Saturday, June 22, 2013

China enters first bilateral swap agreement with G7 countries (UK)

I have not been tracking swap agreements as closely as I once did. But China has just entered such an agreement with UK for up to 200 billion RMB over a three year period. This is the first with one of the G7 countries and could be considered as part of China's movement toward having a convertible renminbi. A fuller explanation can be found in the Wall Street Journal.

Friday, June 21, 2013

There is more to Snowden than the media reports

Asia Times has given the public the first truly extensive and thoughtful analysis of Snowden, the latest NSA whistle blower that captured worldwide attention. Most of us, including me, probably has not heard of previous whistle blowers on the NSA. Author Peter Lee of Asia Times gives you a fascinating look of what happened to previous whistle blowers, Binney, Wiebe and Drake, and how their experiences may have shaped the course of action taken by Snowden.

It's no small irony that this great democracy of the United States encourages the idea, in principle, of whistle blowers to keep abusive government practices in check, but in reality woe unto those that believe in the protection of the American Constitution when they decide to take on the government.

Anyone wishing to understand the degree of dysfunction that afflict the government of United States needs to read the article on the three wise men of NSA.

Just the quote from Snowden is worth the visit, "Being called a traitor by Dick Cheney is the highest honor you can give an American."


Monday, June 10, 2013

Could North Korea Become the Breakthrough in the US-China Relations?


This entry is an revision of the previous blog entry to reflect that the summit between Obama and Xi had taken place and was first posted on China-US Focus.
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The informal summit between the leaders of China and the US concluded pretty much according to most expectations, namely no breakthroughs or unpleasant surprises.

According to some reports, Presidents Barack Obama and Xi Jinping did agree to work together on keeping North Korea in check and the Korean peninsula nuclear free. 

Indeed there have been some recent developments to suggest that North Korea is apparently yielding to China’s pressure to behave. The North Koreans have approached the South Korean government to renew a dialogue that has gone on for years, more off than on.

Of course historically nothing about North Korea has been predictable or dependable. The Pyongyang government has always been able to exploit the difference in the policies regarding North Korea between Beijing and Washington, a difference that gives Pyongyang room to alternatingly test the patience of the two powers.

Despite or because of vocal protests from the US, North Korea has apparently gone ahead with an underground nuclear detonation—“apparently” because no one seems to know for sure.

Despite consternation from Japan and South Korea along with pressure from the US, North Korea has test-fired ballistic missiles in the direction of neighboring South Korea and Japan. Some supposed intercontinental range missile turned out much shorter range than expected and some were outright duds.

Each time after the government has misbehaved on the international stage, it would offer to begin the six party talks, provided of course the US will agree to preconditions that the North Koreans know the US will not accept.

The only recourse Washington seems to have is to lean on Beijing to get the North Korea to behave, since the regime is completely dependent on the food and energy aid from China, without which the regime would certainly collapse.

But China is equally frustrated, if not more so, by the North Koreans. Each time Beijing sends a special envoy to Pyongyang to ask the government not to build a bomb or not to fire a missile, the Pyongyang would assure the envoy and then goes ahead and reneges a few days after the envoy leaves. Sometime, the misbehavior takes place a couple of days ahead of the arrival of the visiting delegation just to rub it in.

Most recently, after the most recent missile test and after finally releasing Chinese fishermen held by the North Koreans—as this has happened more than once—Pyongyang promptly sent their highest ranking military official to Beijing to again express proper contrition and again promise to participate in the much desired six party talks.

North Korea’s seemingly erratic behavior has been deliberate and carefully calibrated. It continues to push and test the boundary of what China will tolerate, because Pyongyang knows that China will not allow the regime to totally implode.

China has two major reasons not wanting to see the Pyongyang regime collapse. First it would have to deal with a massive refugee problem as Koreans flee north into China. Second, presumably the Seoul government will take over and unify the entire peninsula. This would mean potential American military presence all the way to the border of China.

Up to now, Washington has been badgering Beijing to fix the problem and make Pyongyang behave but has offered nothing that would help Beijing get out of the conundrum.

But there is something the US can offer to China that would help China exert pressure on North Korea more effectively. Namely, the US can promise to immediately withdraw all its troops from the Korean peninsula when and if the Pyongyang government collapses and the South Korea government were to unify the peninsula.

It would take a lot more mutual trust in the bilateral relations than currently exists between China and the US before Beijing would accept the promise of American withdrawal as realistic. However once confidence has been established, the Pyongyang government would find much less room to be the bad actor. It would either have to behave or face extinction.

Obama could point out to Xi that since China normalized its relations with South Korea (to the consternation of the North) in 1992, South Korea has become an important economic partner of China and the bilateral relations have been cordial without one-sided demands like those from the North.

If the Korean peninsula were to unify under Seoul, China would have a friendly neighbor and enjoy a stable relationship. With peace and stability being the common goal of China and the US, there would be no further reason for an American military presence.

In order to convince Xi and his Zhongnanhai colleagues that Obama is sincere, he would have to take steps to build trust. The most prominent step would be to change his pivot to Asia, which China regards as military containment, into a platform for joint high sea patrols and exercises with the PLA Navy.

When realized, there are two important benefits for Obama in addition to reining in North Korea. First, with sequestration, Obama is facing a shrinking defense budget. He still has a war budget on al Qaeda that needs to be fed. He does not have the funds to deploy troops in the Pacific where the US faces no threat.

More importantly, Obama should be thinking about his legacy to history. By brokering a lasting peace with China and become partners in developing a stable Asia Pacific, Obama would be remembered for altering the disastrous warpath toward self destruction embarked by the previous Bush administration and putting America back on a path to prosperity.

Saturday, June 1, 2013

Will President Obama seize the opportunity to turn North Korea into a breakthrough with China?


Later this week, President Barack Obama will meet China’s President Xi Jinping in an informal setting in Southern California, an added stop for President Xi en route back to China after state visits in Latin America.

This more or less impromptu meeting has aroused a lot of interest on both sides of the Pacific. Some pundits do not expect the meeting to move the needle on bilateral relations. Others hope for an outcome that’s goes beyond status quo.

Since the White House initiated the invitation, Obama has an opportunity to think out of the box and present an overture that could permanently change the nature of the bilateral relations.

A good place to start would be for Obama to offer a startling new approach to the North Korea issue.

Heretofore, North Korea has been a pipsqueak state that seemed to get away with jerking the chains of both the US and China with impunity.

Despite or because of vocal protests from the US, North Korea has apparently gone ahead with an underground nuclear detonation—“apparently” because no one seems to know for sure.

Despite consternation from Japan and South Korea along with pressure from the US, North Korea has test-fired ballistic missiles in the direction of neighboring South Korea and Japan. Some supposed intercontinental range missile turned out much shorter range than expected and some were outright duds.

Each time after the government has misbehaved on the international stage, it would offer to begin the six party talks, provided of course the US will agree to preconditions that the North Koreans know the US will not accept.

The only recourse Washington seems to have is to lean on Beijing to get the North Korea to behave, since the regime is completely dependent on the food and energy aid from China, without which the regime would certainly collapse.

But China is equally frustrated, if not more so, by the North Koreans. Each time Beijing sends a special envoy to Pyongyang to ask the government not to build a bomb or not to fire a missile, the Pyongyang would assure the envoy and then goes ahead and reneges a few days after the envoy leaves. Sometime, the misbehavior takes place a couple of days ahead of the arrival of the visiting delegation just to rub it in.

Most recently, after the most recent missile test and after finally releasing Chinese fishermen held by the North Koreans—as this has happened more than once—Pyongyang promptly sent their highest ranking military official to Beijing to again express proper contrition and again promise to participate in the much desired six party talks.

North Korea’s seemingly erratic behavior has been deliberate and carefully calibrated. It continues to push and test the boundary of what China will tolerate, because Pyongyang knows that China will not allow the regime to implode altogether.

China has two major reasons not wanting to see the Pyongyang regime collapse. First it would have to deal with a massive refugee problem as Koreans flee north into China. Second, presumably the Seoul government will take over and unify the entire peninsula. This would mean potential American military presence all the way to the border of China.

Up to now, Washington has been badgering Beijing to fix the problem and make Pyongyang behave but has offered nothing that would help Beijing get out of the conundrum.

At the coming meeting with Xi in southern California, Obama has the chance to put a startling offer on the table. Namely, if South Korea were to unify north and south, the US immediately withdraw all its troops from the Korean peninsula!

Of course, American presidents have been known to make deals that they could not later deliver. Therefore Xi’s response is likely to be cautious and measured, but what an ice breaking beginning this would be.

To offer to sit on the same side of the negotiating table opposite North Korea is to declare Obama’s recognition that the US and China have too much at stake in common to continue in adversarial postures.

Obama could point out to Xi that since China normalized its relations with South Korea (to the consternation of the North) in 1992, South Korea has become an important economic partner of China and the bilateral relations have been cordial without one-sided demands like that from the North.

If the Korean peninsula were to unify under Seoul, China would have a friendly neighbor and enjoy a stable relationship. With peace and stability being the common goal of China and the US, there would be no further reason for an American military presence.

The rationale is compelling and the proof is in the doing. In order to convince Xi and his Zhongnanhai colleagues that Obama is sincere, he would have to change his pivot to Asia into an invitation for joint exercise with the PLA Navy. In that way, the expression of peaceful intentions is actualized.

Much work has to be done before this scenario becomes real, but there are two real benefits for Obama. First, with sequestration, Obama is facing a shrinking defense budget. He still has a war budget on al Qaeda that needs to be fed. He does not have the funds to deploy troops in the Pacific where the US faces no threat.

More importantly, Obama should be thinking about his legacy to history. By brokering a lasting peace with China and become partners in developing a stable Asia Pacific, Obama would be remembered for altering the disastrous warpath toward self destruction embarked by the previous Bush administration and putting America back on a path to prosperity.

A similar version has been posted on New America Media.