies. Instead the export restrictions gave domestic companies preferential access to REEs at prices below that available to foreign customers.

World Response to the Reform of China’s Rare Earth Industry – Developing New Rare Earth Sources

Car production could be affected by rare earth shortages

Many governments and companies around the world are also beginning to develop new REE sources, now feasible given the higher REE prices which have resulted from increased REE demand and China’s export restrictions. The Australian company Lynas Corporation, for instance, has invested in an $800 million processing plant located on Malaysia’s East Coast. Once fully operational, Lynas’s Malaysian processing plant is slated to become one of the largest REE processing plants in the world. Yet, the opening of the plant has been plagued by protests from Malaysian activists who worry about its environmental implications. The plant is located on reclaimed swampland just 12 miles from Kuantan, a city of 600,000 people. A particular worry is that the plant’s toxic wastewater, containing chemicals and low levels of thorium, will seep into the groundwater, and that its storage ponds could become vulnerable to the monsoons that inundate the swampy coastline each autumn. Currently, Mitsubishi Chemical is investing $100 million to clean up its Bukit Merah REE processing site which it was forced to close in 1992 when local residents began complaining of leukemia and other ailments tied to thorium contamination. This environmental contamination has caused Malaysian activists to demand greater environmental regulation for all future RE processing facilities located on its soil.

In California, near Death Valley, Molycorp Minerals has invested $781 million in the modernization and expansion of its RE mining and manufacturing facilities that were shuttered in 2002 when it was unable to produce REEs at prices which could compete with Chinese producers. Molycorp aims for its newly refurbished Mount Pass facility to be one of the most technologically advanced, energy efficient and environmentally friendly REE processing operations in the world. By the end of 2013, Molycorp expects Mountain Pass to be producing 40,000 metric tons of REEs annually. As the US currently consumes between 15,000 and 18,000 metric tons of rare earth oxides each year, this would mean that the US would turn into an exporter of REE products in the near future.

Mines are also under consideration in Canada, Australia, South Africa, Greenland, Mongolia, Vietnam and India. In 2009, Japan signed a contract with Vietnam to invest in a rare earth mine that will produce solely for Japanese vehicle manufacturers. The problem is even if these new mines and accompanying processing plants were given the go-ahead, it could still take between 3 and 10 years, not to mention hundreds of millions of dollars, before these new projects would become fully operational. Others are investing more heavily in the manufacturing of high-end REE products outside of China. Japan’s Hitachi Metals Company, for instance, is investing in a permanent magnet factory in China Grove, North Carolina instead of locating it in China as it had originally envisioned.

A concern for those investing in new REE mining and processing locations is that China could increase production again driving down REE prices just as their projects come on line, once again making non-Chinese mining and processing facilities uneconomical. Ironically, a WTO judgment in favor of the US, the EU and Japan could have this effect by forcing them to withdraw export restrictions which would once again flood the market with Chinese REE product. To protect against this, some non-Chinese scientists and industrialists have called for their governments to provide federal support in the form of loan guarantees and other assistance. Others argue that the rapidly growing demand for REEs should help maintain prices, even in the event of a significant increase in Chinese REE production.

World Response to the Reform of China’s Rare Earth Industry – Other Initiatives

International consumers of China’s REEs are also taking other steps to become independent from Chinese supplies. As a short term stop-gap, countries such as Japan and South Korea already have strategic stockpiles of rare earth metals. Countries are also increasing research into REE substitutes and REE recycling.

Trends for the Future

Rare earth mining is certain to be an important part of China’s future economy

China’s REE industry continues to grow at a strong clip. According to the Industrial Minerals Company of Australia, China’s REE annual output is forecasted to rise from 105,000 tons in 2011 to approximately 130,000 tons by 2016.

China considers the development of REE technologies a national priority. To support this objective, it will continue to invest heavily in research and development in all aspects of REE production from improved mining efficiency to the development of cutting-edge REE technologies.  It will also continue to invest in technologies that will allow it to reclaim REEs from its tailing ponds and to recycle REEs from discarded electronic products.

China should be able to have substantially greater influence over REE’s supply and the pricing. To some extent this will offset its inability to control supply and price by export quotas and by other trade restrictions now ruled to be illegal by the WTO. China will also continue to build domestic stockpiles.

The financial and academic resources China is investing in basic REE research are unparalleled anywhere in the world. Similarly, no other country has identified the manufacturing of REE technologies as a national objective and is pursuing it as single-mindedly. Given China’s significant level of naturally occurring REE reserves, its destination as a low-cost manufacturing base, and its heavy research and investment in all aspects of the REE sector, it can be expected that China will continue to rapidly consolidate its already strong foothold in the manufacture of many of the REE technologies. It is likely it will dominate the production of many of these technologies in the future.

Rising REE prices and aggressive Chinese REE policies have caused non-Chinese REE miners and manufacturers to seek alternative REE sources and alternative locations to produce their REE components. Over the next 10 years, it can be expected that new REE mining and processing sources will come on line, allowing international competitors to claw back some unfinished REE market share. In particular, US Molycorp and Australian Lynas both have brought REE mines on stream. Similarly, international REE producers, wary of the Chinese subsuming their technology, will continue to seek alternative, cost-effective places to manufacture. That said, they will struggle to compete against China’s advantages.

Sino-Japanese Relations: In the Shadow of History

An Overview

There can be no doubt that China and Japan are the giants of East Asia, both in economic and political terms. The bilateral relationship is, therefore, of great importance to both the region and the wider world. Despite a mainly cordial relationship over two thousand years of known interaction, Sino-Japanese relations have been complex and difficult for over a century. After a brutal invasion and occupation of the Chinese mainland during its expansive war of the 1930s and 1940s, Japan was defeated and found itself firmly in the anti-Communist bloc during the Cold War. A thaw in the 1970s, driven by the Chinese split with the Soviets led to the normalization of diplomatic relations but the Chinese and Japanese never truly reconciled this history. As a result, the question of history remains one of the biggest thorns in the side of the Sino-Japanese relationship. Compounding this emotional problem is a series of territorial disputes in the East China Sea, most notably around the Diaoyu (in Chinese) or Senkaku (in Japanese) islands. There are also ground for optimism; China has been Japan’s largest trading partner since 2007 and the two countries have worked together to promote regional cooperation and low level institutionalization. Nevertheless, the difficult shared history casts a constant shadow over the relationship.

The Historical Relationship

China’s relationship with Japan has a long and complex history, with interaction between the two cultures stretching back over at least two millennia. There can be no doubt that much of Japanese culture has its roots in that which it borrowed from the Chinese. This is most notable in the written form of Japanese, which uses both Chinese characters and two other scripts that are derived from written Chinese (though the oral language is entirely distinct from Mandarin). The other major similarity lies in philosophy and religion; the adoption of Confucianism and Buddhism, both of which were learned through interaction with the Chinese over many centuries, is still clearly evident in modern Japan. This adoption of aspects of Chinese culture took place across several of China’s dynastic periods, during which interaction was predominantly cordial with the Japanese paying tribute to the Chinese emperors without ever really becoming a “vassal state” in the way that many other areas of East Asia did during this time.

The relatively cordial interaction was brought to an end during the Edo period in Japan (1603-1868) during which it effectively closed itself to dealings with other states. The end of this period coincided with several of China’s military defeats to Western powers, including the Opium Wars, which led to various parts of China becoming “concessions”, effectively miniature colonies within China. These defeats were part of the long decline of China’s final dynasty, the Qing, and Japan, like several Western powers, sought to take advantage of the chaos and confusion that ensued. After the first Sino-Japanese War of 1894-5, which had initially been fought over control of Korea, China was forced to sign the Treaty of Shimonoseki, under the terms of which Japan occupied Taiwan and the Penghu Islands. This defeat is considered by many Chinese to have been a huge psychological blow to the nation. After millennia of perceived Chinese superiority in the region, just a few short decades had seen China’s military humiliation at the hands of various “barbarians” from outside of East Asia and now at the hands of the Japanese, over whom the Chinese had always considered themselves to be both culturally and militarily superior.

However, by far the most significant conflict between the two powers, both in terms of the shutterstock_2646972 resizednumber of deaths and the continuing impact on the bilateral relationship, was the invasion of China by Japan that occurred in the 1930s. After first colonising Manchuria, in the Northeast of China, Japanese forces went on to occupy almost half of Chinese territory, committing widespread atrocities along the way. The most notorious of these atrocities was the Nanjing Massacre, a six-week orgy of violence and destruction during which as many as 300,000 Chinese, many of them civilians, were killed. Almost as notorious was the work of Unit 731, a Japanese research unit that conducted chemical testing on live Chinese prisoners of war. The occupation, including the colonisation of Manchuria, lasted a total of fourteen years, only coming to an end with Japan’s defeat in 1945.

With the dawning of the Cold War era, the PRC and Japan did not normalise relations until 1972, following Richard Nixon’s visit to Beijing. During the negotiations to establish mutual diplomatic recognition the Chinese agreed to forgo any war reparations or compensation from Japan for its wartime atrocities. For the remainder of the 1970s the two enjoyed a warm relationship, culminating in the signing of the Treaty of Peace and Friendship in 1978 and, following China’s decision to embark on market reform, the initiation of a series of low-interest loans (frequently referred to as “Yen loans”) from Japan to China to fund development of industry and infrastructure. While never explicitly acknowledged as such by either party, these were widely considered to be in lieu of war reparations.

The “History Issue”

Despite the apparent thaw in relations it is widely acknowledged that the reconciliation between China and Japan was only ever at a superficial level. This is evidenced by the CHEN WS / Shutterstock.comrecurrence of what has come to be termed “the history issue” in the relationship. Though the countries normalized relations in 1972, the history issue did not rear its head until the early 1980s. An apparent revision of Japan’s history textbooks in the early 1980s, which seemed to downplay Japan’s invasion of China, sparked an angry response from China at both the societal and political levels. Though it transpired that this was a misunderstanding caused by reporting errors in the Japanese media, the damage had been done and this issue recurs each time Japan’s Education Ministry approves a set of history textbooks, normally every four years. In 2001 and 2005, this issue caused widespread anger in China when a book was approved that apparently downplayed the Nanjing Massacre and referred to the invasion of China has merely an “advance”. What is rarely understood in China is that the textbooks in question are produced by the Japanese Society for History Textbook Reform, a very narrowly focused right wing group that attracts little support in the wider Japanese society, and that they only appear on a list of books approved to be used, rather than being the set text. As a result, only a handful of Japanese schools have adopted these books with a reported 0.03% of Junior High School students actually studying them, a figure that would have been much lower were it not for the campaign group issuing free copies to schools for disabled students. Nevertheless, the approval sparked angry demonstrations across China with protest marches attracting in excess of ten thousand in several different cities and violent attacks on Japanese business interests and the Japanese Embassy in Beijing. Though some reports at the time suggested that the Chinese government played a role in organizing and inspiring these protests, later research showed this not to be the only driving force behind the outpouring.
shutterstock_87269803Another particularly sensitive matter is Yasukuni Shrine, a highly controversial Shinto shrine in Tokyo that honors all of Japan’s war dead. Under Shinto beliefs it is believed to be the resting place for the kami (loosely translated as souls) of all those who have died fighting for the Emperor of Japan since the shrine’s inception in the 1860s. This includes Class A war criminals that were convicted after Japan’s occupation of China of war crimes. Most notorious among these is Hideki Tojo, the wartime prime minister. After the Class A war criminals were enshrined in 1978 in a secret ceremony that was revealed a year later, the Emperor refused to visit the shrine again until his death a decade later. His successor has continued the policy of staying away in order not to offend Japan’s neighboring states. However, there have been several high profile visitors that have caused consternation in China (and other East Asian countries, most notable South Korea). In the early 1980s, it was commonplace for Prime Minister Nakasone to visit, until he did so on August 15th 1985, the fortieth anniversary of Japan’s surrender. In response to opposition in China, the General Secretary of the CCP, Hu Yaobang, personally requested that Nakasone stop these visits. Though two other prime ministers visited the shrine in the following 15 years, the issue was largely put to rest until Prime Minister Koizumi returned to the shrine in August 2001. He fulfilled his pledge to visit the shrine once a year while he was in office at great cost to the Sino-Japanese relationship at the highest political level and also at the societal level; bilateral summits were suspended and his actions created the impression among many Chinese that Japan had not fully repented for its previous wrongs and even a fear that it might return to its militaristic past. By the end of Koizumi’s tenure in 2006 the political relationship between the two powers had almost completely broken down and on several occasions popular Chinese anger spilled over into protest and even violence against Japanese in China. Subsequent prime ministers elected not to visit the shrine, allowing the political relationship to thaw once more, but this period serves to highlight that the issue of history is never far from the surface of Sino-Japanese relations. In fact, during the three years that the Democratic Party of Japan (DPJ) led the country from 2009 to 2012, the issue took a back seat in the relationship. However, it has begun to rear its head once more since the LDP (Koizumi’s party, and the overwhelmingly dominant force in Japanese politics since the end of the US occupation) regained power. In December 2013 Shinzo Abe, now in his second stint as prime minister, visited the shrine on the first anniversary of his return to the post. The act was greeted with anger from across the region but most notable in China and South Korea (with whom Japan has also had a difficult relationship in recent years). Abe has since refrained from visiting the shrine, though he has repeatedly sent offerings under his own name. Objections from the US that have become public since his December 2013 visit might provide an incentive for him not to return in person but even if it is a one-off it has put the shrine issue firmly back on the agenda of Sino-Japanese tension. To mark the 70th anniversary of Japan’s defeat in World War II, Abe made a significant and closely observed speech, repeating aspects of previous apologies but insisting that future generations should not be “condemned” to repeatedly apologize for actions in which they had no part. This was a clear indication that he wanted to move Japan away a position that he – and his supporters – consider to have been overly deferential to China in this area for too long. Such a shift does not go down well in China and this was underscored by Xi Jinping’s speech at its own commemorations of the 70th anniversary a few weeks later.

Slips of the tongue from Japanese politicians (that are not always unintentional) often cause anger and resentment in China as well. In his first period in office immediately succeeding Koizumi, Shinzo Abe managed to offend both China and South Korea by claiming that the issue of ‘comfort women’ – a euphemism for the thousands of women forced into sex slavery at the hands of the Japanese military during their occupation of East Asia – had been exaggerated, earning himself a telling off even from the US. More recently, the mayor of Nagoya declared that he did not believe that the Nanjing Massacre happened. This was particularly insensitive as he made the claim when welcoming a delegation from Nagoya’s sister city: Nanjing. It is this level of insensitivity – displayed by only a minority of Japanese but often by those who make themselves most well heard – that continues to cause frustration, bemusement and resentment among the Chinese. Even more recently, similar views have been expressed by one of the governors of NHK, Japan’s national broadcaster.

Territorial Disputes

The other major issue that threatens the stability of the bilateral relationship from time to time is the dispute over sovereignty of the Diaoyu Isalnds (known as Senkaku in Japanese). These uninhabited islands are currently administered by Japan, but are claimed by both countries (and also by Taiwan). It is widely believed that significant levels of resources, including oil and gas, may lie underneath the islands, as well as within the maritime EEZ that would accompany recognition of the sovereignty of the islands. Complicating the issue is China’s exploitation of the Chunxiao gas field; although there is no dispute over the sovereignty of the gas field itself, it is within four kilometres of what Japan considers to be its EEZ and it argues that China may siphon resources from its side. China disputes that this is likely and, in any case, does not accept Japan’s demarcation of its EEZ as it is based on Japanese sovereignty of the islands.

Attempts to resolve the dispute have been largely unsuccessful; during the negotiations for the Treaty of Peace and Friendship it was determined that the matter should be shelved and left for future generations to resolve. However, nationalist activists on both sides have sought to push forward their respective country’s claims to the islands, often leading to heightened diplomatic tensions between the two. One of the most serious incidents in recent times occurred in September 2010 when a Chinese fishing boat collided with a Japan Coast Guard ship that was patrolling the area. The captain and crew of the boat were all arrested and imprisoned in Japan, leading to a major diplomatic dispute between the two countries, with both governments accusing the other of violating sovereignty. The captain was eventually released without charge after Japanese prosecutors determined that action against him would harm Japan’s national interests, though a video was leaked to the media that showed the captain, apparently under the influence of alcohol, intentionally ramming his boat into the Japanese ship. The strength of China’s reaction shocked many in Japan as several Japanese businesspeople were arrested on fairly dubious grounds and exports of rare earths to Japan were apparently halted, though Beijing insisted that the issues were unconnected.

shutterstock_103396334In 2012 Shintaro Ishihara, then the mayor of Tokyo and a right wing firebrand who had long campaigned for a tougher policy towards China, launch a campaign to nationalize the islands. The three largest islands had been in private ownership since Japan integrated them into its territory at the end of the eighteenth century. The family that held the rights to them had been keen to sell them on but was not willing to do so if there could be any threat to Japan’s sovereignty claims. As a result, Ishihara launched a bid to raise enough funds to buy the islands and vowed to take them under the umbrella of the Tokyo government. His plans also included the building of a harbor on the largest island, a move that would unquestionably have inflamed tensions with China and possibly have provoked a military response. When Ishihara’s campaign achieved its goal of raising sufficient funds, the national government decided it had no option but to move on the issue. The then-Prime Minister Yoshihiko Noda announced that the national government would purchase the islands and quickly struck an agreement with the family that owned them. This move was, without doubt, driven by a desire to lessen the tension with China as Ishihara’s plan was deemed highly provocative. Under the national government’s ownership no development of the islands would occur and the status quo would effectively be maintained. Noda clearly hoped that this move would be recognized by the Chinese and the response would be proportionate.

However, the nationalization of the islands proved to be a particularly hot topic in China and the response from Chinese society was the most serious that has been seen in any international issue in living memory. A series of scathing diplomatic attacks from the government served as a backdrop to widespread anti-Japanese protests across China. In total, 85 cities on the mainland witnessed large protests with many of these becoming violent. Japanese businesses and citizens were harassed, with even the ambassador’s car coming under attack in Beijing. Calls for boycotts of Japanese produce – a common response from nationalistic Chinese whenever a dispute with Japan occurs – appeared to have a greater effect than ever; in one bizarre demonstration of support for this idea a man set fire to his own Honda car in the middle of a Shanghai street. The economic relationship was demonstrably affected, with Japanese firms temporarily closing factories in China and laying off tens of thousands of workers. Sino-Japanese trade had previously been thought to be almost immune to the repeated spats between the two countries, but annual trade dropped by 4% in 2012. Two-way tourism figures fared even worse, with Chinese visitors to Japan down 33% in October 2012 compared with the previous year while the numbers of Japanese visitors to China fell by two thirds in the second half of 2012.

Since the nationalization China has stepped up “surveillance” of the areas surrounding the islands. Where once an unwritten agreement not to enter Japan’s de facto contiguous zone around the islands had kept the prospect of conflict to a bare minimum, China has since regularly flouted this norm. Though the incursions are frequently “Marine Surveillance” vessels rather than military ships, the possibility of conflict has been raised to its highest level since the two countries normalized relations in 1972. This was brought into sharp focus in December 2012 when a Chinese “Maritime Surveillance” plane entered the airspace of the islands, leading to the Japanese scrambling jets in response. A further escalation of the dispute in January 2013 occurred when the Japanese claimed that a Chinese PLAN frigate (a navy warship) had locked its radar onto a Japanese ship in the waters, suggesting that the first shots were about to be fired. Though China subsequently denied the incident the fact that such ships are now in frequent and close contact has significantly raised the possibility of a miscalculation that might trigger actual armed conflict between the two powers. The seriousness of the situation was heightened by a declaration from Hilary Clinton in January 2013 that the US’ joint security treaty with Japan covers the islands, thus obliging it to defend Japan if attacked by China. This raises the possibility of direct conflict between China and the US for the first time since the Korean War and is a stark reminder to all involved of the gravity of the situation. This was again brought into sharp focus in April 2013 when Prime Minister Abe issued a warning that Japan would respond with force to any attempt by China to land on the islands. Though this is would clearly be a war that would benefit nobody, it remains an unpalatable possibility.

In October 2013 China declared an Air Defense Identification Zone (ADIZ) above the East China Sea, including directly above the islands. This requires aircraft entering the zone – which is separate from China’s territorial airspace – to identify themselves to the Chinese authorities, log a flight path and retain open communications for the duration of the period of time in the zone. Although the zone is not unique – several of China’s neighbors have similar zones, including Japan – the sudden declaration and the more stringent requirements imposed by China have made this a controversial move that is clearly linked to the islands dispute. Aircraft from both Japan and the US have so far ignored the rules without serious consequence but the potential for miscalculation has clearly been raised even further by this development.

The islands issue has calmed somewhat in recent months but remains a potential flashpoint between the two countries. Certainly no resolution of the issue appears imminent and it has clearly played a role in Japan’s moves to reinterpret its Constitution in order to allow its military to play a role in collective self defense, a move that has caused a great deal of unease in a number of countries in the region, not least in China and South Korea.

The Taiwan Issue

When Japan defeated the Qing in the First Sino-Japanese War of 1894-5, one of its major prizes was the ceding of the island of TaiwanTaiwan has not been ruled by Beijing since then, despite its continued claims of sovereignty. Though the Japanese were expelled after their defeat in 1945, its role and position within the Taiwan issue remains a cause of consternation for the Chinese. In particular Japan’s continued hosting of US forces on Okinawa, an island that is of clear strategic importance should the US ever seek to defend Taiwan in a conflict with China, causes friction with Beijing, though it should be noted that it is even more controversial in Okinawa itself where local people have long campaigned for the complete withdrawal of US forces.

Though Japan is firmly committed to the ‘one China’ policy that all countries with which Beijing has diplomatic ties must affirm, it continues to have close ties with the island. These ties are particularly evident in the field of business and Japan is Taiwan’s second largest trading partner with bilateral trade topping $70 billion in 2011. Japan also continues to have a close cultural relationship with the island, with Japanese pop music and television programs particularly popular. This successful ‘soft power’ irks the Chinese who see a continued threat to their claims of sovereignty from a power that has not only demonstrated a willingness to colonize in the past, but which also has a motivation for preventing or delaying the process of the ‘reunification’ of Taiwan and the mainland.

Bilateral Trade


Bilateral trade is the biggest area for optimism in the relationship, and it has been argued that the main factor in preventing open conflict from erupting has been the level of trade between the two. Japan has consistently been one of China’s biggest trading partners since early in the reform era, and has also been a source of significant inward FDI. In 2007 China became Japan’s biggest trading partner and, though Japan’s significance to China has declined relative to other major partners, the two remain closely interlinked. In 2010, bilateral trade reached $300 billion. Such interdependence was forged from a high level of complementarity between the two economies – China was in a position to provide plenty of cheap labor in return for investment and technological transfer at a time that Japanese firms found the need to expand and outsource away from Japan – in combination with a geographic proximity that allows relatively quick transport of both people and goods. In June 2012 direct trading between the RMB and the Yen began, bypassing the US dollar for the first time and making bilateral trade even easier. The trading relationship has remained robust through some of the most heated political disputes, and the relationship during the early 2000s, characterized by political spats over the history issue and popular anti-Japanese protests in China, came to be referred to as “zhengleng jingre” (cold politics, hot economics), though it could also be argued that such problems do impact on bilateral trade that could have been even more spectacular against the backdrop of smoother political ties. Notably, when China chose the partners for its high speed rail network it felt compelled to shun Japanese firms in response to domestic pressure from nationalists angered at Japan’s perceived continued provocations over the history issue. As a result, China’s network of high speed train network was put together by a combination of firms from France, Germany, Canada and China, among others. This represented a negative outcome for both sides, with the Japanese unable to cash in on Chinese investment in its infrastructure that has totaled $300 billion by 2012 and is expected to continue to rise as the network is expanded, while the Chinese ended up with a system that fell short of its original expectations and may have contributed to the fatal train crash in Wenzhou in 2011.

East Asian Regionalization

In recent years there has been some limited progress toward regional integration and institutionalization in East Asia. In some areas this has actually been a source of competition for influence between China and Japan such as in the development of ASEAN +1 and ASEAN +3, whereby the two countries have sought to engage with Southeast Asian countries in order to further their own interests rather than to develop frameworks for dealing directly with each other. However, the two countries’ involvement in the six-party talks over the North Korean nuclear issue that also included both of the Koreas, Russia, and the US, was a first step in the creation of a significant regional forum. Though not formally related to the six-party process which has now stalled, China and Japan, along with South Korea, now hold annual three-way summits, hosted on a rotational basis, that have begun to foster a much greater sense of understanding and cooperation between the three powers. While it is significant that South Korea is involved in this, it is the engagement of China and Japan that has the greatest potential for positive impact on the region going forward. However, the islands dispute between China and Japan (as well as another territorial dispute between Japan and South Korea) the erupted again in 2012 has stalled the process. The 2013 summit was indefinitely postponed and although never formally abandoned, there has not been a summit since 2012.

Future Trends

The Sino-Japanese relationship is, arguably, the most important bilateral relationship in shutterstock_3155944East Asia. Many tensions remain, particularly over the history issue and the Diaoyu/Senkaku dispute. While the former of these problems has appeared to have been handled sensibly on both sides since the resignation of Koizumi, it remains a deeply-rooted issue that retains the potential to be the cause of significant mistrust and ill-feeling, something that was potently demonstrated by Abe’s visit to Yasukuni Shrine in 2013. That mistrust of Japan’s apparent moves towards normalization of its military forces is played out in the arena of this historical ill-feeling underlines how important the interpretation of history is in the bilateral relationship, even when considering contemporary issues. The territorial dispute appears equally unlikely to be wholly resolved any time soon, with the positions of both countries entrenched and apparently irreconcilable. The trawler incident in 2010 demonstrated how easily this issue can come to the fore and become a major stumbling block in improving Sino-Japanese relations. Furthermore, the nationalization and subsequent flare-up of tensions from 2012 onwards has shown how dangerous this issue is. However, both sides have ordinarily demonstrated the political resolve to prevent either of these two issues from spilling over into open conflict, and a return to military warfare seems highly unlikely, even if it is no longer entirely unthinkable. The strength of the economic relationship, while declining in relative importance to China, continues to grow and remains both a motivation for, as well as a method of, mitigating the undoubted tensions that do exist between the two powers.

China’s Island Disputes – A lot at Stake

Introduction

By 中国海监总队/China Marine Surveillance (中国海监总队/China Marine Surveillance) [Public domain], via Wikimedia Commons

A Chinese surveillance ship and a Japan Coast Guard vessel at close quarters

Among the numerous causes of friction between China and its neighbors, the continued failure to resolve a series of territorial disputes remains one of the most pressing. Threatening to destabilize the entire region, the disputed islands bring China into potential conflict with Vietnam, the Philippines, Malaysia and, most worryingly for regional security, Japan. Though virtually all of the islands are uninhabited and largely uninhabitable, they carry with them issues of military strategic importance as well as access to a potential wealth of natural resources. China formerly had land-based territorial disputes with each of the fourteen countries with which it shares a border but has worked hard to resolve these in a peaceful and frequently generous manner, accepting less than 50% of the disputed area in most cases. The only exceptions to this were with Russia, in which each side settled for precisely half of the disputed territory, and India, with whom several disputes are outstanding, complicated by the Tibet issue. The contrast with the maritime disputes could not be starker with almost no progress towards resolution in any of the disputes since the foundation of the PRC in 1949 and with the Chinese position seemingly utterly intransigent. Indeed, developments in recent years have seen a more assertive Chinese position causing serious friction and concern for regional stability. This seemingly belligerent stubbornness is rooted in a complex web of motivations that includes strategic considerations, access to natural resources and fish stocks, the psychological importance of national unification and territorial integrity, and a genuine sense of historical ownership.

Diaoyu/Senkaku Islands

Senkaku islands location map (senkaku) http://commons.wikimedia.org/wiki/File:Topographic15deg_N20E120.png Author: jackopoid

Map showing the location of the disputed islands

Perhaps China’s most talked about maritime dispute – certainly in recent times – is in the East China Sea, where it contends with Japan for the sovereignty of what it calls the Diaoyu islands, known to the Japanese as the Senkaku islands. The islands have occasionally been referred to in English as the Pinnacle Islands, but as this is a translation of the Japanese name it is normally not used unless expressing an opinion that the islands are Japanese territory. The rocky, uninhabited islands are located approximately 80 miles northeast of Taiwan and 250 miles west of Okinawa, an island over which there is no dispute and Japan’s most southerly prefecture.  The five islands in the group have a total combined area of just 2.7 square miles and do not have any infrastructure built on them. The dispute is complicated somewhat by Taiwan’s involvement, as it also claims the islands. However, this is not a challenge to China’s position as it considers the islands to be a part of the province of Taiwan, which is internationally recognized to be a part of China.

History

The islands are known to have been used by Chinese fishermen during the Ming Dynasty as shelter during storms, but were never permanently inhabited and their use by the Chinese appears to have come to an end at some time during the Qing Dynasty. Japanese historians argue that the islands were historically a part of the Ryukyu Kingdom, a small chain of islands that included Okinawa which operated as a relatively independent state until the late eighteenth century. However, there is evidence that shows the Ryukyu Kingdom itself acknowledged the islands to be a part of the Chinese realm, though this is disputed by some. By the time the Ryukyus were annexed by Japan in 1879 there was no mention of the Senkakus. The islands were re-discovered by a Japanese businessman named Koga in 1884, after which the Japanese surveyed the islands over a ten year period, before fully incorporating them into Japanese administration in 1895.

Respective Positions

The Chinese position on the sovereignty of the islands has two bases: a historical claim; and a geographical claim. The historical claim refers to the first established use of the islands as outlined above. From this perspective, since the islands were first discovered and then used on a frequent basis by the Chinese as early as the 14th century, there can be no dispute as to the original sovereignty of the islands. Given their geographical location it is entirely logical that they would be a part of the province of Taiwan. However, this province was ceded to Japan in 1895 after the First Sino-Japanese War ended with the Treaty of Shimonoseki that awarded Taiwan to the Japanese “in perpetuity”. Taiwan remained a colony of Japan until its defeat in the Second World War in August 1945, at which point the Potsdam and Cairo Declarations – both accepted by Japan as conditions of its surrender – decreed that Japan should return Taiwan to Chinese sovereignty. As the Diaoyu Islands are considered to have historically been part of Taiwan, they should be included in this. The second basis of China’s claim is somewhat tenuous in international law and refers to the nature of the East Asian continental shelf. China claims that the shelf is part of Chinese territory and extends out into the East China Sea, incorporating the Diaoyu Islands. Though it is true that the continental shelf is exceptional in its extension, it is worth noting that such a claim has never been used by any other country in the world, and there is little to suggest that it has any basis in law.

The Japanese position on the islands is based on a claim of “continuous occupation or administration”. From the Japanese perspective the uninhabited and entirely undeveloped islands were rediscovered in 1884 by Koga, and an appropriate survey conducted over the following decade. They were then incorporated into Okinawa Prefecture as sovereign Japanese territory. After Japan’s surrender in August 1945, the islands remained under the administration of the occupying US forces, who maintained control of Okinawa until 1972, a fully twenty years after handing back control of the Japanese mainland. For the Japanese, the Senkaku Islands were restored to Japanese sovereignty at this point and had not been separated from Okinawa Prefecture at any time since 1895.

Though China never acknowledged Japanese claims over the islands, it never challenged US administration of them during the almost three decades following the end of the war, though this is complicated by the presence on Taiwan of US allies the Kuomintang (Guomindang, KMT). However, it is notable that serious diplomatic noises surrounding the sovereignty issue only emerged after a UN report was released in 1968 suggesting that significant reserves of oil and gas may lie under the water surrounding the islands. Despite these noises, when the PRC and Japan normalized relations in 1972 the matter was shelved, as it was in 1978 during negotiations over the Treaty of Peace and Friendship, with Deng Xiaoping confidently declaring that “the next generation will be wiser”. Since then, no significant negotiation has taken place over the issue, with the Japanese exercising de facto control of the islands through regular patrols by the Japanese Coast Guard.

Modern Day Controversies

By Wuyouyuan (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

A Chinese poster showing the islands with superimposed Chinese flags signifying sovereignty

In response to Chinese claims over the islands, the Japan Youth Federation – a right wing group nationalist group with links to serious organized crime that seeks to promote a positive Japanese national identity and downplay Japan’s wartime atrocities – landed on the largest of the islands and erected a lighthouse, the first structure ever built on the islands. This was done without the consent of the Japanese government and China strongly objected to it as a provocation. The lighthouse has continued to be a source of controversy as members of the group have returned to the island periodically to conduct “maintenance”, frequently at times of increased tension over the issue. At the same time as building the lighthouse the group sought to address the problem of the islands being uninhabited, by leaving two (Japanese) goats behind. This symbolic gesture has had unintended but serious consequences for the island’s ecosystem; the single pair of goats, without any natural predators, has bred to a total in excess of 300, devastating the vegetation and bringing the Senkaku mole – an evolutionary distinct mammal found only on the island – to the brink of extinction.

A diplomatic spat between China and Japan was sparked in 1996 when the Japan Youth Federation returned to the islands to conduct maintenance on its lighthouse. However, what is notable about the controversy – which occurred in the wake of the Taiwan Strait Crisis that appeared to bring the region to the brink of military conflict – is that it was not publicized in China until it had been resolved. The People’s Daily – the most widely circulated newspaper in China that also functions as the CCP’s mouthpiece – did not report on the issue, even in pieces that criticized Japan over other issues. There was a clear desire in China not to provoke the public over the issue, and the matter was dealt with relatively swiftly at the diplomatic level.

The issue continued to be one of several sources of tension between China and Japan throughout the rest of the 1990s and into the 2000s, without sparking serious incident. It remained a matter of dispute that was brought up during virtually every bilateral meeting and no solution has ever appeared close but neither side had sought to change the status quo. There were minor sources of irritation, including the arrest of a Chinese fisherman near the islands in 2004, but he was swiftly released without charge by the Japanese who sought to play down the significance of the incident.

However, in 2010, the matter returned to centre stage in Sino-Japanese tension. In September of that year a Chinese fishing boat was spotted in what Japan considers to be its waters. A patrolling Japan Coast Guard (JCG) ship ordered it to leave the waters immediately, but the fishing boat instead changed course to head directly towards the Japanese ship. Though the Chinese side later disputed this version of events a video taken from the JCG vessel that was later leaked by a disgruntled employee clearly showed that the fishing boat intentionally rammed into the Japanese boat twice. At this point the entire crew was arrested, sparking a major diplomatic dispute between the two countries.

Though the rest crew was released almost immediately, the captain of the boat was detained for a total of 17 days, on possible charges under Japanese law. The Chinese response was vociferous, both at the governmental and societal levels, with strongly worded diplomatic protests and apparently spontaneous street demonstrations against Japan. There were reports that China had suspended exports of rare earths to Japan in response, though academic analysis has later disputed this version of events. A group of Japanese businessmen were also arrested in the aftermath of the boat captain’s detention, on seemingly spurious charges that appeared to be a tit-for-tat retaliation. The diplomatic standoff finally came to an end when Japan apparently blinked first, with the Chief Prosecutor announcing the release of the captain without charge on the grounds of “Japan’s national interests”, something that caused a debate over the legality of his actions within Japan. While this brought an end to this chapter of the dispute, it served to bring the islands to the forefront of Sino-Japanese tensions.

Japanese Nationalization

In 2012 a campaign Shintaro Ishihara, then the mayor of Tokyo and a right wing firebrand who had long campaigned for a tougher policy towards China, launch a campaign to nationalize the islands. The three largest islands had been in private ownership since Japan integrated them into its territory at the end of the eighteenth century. The family that held the rights to them had been keen to sell them on but was not willing to do so if there could be any threat to Japan’s sovereignty claims. As a result, Ishihara launched a bid to raise enough funds to buy the islands and vowed to take them under the umbrella of the Tokyo government. His plans also included the building of a harbor on the largest island, a move that would unquestionably have inflamed tensions with China and possibly have provoked a military response. When Ishihara’s campaign achieved its goal of raising sufficient funds, the national government decided it had no option but to move on the issue. The then-Prime Minister Yoshihiko Noda announced that the national government would purchase the islands and quickly struck an agreement with the family that owned them. This move was, without doubt, driven by a desire to lessen the tension with China as Ishihara’s plan was deemed highly provocative. Under the national government’s ownership no development of the islands would occur and the status quo would effectively be maintained. Noda clearly hoped that this move would be recognized by the Chinese and the response would be proportionate.

By 中国海监总队/China Marine Surveillance (中国海监总队/China Marine Surveillance) [Public domain], via Wikimedia Commons

Anti-Japan protest in Beijing in 2012

However, the nationalization of the islands proved to be a particularly hot topic in China and the response from Chinese society was the most serious that has been seen in any international issue in living memory. A series of scathing diplomatic attacks from the government served as a backdrop to widespread anti-Japanese protests across China. In total, 85 cities on the mainland witnessed large protests with many of these becoming violent. Japanese businesses and citizens were harassed, with even the ambassador’s car coming under attack in Beijing. Calls for boycotts of Japanese produce – a common response from nationalistic Chinese whenever a dispute with Japan occurs – appeared to have a greater effect than ever; in one bizarre demonstration of support for this idea a man set fire to his own Honda car in the middle of a Shanghai street. The economic relationship was demonstrably affected, with Japanese firms temporarily closing factories in China and laying off tens of thousands of workers. Sino-Japanese trade had previously been thought to be almost immune to the repeated spats between the two countries, but annual trade dropped by 4% in 2012. Two-way tourism figures fared even worse, with Chinese visitors to Japan down 33% in October 2012 compared with the previous year while the numbers of Japanese visitors to China fell by two thirds in the second half of 2012.

Since the nationalization China has stepped up “surveillance” of the areas surrounding the islands. Where once an unwritten agreement not to enter Japan’s de facto contiguous zone around the islands had kept the prospect of conflict to a bare minimum, China has since regularly flouted this norm. Though the incursions are frequently “Marine Surveillance” vessels rather than military ships, the possibility of conflict has been raised to its highest level since the two countries normalized relations in 1972. This was brought into sharp focus in December 2012 when a Chinese “Maritime Surveillance” plane entered the airspace of the islands, leading to the Japanese scrambling jets in response. A further escalation of the dispute in January 2013 occurred when the Japanese claimed that a Chinese PLAN frigate (a navy warship) had locked its radar onto a Japanese ship in the waters, suggesting that the first shots were about to be fired. Though China subsequently denied the incident the fact that such ships are now in frequent and close contact has significantly raised the possibility of a miscalculation that might trigger actual armed conflict between the two powers. The seriousness of the situation is heightened by a declaration from Hilary Clinton in January 2013 that the US’ joint security treaty with Japan covers the islands, thus obliging it to defend Japan if attacked by China. This raises the possibility of direct conflict between China and the US for the first time since the Korean War and is a stark reminder to all involved of the gravity of the situation.

In October 2013 China declared an Air Defense Identification Zone (ADIZ) above the East China Sea, including directly above the islands. This requires aircraft entering the zone – which is separate from China’s territorial airspace – to identify themselves to the Chinese authorities, log a flight path and retain open communications for the duration of the period of time in the zone. Although the zone is not unique – several of China’s neighbors have similar zones, including Japan – the sudden declaration and the more stringent requirements imposed by China have made this a controversial move that is clearly linked to the islands dispute. Aircraft from both Japan and the US have so far ignored the rules without serious consequence but the potential for miscalculation has clearly been raised even further by this development.

South China Sea Disputes

In addition to China’s dispute with Japan in the East China Sea, it has competing claims with several countries of Southeast Asia for islands and maritime rights. China’s famous “nine dashed line” details its claim to virtually every single island and rock in the South China Sea, stretching to within 50 miles of the mainlands of Malaysia and the Philippines despite being more than a thousand miles from China’s mainland in several instances. There are two main groups of islands within this vast area of sea claimed by the PRC: the Paracel Islands, which is disputed with Vietnam; and the Spratly Islands, which are wholly claimed by China, and partly claimed by each of Malaysia, the Philippines, Brunei, and Vietnam, with Indonesia also claiming maritime rights in the area without actually staking a claim to any territory. Additionally, there are disputes with the Philippines over Scarborough Shoal and Macclesfield Bank. As with the East China Sea, each of the disputes is complicated by matching claims from Taiwan which are based on the same justifications as the PRC.

The Paracels

The location of the disputed and uninhabited Paracels and Spratlys

Known as Xisha Qundao (West Sand Islands) in Chinese and Hoàng Sa (Yellow Sand) in Vietnamese, the Paracel Islands are located approximately 200 miles south of Hainan Island (China’s most southerly province) and a similar distance east of central Vietnam. The group is made up of more than 30 islands, islets, reefs and sandbanks. Their significance lies mostly in access to significant fishing stocks, though it is thought that oil and gas deposits may also be present.

From a Vietnamese perspective, the islands have been sovereign territory since the 15th century, when harvesting of sea produce was conducted on the islands. This claim is supported by some historical evidence in the form of records kept by several of the Vietnamese dynasties that detail continues use of the islands throughout the following centuries. The islands were claimed by France in the mid-19th century after the colonization of Indochina, and this claim met with no objection from China, though it is reasonable to consider that China was in something of a situation of turmoil itself at this time facing the prospect of colonization itself for the first time in its history. The French reasserted their claim to the islands in 1930, this time meeting with resistance from what was then the Republic of China. The islands were annexed by Japan in 1939 as its military rolled across East Asia. Following Japan’s defeat in 1945, the status of the islands was left ambiguous by the post-War treaties, until Japan itself completed an agreement with Vietnam for the return of sovereignty over the islands 1952. Though this was complicated further by the partition of Vietnam two years later, the present-day reunified Vietnam considers this treaty to be valid and still in force, demonstrating its continued sovereignty over the islands.

China’s claims actually predate those of Vietnam, with record from the Song Dynasty suggesting that some Chinese habitation of the islands occurred during this time. The islands were also included in maps produced during later dynasties, including the Yuan and the Ming. Though the use of the islands appears to have subsided during the Qing Dynasty, no Chinese government ever renounced the claims and the Republic of China formally objected to the French colonial government of Indochina building a weather station on the largest of the islands in 1932. Additional evidence of China’s claim, perversely, comes from the Japanese invasion during the Second Sino-Japanese War, during which the Japanese foreign ministry demanded that France desist from activities on the islands on the basis that they were part of the administrative prefecture of Hainan Island, then under Japanese occupation. After Japan’s defeat, China considers sovereignty to have been returned to it under the terms of Japan’s surrender.

In 1974, while North Vietnam and South Vietnam were still engaged in war with each other for control of the two countries, the south fought a battle with China for the Paracel Islands. The battle was sparked by attempts from the South Vietnamese navy to expel Chinese fishing vessels from the surrounding waters, leading China to take military action in support of its fishing rights. After a brief naval battle and aerial bombardment, the Chinese forces launched an amphibious assault on several of the islands that it had not previously occupied, securing a decisive victory that established a permanent military presence on the islands. The battle lasted only a couple of days and Vietnamese casualties were relatively small, with around 50 deaths and a similar number of injuries, but the result was highly significant in the dispute over the islands as it established Chinese de facto control of the archipelago. A recurrence of military activity in 1988 left a further 70 Vietnamese dead, though this incident is frequently dismissed as nothing more than a ‘skirmish’.

The dispute remains unresolved has been at the root of sporadic incidences of diplomatic difficulties between the two countries, usually sparked by disagreements over fishing rights. These spats have become more commonplace since China established a symbolic administrative region that incorporated the Paracels in 2007. In 2010 China announced plans to develop tourism to the islands in a move that the Vietnamese condemned as a “serious violation” of its sovereignty. A potentially serious flashpoint occurred in June 2011 when a Vietnamese oil survey ship was apparently rammed by a Chinese patrol vessel in waters close to Vietnam, seemingly outside of what even China considers to be its waters. Chinese military vessels have also detained Vietnamese fishermen on numerous occasions in recent years. For example, in March 2012 a total of 21 fishermen were arrested by Chinese patrol boats, after a fleet of around 100 Vietnamese boats entered what China considers to be its waters surrounding the islands. Though they were released a few weeks later the reaction sparked angry and violent protest against China in Vietnam, notably in the capital, Hanoi. Though both governments have sought to develop friendlier ties in many other areas of their relationship in recent years, the islands dispute remains a constant thorn in bilateral ties and a conduit for ugly nationalist sentiment in both countries.

In May 2014 China moved an oil rig from a part of the sea that was undisputed into an area that Vietnam considers to be its territorial waters. This sparked an angry response from both state and society in Vietnam with violent anti-Chinese protests breaking out across the country, resulting in several serious injuries to Chinese workers and the evacuation of hundreds of foreign workers (including many non-Chinese caught up in the protests). Though no direct military confrontation has followed, the dispute has taken Sino-Vietnamese relations to their lowest point for decades.

The Spratlys

The Spratly Islands are a group of around 750 islands, islets, reefs and sand banks, totaling a little over one square mile of actually land but spread out across in excess of 100,000 square miles of the South China Sea. They are largely uninhabited but several countries have succeeded in establishing military presences on some of the islands in their respective claims. Thus, 45 of the islands are home to military forces from China, Taiwan, Vietnam, the Philippines, and Malaysia. Brunei also claims one island but has not established a military presence on it. China refers to the islands as Nansha Qundao (South Sand Islands), and considers them to be part of the same symbolic administrative region as the Paracels. It is the only country (except for Taiwan, whose own claims overlap the PRC’s for historical reasons) to claim the entire archipelago, which includes islands that are within 50 miles of the mainlands of Malaysia and the Philippines but more than 1000 miles from China’s own mainland. The economic value of the island is questionable at best, with initial surveys suggesting that oil and gas may be present but in unknown quantities. However, from a strategic perspective, as well as for reasons of national pride and for access to fishing stocks, the islands retain a high level of importance to all parties in the dispute.

As with the Paracels, China’s claims rests on historical usage of the islands during dynastic times, stretching back to the Yuan Dynasty, while Vietnamese claims are also rooted in their own historical use and supported by the French colonization of the area that purported to include the archipelago in its empire. Claims from Malaysia, the Philippines and Brunei are more geographical than historical, with each citing the proximity of uninhabited and undeveloped islands to their own undisputed sovereign territory as justification for their claims. The dispute is complicated by the lack of native populations and the previous colonization of several of the competing countries in the claims.

The dispute has remained unresolved and, particularly in recent years, has led to heightened tension with potential for military conflict in the region. Indeed, in May 2011 it was reported that vessels from the Chinese navy (PLAN) had fired upon several Vietnamese ships in the region, including two oil survey ships and at least one fishing boat. The incident contributed to a serious deterioration of ties between the two nations during that time and sparked further angry anti-China protests in major Vietnamese cities. Around the same time the Philippines government began to express concerns about China’s increased activity around the islands and openly warned the visiting Chinese Defense Minister, Liang Guanglie, that his country “risked sparking an arms race” in the region if it did not seek to ease tensions swiftly.

Scarborough Shoal and Macclesfield Bank

Macclesfield Bank: a tiny, uninhabitable ridge in the South China Sea

Outside of the Paracels and the Spratlys, the South China Sea is also home to Scarborough Shoal and Macclesfield Bank which are disputed between China and the Philippines. Both are significant for strategic reasons and for the implications that any acknowledged sovereignty claim might have on other disputes in the Spratly Islands.

Macclesfield Bank, known as Zhongsha Qundao (Central Sand Islands) is a completely submerged chain of reefs that does not qualify as territory under international law since it cannot be inhabited by human beings. Nevertheless, both the PRC and Taiwan claim it to be part of Chinese territory. The position of the Philippines government is less clear; in 2012 it objected to Chinese activity in the area but has never lodged a formal claim to sovereignty. In any case, since the atoll is entirely submerged it is not clear how such a claim would be made and what effect it could have.

Scarborough Shoal, known in Chinese as Nanyan Dao (South Cave Island) is actually a group of small islets or rocks, all uninhabited. Its sovereignty is disputed between China and the Philippine (as well as Taiwan) in the same way that the Spratly Islands are, though are considered geographically separate. Claims from all sides are somewhat patchy in their historical evidence, particularly as there is no evidence of inhabitation on any of the rocks at any point in history. Nevertheless, it remains a sore point in bilateral relations as both China and the Philippines seek access to fishing stocks and potentially other natural resources.

The dispute came to international attention in 2012 when eight Chinese fishing boats were apprehended by a Filipino naval vessel which accused the crews of illegally catching sharks and taking coral. China sent in two “Marine Surveillance” ships to block the Filipinos from taking further action and a standoff ensued, leading to heightened diplomatic tensions between the two countries and tit-for-tat protests in major cities. Strong winds ultimately led to the Philippines having to temporarily withdraw its presence, after which Chinese surveillance ships set up a naval blockade, preventing any further access to the shoal. Though no direct conflict occurred, the situation is ongoing with the blockade remaining in place to the chagrin of the Philippines.

Trends

It is quite clear that an expansion of China’s naval capabilities achieved through its rapid military modernization has allowed it to become more assertive in its various maritime disputes with its neighbors. It represents a significant departure from the policy that was pursued with regard to the various land disputes that China previously had with all of its neighbors, during which it sought to resolve them rapidly and generously, gaining much appreciation in doing so. This change of stance over the maritime disputes has had several implications for the region as a whole as well as for China itself.

Firstly, it has led to a worsening in bilateral ties with several of China’s neighbors. The most serious of these is the ongoing dispute with Japan that has taken Sino-Japanese relations to arguably their lowest point since the Second Sino-Japanese War. This has inflamed nationalist tensions on both side and had an impact on the economic relationship as well as threatening military conflict. The room for compromise on this issue is severely limited for both sides and it will remain a significant source of tension between the two regional powers. Similarly, the relationships with Vietnam and the Philippines have suffered and both of these countries have witnessed anti-China protests in recent years as a result of the maritime disputes.

Secondly, China’s adversaries in the region have sought to strengthen their ties with the US in order to further protect themselves against what they see as a more assertive China. This will provide a challenge for China as it has previously sought to mitigate US power in the region. What China believes to be US attempts to encircle it and limit Chinese growth can only be served by its neighbors developing closer ties with the US and this may, ultimately, be the most significant cost to China of its policy shift. Hilary Clinton’s declaration in September 2012 that the maintaining freedom of navigation in the South China Sea is a matter of “national interest” to the US was a stark illustration to China that its change in stance over the area has consequences in this regard.

Thirdly, Chinese ‘soft power’ in Southeast Asia has suffered greatly because of its stance over the South China Sea. Having previously worked hard to project an image of a responsible power in the region, such damage has quickly undone decades of policies aimed at convincing China’s neighbors that its rise would be peaceful and not threatening. It is not clear how this can be rectified if it continues with the same pattern of hard-line policies in this area.

Finally, despite these costs to China’s international position and various bilateral relationships, its strategic position has been strengthened in various parts of the South and East China Seas. It now controls, or has access to, several positions that previously it did not. From a purely traditional military point of view, this can be viewed as a success and a gain in the balance of power in the region. Whether this will compensate adequately for the increased attention that the US will now pay to the region, the damaged bilateral relationships, and China’s deteriorating image in the region, remains to be seen.

History Articles

China and Southeast Asia: Waking up the Neighbors

Introduction

shutterstock_15960148 resizedIf China is to be the world’s next superpower, then Southeast Asia is its ‘backyard’, just as Central Asia was to Russia during its superpower era, and Central America is to the US. It is a diverse region made up of countries of various sizes, political systems, and levels of development, with annual GDP per capita ranging from a little over $1,000 (Myanmar and Laos) to $50,000 (Singapore). China competes for influence in this area both with its main regional rivals – Japan and India – as well as its main global competitor – the US. China’s successes in gaining trust and deepening economic ties with Southeast Asia have been hampered by a complex shared history that both facilitates cultural commonality, and fosters mistrust of the intentions of a powerful, hegemonic China. The relationship is also challenged by historically-rooted territorial disputes that occasionally flare up, threatening peace in the region.

In recent years, China has made many efforts to gain Southeast Asia’s trust, and to shutterstock_93345997 resizedprogress its economic and political ties with the region. A key form of engagement with the countries of Southeast Asia has been through the Association of Southeast Asian Nations (ASEAN). Founded in 1967, ASEAN consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam (the geographical term ‘Southeast Asia’ is generally considered to include these countries as well as Timor L’Este, which has held tentative discussions about joining the group). ASEAN states its main purpose as being “to accelerate economic growth, social progress, and cultural development in the region” as well as “to promote regional peace and stability”. Although it has worked towards the development of a cultural Southeast Asian identity in recent years, most would agree that its greatest achievements have been in the field of economic cooperation and regional stability. While Indonesia is the giant of the group, it has been careful not to dominate the organization. ASEAN prides itself on conducting its business through the ‘ASEAN way’, which involves building consensus among all members and maintaining a commitment to mutual non-interference. ASEAN gives the less powerful countries the benefit of collective bargaining, which serves to balance to some extent the relationship of these countries with China. Settling issues of mutual interest within the ASEAN framework has eased many tensions between member countries and has promoted overall cooperation within the region. Despite real successes with China, ASEAN itself has not been a silver bullet and many difficult issues remain between China and the region. In addition to ASEAN, engagement between the countries of Southeast Asia and China has also been facilitated through the large Chinese emigrant populations in most of the Southeast Asia countries, many of whom maintain strong business and cultural ties with their ancestral home.

Historical Context

 

Throughout much of China’s dynastic history it maintained regional hegemony in East Asia (East Asia refers to the territory of what today is Southeast Asia, China, the two Koreas, and Japan) by instigating a ‘tributary system’. Regional East Asian rulers would seek the patronage of the Chinese emperor of the day in order both to legitimize their own rule and to ensure that peace was maintained with their powerful neighbor. This system had a profound effect on many parts of Southeast Asia, particularly the areas that are now Vietnam, Cambodia, and Laos, where the cultural influence of China is palpable. This is evidenced, for example, by the presence of Chinese characters on many older buildings although they are no longer used in the writing systems in these countries and by the pervasion of Confucian values in the respective societies. Equally important as the political ties was the trade between China and many of the countries of Southeast Asia. Chinese merchants, following trade routes, gradually immigrated to various Southeast Asian countries, where they settled and assimilated. Thus, every single country in Southeast Asia now has significant Chinese communities, many of whom maintain strong cultural links to their ancestral home. This is especially noticeable in Singapore, Malaysia, and Indonesia but can be observed across the region.

The legacies of this history are complex. The cultural links that have been created between many parts of Southeast Asia and China, both in terms of shared norms and values and because of the ethnic Chinese still living in these countries (referred to in Chinese as huaqiao, which literally means ‘Chinese bridges’), provide a huge opportunity for China to extend its influence throughout the region. In recent years, China has sought to exploit this both through economic integration and by the development of ‘soft power’. For example, China has promoted the study of Chinese language and culture by bestowing scholarships for poorer students to come to China to study. While this program to promote the teaching of Chinese culture and language is worldwide, China has concentrated its main focus on Southeast Asia. Specifically, a large proportion of the recipients are huaqiao. This awarding of scholarships to ethnic Chinese has been controversial, reminding some in the region of a Mao-era tendency to interfere in countries with large ethnic Chinese communities on the premise that these populations remained, in effect, part of the Chinese nation. Such interference was a source of serious friction with both Indonesia and Malaysia in the 1950s and 1960s. Another legacy of this shared and complex history is the issue of territory. Although China has now resolved virtually all of its outstanding land border disputes (only those with India and Bhutan remain), it still has numerous disputes with several countries in Southeast Asia over sovereignty of islands in the South China Sea.

A particularly significant event in China’s relations with the region occurred in 1979 when Deng Xiaoping gave the order for the PLA to invade Vietnam. The invasion was in response to the Vietnamese occupation of Cambodia after defeating the Khmer Rouge, a Chinese ally, as well as a reaction to internal Vietnamese policies that discriminated against ethnic Chinese and had resulted in a flood of refugees into China. Deng announced, during a trip to America, that China would “teach Vietnam a lesson”. The war was brief but bloody, lasting only three weeks but resulting in the deaths of tens of thousands. Some Western academics have put Chinese casualties as high as 20,000 though this figure is disputed by China, while Vietnam claims 10,000 civilians were killed (it gives no figures for military casualties but it is widely believed that these number in the region of 50,000). Chinese forces withdrew from all areas that had been briefly occupied, claiming success in their mission, but there is no question that they suffered much heavier losses than they had envisioned and that China’s reputation suffered tremendous harm as a result. The damage was both in terms of its perceived relative power, as well as to its image as a trustworthy and peaceful neighbor. Vietnamese perceptions of the war are of another successful repulsion of a foreign invasion, following soon on from the defeats of both the Americans and the French.

Territorial Disputes

The most serious political and security issue that exists between the nations of Southeast Asia and China is the continued failure to resolve to numerous territorial disputes. By far the most grave of the disputes is that of the Spratley Islands, which are situated in the South China Sea close to the Philippines and the northern coast of Malaysia. The PRC claims sovereignty over the entire archipelago of more than 30,000 largely uninhabited islands that constitute the Spratleys. However, Brunei, the Philippines, Vietnam, Malaysia, and Taiwan all claim some of this area. To complicate matters further, some of these claims are overlapping and so there is no unified Southeast Asian position from which to argue with China. In order to protect their claims, military installations from all the claimants, except for Brunei, are stationed within the archipelago, making the area one that is fraught with multilateral tensions. Although all countries are rhetorically committed to resolving the dispute peacefully, the presence of so many different militaries means that low-level conflict from time to time is almost inevitable. This is particularly true with regard to the two largest presences, China and Vietnam. For example, several Vietnamese fishing boats were captured in 2007 in an area that is claimed by both countries. In May 2011, there were reports that Chinese patrol boats had escorted a Chinese fishing boat when it rammed a Vietnamese survey ship in the area. The other major dispute is over the Paracel Islands, a chain of around 30 islets roughly equidistant from China’s Hainan Island and the east coast of Viet Nam. This dispute is largely a bilateral one, between China and Viet Nam, although Taiwan also has a claim. The islands were occupied by both Chinese and Vietnamese forces until battle in 1974 which resulted in control over the entire archipelago being taken by the PRC. Viet Nam, however, has never renounced its claim to the islands and sporadic incidents involving fishing boats in the area have continued. Two other disputes, both with the Philippines, persist over two small groups of islets and this spilled over in early 2012 when Chinese patrol boats prevented Philippines police patrols from boarding Chinese fishing boats in the region. A stand-off between the two nations ensued that escalated tensions in the region, leading to anti-Chinese protests in Manila. Though the situation appeared to be resolved in June 2012, the withdrawal of all concerned may have had more to do with the coming typhoons than any diplomatic breakthrough. Certainly this issue has not yet gone away for good.

2014 brought another serious outbreak, but this time with Vietnam. In May 2014 China moved an oil rig from a part of the sea that was undisputed into an area that Vietnam considers to be its territorial waters. This sparked an angry response from both state and society in Vietnam with violent anti-Chinese protests breaking out across the country, resulting in several serious injuries to Chinese workers and the evacuation of hundreds of foreign workers (including many non-Chinese caught up in the protests). Though no direct military confrontation has followed, the dispute has taken Sino-Vietnamese relations to their lowest point for decades.

shutterstock_42598996The importance of the disputed islands is threefold. Firstly, the islands are of strategic importance militarily to China as its strives to increase its naval projection, especially given their ideal location close to some of the world’s busiest shipping lanes. Secondly, it is widely believed (though not conclusively proven) that significant resources of gas and oil lie within the EEZs (Exclusive Economic Zones) that would accompany recognized sovereignty over the islands. Finally, the issue of territorial integrity is of critical importance to Chinese national identity and the legitimacy of the government, meaning that nationalists in the country would not tolerate acquiescence on any of the disputes. A combination of all three of these reasons has seen China become increasingly active in the area over recent years. This has not gone unnoticed in those countries that also claim the islands and Southeast Asian states have responded by seeking the protection of other powers, most notably through closer ties with the US. In 2010, US Secretary of State Hillary Clinton declared that the South China Sea was of “national interest” to the US, sparking an angry response from China. In the same year, cities across Vietnam saw large scale anti-China demonstrations that evidenced the damage done to China’s soft power initiative in the region. China is now facing a choice of maintaining an inflexible stance about the islands, risking further harm to its hopes of regional leadership and even potential conflict with the US, or backing away, risking upsetting its domestic audience. It is a tough balancing act and is complicated by the competing policy-makers within China. A successful charm offensive launched by the Chinese around the turn of the millennium to woo its Southeast Asian neighbors and convince them of the benign intent behind China’s rise has been wholeheartedly undermined by what appears to a bullying and militaristic tendency with regard to the territorial disputes, the key issue in China’s relations with the friends it sought. A more coherent policy towards these countries would be beneficial for all concerned.

ASEAN

The ten-member Association of Southeast Asian Nations (ASEAN) has developed into one of the most successful regional organizations in the world, arguably second only to the EU in terms of its coherence, levels of cooperation and weight in the international arena. Formed in 1967, ironically as a foil against the spread of communism in Asia, its five founding members were Indonesia, Malaysia, the Philippines, Singapore and Thailand. Its success in terms of promoting economic cooperation and development among its members led to applications from other states to join. The end of the Cold War allowed for even those states against which the alliance had originally been aimed to become full members and the organization now incorporates the whole of Southeast Asia, with the exception of Timor L’Este. While China is not a member, it, uniquely in East Asia, recognized from an early stage both the importance of the institution and the need for its own engagement with it. Specifically, China spotted a double opportunity with regard to Southeast Asia, and ASEAN proved to be the vehicle through which it could exploit it. The two aspects of the opportunity that China seeks to exploit are: the development of economic growth and integration; and the promotion of its ‘soft power’ in a region it considers to be its own ‘backyard’.

The creation of ASEAN+1 (which includes China) and ASEAN+3 (which includes China, South Korea and Japan) shows how China has stolen a march on its East Asian rivals in shutterstock_112693318 resizedgaining leverage with the Southeast Asian states. That there is a forum which is basically dedicated to China-ASEAN relations, in which other states have no part, as well as a forum dedicated to ASEAN-East Asia relations, in which China still has a key role, shows how it has positioned itself as a key player in this process of ASEAN-centered regionalization. Despite interest from both Japan and South Korea in increasing trade ties with Southeast Asia, it was China that managed to secure a Free Trade Agreement with ASEAN, which came into force on January 1st 2010. Theoretically, this created the largest free trade area in the world by population (1.9 billion people), though it ranks third in terms of actual volumes of trade. There are also many more exemptions than one might ordinarily expect in such an agreement. Each country lists dozens of areas where tariffs may continue, and four ASEAN countries (Laos, Vietnam, Cambodia, and Myanmar) are completely exempt until 2015. It should also be noted that a similar, though less extensive, agreement between ASEAN and India came into force on the same day. Nevertheless, the establishment of the agreement represents a public relations coup for China and the economic benefits for all involved should not be underestimated. By December 2010, China-ASEAN trade reportedly increased by almost 40% and two-way FDI topped $10 billion, with two thirds of that figure flowing into China. The slated 2015 opening of high-speed rail links between mainland Southeast Asia and China, linking the southwest of China with Laos and part of China’s enormous and ambitious high speed rail network project, should increase integration even further.

China has also involved itself in the ASEAN Regional Forum (ARF) that is designed to promote security dialogues and confidence building between states around the Asia Pacific region. The forum involves 27 members, including all ASEAN members, China, Japanthe USthe EU and every other major actor in the region – excluding, at China’s behest, Taiwan. It is through this forum that China has sought to ease the fears of its smaller neighbors over its own rise and expansion of power, particularly with regard to its military expansion and the previously mentioned maritime territorial disputes. Generally, China balks at being pinned down by any broad-spectrum ASEAN-China negotiations, preferring instead to deal bilaterally to solve issues between countries. Nevertheless, it has agreed in principle to a ‘Declaration on the Conduct of Parties’ which would commit all signatories to peaceful resolution of these disputes. While this is not yet signed and sealed, China’s agreement has helped ease some tensions with its Southeast Asian neighbors.

Water

shutterstock_11779609 resizedThe Mekong, a major river that runs through Myanmar, Laos, Cambodia and Vietnam, has its source in China, making relations with it of potentially critical importance to these nations. China considers developing large-scale hydropower to be critical to meeting its future energy needs and thus its national security. The Chinese government has thus worked to keep these resources under its control, and has been unwilling to sign any comprehensive water sharing agreement with downstream riparian nations or to join any river basin associations such as the Mekong River Commission, which was established in 1995 “to promote and coordinate sustainable management and development of water and related resources for the countries’ mutual benefit and the people’s well-being.” It is also one of only three countries that voted against the 1997 UN Convention on the Law of Non-Navigational Water Courses which lays down rules on the shared resources of international watercourses. Additionally, China has been reticent to share information on water levels and flows with its downstream neighbors once its dams are operational. China is now impounding water for the large reservoir behind the Xiaowan dam on the upper Mekong, for instance, which some believe exacerbated 2010 drought conditions downstream. Only after the drought became severe, and China came under significant pressure from the Mekong River Commission, did it start to provide information on daily water flows from its dam cascade.

China has tried to offset complaints and the potential creation of anti-Chinese alliances by its downstream neighbors by using trade and development incentives – developing the Southeast Asian electricity grid and building sewage and road infrastructure in Cambodia for example – to weaken their ability to challenge China’s dam-building activities. It also engages in a public discourse that not only advocates the importance of hydro-power to its national security, but emphasizes exclusively the benefits of the dams without considering how they will disrupt downstream ecosystems and water access. Specifically, it talks about flood control, reduction of Chinese CO2 emissions, and the benefits of improved navigation and water flow during the dry season. In many cases, it is also helping to fund and construct dams downriver in places such as Vietnam, Laos, Myanmar and Cambodia. Their own independent construction of dams with Chinese financing has weakened downstream riparian neighbors’ ability to protest the ecological destruction that China’s upstream dams are causing.

Future Trends

China’s relationship with Southeast Asia is one of its key foreign policy priorities. If it is to establish itself as a global power then it must first be a genuine regional leader. It can only achieve this through engagement with the ASEAN countries at both the economic and political levels. It has shown a clear understanding of the importance of this through its engagement with the ASEAN institutions in which it was ahead of the competition, specifically Japan and South Korea. It can be expected that China will continue to increase its ties with ASEAN in the future.

The increased economic integration with the region has been facilitated both by this willingness to become involved in ASEAN’s structures and also by the myriad cultural ties that bind China to Southeast Asia. It seems likely that both of these factors will continue to contribute a close relationship and this, on the face of it, appears to be a positive development in China’s quest for acceptance as a regional leader and, therefore, a global power.

However, the continuing territorial disputes represent a major threat to China’s goal of shutterstock_78574054 resizedattaining regional leadership. China’s national interests will likely dictate that its claims over the islands continue to be non-negotiable; driven by both strategic concerns and the demands of domestic nationalists it would be virtually unthinkable for China to acquiesce on any of its claims now. One unwelcome side-effect of this from China’s perspective is that the developments have driven several Southeast Asian countries to renew and strengthen their ties with the US. Notable among these have been Vietnam and the Philippines. Such close ties are clearly not in the interests of China’s own national security, nor its ambition to be the regional hegemon. While the recent moves within the ASEAN framework to establish formalized dialogue on the issue are welcome and positive, the prospect of a compromised resolution seems remote and, particularly in the case of the islands, China continues to insist that each individual dispute be resolved bilaterally. With China continuing to expand its naval projection-capabilities in the area, the prospect of increased hostility is very real. Indeed, China’s increased tendency to flex its muscles in this area over the last few years has undone much of the good work it had done in promoting a positive image of itself in the Southeast Asian countries. This schizophrenic policy toward the region may do further harm in the long run as smaller countries seek the protection of a larger and more predictable ally in the form of the United States, a result that would be counter to all of China’s perceived interests. This risk of hostility will continue to cast a shadow over relations between China and the Southeast Asian region.

Sino-Indian Relations: Realists and Rivals

Introduction

Imagemaker / Shutterstock.com

The two most populous nations in the world, China and India share a disputed border, are both on the rise economically and politically, and both possess fearsome nuclear arsenals. Their rapidly changing economic and diplomatic positions have put not only their relationships in the wider world in flux, but they have also created a shifting engagement with each other. While China and India’s ever-closer economic ties have created a degree of optimism that their developing relationship will be harmonious and productive, territorial disputes, competition for spheres of influence within South Asia, and increasing friction over water rights will continue to significantly challenge their relationship.

Historical Ties

JeremyRichards / Shutterstock.com

Throughout ancient times, the link between India and China has been limited; theHimalaya formed a formidable natural barrier between the two civilizations. The most significant Indian contribution to Chinese culture was the transmission of Buddhism into China during China’s Age of Division 220-618 CE. Although the exact time and manner of Buddhism’s spread to China is still debated, it is likely that it made its way to China over the Silk Road, following merchants engaging in trade between the empires. Chinese scholars and monks also travelled to India to study Buddhism and to translate its scriptures. The most famous of these monks was Xuanzang, whose travels to and seventeen year stay in India were fictionally immortalized in the Chinese story, “Journey to the West”, considered one of the four great classics of Chinese literature.

In the modern era, with India colonized by the British, exports of opium to the Chinese mainland eventually led to the two Opium Wars of 1839-1842 and 1856-1860 between Britain and the Qing Dynasty of the time, though the involvement of what we now think of as India was incredibly limited, as it was a colony of Britain at the time. The post-Second World War period was a time of dramatic change for both countries. India was granted its independence from Britain in August 1947. The process of India’s independence was complicated by its separation from Pakistan which the British enacted immediately before granting independence to both nations as separate entities. Violence followed between the two new countries. Indeed, more than six decades after their separation, India and Pakistan remain at odds on many issues. Similarly, in China, violence ensued until the People’s Republic of China was founded in 1949 as Chiang Kai-shek’s Nationalists, and Mao Zedong’s Communists fought for control of the country. This meant that two giant new nations, both with extensive territories and massive populations, both recovering from differing forms of colonialism and struggling to find their place in the new world order, were created within a very short space of time. Despite their very long histories as civilizations, China and India are thus relatively new nation states. Their early dealings with each other have reflected their struggles to adjust to their relatively new country status and their efforts to find their place in the post WWII international order.

One early contribution that the Sino-Indian bilateral relationship made to wider international relations was the 1954 agreement in which was stated the “five principles of peaceful coexistence”. These principles were agreed as part of a treaty relating to Indian trade with Tibet, over which China had regained suzerainty. The five principles became both the founding principles of the Non-Aligned Movement (NAM) – a grouping of countries that sought to distance themselves from the Cold War by refusing to align with either superpower – and the cornerstone of China’s foreign policy, at least rhetorically. The five principles were: mutual respect for territorial integrity and national sovereignty; mutual non-aggression; mutual non-interference in the other’s internal affairs; equality and mutual benefit; and peaceful coexistence. At the heart of these principles is the agreement not to infringe the sovereignty of another country. Yet, despite their mutual commitment to these principles, within just a few years China and India were at war with each other.

The 1962 Border War

Following the 1959 Tibetan uprising – which was repressed by the Chinese military and resulted in the Dalai Lama’s fleeing into exile in India – there were several skirmishes between Chinese and Indian troops along the border. The border had never been successfully demarcated between the nations of China and India. An agreement reached in 1913 over the border between British India and Tibet – at the time conducting affairs as a pseudo-independent nation following the breakup of the Qing Dynasty – has been consistently rejected by the PRC, despite the apparent presence of Chinese representatives at the negotiations. China refuses to acknowledge any agreement made with the Tibetan authorities as it declines to recognize that Tibet had any level of suzerainty in this period of history. Interestingly, China’s refusal to recognize this agreement has some validity as it was, in fact, in breach of the Anglo-Russian Entente. Signed in 1907, but annulled in 1922, it stated that all dealings with Tibet must be conducted through the Chinese authorities in Beijing.

In October 1962 China invaded Aksai Chin and Arunchal Pradesh, the two largest portions of disputed territory over which it claimed sovereignty, but which were occupied by the Indians at the time. The simultaneous invasions were over a thousand of miles apart. The war lasted precisely one month, with the Chinese winning a military victory and successfully occupying much of the disputed areas. However, once military superiority had been established, a ceasefire was called and the Chinese unilaterally withdrew from all the territory they had gained in the offensive. While China’s real reasons for unilaterally withdrawing and ending hostilities are still debated, it is likely that a key reason for their retreat was the prospect of US involvement in the conflict, which raised concerns in China of an unwanted and unnecessary war with the superpower. Premier Zhou Enlai insisted that the withdrawal was a signal of good faith and that China had always wished to resolve the dispute peacefully.

The casualties in the war were relatively small, with an estimated 2000 Indians and more than 700 Chinese troops thought to have been killed. However, the consequences for the relationship and the region as a whole were extensive. While the Chinese succeeded in demonstrating their military superiority over their Indian rivals, the invasion harmed their international image and fed the belief in the West that China was a belligerent power intent on using aggressive means to expand its territory and influence. The lesson learned by India was that its military was woefully underprepared and wholly inadequate for purposes of self-defense. It therefore set about wholesale modernization of its military capabilities.

Territorial Issues

 

Territorial disputes are probably the greatest issue of difficulty between China and India. The disputes involve ten separate portions of territory, though several of these are tiny. There are two particularly significant areas: the more than 60,000 square km – around three quarters – of what India, and most other countries in the world, consider to be the state of Arunachal Pradesh; and the 37,000 square km Chinese-administered Aksai Chin, to the west of Nepal. It was these two areas over which the 1962 war was fought. At the time the Arunachal Pradesh was sparsely populated, but is now home to around one million Indian citizens. Since the 1962 war there have been many skirmishes along the disputed area, most notably in 1967 and 1987.

Given the size of the larger territories under dispute, it is politically difficult for either country to concede the territory to the other. This is especially true in the case of Arunachal Pradesh, which would be tantamount to the the Indian government effectively giving away the majority of an established Indian state. The other major disputed area, Aksai Chin, is considered by India to be a part of Kashmir and therefore complicates the matter further, given that India is already contesting Kashmir with Pakistan. Certainly, no solution to the current impasse appears imminent and the failure of the two great powers to resolve this remains a constant thorn in the side of diplomatic relations of the two. With that noted there has been some limited success in reaching agreement over the Indian state of Sikkim; initially claimed by both India and China but effectively operating as an independent state, Sikkim voted to join the Indian Federation in 1975. China originally refused to recognize this and continued to display Sikkim as a separate state on maps produced in the PRC. In 2004, it finally accepted it as an Indian state, although it did so with little fanfare.

As with most territorial disputes around the world the problem is exacerbated by nationalists on either side, who are prone to react to even the slightest provocation. Though nationalist responses in China are not as prominent as those that are directed against Japan or the US from time to time, India has emerged as a target for outpourings of nationalist sentiment, particularly over the issue of the disputed territory. Simon Shen, an academic who specializes in Chinese online nationalism, has identified that China’s online nationalists have turned their attention to India in recent years and use the government’s reaction to any perceived provocation as something of a litmus test. India also has its share of hotheaded protesters who make themselves heard whenever China acts in ways considered to infringe on India’s sovereignty over these areas.

Tibet

For historical, religious, cultural and geographical reasons, India continues to play a role in the Tibet issue. Homeland to the Tibetan people, and located on the high plateau of the north-eastern Himalaya, Tibet was unified in the 7th century, but then fractured into various territories which have since been controlled at various times by Tibetans, theDaniel J. Rao / Shutterstock.com Mongols and the Chinese. Tibet has been part of the People’s Republic of China since 1951, though full control by Beijing was only established following a military advance into the region in 1959. While China’s sovereignty over Tibet is accepted by the international community, its continued rule there remains controversial with the Dalai Lama continuing to campaign internationally for the Tibetan people to be allowed greater autonomy. Though China insists that the Tibet issue is a purely domestic matter in which no other country must interfere, India is inescapably intertwined in the problem. This is, primarily due to the fact that when the PLA rolled into Tibet in 1959, the Dalai Lama fled to India where he was given asylum, and allowed to establish the Tibetan “government in exile” – in the northern Indian town of Dharamsala. There have certainly been times since 1959 when the Indian government has wished it could bring an end to its own involvement in order to ease its strained relationship with China over this issue, but the Dalai Lama’s successful international promotion of the Tibetan cause has made this an impossibility, at least while he remains alive. For its part, China continues to raise this matter with Indian leaders, particularly whenever Tibetan refugees flee across the border to seek asylum there.

Competition for Water Resources

Tibet is also relevant to Sino-Indian relations as it is the source of the Brahmaputra River which provides significant water and power resources for Bangladesh and India. To take advantage of Tibet’s vast hydro power, China is planning a series of dams on the various transnational rivers that originate there. One of its proposed mega-dam projects is on the Brahmaputra, where it does a big U-turn in the world’s deepest canyon before entering India, close to one of the borders disputed by the two countries. This bend on the Brahmaputra is considered to be one of the world’s largest concentrations of river energy on earth. This mega-dam at the Brahmaputra is just one of what is estimated to be as many 28 dams on the Brahmaputra that are either planned, completed or under discussion by China. While China denies it, some Indian scientists also fear that China might also be planning to divert 200 billion cubic meters of water a year from the Brahmaputra to the Yellow River and other Chinese rivers.

China’s damming of the Brahmaputra puts control of a key source of Indian water into Chinese hands. More than 185 million people in north-eastern India and Bangladesh depend on the Brahmaputra. In the Indian state of Assam, 80 per cent agriculture relies on water from the river. Damming also affects a river’s ecosystem, altering silt and nutrient flows that risk impacting India’s downstream fertility and fisheries. Additionally, India derives significant power from its own hydroelectric projects on the river and its tributaries. The efficacy of these dams could be affected if China significantly alters the river’s flow volumes

Competition for Influence

As large and now rising nations, China and India have competed for and will continue to compete for influence in Asia and abroad. One keen area of competition is in Nepal and Myanmar. There is a difference in motive for the two of these countries. Nepal is considered to be a buffer state between the two powers, so that influence and access within Nepal is a strategic priority for both China and India. In any potential conflict between the two countries, Nepal would have clear tactical importance. Myanmar, on the other hand, is important to both countries as a source of natural resources, particularly natural gas. To seek influence in Nepal and Myanmar, China and India provide both countries with badly needed infrastructural investment; both Nepal and Myanmar have some of the worst infrastructure in the world. China in particular has been focused on building crucial road links throughout Nepal and into China, boosting trade and enhancing ties between the two countries.

While Nepal and Myanmar are important considerations, the relationship with Pakistan is potentially explosive. China has been Pakistan’s long term ally, while Pakistan remains India’s greatest foe, a consequence of the fact that most Indians opposed Pakistan’s separation from India before independence. During the Sino-Indian 1962 border war, Pakistan saw an opportunity to develop a strategic relationship with a large neighbor that would help to balance against what it perceived as the threat of Indian invasion. For its part, China sees its relationship with Pakistan as a way to offset what it believes to be a US strategy to contain China, which the US employs by forming strategic partnerships with significant powers surrounding China, revolving around the axis of Japan, Australia and India. There is unquestionably some truth in this analysis of US intentions, and India’s position within this alliance system is very important. The continuance of friendly relations with Pakistan is one way China works to counter this US strategy, though this has been complicated over recent years by the US-Pakistan alliance that formed in the wake of the 9/11 attacks. China’s engagement with Pakistan involves it in India’s most prickly international issue, Kashmir, which in turn causes further friction with India at both the government and the societal levels.

China and India are also now beginning to come into direct competition for influence and access to resources in Africa. China’s engagement with Africa has increased significantly in the last two decades as it looks to Africa both as a source of raw materials and as a market for its goods. India’s foray into Africa is still in its early stages, but it is already clear that both countries are pursuing differing strategies within the region. India’s investment strategy has been led by the private sector, where China’s incursion into Africa has been led by large SOEs and government ODA seeking access to Africa’s raw materials such as its oil and timber. Indian multinational companies are seeking to penetrate African markets by exploiting the comparative advantage of a significant Indian diaspora on the continent, as well as the ability of its nationals to speak English. That said, as competition for the continent increases, India’s government seems increasingly willing to engage to secure its competitive position. In 2011 for instance, Manmohan Singh, India’s Prime Minister, announced a three year aid package to Africa worth $5 billion. While significant, it is still dwarfed by Chinese aid that currently tops $20 billion per annum. As the China and India continue their rapid development, this competition for access to Africa’s resources and markets is likely to increase in the future though, for now at least, China appears better placed to take advantage.

Bilateral Trade

Though bilateral trade is not as large as one might expect given the sizes of the two nations, it offers one of the best chances to promote a cooperative coexistence between the two Asian giants. China is already India’s largest trading partner and in 2011 bilateral trade topped $74 billion, though this fell back slightly in 2012 to $66 billion. The 2012 reduction in trade was driven almost entirely by a 20% drop in Indian exports to China, with the trade deficit now $29 billion. Total bilateral trade is projected to reach $100 billion by 2015 with potential for even faster growth after that.

China does not offer India economic complementarity in the way that it does to some ofjbor / Shutterstock.com its richer neighbors to the east, such as Japan and South Korea. India, whose population is expected to surpass China’s within two decades, also competes to be a hub for low-cost manufacture out-sourcing. However, India provides China with raw materials; ore and slag, for instance, account for more than a quarter of all Indian exports to China. India also exports $1.5 billion dollars of cotton to China annually, providing a crucial source of supply to China’s critical textile industry, which is the world’s largest and responsible for a quarter of all Chinese exports. In contrast, Chinese exports to India are predominantly in manufactured goods, in particular electrical machinery which represents around a third of total Chinese exports to India. The fact that India exports raw materials to China and China returns finished goods reflects a slightly imbalanced relationship; indeed, India ran a trade deficit of around $20 billion with China in 2010. Nevertheless, deeper economic ties with China remain in India’s long term interests. Overall, India is developing its own economy in different ways to China. Specifically, India has focused on information technology and services. China’s rapidly growing IT market, which already boasts the greatest number of internet users in the world, offers opportunity for India’s leading IT firms. For instance, Infosys Technologies, an Indian IT firm, set up a Chinese subsidiary as far back as 2004. While its Chinese subsidiary still derives the majority of its income from outside of China, the Chinese domestic market now accounts for one third of its profits; this is projected to grow in the coming years. By 2014, Infosys predicts its Chinese subsidiary will employ 10,000 people, triple what it does today. The Tata Group, through Tata Consultancy Services (TCS), has also established a significant presence in China. It exports IT services to the Chinese banking sector, with Bank of China among its most notable clients. Its workforce in China is expected to quadruple over the next three years, taking the total number of its employees to over 5000. Following in TCS’ wake is India’s Wipro Technologies which has plans to center its Asian operations in China’s western city of Chengdu, in order to focus on growing its Asian market, and to diversify away from the US and Europe. India’s other great success story in China has been Mahindra & Mahindra, a manufacturer of tractors. Mahindra & Mahindra has established two joint venture tractor manufacturing companies in China which, combined, account for more than 30,000 employees and produce more than 30,000 tractors each year, many of which are exported to Europe or India. Indian IT firms are also seeking Chinese investment. By June 2009, the total Chinese investment in IT in India reached almost $30 billion. Much of this came from the Chinese giant Huawei.

Like many foreign companies working in China, Indian firms have also complained of barriers to their entering and expanding within the Chinese market. These barriers are increasingly being raised at the highest political levels. Complaints from the Indian side are met with calls from China for a bilateral Free Trade Agreement (FTA). Although India has been reluctant to agree to this until its trade deficit with China has been tackled, such an agreement, if signed, would represent the largest free trade area in the world measured in size of populace.

The BRICS Nations

Another area of promising cooperation between China and India is their involvement with the BRICS nations – Brazil, Russia, India, China and South Africa. The name originally came from an economist working for Goldman Sachs, who coined the term ‘BRIC’ in 2001 (South Africa was not included in either the original thesis or the initial gatherings of the countries) when writing about the shift in global power balances from the large developed western countries to the large developing ones. Initially not a formal structure, the four BRIC countries sought to capitalize on the success of the term by launching annual summits in 2009, where the countries meet to discuss their positions in the global order and to call for greater equity within it. South Africa was invited to join at the end of 2010 and attended its first summit in 2011. Both Brazil and India seek to exploit the status of the alliance in order to promote their aspirations for permanent membership of the UNSC, though declarations from the BRICS summits do not go as far as to directly call for this. Questions have been raised about the continued relevance of the grouping with varying degrees of economic growth; in 2012, only India and China surpassed GDP growth of 5% with South Africa as low as 2.8%.

Future Trends

Of the potentially disruptive issues that remain in the Sino-Indian bilateral relationship, the territorial dispute is probably the thorniest. There is seemingly some room for maneuver on China’s part in the disagreement over Arunachal Pradesh; certainly it seems impossible that the Chinese would try to make good their claims on an area that is widely recognized internationally as Indian territory and which is populated by more than one million Indian citizens. However, other disputes seem more intractable, particularly where Kashmir comes into the equation. Acts of insensitivity on either side are likely to continue to provoke minor spats, but the prospect of armed conflict between the two is highly remote. Indeed, informal talks on this very issue were held in Beijing in December 2012, though without any significant movement. The last formal negotiation on the matter took place in January of the same year.

The Tibet issue seems likely to continue to be an irritant as long as the Dalai Lama survives. It is probably China’s own calculation on this issue as a whole, not just with India, that the Dalai Lama’s death will help to remove Tibet from the intense international focus that it has been under for the last few decades. From India’s perspective, the trouble the Dalai Lama has caused has likely overwhelmed any soft power that it may have accrued as a result of it providing the Tibetan leader with asylum. There is probably understanding at the highest political level in the bilateral relationship that there is little that can be done in the short term over this issue.

China’s water disputes with its neighbors will likely be a growing problem, particularly given the unprecedented level of its dam building. Tension over water rights with India will be no exception. What is unclear is what its downstream neighbors can do about China’s hydro ambitions. It will likely be an increasing source of acrimony between China and India, especially as India plays catch-up to China’s water projects. India might voice these concerns more vocally on the world stage. It might also gain influence and leverage with other countries that are similarly vulnerable to China’s hydro ambitions to place economic and other pressures against the country.

It is in the economic ties that the greatest reasons for optimism lie. The different directions that the two economies have taken in their development mean that the potential for bilateral growth is significant. For both countries economic development is key and will continue to be so. They share much in common in terms of the continued need to raise large sections of their population out of poverty, a problem that is particularly pronounced in India. The incentive to stay focused on trade rather than to get tied down by territorial disputes or regional competition should remain at the forefront of the minds of policymakers on both sides of the Himalaya.

The election of Narendra Modi as India’s new prime minister in 2014 brought some new-found optimism given his pragmatic approach to international relations and prioritisation of economic cooperation. Modi was already popular in elite circles in China thanks to his careful diplomacy when serving as a regional leader in Gujurat, during which time he made numerous trips to Beijing. Nevertheless, the many thorny issues in the relationship cannot simply be washed away and the presence of Tibet’s prime minister-in-exile at Modi’s swearing in ceremony indicated that he would not simply roll over and acquiesce to all of Beijing’s demands.

The Tibet Issue

Introduction

To many in the West, China’s continued rule in Tibet is often considered to be a foreign occupation, though few inside China accept this point of view. Tibet is of great psychological importance to China and to Chinese people in terms of national identity and the maintenance of Chinese national unity, as well as of enormous strategic importance with regard to China’s traditional national security and its access to water and other vital natural resources.

Geography

The Tibetan Plateau is the highest region on the planet, sometimes referred to as “the roof of the world”. With an average elevation of more than 4500 meters, it is an

inhospitable place to plant and animal life alike and frequently leaves unaccustomed visitors gasping for air. It is home to one half of the world’s highest mountains, including Mount Everest or Qomolangma as the Tibetans call it, with the peak forming the border with Nepal. Tibet is also the source of many of Asia’s major rivers, including China’s two biggest, the Yangtze and the Yellow River, as well as the Brahmaputra, the Salween, the Mekong, the Irrawaddi, the Arun, the Karnali, the Sutlej and the Indus. About 90% flows downstream to China, India, Bangladesh, Nepal, Pakistan, Thailand, Myanmar, Laos, Cambodia and Vietnam. The sources of these rivers are the huge glaciers that exist in the Tibetan mountains, effectively forming enormous frozen reservoirs that are gradually released to flow down river. The constant flow of these rivers creates a stable source of water in regions which are otherwise dominated by monsoon rain falls. The Tibetan rivers are thus extremely important to sustaining life throughout South and Southeast Asia.

The territory of Tibet is large, with the Tibetan Autonomous Region (TAR) spanning more than 1.2 million square kilometers. Historically, though, Tibet has often included the whole of Qinghai province, as well as the western sections of Sichuan, Gansu, and Yunnan, making it geographically almost the size of modern day India. These areas outside of the autonomous region maintain a strong Tibetan identity today and continue to be populated by mainly ethnic Tibetans. Indeed, many of the protests that have made the news in recent years have occurred outside of the autonomous region, predominantly in Sichuan. When the Dalai Lama speaks about Tibet, he’s referring to those parts of the plateau that were historically Tibetan and are primarily populated by Tibetans. When China refers to Tibet, it is normally referring solely to the TAR.

Demographics

Despite covering such a vast area Tibet’s population is relatively small. The harsh climate has dictated sparse population throughout its history and, even with advances of modern technology, this continues to be the case. The TAR has a population of just 3 million people, though the total Tibetan population of areas that have historically been within Tibet numbers around 6 million. Such small numbers in such huge areas make Tibet one of the most sparsely populated places on the planet, a striking contrast to the thronging cities of eastern China.

Unlike the other autonomous regions in China, Tibet has maintained its ethnic identity throughout the history of the PRC; whereas the Uyghurs in Xinjiang, the Hui in Ningxia, the Mongols in Inner Mongolia, and the Zhuang in Guangxi all now account for less than half of the population in their respective areas, Tibetans still represent 92% of the population in their own autonomous region. This is, however, changing rapidly. The opening of the world’s highest railway connecting Qinghai to Lhasa – an impressive engineering feat that takes trains across mountain passes over 5200 meters high – has enabled a much greater flow of people into, and out of, the TAR. Han Chinese currently make up around 6% of the population, but that number is beginning to rise as the Chinese government encourages Han migration into the areas by providing incentives such as housing, business, and pension benefits. Indeed, It is estimated that Han Chinese now make up 50% of the population of the capital city, Lhasa, and the Chinese government is heavily investing in the city’s infrastructure to raise the city to modern Chinese standards. Beijing says that the Han economic migrants have temporarily come to Tibet in order to help modernize the area. Some Tibetans fear that China will use demographics as a way to more thoroughly integrate the region into China. Visitors to Lhasa are keenly aware of the division with the city almost literally split into two areas, one almost entirely Tibetan and the other almost entirely Han.

Tibet remains overwhelmingly Buddhist, though the influence of Tibet’s native religion, Bon, can still be seen in some of the practices. Although the much of Tibetan monastic heritage was destroyed during the Cultural Revolution, Tibet still remains home to many large and small Buddhist monasteries and temples, with Tibetans making pilgrimages at various times of the year to sites of importance. The Jokhang Temple in Lhasa is the centerpiece of Tibetan Buddhism. It attracts tens of thousands of pilgrims yearly, particularly during the winter months when some Tibetans from rural areas may walk hundreds of miles to pay homage by prostrating themselves around the perimeter.

The Tibetan Economy

China currently invests about $2.5 billion annually in the region, primarily in the form of shutterstock_77066617infrastructure projects. Farming, forestry, animal husbandry and fishery accounted for approximately 70% of the total gross output value in 2000. Because of its high altitude and mountainous conditions, the Tibetan growing season is short, and the main crops grown are barley, wheat, buckwheat, rye, potatoes and some fruits and vegetables. Sheep, cattle, goats, camels, yaks and horses are also raised within Tibet, with the yak being particularly well suited to Tibet’s harsh winter conditions. Most of the farming, animal husbandry and forestry is still done by hand or with animal labor. Increasingly, electric and hydro-power, mining, light industry and handicrafts also generating earnings for the region. Tibetan hats, jewellery, wooden items, clothing, quilts, fabrics and carpets are all important money earners, as is tourism, with most tourists staying in Lhasa, Shigatse, and the Mount Everest base camp, though the number of foreign tourists permitted to visit Tibet has been scaled back in recent years. Tibet also has large deposits of gold, copper, salt and radioactive ores, although its lack of infrastructure to date has meant that it has been difficult to extract these minerals. China’s huge investment in infrastructure should mean that mining will be a growing sector for Tibet in the future. Overall, China’s significant investment in the region has meant that many Tibetans have seen a rise in living standards. Annual per capita income, for instance, quadrupled to $1076 between 1986 and 2006, though there are claims that this benefit is felt primarily by Han Chinese migrants and not by the indigenous population. Unemployment remains high at approximately 10.3%, more than double the national urban rate.

The Historical Argument

The Tibetan empire reached its zenith around the 8th century CE with an empire that encompassed parts of Southeast Asia, Central Asia, northern India, Nepal, Bhutan, Bangladesh and also parts of what are now the Chinese provinces of Qinghai, Yunnan, Gansu and Sichuan in China. During the Tang dynasty in around 640 CE the Chinese princess Wencheng was sent to Lhasa to marry the then Tibetan emperor Songtsan Gampo. Many Chinese academics credit this as the first sign of China’s suzerainty over Tibet, though many Tibetans claim the opposite: that this was a sign of Tibet’s power and independence since the Emperor only acquiesced in sending the princess under threat of force from Tibet (a claim which is not accepted by modern Chinese historians and was not recorded in the Chinese written Tang annals). Contemporaneously, an informal treaty was signed between the two countries in which the Tibetans claim that the Chinese recognized Tibet as equal to China. By 821 a formal peace treaty was agreed and signed between Tibet and China, known as the Tang-Tibetan Alliance, and the details of this were inscribed on a stone pillar outside of the Jokhang Temple in Lhasa in both Tibetan and Chinese. This pillar remains in place today.

The 13th century Mongol subjugation of Eurasia brought Tibet and China under one rule for the first time when both countries became subject nations under the Mongol empire. Having conquered China, Kublai Khan consolidated his rule by proclaiming himself the Emperor of the Yuan Dynasty. Despite the Yuan Dynasty being formed as a result of an invasion from an external force, Kublai Khan is considered in China to have been Chinese as he perpetuated China’s cultural heritage. That he was Mongolian is no barrier to this interpretation, as Mongolians are recognized as one of China’s official 56 ethnic groups. As a result, modern Chinese historians argue that it was during the Yuan Dynasty that Tibet formally became part of Chinese territory and has remained so ever since. In contrast, the opponents of this view maintain that China and Tibet were two independent countries subjugated by an outside force; in emphasis, they point out the Mongols ruled the two territories separately much in the same way that the British ruled its colonies independently, and that Tibetan life remained centered on monastic Buddhism rather than Chinese cultural norms. Tibet continued to move in and out of the Chinese sphere of influence throughout the Ming and Qing dynasties that followed the Yuan, leading up to the end of the 19th century.

The 13th Dalai Lama entered a rapidly changing international order when he assumed power from his regent in 1895, by which time both Tibet and the Qing were under pressure from predatory Japanese and European colonial powers. By 1890 the British were negotiating a treaty with the Qing to establish the border between Tibet and Sikkim, which the British sought to include within its Indian colony. Historically, the Himalayan kingdom of Sikkim had been viewed as a vassal tributary state by Tibet, yet the Tibetans were not consulted during the treaty negotiations. Mainly as a result of fear that Russia was making incursions into Tibet in order to establish a sphere of influence, Britain invaded Tibet in 1904 and the 13th Dalai Lama fled into exile. The British invasion of Tibet refocused Qing attention on the region, which had been distracted by challenges closer to home. By December 1904, Tibetan officials left in charge by the 13th Dalai Lama, capitulated to British terms in order to secure withdrawal of troops from Lhasa. In the resulting convention between Great Britain and Tibet, Tibet accepted London’s annexation of Sikkim and agreed not to conduct for relations with foreign states, including China. Tibet also had to pay war reparations.

During this time, the thirteenth Dalai Lama was trying to get Russia to engage on Tibet’s shutterstock_94573753 resizedbehalf, yet Russian help was not forthcoming. Ultimately it suited both the British and Russians that Tibet was neither an independent state nor a vassal of an enemy. London and Moscow concluded that it was in both their interests to recognize a purposely vague Chinese claim over Tibet, especially as the British realized that it would be too expensive to turn Tibet into a true British protectorate as it had done to Sikkim. As a result, some clauses of the 1904 Convention were rejected by the Foreign Office in London, and it negotiated two new treaties with the Qing and with Russia. In a 1906 treaty with the Qing, the government of Great Britain engaged not to annex Tibetan territory or to interfere in the administration of Tibet. The Qing undertook to prevent other foreign states from interfering with the territory or internal administration of Tibet. The British then signed a second 1907 accord with Russia in which the two states agreed to recognize the principle of Chinese suzerainty over Tibet, thus effectively denying that Tibet was an independent nation. Moreover, English legal and historical documents were beginning to equate China with all the territory of the Qing empire. At the same time, as those Han Chinese that sought to end imperial rule began to think what a Chinese nation would be once the Manchus were overthrown, they too began to define their borders by those drawn by the Manchus when they took power. The Chinese became fixated on the humiliation that they were experiencing at the hands of foreign powers so the defense of Chinese borders became a matter of national pride for the Chinese people. By 1912, a year after the overthrow of the Qing Dynasty and the formation of the Republic of China, San Yatsen declared China to be a multi-ethnic state composed of Manchus, Mongols, Tibetans, Han and Uyghurs among others. Promoting this diverse population was one of the ways that the young republic articulated that its aim was to consolidate its country upon the larger Qing borders.

Taking advantage of the chaos during the early days of the Republic of China, in 1912 the 13th Dalai Lama proclaimed Tibet’s complete independence, and a voluntary Tibetan army drove the remaining Chinese out of the Tibet. In 1913, the Dalai Lama returned from exile after an absence of eight years. Importantly, the Tibetan government also negotiated with British India over shared borders and an agreement was signed between British India and Tibet in 1912 which ceded Tibetan territory to colonial India. This is often cited as proof that Tibet acted with genuine independence as a nation state at this time, but it is the only example of Tibet ever acting as such in the modern international system. It is worth noting that Chinese authorities were included in these negotiations and the Chinese representative even initialed the final treaty. Though this is now downplayed by Beijing due to the complications of continued disputes with India over the modern border, it does raise a serious question over the ability of Tibet to act as a genuinely sovereign nation even during this sole example of it apparently doing so. Furthermore, Britain was in breach of its own Anglo-Russian Entente, signed in 1907, in which it had agreed that all matters surrounding Tibet would be dealt with through the authorities in Peking (Beijing) and that no negotiations would be conducted with Tibetan authorities. The chaos and confusion in China after the fall of the Qing left Tibet’s status relatively unaddressed. During this period, the 13th Dalai Lama passed away. Tibet’s 14th and current Dalai Lama was born on July 6, 1935, 18 months after the death of his predecessor.

Tibet under the PRC

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During the struggle against Japanese occupation and the civil war between the communists and the nationalists, it is reported that Mao Zedong pledged that the periphery regions of China, such as Tibet, Xinjiang, and Outer Mongolia, would be free to decide their own future. However, upon the establishment of the PRC in 1949, this policy was repudiated (with the exception of Mongolia, whose independence was accepted by the communists probably as a favor to their allies in the Soviet Union). By 1949, the Chinese were using its radio infrastructure to broadcast into Tibet its need to peacefully liberate the country. By October 1950, the PLA had entered Tibet’s eastern regions. After initially rejecting the idea of Chinese sovereignty over Tibet, the Dalai Lama signed the “17 point agreement” in 1951 after recognizing that it was not in Tibet’s interests to make an enemy of its giant neighbour against which it stood little chance of military success. The Chinese army had already inflicted defeats against Tibetan resistance and it was clear that the battle could not be won. The agreement accorded the Tibetans autonomy over their own affairs, recognized the position of the Dalai Lama and guaranteed freedom of religion in Tibet. It needs to be acknowledged that this both demonstrates that the PRC government recognized the ability of the Tibetan authorities to act on behalf of Tibet (otherwise they would not have conducted negotiations and signed an agreement with them) and also that several of the points in the agreement have been broken by the PRC authorities, in particular the promise not to interfere with the position of the Dalai Lama and the guarantee that local religion would be respected.

The Dalai Lama remained in Tibet after this agreement was signed and, according to his own account of the story, met with Mao Zedong in Beijing on more than one occasion. In March 1959, following three years of sporadic battles at the edges of Tibet between local paramilitaries and the PLA, the Dalai Lama officially repudiated the agreement citing breaches from the Chinese. What followed was an uprising from Tibetans against the increasing Chinese presence in Tibet, followed by a large military response from the Chinese and a bloody wave of repression. The Dalai Lama fled, on horseback, across the Himalaya into India where he later claimed asylum and established the ‘Tibetan government in exile’ in Dharamsala. It took a further three years to fully establish Chinese control over Tibet. The number of Tibetans killed has never been independently verified but the Tibetan government in exile claims the figure to be in excess of 86,000. It is also believed that the US was involved in inspiring the uprising by engaging in training some of the Tibetan paramilitaries, a practice that continued for several years after the uprising was crushed.

Prior to China’s ‘liberation’ or ‘occupation’ (what it is called depends on one’s own viewpoint) there is no doubt that life in Tibet was a long way from the idealistic vision of a harmonious, peace-loving, and free society that some in the West tend to paint it as. Life expectancy was just 36 and the overwhelming majority of the population was illiterate. A majority of Tibetans were hereditary serfs of varying statuses, allowing the elite – including the religious leaders – to live a luxurious life on the backs of a poor, uneducated society that was structurally condemned to remain in poverty through the following generations. In essence, this was precisely what the international communist movement sought to bring to an end. Tibet had no roads, poor sanitation, and no monetary system. Until the 1960s, there were virtually no vehicles of any kind, motorized or otherwise. Punishment for various crimes was barbaric, including amputation of limbs and eye-gouging.

However, whatever the rights and wrongs of the legal or moral claim that China may have over Tibet, there is no question that many Tibetans suffered both during the ‘liberation’ and after, particularly through forced collectivization and during the Cultural Revolution. In this latter period many temples were destroyed and monks forced to tend pigs, sometimes within the walls of their own religious institutions, a grievous insult. While it is important to keep such acts in context – the Cultural Revolution was a chaotic and unpleasant time for most people in China, regardless of ethnicity – it does not excuse such acts in the minds of Tibetans, and many continue to harbor ill feelings over this. Despite the orgy of destruction that ensued in the late 1960s, it is thought that the Potala Palace, the former winter home of the Dalai Lama and Tibet’s most famous symbol, was preserved at the behest of Zhou Enlai who recognized its significance.

The Dalai Lama has remained in exile since 1959 and has spearheaded a very public campaign for Tibetan autonomy, gaining much sympathy and support in Western countries and elsewhere, including in Japan. In 1989 another attempted uprising, marking the fortieth anniversary of Dalai’s flight from Tibet, was crushed on the orders of the then-Party Secretary of Tibet, Hu Jintao, who would later go on to become China’s president and supreme leader. During the incident around 400 Tibetans are believed to have been killed. This occurred just months before the Tiananmen Square incident but did not receive a similar level of coverage due to a lack of media presence on the plateau at the time. Later that year, the Dalai Lama was awarded the Nobel Peace Prize for his “consistent resistance to the use of violence in his people’s struggle to regain their liberty”. The award, and the celebrity endorsements that have continued to flow (the Hollywood actor Richard Gere is the most notable), have helped to keep the Dalai’s drive for “genuine autonomy” within the PRC in the headlines, at least in the West. He abandoned hopes of Tibetan statehood in 1979, though the PRC government continues to paint him as a “splittist” seeking to create a separate country, and maintains that Tibet can exist within the PRC to the chagrin of some of his followers who would prefer a cleaner separation.

The Panchen Lama, Tibet’s second most important spiritual leader who has the responsibility of identifying the reincarnated Dalai Lama after his death, was arrested shortly after being confirmed as the current Dalai’s accepted choice in 1995. Aged just six years old at the time, Gedhun Choekyi Nyima was considered to be the world’s youngest political prisoner by many in the Tibetan movement. Beijing subsequently appointed their own choice of Panchen Lama, Gyancain Norbu, a somewhat difficult position for the CCP to explain given its strictly atheist constitution. Beijing’s Panchen Lama has never been accepted by the Dalai Lama and the campaign for the release of Gedhun Choekyi Nyima continues. He is reported to still be alive and living in Beijing under virtual house arrest and with an assumed identity. This complicates any future succession the Dalai Lama. Under the system in place in Tibet for more than five centuries, the Panchen Lama has the responsibility to identify the reincarnated Dalai, something he clearly will not be able to do whilst under house arrest in Beijing. Any reincarnation identified by Beijing’s hand-picked Panchen is unlikely to garner support from grassroots Tibetans and will be probably be seen as simply a puppet of the Chinese. With this in mind, the current Dalai Lama – who, while in good health, is already in his late seventies – has suggested that his reincarnation might be found outside of Tibet.

In recent times, particularly since the death of Mao and the launch of the reform era in China, there has been a drive towards economic development in Tibet. This has included some of the aspects of Chinese rule that provoke controversy among Tibetans and pro-independence groups such as increased migration of Han Chinese. Most controversial has probably been the development of a railway line that now connects the Tibetan heartland to the rest of China, making it possible to take a train from Beijing all the way to Lhasa (an extension to Shigatse will open in 2014). While this railway represents a notable engineering feat – with passes as high as 5200 meters it is the highest railway in the world – concerns over damage to Tibet’s delicate ecosystem have not been allayed. Furthermore, the massive increase in internal tourism that has accompanied the launch of the train service threatens to erode Tibet’s unique culture even further, turning important historical and religious sites into Disneyland-esque tourist stops. While it is undeniable that this has brought economic benefits to the area, with an increase in GDP per capita of around 400% during the first decade of the 21st century, an astonishing growth rate even by China’s standards, accusations that this increase does not benefit the local population abound. The truth is difficult to ascertain as the Chinese government does not release relevant statistics and may not even keep them itself.

Over the last few years there has been an upsurge in political activity and protest in the TAR and the surrounding Tibetan areas. The most high profile of these was a series of protests in Lhasa in March 2008, marking the anniversary of the 1959 uprising but also timed to gain maximum international attention in the run up to the Beijing Olympics. Riots across Lhasa left hundreds wounded and a reported 18 dead, mostly Han Chinese. The response from the Chinese authorities was initially relatively low key, though Tibetan groups in exile later reported that upwards of 1500 people were arrested, with many allegations of torture being used to extract confessions. Since 2008 security in the TAR and surrounding areas has increased, making it substantially more difficult for foreigners to visit for tourism and almost impossible for journalists or academics to investigate some of the claims being made. In 2012, a series of self-immolations made the headlines both in China and abroad, leading to the Dalai Lama to appeal for Tibetans not to resort to such measures, though Beijing is resolute in its insistence that such acts are committed at his behest.

China’s Traditional and non-Traditional Strategic Considerations

Tibet provides a buffer region between the Chinese heartland and both India and Pakistan, two nuclear powers. While neither of these two countries poses an apparent and immediate threat to China (they are normally more focused on each other) this is a consideration that any strategist would make. In particular China’s relationship with India has been problematic and the two fought a border war in 1962, and have a continued dispute over territory. A sparsely populated region such as Tibet is an ideal way to keep tensions at a minimum between two such nations. Allowing any form of independence to Tibet risks creating a kind of power vacuum that might be filled with Indian influence. From the point of view of national self-defense, no government in the world would countenance this if it did not have to.

Access to water resources will be crucial to China in the coming decades as it seeks to continue its rapid economic growth and improvement in living standards. China has less than half the per capita average of available water resources and large areas of the country suffer from serious drought on an almost annual basis. For this reason, the large rivers that flow through China are essential to the survival and prosperity of its people. Several of China’s largest and most important rivers have their sources in Tibet, including both the Yangtse and the Yellow River which, combined, provide water supplies for more than 500 million people. The Tibetan Plateau is the greatest store of fresh water outside of the North and South Poles. Although not explicitly acknowledged by the Chinese government in any discussion of the question of sovereignty over Tibet, it is clear that this remains a significant consideration for policy-makers when addressing the issue. The control of these river sources is an important advantage that no country would give up willingly, particularly one that is in such a precarious position with regard to its water supplies.

The Psychological Importance of Tibet

Knowing China’s modern history is crucial for understanding its perspective on many contemporary issues. Moreover, comprehending the Chinese interpretation of that history is the key to unlocking much of the Chinese view of the so-called “Tibet issue”. China’s view of itself as a victim of various powerful nations that took advantage of it while it was fragile, and sought to keep it weak by breaking it up, is a powerful lesson both for those in government and for the citizens of modern China. This “century of humiliation” was (in the Chinese narrative) brought to an end by the Communist victory in the civil war in 1949 but the scars remained in the form of Hong Kong, Macao and Taiwan. What is viewed in China as the rightful “return to the motherland” of the first two went some way towards redressing this and the continued desire to “reunify” with Taiwan demonstrates its continued role. Given that nearly all Chinese start from the view that Tibet is part of China, efforts to remove it from the unity of the PRC are viewed through this lens, and foreigners who involve themselves in the issue are ordinarily seen as trying, once more, to “split” China. This is a particularly potent storyline during a period of time in which China’s power is clearly rising and fears from outside are evident.

The View from the West

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Tibet is frequently presented as an almost-mythical “land of snows”, populated by peace-loving religious people who live a simple (indeed, backward) life. The mythical Shangri-La is widely believed to be in Tibet (it has officially been designated as Zhongdian in northwest Yunnan but this is purely for tourism purposes). Tibetan people are portrayed as being deeply religious and almost entirely homogenous in their devout commitment to their religion and its leading figure, the Dalai Lama, as well as to the path of peace that he passionately advocates. In many ways Western depictions of Tibet and its people are simplistic, romantic, and occasionally patronizing.

When Tibet comes into the consciousness of Westerners it is often through the activities of high profile groups such as the International Campaign for TibetTibet House and Free Tibet, all of which are based in major Western cities such as New York, Brussels and Berlin. Richard Gere’s role in several of these groups has raised the profile further and reached audiences that do not ordinarily pay a great deal of attention to international political issues. The involvement of celebrities has sometimes been frivolous; the British rock band, Oasis, was denied visas to play concerts in Beijing and Shanghai in 2009 because of the involvement of Noel Gallagher, the band’s guitarist and lyricist, in a ‘Free Tibet’ concert twelve years previously despite Gallagher’s own confession that he had no recollection of the event and no interest in the movement. Condemnation of human rights abuses in Tibet frequently comes from senior figures in the US political scene as well as from independent NGOs across the Western world, lending such reports an air of credibility despite the difficulty in corroborating many of the individual stories that constitute the reports. The explanations offered by these groups for China’s continued presence and interest in Tibet focus entirely on the economic benefit that China can gain from the region. Free Tibet, for example, cites only the vast reserves of minerals and the sources of much of China’s water supply as its motivation, making China’s motives appear entirely selfish and materially-based.

The most visible manifestation of this feeling in the West came in 2008 with the protests Sam DCruz / Shutterstock.com surrounding the Olympic torch relay, particularly in European cities such as Paris and London. Large crowds of people displayed banners and waved Tibetan flags while some attempted to extinguish the Olympic flame. This was in direct response to the reports of riots in and around the Tibetan Autonomous Region in March of that year. The riots were misreported by some parts of the media in the West (this was not helped by the Chinese authorities preventing many outlets from entering the territory) and so it is not fully understood that many of those that died were Han Chinese, killed or burned alive by Tibetan rioters. These acts, if carried out in a US domestic context, would have been labelled as terrorism. This reporting caused anger among many Chinese who cannot understand where the Western bias comes from and consider it to be simply “anti-Chinese”.

No country in the international system recognizes Tibet as an independent nation and all who have diplomatic relations with Beijing acknowledge Chinese sovereignty over the region (indeed, even those few countries that maintain diplomatic relations with Taipei instead consider it to be part of the Republic of China). The last country to fall into line and recognize Tibet formally as part of the PRC was the UK, which did so in 2008, blaming a bureaucratic oversight for not having done so previously. Even the Dalai Lama himself no longer calls for independence, but for “genuine autonomy” within the People’s Republic.

The Future of Tibet

The Tibet question is one that has shown no sign of simply going away. The Dalai Lama’s successful internationalization of the issue has made it infinitely more complex for the Chinese leadership to handle but their legitimate and rational security concerns, combined with the crucial issue of maintaining territorial integrity of the Chinese nation, mean that the Dalai’s wish for genuine autonomy is unlikely to be granted. The Chinese government, despite its intermittent negotiations with representatives of the Dalai (the last of which took place in 2008 prior to the riots), shows no intention of shifting position and appears to be playing a waiting game, apparently believing that Tibetan resistance will subside after the death of the fourteenth Dalai Lama. Having captured the Panchen Lama and appointed their own, they consider themselves to be in charge of the future of that particular institution. However, the Dalai himself has raised the possibility that a future reincarnation of himself may be born outside of Tibet (previously believed impossible) which might allow for a continuance of a government in exile that maintains some level of loyalty from the Tibetan people. Furthermore, he has already announced that he intends the position to be one only of religious leader and that the head of the Tibetan government should be democratically elected. Even without this, there is no guarantee that the Chinese waiting game will pay off in the long run; there is some evidence, particularly in the wake of the 2008 protests and the recent spate of self-immolations, that Tibetan youth is becoming radicalized in the face of an apparently immovable Chinese position, and without the calming influence of their spiritual leader it is possible that further violence might erupt.

China continues to focus on the economic development of Tibet, hoping that continued economic prosperity will help Tibetans feel more integrated into China. China has invested heavily in Tibetan roads, housing, schools and electrical grids so that it may feel the benefits of being part of China. Yet proposals that carry with them the prospect of greater prosperity, such as the proposal to extend the railway from Lhasa further into Tibet, are also viewed with suspicion by some Tibetans who fear that they are just another tool for the Chinese military to ensure control over the region is maintained. To assuage these fears, China needs to pay more attention to the legitimate complaints of Tibetans who feel that their culture and history is being destroyed. This loss cannot be compensated with the kind of economic progress that has, so far, satiated other parts of Chinese society.

Taiwan: Strait Talking

Introduction

More than sixty years after the establishment of the People’s Republic of China when Chiang Kai-shek’s nationalists fled to the island, Taiwan remains at the core of domestic and foreign policy decisions for Beijing. Despite enjoying de facto independence, having never been directly ruled by the CCP, Taiwan is considered by Beijing to be an inalienable part of its territory and the goal of ‘reunification’ is one of its highest priorities. This is resisted in Taiwan where most people favor retention of the status quo; that is, neither a declaration of de jure independence – a move that would almost certainly provoke an angry reaction from the mainland – nor a move to accept CCP rule over the island. The issue is a sensitive one in China at both the political and societal levels and any suggestion of support for an independent Taiwan ordinarily sparks heated responses from China, which accuses its protagonists of trying to ‘split’ China. It is a complex, emotional, and seemingly intractable problem.

Chinese Annexation and Japanese Colonialism

Taiwan was formerly known as Formosa in the West

Known as the island of Formosa in its past, Taiwan’s history over the past two hundred years has been complex. The largest island of the Formosa island chain located off the southeastern coast of mainland China, it was originally the home of aborigines and the occasional Chinese migrant, refugee, and pirate. Neither Western nor Asian powers showed any sincere interest in acquiring the island until the late seventeenth century, when China brought Taiwan under its authority in order to quell pirates using the island as a base of operations. China largely left the island untouched until the Qing Dynasty was forced to cede the island to Japan after its loss in the First Sino-Japanese War of 1894-5. Qing subjects were given a two-year grace period to sell their property and move to mainland China if they so wished, but very few Taiwanese saw this as feasible and most remained under Japanese rule. An 1895 effort by pro-Qing Taiwanese officials to challenge impending Japanese rule was quickly put down by Japanese forces.

During Japan’s fifty-year control of Taiwan, the occupying government imposed harsh rule on the island, showing no tolerance of dissent, and limiting lucrative jobs and business contracts to Japanese living on the island. Aboriginals and Chinese were treated as second-class citizens. Despite this harsh rule, the Japanese helped to develop Taiwan’s economy and brought with them technology that was unseen on the Chinese mainland. They also helped to enlarge Taiwan’s railroad and other transportation networks, built a widespread sanitation system, and developed the public school system. Rice and sugarcane production also increased greatly under Japanese occupation. Thus, by the end of the World War II the island of Taiwan was much better off than mainland China. That it was largely saved from the ravages of the Japanese occupation that were meted out on the mainland certainly helped in this, but it is an uncomfortable truth for those on both sides of the strait that Taiwan owed its position of relative economic strength to its former occupiers.

The Republic of China

Japanese rule over Taiwan came to an end after they surrendered to the Allies at the end of World War II in 1945. At this time the approximately 300,000 Japanese living in Taiwan were repatriated back to Japan. After Japan’s surrender Taiwan once again fell formally under Chinese rule, which was by this time under by the Chinese Nationalist Party or Kuomintang (KMT), with China now formally called the Republic of China (ROC). Celebration of the island’s return to Chinese rule was short lived. Tension soon built between the locals on the island and their new government. The source of this tension was two-fold. Firstly the KMT government questioned Taiwanese loyalties after their having been subject to fifty years of Japanese rule. The KMT thus continued Japan’s policy of treating the Taiwanese as second-class citizens. Secondly, as the KMT was fighting a civil war with the Communists in China, they took every resource available on the island to support their war efforts.

These tensions culminated in the 228 Massacre of 1947, so called because it occurred on February 28th. What started off as police harassing an old woman who was peddling cigarettes turned into island-wide riots in which local residents attacked mainland immigrants and their property. KMT leader Chiang Kai-shek and Taiwan governor Chen Yi responded by bringing in military reinforcements to restore order to the island. The result was the execution of as many as 4,000 Taiwanese. The 228 Massacre was the start of the nearly four-decade White Terror in which the KMT established a dictatorship over the island and suppressed any organized dissent.

The Chiang Kai-shek Memorial Monument in modern day Taipei

In 1949, Chiang Kai-shek was forced to flee to Taiwan after Mao Zedong and the Communists took control over all of mainland China and founded the People’s Republic of China (PRC). Eventually, 2 million people, most of them soldiers, KMT party members, intellectuals and business elite where evacuated to Taiwan. These refugees brought with them many national Chinese art treasures, as well as gold in foreign currency reserves. Most people on the island believed this would be the end of the KMT as Mao amassed an invasion force in the Chinese province of Fujian, directly across the Taiwan Strait from the island. In addition, the US, the KMT’s largest provider of funds and material, announced it would take no further steps to support Chiang in his fight against the Communists. It appeared that it was simply a matter of time before the PRC would gain control of the island.

The situation changed quickly in 1950, however, when communist North Korean soldiers crossed the attacked the US ally South Korea. US President Harry Truman, fearing communist attempts to take over all of Asia, reversed his policy on Taiwan and sent the US Naval Seventh Fleet into the Taiwan Strait to protect the island from Chinese invasion. This led to a political and military stalemate that is still basically in effect today. Because of the Cold War, most Western nations and the United Nations regarded Taiwan’s Republic of China as the sole legitimate government of China until the 1970s, when the most nations began switching their recognition to the PRC, a response to a thaw in relations with the US that saw it achieve mutual diplomatic recognition by 1978. Initially, Taiwan held the seat on the United Nations Security Council under its formal name of the Republic of China, recognized as the sole legitimate government of all of China. In November 1971, the seat was transferred to the PRC, since which time Taiwan has had no formal representation at the UN despite some sporadic attempts to achieve this.

Taiwan’s accelerated economic growth since World War II has transformed it from a largely agrarian island into an industrialized, developed society. The IMF categorizes it as an ‘advanced’ economy, and the World Bank considers it to be a ‘high income’ economy. One of the strengths of its economy is its advanced technology industry, which plays a significant role in the global economy. Although most of this manufacturing is now outsourced to mainland China, Taiwanese companies still control the production of a large portion of the world’s consumer electronics.

Political Reform

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The Sun Yat-sen Memorial in Taipei

Chiang Kai-shek died in April 1975, just over a year before the death of his old foe, Mao Zedong. Chiang’s son, Chiang Ching-kuo, took over. The younger Chiang slowly instituted political reform, allowing more native Taiwanese to enter into the bureaucracy and tolerating limited dissent. One example of the latter was the Tangwai. While the KMT did not allow any opposition parties to develop before 1987, it did allow for candidates to run for office independently. Thus some independent activists and politicians founded the Tangwai. The Tangwai, whose name literally translates as “outside the party”, was a loose coalition of people whose main commonality was opposition to the KMT’s dictatorship. The KMT did occasionally persecute its members, namely in response to a 1979 protest held in the southern port city of Kaohsiung. Nevertheless, KMT leaders largely tolerated the organization.

The Democratic Progressive Party (DPP), the island’s first enduring opposition party, was founded in 1986, a year before such parties officially became legal. The DPP’s makeup was similar to that of the Tangwai in that members were united predominantly in their opposition to the KMT. In fact, the DPP was made up largely of former KMT members. However, within a few years of its founding, the party had established itself as a pro-Taiwanese independence party that promoted a Taiwanese cultural and national identity.

Chiang Ching-kuo died in 1988 and was replaced by his hand-picked successor Lee Teng-hui, the first native Taiwanese to become ROC president and KMT chairman. Lee continued with Chiang Ching-kuo’s reforms, working within the KMT and with activists to open up more government positions to competitive election. For example, the National Assembly and Legislative Yuan, the government’s two legislative bodies, had their first general elections in the early 1990s, and Taipei, the island’s capital, had its first competitive mayoral elections in 1994, which was won by the DPP candidate Chen Shui-bian.

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Taiwan’s current president is the KMT’s Ma Ying-jeou

Taiwan’s democratic reforms continued through the early 1990s and culminated with the island’s first ever direct presidential election, held in 1996. Interestingly, in a world where dictatorial parties tend to get punished in free elections, the KMT’s Lee Teng-hui won what was widely considered to be a fair election. China reacted angrily to the possibility of elections in Taiwan and engaged in military exercises in the Taiwan Strait in a naked attempt to intimidate politicians and voters on the island. The move backfired as it led to the US intervening by sending its aircraft carrier into the area as a warning to the Chinese. The move also appeared to harden both the determination to democratize as well as the opposition to any suggestion of ‘reunification’ with the mainland. Four years later, taking advantage of a split KMT ticket, DPP candidate Chen Shui-bian was elected and succeeded Lee, becoming the first non-KMT president of Taiwan and marking the first change in government brought about by democratic elections anywhere in the Chinese speaking world.

Despite grand hopes that the new ruling party brought with them into office, Chen’s eight years as president were largely disappointing. There were many causes of this disappointment. For example, Chen came to power during a global economic downturn. As Taiwan has an export-based economy, the slump in demand significantly harmed many Taiwanese livelihoods. Additionally, China refused to deal with Chen, declaring him to be a Taiwanese separatist with whom they could not deal. While economic ties between the two sides continued to strengthen, political ties significantly worsened. Another problem lay in people’s expectations of Chen himself. Chen, as president, actually had relatively little power to keep his campaign promises. The power his predecessors enjoyed were largely due to martial law and other temporary revisions the government put in place during the KMT’s dictatorship. As the country instituted democratic reform, many of these presidential powers were taken away and given back to the legislature, where the writers of the constitution originally allocated them. This left Chen mostly powerless to enact some of the reforms he promised. Lastly, many in Chen’s administration, and ultimately Chen himself, were accused of corruption. After Chen’s terms as president ended, he was indicted on charges of bribery and is now in prison serving a 19 year sentence, though he maintains that the trial was politically motivated.

The teahouses of Jiufen

The KMT took back the presidency in 2008 with the election of Ma Ying-jeou, showing the resilience of this once dictatorial party. Ma has moved to improve relations with the mainland, recognizing the futility of antagonizing Beijing and the enormous potential of cross-straits trade, though he has always stopped short of advocating imminent reunification. The KMT remains rhetorically committed to the goal of reunifying with the mainland, though insists that this cannot be under the rule of the CCP. Though this had previously been an unacceptable stance to Beijing it has become the lesser of two evils in contrast to the pro-independence stance taken by many in the DPP. Ma was re-elected in January 2012 with more than 51% of the vote on an impressive turnout of over 74%.

Relations with China

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Taiwan’s army is focused almost entirely on one possible aggressor

Despite having a mature and stable government, a thriving economy, and an active civil society, Taiwan’s status in the international community remains in limbo. The reason for this is the position of China. Beijing insistence that Taiwan is a part of China that must eventually come under Beijing’s rule, whether peacefully or by force, remains a stumbling block for Taiwan in many of its dealings with the international community. Though Taiwan has never made a formal declaration of independence, partly because of the KMT’s stance that Taiwan is part of one China but also because of the fear of serious reprisals from Beijing if it did so, Taiwan maintains its de facto independence. In other words, Taiwan is independent for all practical means and purposes. It maintains set geographical boundaries, a government to rule over lands within those boundaries and this government and its state are recognized by its population. The international realm is not so clear. Other states do recognize Taiwan’s passport but most do no conduct formal bilateral relations with the island, although many maintain links in an unofficial capacity. There are 23 states that maintain diplomatic relations with Taipei instead of Beijing, a reduction from 71 in 1969, the most significant among them being Guatemala, the Dominican Republic and the Vatican. A practice of the PRC and Taiwan competing for diplomatic recognition among states seems to have come to an end; according to a document released by Wikileaks, Panama made moves to switch its recognition to the Beijing but was asked to remain with Taipei in order not to cause diplomatic embarrassment at a time when cross-straits relations were improving. Taiwan is therefore not able to enjoy de jure independence, which means it is not independent according to law. This means that Taiwan cannot join many international organizations that require statehood for membership. These organizations include the UN and the Organization for Economic Co-operation and Development (OECD). Additionally, when joining in other international events and organizations, Taiwan must join under some alternate name, such as its official Olympic title of Chinese Taipei.

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The US continues to supply F16s to Taiwan, despite objections from China

The status of Taiwan cannot be ignored in any aspect of China’s international relations; it is impossible for any state in the international system to have diplomatic relations with Beijing without recognizing the PRC’s sovereignty over the island. This is especially pronounced in the relationship with the US, and in almost every high level political meeting it is incumbent on the representatives of the US to reiterate their support for the “one-China policy”. However, there is a nuance to this acceptance by the US in that it explicitly opposes any actions or statements that would “unilaterally alter Taiwan’s status”. This applies to both Taiwan and the PRC, meaning that Taiwan has an insurance policy in its relationship with the US that ought to deter China from making the first move in any conflict. The special relationship that exists between the US and Taiwan is at the root of this sensitivity, but it is more serious than a linguistic exercise in diplomacy. The US has, on several occasions, demonstrated its willingness to defend Taiwan should it be subject to an unprovoked attack from the PRC. This was evidenced in the 1996 deployment of warships to the Taiwan Strait in response to PRC missile testing in the region. Additionally, the US has continued to meet its legal obligation to provide Taiwan with defensive arms which provokes strongly worded protests from Beijing on each occasion. Since 1990, according to a US Congressional report, Taiwan has requested major purchases in every calendar year except for 2006 and 2009. One of the most recent purchases, agreed in January 2010, included 114 PAC-3 defense missiles and 60 Black Hawk helicopters in a deal worth almost $6.4 billion; one of the largest ever agreed. In September 2011, the US reached a decision to refurbish Taiwan’s fleet of F-16s, fitting them with AESA radars (a form of stealth technology) but stopping short of approving the sale of new planes, but going far enough to anger China. While there are now some calls among American academics to rethink this alliance, it is unlikely to alter in the near future. The involvement of the US seems to assure that the future will be one of an easy maintenance of the status quo. While far from a perfect a solution, this is probably the best option for all concerned.

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China Airlines, Taiwan’s national carrier, now flies direct to the mainland

The period of Chen Shui-bian’s presidency was certainly a low point in cross-straits relations, but the recovery since Ma’s election in 2008 has been impressive and encouraging. Political gestures have been important in this process, most notably the historic visit to the mainland by then-chairman of the KMT, Lien Chan, in 2008. Following Lien’s trip Beijing relaxed rules on Taiwan residents visiting the mainland and on mainlanders visiting Taiwan. The result was a dramatic increase in grassroots exchanges across the strait, with up to 3000 mainland tourists visiting the island every day. Direct flights were permanently established in the same year as Lien’s visit and have expanded consistently ever since, with a total of 558 weekly direct flights between the island and one of 41 cities on the mainland. Taiwanese investment in the mainland is thought to be greater than from any other territory, though the exact figures are obscured by a tendency for the investment to be channeled through tax havens such as the British Virgin Islands. More than one million Taiwan residents – around 5% of the population – now live on the mainland.

Future Trends

Taipei 101 was the tallest building in the world for a time

While maintaining such an unconventional status within the international arena does present some symbolic challenges for the Taiwanese, the situation across the Strait right now remains stable and even mutually-beneficial for both sides. By some measurements, Taiwan is the number one source of FDI into China, providing valuable capital and knowledge from Taiwan’s world-class IT industries. In turn, these economic ties have allowed Taiwanese companies to remain cost-effective even as the island has shifted away from a labor-intensive to a knowledge-intensive economy. These economic ties have also gone some way in tempering Beijing’s saber rattling towards the island. One example of this was seen in 1996 when local officials in Fujian province, an important destination for Taiwanese capital, encouraged Beijing to show restraint during missile tests in the Strait, lest they scare off investors from the island. While CCP leaders say that economic factors would not deter an attack on the island if warranted, the prospect of the flight of Taiwanese capital from China certainly raises the potential cost for any Chinese action.

Although most states in the world continue to pay lip service to China’s ‘one China’ policy, they also maintain informal relations with Taiwan in their day-to-day affairs, particularly in the economic sphere. The US, in particular the US Congress, is Taiwan’s most ardent and powerful supporter. The involvement of the US and the potential for a conflict between to the world’s two greatest powers means that the cost of China acting unilaterally with regard to Taiwan is high, though the complexities of the forces competing for influence in China over this issue mean that it cannot entirely be ruled out. Oddly, one of the most potent sources of political tension in the region – the dispute between China and Japan over the Diaoyu/Senkaku islands – has provided an opportunity for improved relations between China and Taiwan, since both share a rhetorical position on the matter. Nevertheless, the most likely future path for Taiwan and its relationship with the mainland is one of an uneasy maintenance of the status quo; it is in neither side’s interests to act unilaterally and the scope for common ground is too narrow to allow an agreement to be reached in the foreseeable future. Taiwan will not gain the independence that some of its people seek, but it is unlikely to be swallowed whole by China any time soon.

From Indifference to Engagement to Dominance? China and International Organizations

Introduction

Since the founding of the People’s Republic of China in 1949, its strategy with regard to involvement in international organizations has undergone a complete U-turn. As political and economic international organizations such as the United Nations and the Bretton Woods Institutions developed in the years after WWII, the PRC remained skeptical and suspicious of becoming entrapped in a framework set by external, Western, and ordinarily capitalist powers. Instead, it pursued a policy of non-engagement in multilateral institutions, with very few exceptions. Those it did involve itself with, such as the Non-Aligned Movement, evidenced attempts by China to disassociate itself from the superpower struggle between the US and the Soviet Union. Although this was partly driven by the politics of the Cold War that determined so much of international relations at that time, it also reflected the mistrust felt in China towards such institutions, rooted in the historical sense of injustice felt at its treatment by the League of Nations, which failed completely to arrest the invasion of China by Japan, a League member.

China began to rethink its engagement in international organizations after the success of its economic reform program launched in 1978. As an increasing percentage of its GDP became generated through international trade, and its status as an international power began to rise, China came to determine that engagement with international organizations would be useful in resolving trade disputes, gaining access to markets, promoting its perspectives on the international stage, and assuring established powers that its rise would be peaceful and would happen within the existing international framework. Today, China is not only a member of virtually all relevant international organizations, but it is also a key actor in many of them.

United Nations

Since the creation of the UN in the aftermath of World War II, one of the five permanent seats on the Security Council has been reserved for China. This seat was initially occupied by the Republic of China in Taiwan that was recognized as the government of all of China by most Western powers from 1949-1971. The People’s Republic of China, therefore, had no representation within the UN. This changed in 1971 when a UN General Assembly vote recognized the PRC as the legal government of China, effectively transferring all UN powers to the PRC, including Taiwan’s permanent seat on the Security Council and the veto that comes with it. This was an important step in the gradual global recognition, by international powers, that the PRC was the legitimate government of China. The ROC in Taiwan was expelled from the UN as it was no longer recognized as a state, and has never been readmitted, despite sporadic attempts from within Taiwan for it to be recognized. Thus, its membership in the UN had the immediate effect of facilitating the promotion of the PRC’s ‘one China’ policy, which ensured Taiwanwould never be officially recognized as separate from the PRC.

In its early years in the UN, China was relatively passive in its behavior, ordinarily abstaining in votes on peacekeeping operations (PKOs) and never participating in the operations themselves. During the 1971-1978 period, China voted in favor of roughly 40% of the resolutions that passed. This gradually began to change after 1978 with China increasing the number of motions it put forward. This more participative and assertive behavior continued in the 1990s, particularly from the first Gulf War onwards, when China not only began to vote in favor of peace keeping operations, PKOs, but actually became involved in the operations directly. By 2008, China was contributing approximately 2500 troops to UN PKOs, a similar number to France and significantly more than the US. The record since the turn of the millennium shows that more than 95% of resolutions that pass in the UNSC receive the support of China. This demonstrates both a shift in the behavior of China itself, which has become much more willing to take an active role in the process of international governance, as well as in the attitude of other UNSC members, who have come to see China’s support, as opposed to its passivity, as crucial to the perceived legitimacy of any UN action.

China’s increased willingness to engage in the UN framework has resulted in a slight contradiction in its official policy regarding the sovereignty of nations. While the rhetoric continues to stay on the message of respect for sovereignty and the maintenance of the principle of non-interference, China’s voting pattern suggests that there are circumstances in which it is willing to forgo this principle. Its acquiescence in 2002 on UN resolution 1441 which, ultimately, was used to justify the invasion of Iraq (though it should be noted that a clause on Iraq’s sovereignty and territorial integrity was included partly at China’s behest) exemplified this. An even starker example came in 2011 when resolution 1973 established a no-fly zone and authorized “all necessary measures” to protect civilians in Libya. That China saw fit to allow this resolution to pass (both China and Russia abstained) appears to demonstrate the limit of its international defense of the principle of sovereignty. However, such an increased willingness to allow such motions to pass in the UNSC should not be viewed as evidence that China has become a pushover in its dealings with Western powers – rather, it ought to be seen as proof that China has learned how to operate within the institutions of the UN, protecting its own key interests while promoting an image of a responsible world power.

China has positioned itself within the UN as something of a voice for developing nations and frequently counts on the support of these countries in votes in the General Assembly (where the veto it wields on the Security Council cannot be used). This has been particularly useful in avoiding censure over human rights abuses. As by far the largest member of the G77 group of developing nations, China is able to use its influence both to secure support from, and to advance the interests of, a significant bloc of the UN’s membership. Although this makes it a major player in the General Assembly, the most powerful body of the UN remains the Security Council where it continues to have to work with the other permanent members.

China is not only involved in the Security Council and General Assembly, but is also active in most other UN organizations through which it continues to pursue its core national objectives. For instance, even during the 2003 SARS and 2006 Avian Flu epidemics, China maintained its stance of blockingTaiwan’s participation in the World Health Organization, on the grounds that statehood is required for membership and the PRC is the sole legitimate government of China with Taiwan as part of China’s territory. Such an intransigent position was criticized both in Taiwan and by health experts in the organization with some suggesting that lives were lost as a result, though there are no credible statistics to support this claim. What this episode clearly demonstrated was China’s “red line” with regard to its position on Taiwan and the position of strength it now occupies in the UN structure through which it can pursue its objectives.

World Trade Organization

After protracted negotiations China finally gained membership of the WTO on December 11th 2001, a full fifteen years after it originally applied to join, symbolically three weeks before Taiwan – under the name “Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu (Chinese Taipei)” – also accessed. It should be noted that the WTO is an organization that does not require statehood for membership and Hong Kong has been a member since the organization’s inception in 1995. China’s leadership during the long negotiations went to great lengths to ensure China gained its place. Both Jiang Zemin and the then Premier Zhu Rongji invested enormous personal political capital in the process and Zhu, in particular, came under fire for the level of concessions made in order to be eligible for entry, particularly with regard to a commitment that China would open its telecommunications industry to foreign competition. The perception, both within China and among some analysts abroad, was that the requirements for Chinese admission were greater than those asked of other countries. In particular the decision not to bestow “Market Economy” status on China seems to have been politically motivated: the requirements that were laid out for China to achieve this status have been demonstrated by the Financial Times, a respected UK newspaper, to be so stringent as to rule out any member of the WTO from passing the test. The result of this apparently un-passable test is that when China is accused of breaches of WTO rules, the arbitration process measures the validity of such claims against other countries’ economic indices. For example, when China is accused of ‘dumping’ – selling goods into another economic area at below the price they are produced– it is not China’s own labor and raw material costs that are used to determine if this is the case. On occasion, Malaysia has been used despite wages in that country being significantly higher than in China.

Despite popular perceptions of China as a country engaging in unfair practices in global trade, particularly within regard to its apparent currency manipulation and the practice of ‘dumping’, its early years in the WTO were remarkably non-confrontational. In fact, no cases were brought against China in its first two years of membership, and China itself did not bring a case against another member until as recently as 2009. In those cases that have been bought against China, all of which have been by the EU or the US, it has struggled at times to defend itself, winning just one of the dispute cases that have gone through to completion. China also seems to have followed a similar pattern in its behavior in the WTO as it did in the UN, in that it spent its first few years learning how to operate within the WTO system, before attempting to become a major player. China’s increased activity over the last 2 or 3 years, during which time it has gone from bringing no cases against other members to averaging 3 per year (all of which have been against either the US or the EU) is evidence of this. Recently, despite the structural disadvantage that China faces by not being a “market economy”, it has had some success. For example, in 2009 China successfully brought a case against the US to end the ban on its poultry exports that had been in place since the Avian Flu epidemic. Similarly, in 2010 the WTO ruled that the EU’s anti-dumping measures on Chinese sales of fasteners were unfair and too broadly applied. Despite these victories, China’s success rate in successfully resolving WTO disputes remains below the average for the organization.

World Bank and International Monetary Fund

Along with the General Agreement on Trade and Tariffs (GATT), which later became the WTO, the World Bank and the IMF made up the key international financial institutions that came into being in the post-World War II era. China has officially been a member of both the World Bank and the IMF since their founding, although just as with the UN, responsibility for these positions was with the Republic of China on Taiwan until 1980, when the PRC took over control. As with the UN, Taiwan has since been denied participation in both organizations. The PRC has called upon the IMF for financial assistance on only two occasions, both of which occurred during the early period of its post-1978 economic reform and restructuring program, and both loans have since been repaid in full. In recent years, as China’s international standing has continued to grow, China has pushed hard for greater influence for itself and other developing nations within both organizations. It has had only limited success to date. It currently holds 96,000 votes in the IMF, equivalent to 3.81% of the total, making it the sixth largest behind the US (16.76%), Japan (6.24%), Germany (5.81%), France (4.29%) and the UK (4.29%). These figures represent an increase in the voting share for China that came into force in 2008. However, under IMF voting rules, a total of 15% is required to veto any proposal, meaning that the US alone, or a combination of any four of the other G7 countries without the US, has this power. China is a long way from achieving such privilege. By increasing its agreed contribution to the budget of the IMF, China has (along with other developing nations) successfully campaigned for further reform. Thus, another shift in the make-up of these shares has been agreed in principle, but not yet implemented. Although China’s position is likely to improve as a result of these reforms, it is not clear how the final figures will appear once this agreement has been ratified, but a review is currently ongoing and this is expected to be completed in 2013. Voting in the World Bank system is more complex, as it is divided into several organizations, each of which has its own voting allocation. Despite recent reform and reallocation in favor of several developing countries that saw China as the largest beneficiary, China still remains a relatively small player. Since its foundation, the president of the World Bank has always been a US citizen. Similarly, the recent election of Christine Lagarde as the president of the IMF continued the pattern of Western Europeans heading that institution. Still, the appointment of Justin Yifu Lin, a Taiwanese-born citizen of the PRC, as Chief Economist at the World Bank represents a breakthrough of sorts. The domination of Western, developed nations in both of these organizations, however, is likely to continue for some time to come, despite the damage to reputations done by the financial crisis of 2008, a source of some resentment from within China.

G20

The G20, established in 1999 in recognition of the need to involve some of the larger developing nations in summits similar to those held by the G7 or G8, consists of 19 countries plus the EU. Since its inception, it has grown in significance, in no small part because of the inclusion of China, along with other major developing forces in global political and economic circles such as India and Brazil. These countries have pushed hard to make the G20 summit that takes place annually the premier event for global economic discussions and, consequently, to limit the importance of the G7 and G8 summits. While there has been some resistance to this, particularly from Japan which treasures its role in the G7 as a surrogate for its yearned-for but out-of-reach permanent place on the UN Security Council, the growing economic clout of China has meant this is, increasingly, the reality. Sideline summits have also given China a tremendous opportunity to promote symbols of its increased power on the world stage and one of the annual events of the G20 is the so-called G2 meeting that involves only China and the US. The existence of the G20, as opposed to an expanded G8, indicates China’s unwillingness to be enmeshed into yet another existent structure dominated by Western powers and, instead, to create a new system that incorporates other countries with potentially similar goals to its own, with whom it can form powerful alliances to overcome Western dominance.

Shanghai Cooperation Organization

Until very recently the Shanghai Cooperation Organization (SCO) received little attention in the West, but it has been a significant part of the PRC’s foreign policy since the mid 1990s. Formed as grouping of five countries – China, Russia, Kazakhstan, Kyrgyzstan, and Tajikistan – at a meeting in Shanghai in 1996, its initial objective was to foster greater military trust between central Asian neighbors. After its inception the group began to meet annually and became dubbed ‘the Shanghai Five’. The addition of Uzbekistan and a more formalized structure to the grouping saw it renamed as the SCO in 2001. Since then, several states in the region have expressed an interest in joining a group which has been mooted as an Asian rival to NATO – though this language is never used by the countries involved. Those expressing serious interest in joining the SCO include Pakistan and Iran who, along with India, Mongolia and Afghanistan, have observer status. In 2012, Turkey was granted ‘Dialogue Partner’ status, becoming the first NATO country to have official ties with the organization.

The SCO has expanded military cooperation between its member states to levels that could not have been achieved without it. Annual joint practice operations in various fields of conflict have increased to include a total of more than 5000 participants from all six member states. The majority of these come from the two largest militaries in the group – China and Russia – and the closer military and strategic ties between these two states is one of the most significant outcomes of the SCO’s development. However, the most important potential impact of the SCO is the creation of a multilateral framework of military alliances that does not include any Western power, and which has China as its assumed leader. Clearly China and Russia are the lynchpins of this organization, but the enthusiasm of the other four members, as well as the level of interest from Pakistan and Iran, makes the SCO a potentially significant actor in future international relations.

Future Trends

China’s policies on International Organizations are unrecognizable from those that were pursued prior to the Reform Era. China now seeks engagement and involvement, as its many international organization memberships and its active participation within the organizations testify. However, as a relative latecomer to virtually all organizations, China has a structural disadvantage in that it has to learn how to play by the rules that have already been set by others, which are not always to its advantage. While it has had some success promoting its objectives within these pre-existing power structures, being hampered by Western-originated frameworks remains a continued source of frustration for the Chinese leadership. China has tried to address this frustration by creating alliances with developing nations within the organizations to give it greater negotiating power. The instigation of the SCO and the promotion of the G20 are examples of how China can combat this, by instigating new institutions which place itself at the heart. It is also used its rising economic and political power to gain greater leverage in the international organizations, as when it demonstrated a willingness to increase financial contributions to the World Bank and the IMF in exchange for a greater share of the voting rights.

To date, China’s increased involvement in International Organizations has, for the most part, been consistent with its proclaimed world view: that of respect for sovereignty, non-interference in the internal affairs of other nations, opposition to hegemony or unilateralism, and the promotion of multilateralism. As China’s own stake in global political, economic, and security affairs continues to grow, it will be interesting to watch how firmly it can stick to such principles. There are already signs that it is willing to compromise on the reality of non-interference, even if the rhetoric continues unabated. China has, however, been utterly uncompromising in its insistence that any organization that requires statehood for membership must exclude Taiwan. Thus, Taiwan has been progressively and near-comprehensively marginalized in the international arena, allowed to participate in only limited ways in limited organizations. Despite numerous attempts to rejoin the UN, Taiwan will not, under any name, be able to do so. This represents a clear example of how China has used its involvement in international organizations to achieve one of its key domestic and foreign policy objectives.

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Defining the 21st Century: the Sino-US Relationship

Introduction

The Sino-US relationship is, without question, the most important bilateral relationship in the international system today, and is likely to define the twenty-first century. At stake will be whether China and the US can become “strategic partners”, as Bill Clinton argued they ought to be, or whether they will remain the “strategic rivals” as they were characterized by George W. Bush. In other words, can the two develop a working relationship that serves the core interest of both parties as well as the stability of the international system, or are they destined to clash over key interests? The answer will depend on careful management by both sides of the many tensions that exist between the two powers. In truth, given the complexity of the Sino-US relationship, it is unsatisfactory to characterize the relationship in such simplistic partner-rival terms; a productive and stable relationship between the world’s two greatest powers will surely have to encompass elements of both partnership and competition. A constructive Sino-US relationship will be one in which the partnership element is at the fore.

The Cold War and Normalization

After the end of the Second World War, the international system in general, and US bilateral relations in particular, came to be defined by the dichotomy between Communist and non-Communist nations. The People’s Republic of China (PRC) fell firmly into the Communist camp, while the US was at the head of those opposing communism. US relations with China were further complicated by the existence of the Republic of China (ROC) on Taiwan, which was an ally of the US and still recognized as the legitimate government of the whole of China by most countries in the non-Communist bloc. Additionally, the ROC held China’s UN Security Council seat. The two sides actually fought an armed conflict in the Korean War, which resulted in the deaths of nearly two hundred thousand Chinese soldiers and over thirty thousand Americans.

The first steps towards Sino-US reconciliation came somewhat out-of-the-blue in the early 1970s, although, with hindsight, there was clear motivation for wanting rapprochement on both sides. The US was mired in the Vietnam War and still feared the “domino effect” of communism toppling state after state across the world. The US leadership felt that they needed a breakthrough to split the most powerful country within that bloc (the USSR) from other significant players. This coincided with a Sino-Soviet rift of the 1960s that had, by the end of the decade, become a serious threat to the PRC’s own perception of its national security, exemplified by a series of border skirmishes that occurred between the two former allies at that time.

In the autumn of 1969, there existed no official channel of exchange between the People’s Republic of China and the United States, so that when Nixon wanted to indicate to China his willingness to create conduits of communication between the two countries, he had to relay the message through the Pakistani and Romanian leaders who then communicated with China. Having received no reply from China, Nixon tried again in December 1969. The US ambassador to Poland approached his Chinese counterpart at a function in Warsaw. This time China responded, albeit in a circuitous manner through the two countries’ respective ambassadors to Pakistan, indicating that the two respective ambassadors to Poland might meet in Warsaw in January 1970. In this meeting, the US expressed willingness to send an envoy to China. In a second meeting China communicated that if the Americans wished to upgrade their diplomatic relations with China, they would need to recognize that Taiwan was a part of China and to withdraw all US forces from the Taiwan area. Nixon again pushed to establish a direct channel of communication with Beijing so that the two countries could more effectively discuss Taiwan and other issues. However, events in Southeast Asia complicated the process, with the US deeply entrenched in the war in Vietnam and China involved in a power struggle with the Soviet Union involving both Cambodia and Vietnam.

An acceleration in the Sino-US reconciliation came in March 1971 when the US and Chinese ping pong teams met in Japan, during which the Chinese invited the American team to visit China. The visit of the American ping pong team to China received prominent coverage in Chinese media. During the visit, the American team met with Premier Zhou Enlai at the Great Hall of the People, where he declared that the Americans’ visit had “opened a new chapter in the history of the relations between the Chinese and the American people.” This “ping pong diplomacy” paved the way for Henry Kissinger’s clandestine visit to China in July 1971, which laid the groundwork for Nixon himself to make his historic visit to Beijing in February 1972. The famous image of Nixon walking down the steps of the plane with his hand extended came about because Kissinger had caused great offence by refusing to shake hands with Zhou Enlai on his own visit. Nixon’s gesture was appreciated by the Chinese who considered it a restoration of ‘face’. During the visit, President Nixon agreed to withdraw US forces from Taiwan, and to publicly recognize that there was only “one China” as Taiwan was part of Chinese territory. Although it paved the way for a normalization of diplomatic relations between China and the US, thus driving a wedge between the two major Communist powers of the Soviet Union and China, the ‘one-China’ concession was viewed as highly controversial, with many in the US as it was considered an abandonment of a long-term ally. This controversy, along with the disruption caused by the deaths of both Mao and Zhou Enlai in China, meant that it took a further seven years before diplomatic relations were finally established between the US and the PRC, causing the US to cut official ties with Taipei in the process. In order that agreement could be reached within the US, the Taiwan Relations Act was passed. Under the terms of the Act, the US allows Taiwan to be treated as a normal state in its relations in everything but name and, even more significantly, it legally obliges the US to “provide Taiwan with arms of a defensive character”. These provisions were essential to the acceptance of the switch of diplomatic recognition from Taipei to Beijing, allowing the two countries to formalize their diplomatic relations. Yet these provisions also created the greatest source of current tension between the two countries.

Taiwan

The status of Taiwan cannot be ignored in any aspect of China’s international relations; it is impossible for any state in the international system to have diplomatic relations with Beijing without recognizing the PRC’s sovereignty over the island. This is especially pronounced in the relationship with the US, and in almost every high level political meeting it is incumbent on the representatives of the US to reiterate their support for the “one-China policy”. The special relationship that exists between the US and Taiwan is at the root of this sensitivity, but it is more serious than a linguistic exercise in diplomacy. The US has, on several occasions, demonstrated its willingness to defend Taiwan should it be subject to an unprovoked attack from the PRC. This was evidenced in the 1996 deployment of warships to the Taiwan Strait in response to PRC missile testing in the region. Additionally, the US has continued to meet its legal obligation to provide Taiwan with defensive arms which provokes strongly worded protests from Beijing on each occasion. Since 1990, according to a US Congressional report, Taiwan has made major purchases in every calendar year except for 2006 and 2009. The most recent purchase, agreed in January 2010, included 114 PAC-3 defense missiles and 60 Black Hawk helicopters in a deal worth almost $6.4 billion; one of the largest ever agreed. In 2011, the US reached a decision to refurbish Taiwan’s fleet of F-16s, stopping short of approving the sale of new planes, but going far enough to anger China. While there are now some calls among American academics to rethink this alliance, it is unlikely to alter in the near future.

Belgrade Embassy Bombing and Hainan Spy Plane Incident

At both the political and popular levels, the reputation of the US in China has suffered greatly in recent years for a number of reasons. The most notable incidents were the bombing of the Chinese embassy in Belgrade by US forces in 1999, and the collision of a US spy plane with a Chinese fighter jet close to Chinese territory two years later. The embassy bombing, which resulted in the deaths of three Chinese staff, occurred during the action against Slobodan Milosevic’s regime. It was blamed by the US on outdated maps that failed to identify the building as the Chinese embassy, despite the fact that it had been in that location for three years. This version of events has never been fully accepted by the Chinese. The reaction in China was one of anger and outrage. Popular protests in Chinese cities culminated with an attack on the US embassy by a mob of protesters who threw stones and other projectiles, and tried to set fire to the building with the US ambassador still inside. A similar reaction occurred in 2001 when a US spy plane was intercepted by Chinese jets and ultimately collided with one of them, killing its pilot and causing the US plane to make an emergency landing on Hainan. Its 24 crew were captured and held by the Chinese authorities, who refused to release them until an apology was issued by the US government, though the eventual apology was deliberately ambiguous and designed to allow both sides to claim a moral victory.

Economic Interdependence

Trade relations and the growing level of economic interdependence that exists between both countries cannot be ignored in any assessment of the bilateral relationship. The level of trade is a cause of concern for some in the US, both because of its exceptionally high trade deficit with China and because of the belief that this deficit is caused in large part by the PRC’s policy of maintaining a debased RMB. The high level of trade dependence, while viewed by some as a sign of US weakness, is in fact seen by many as a reason for optimism. Some scholars argue that high levels of economic interdependence lead to stable and peaceful relations between states due to the resulting greater levels of bilateral interaction and the increased costs to both sides of conflict. There are concerns in the US that Chinese ownership of US debt puts the US in a position of weakness vis-à-vis China; in theory, if China decided to sell its debt and its other holdings of US currency en mass, it could trigger a collapse in the value of the dollar and an economic crisis in the US. However, the result of such an action would be catastrophic for China as well given that any collapse in the value of the dollar would diminish the value of their huge reserves, as well as triggering a global economic downturn that would unquestionably affect China detrimentally. Indeed, recent Chinese criticism aimed at the US about its debt ceiling management indicates that China understands fully how much it has invested in the prudent management of the US economy and its currency. Thus, it seems well argued that the economic relationship is mostly beneficial to the overall condition of the political relationship between the two states.

Human Rights

On the agenda at every high-level meeting between almost any Western nation and China is the issue of human rights and political reform. In no Chinese international relationship is this more prominent than with the US. While many in the US consider this to be an important issue that their leaders have a moral responsibility to tackle with China, the issue of human rights is perceived by the CCP leadership as, at best, an irritation and, at worst, a hypocritical infringement of China’s sovereignty. The annual report issued by the US State Department on China’s human rights record is frequently critical of the lack of, among other issues, freedom of religious expression, the failure to liberalize politically, and the practice of detention without trial. In 1998, in direct response to this criticism, China began to publish its own annual report on the US record on human rights. In 2004, for example, this report highlighted the abuses of Iraqi prisoners of war at Abu Ghraib. While this report is not taken seriously in the US, it is designed to reveal what many on the Chinese side view as double-standards from the US over this issue.

Perhaps the most prominent ongoing issue of human rights in China that concerns the US government and many of its citizens alike is the issue of Tibet. Although the US explicitly recognizes Tibet to be sovereign Chinese territory, it frequently expresses concern over apparent human rights abuses in the region. The position of the Dalai Lama, dismissed in Beijing as a “splittist”, is a constant thorn in Sino-US relations. Every US president since George Bush Senior has met with the Dalai Lama – though, with the exception of George W. Bush’s presentation of the Congressional Gold Medal to the Tibetan leader in 2007, these meetings are never in public – and, on each occasion, Beijing reacts with venomous language. In 2010, a Chinese official issued a veiled threat over President Obama’s planned meeting, calling it both “irrational and harmful” and warning that China “will take necessary measures to help them realize this (US mistake)”. However, such rhetoric has yet to sway any president from a planned meeting with the Dalai Lama, though the US continues to give limited publicity to such meetings; just a single photo of Obama’s meeting was released.

China’s Military Development

A key concern in the US regarding China’s increasing power in the international system pertains to its military development. There is a widespread perception that China’s rapidly developing military capacity and its year-on-year double-digit increase in expenditure has positioned it as a military rival to the US. Such views, however, are not accurate. While it is true that China’s military expenditure has grown by significant amounts in recent decades, it is important to put this into some kind of perspective. According to figures from the Stockholm International Peace Research Institute (SIPRI), the most widely-respected research organization that reports on such matters and one that uses educated estimates to include military spending that is not declared in official statistics, China’s military expenditure as a proportion of GDP has actually fallen from 2.5% in 1990 to 2.2% in 2009. For comparison, the figures for the US show military expenditures were at 4.7% of GDP in 2009. More significantly, despite the sharp increase in absolute terms, and even using the higher estimate provided by SIPRI, China’s military budget remains less than one fifth of that of the US, whose own expenditure exceeds the combined total of the next 17 largest military budgets. Similarly, apparent advances in military technology, while unquestionably real, appear to have been exaggerated. The reports of the testing of a new Chinese Stealth fighter earlier this year were, in some quarters, treated as proof that US superiority is being eroded. Yet this seems premature; conservative estimates suggest that even if the testing was successful, and there is no evidence in the public domain that it was, then it will likely be at least seven years until the technology is battle-ready. Given the consistent levels of investment in military technology in the US, it is improbable that its own arsenal would stand still over this period and, in any case, it already has in excess of 130 stealth fighters that are ready for military deployment.

Future Trends

As with most bilateral interaction in the international system, there are causes for both optimism and pessimism in the Sino-US relationship. There are signs of both the rivalry

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and partnership that Presidents Bush and Clinton identified. The economic interdependence has two principle benefits that ought to aid relations. Firstly, the increased mutual reliance on each other’s economies raises the cost of any potential conflict for both parties, which ought to at least alleviate some tensions. Secondly, the higher amount of interaction at a societal level that results from the natural course of trade should foster a greater understanding between the two peoples, and go some way towards mitigating the mistrust that has developed over recent decades. As demonstrated above, the oft-cited military build-up is not as great a threat to the balance of power as is sometimes suggested. Additionally, the number of contacts between the two militaries is reason for cautious optimism.

Nevertheless, there are other issues that may come to the fore which, if not handled sensitively on both sides, may cause Sino-US relations to deteriorate. For instance, as China’s involvement in, and financial contribution to, major international organizations such as the World Bank and IMF has increased, it has also jockeyed for more influence within the organizations still dominated by the US and Europe; in 2008, Justin Yifu Lin, a Chinese citizen who was born in Taiwan but defected to the PRC, was appointed as Vice-President at the World bank. The US has been reluctant to weaken its positions of prominence and this has caused resentment in China. In some cases, this resentment has contributed to China’s decision to work outside of existing frameworks. For example, the Shanghai Cooperation Organization, in which China plays the leading role, has been termed as a potential competitor to NATO. China decided to work within the G77 instead of joining a G9 so that its interests would not be overwhelmed by the other Western-oriented members. China’s creation of rival international frameworks not only frustrates a US accustomed to global control, but it also creates concerns about China’s ultimate aims and intentions.

Similarly, as China’s economy expands, it will be a fiercer competitor with the US for natural resources and basic commodities around the globe. This affects the Sino-US relationship in three ways. Firstly, as natural resources are finite, there may become a time when there will not be enough resources to go around and China’s acquisition of resources may be at the expense of the US. Secondly, rising global demand, much of which has been driven by China’s booming economy, has sent global prices for commodities to record levels. In April 2011, the IMF raised its global inflation forecast from 3.7% to 4.5% due to these commodity price gains. Similarly, the IMF revised its 2011 US inflation forecast to 2.2% in 2011 up from 1% in 2010 due to higher food and energy prices. If inflation continues to increase, the US may feel pressured to raise interest rates to curb its rise, thus putting at risk the already weak Western recoveries. Finally, China’s eagerness to secure supplies of natural resources has led it to form alliances with countries which Western powers have tried to ostracize. Such Chinese alliances directly conflict with US policies in the region, and can inflame citizen passions on both sides. Mia Farrow, for instance, led protests against Beijing’s “genocide Olympics”, so-called because of China’s continued support of the Sudanese regime despite its actions in Darfur. The Chinese reject such claims out of hand, and viewed Western attempts to meddle with the Olympics as insulting and an attack on its national honor. China maintains that it does not interfere in internal affairs of other countries. This position stems from China’s own experiences of occupation and meddling in its affairs by Western powers during the late 1800s and early 1900s, as well as the brief, but unsuccessful, period in the early years of the PRC when Maoist policies were exported to other countries. It is certainly observable that the no-strings attached approach to infrastructure investment in Africa has had some significant benefits for China in terms of promoting itself there.

Yet despite these many issues of concern between the two countries, some form of which will undoubtedly remain between the two powers as the US adjusts to a more vocal and powerful China in the international arena, outright conflict between the two powers is highly unlikely. Instead, current and future issues between the two countries will continue to be resolved, or at least mitigated, through negotiation and diplomacy.

The wildcards in this prediction are Taiwan and the ongoing dispute over the Diaoyu/Senkaku islands with Japan. The special relationship that exists between the US and Taiwan, and the US’s own legal obligations to defend the island should it be attacked, render the possibility of military conflict between China and the US over Taiwan a possibility, however unlikely. Vigilance on both sides – and in Taiwan – is essential in order to avoid a conflict that would be to nobody’s benefit. Similarly, the US is committed to defending Japan, its closest ally in Asia, should it be attacked. The simmering tensions over the Diaoyu/Senkaku islands that boiled over in 2012 continue to cause concern for US policy-makers. The US will continue to push for diplomatic resolution on this issue but an outside chance of a low-level military conflict cannot be ruled out.