The notion of a potential trade war breaking out sometime in the near future is creating much speculation. A number of well known economists, including Nobel Prize winners Joseph Stiglitz and Paul Krugman are convinced President Trump’s aggressive protectionist tariffs, coupled with China’s retaliatory actions herald the beginning of a US-China trade war that will have drastic effects on the global economy. Other economists, and experts in the field are less convinced a trade war is upon us. They point to the Chinese retaliation measures as proof of this thesis. Beijing’s response has been cautious, and calculated. 128 US products with an import value of $3 billion have been targeted. The sum is a fraction of President Trump’s tariffs on $60 billion in Chinese imports. What the future will bring remains to be seen, but if the market reactions over the last two days are an indication, the anxiety out there may not diminish for some time.
It is open for debate whether or not China’s responses will be strictly economic in nature. Economists seem to believe this will be a tit-for-tat exchange of tariffs between the US and China. Beijing can decide to craft a geopolitical response as well. China’s actions in the North Korea situation have vacillated between helpful and hindering. The Trump administration had long sought Beijing’s assistance in defusing the high tensions in the region. To Washington’s chagrin, China has not exercised its substantial influence with Pyongyang in a beneficial manner. With economic tensions between the US and China rising, Beijing could use it as a justification to do even less with regards to the North Korean situation.
The South China Sea presents another arena where the PRC can project its displeasure with US actions. China has been extending its military reach there, and has expressed increasing annoyance with US attempts to project power in the disputed sea. Today a US Navy destroyer cruised within 12 nautical miles of Mischief Reef, once a fishing atoll, now the site of a Chinese military installation. Now, with the tariffs becoming a heated matter, Beijing can respond more aggressively to US warship patrols, possibly leading to a diplomatic compromise or a concession of sorts down the line.
Saving face is important to China. If the tariff tug-of-war continues, and even escalates, the South China Sea, and North Korean issue provide two areas where Beijing can challenge Washington with a measured approach without plunging the world into a major trade war.
Planning and preparation is underway for the nuclear-powered aircraft carrier USS Carl Vinson’s visit Da Nang in March. News of the potential visit broke when Secretary of Defense James Mattis was in Vietnam for talks with Nguyen Phu Trong, the general secretary of the ruling Communist Party of Vietnam. It’s almost certain now that the United States Navy will be returning to Vietnam in a very big way. Carl Vinson’s port call will mark the first time a US aircraft carrier has sailed in Vietnamese waters since Operation Frequent Wind, the evacuation of US citizens from Saigon in April, 1975.
Word of the port call comes at a time when tensions in the South China Sea region appear ready to flare up. China has claimed that earlier this month a US Navy destroyer violated its territorial waters when it sailed within 12 nautical miles of Scarborough Shoal. There is speculation that Beijing is preparing to make a move in the region. On 30 December, 2017 Chinese state television broadcast video of Chinese military facilities on Fiery Cross Reef in the South China Sea. The broadcast highlighted the scale of China’s military buildup in the region. China may intend to use the transit as the reason for increasing its military presence in and around South China Sea.
Carl Vinson’s visit is symbolic of the growing defense relationship between the United States and Vietnam. Vietnam has been quite vocal with its opposition to Chinese moves in the area, joining India, Australia, Japan, and other regional powers that harbor misgivings about China’s long-term intentions. Those nations have followed the US lead and strengthened their defense relationships with Vietnam over the past five years. India has provided advanced training for Vietnamese fighter pilots, and its budding submarine force. Australia has provided equipment and advisors to a lesser degree.
The purpose that is fueling the relationship’s growth is clear. Vietnam represents the first line of defense against Chinese actions in the South China Sea. The more capable its military becomes, the greater the possibility that it can slow down a potential Chinese military venture until US, Australian, and Japanese warships and aircraft arrive in force.
The People’s Republic of China has launched its second aircraft carrier in the port city of Dalian. This ship will be the first domestically built carrier, however, it will not likely enter service until 2020. At present the PLAN (People’s Liberation Army Navy) has one aircraft carrier in service, the Liaoning, an ex-Soviet Kuznetsov class ship. When Liaoning became operational it was suspected that the ship was serving as a testbed of sorts for China’s aircraft carrier program. Judging by the first photos of the new carrier, which show its design has borrowed heavily from the Liaoning, the suspicion is reasonable. The flight deck layout and island structure is nearly identical to the Liaoning and its displacement of 50,000 tons is on par with the earlier carrier.
This is a big step for China. It has been over twenty years since the 1996 Taiwan Straits Crisis when two US carrier battlegroups were rushed to Taiwan in a traditional show-of-force that deterred Beijing from taking aggressive action against the island nation. The crisis forced China to acknowledge the threat posed to them by US aircraft carriers and accelerate its military buildup, and begin to consider building or purchasing aircraft carriers of its own.
The PLAN has taken on a more prominent role in China’s foreign policy as the South China Sea and Senkaku situations moved to the forefront of national priorities and international scrutiny. Large scale naval exercises and Chinese warships appearing at far-flung locations around the world were common in 2016 and act as the vanguard of China’s growing ability to project power and influence events with its own maritime forces. The ongoing buildup of US naval forces in the Sea of Japan serves both as a mirror of what the PLAN is striving to become, as well as an illustration of the sort of US involvement in regional matters that China wishes to deter.
The PLAN’s (People’s Liberation Army Navy) sole aircraft carrier and its accompanying escorts continued their power-projection tour of the Western Pacific today. Liaoning has been at sea for the last three weeks or so primarily conducting drills and taking part in exercises in the South China Sea. This morning it transited the Taiwan Straits and steamed northwest along the center line that divides the straits. Taiwan scrambled warplanes and monitored the transit closely.
The move has come at a time when tensions between Taiwan and the PRC are rising. Taiwanese President Tsai Ing-Wen spoke with US President-elect Donald Trump weeks ago, a move that broached diplomatic protocol and enraged Beijing. This past weekend, Tsai met with US Senator Ted Cruz on a stopover in Houston while she was en route to Central America. The meeting was controversial and served to increase the tensions between Taipei and Beijing.
China’s decision to transit the carrier through the straits appears to be geared as a warning to Taipei about its recent diplomatic moves as well as a show of force. It is the second action in recent days. On Sunday a Chinese H-6 bomber flew in close proximity to the Spratly Islands, a not-so-subtle message projecting China’s ability and willingness to use military force to settle territorial disputes.
There has been concern in Beijing that Donald Trump will change or abandon the One-China policy when he takes office. A state-run Chinese tabloid newspaper even went so far as to warn that China will take revenge if the One-China policy is tampered with.
Since President Rodrigo Duterte took office in Manila relations between the Philippines and China have improved considerably, while the PI’s relations with the United States have deteriorated to an extent. Duterte appears eager to move his nation out from beneath the shadow of the US and set it on a more independent course. Thursday’s remarks by the Philippine defense secretary are an example of this. Delfin Lorenzana said it is unlikely that the Philippines will allow the US to use his country as a springboard for freedom of navigation exercises in the South China Sea. He pointed out that the US has numerous bases in the region that its ships and aircraft can use.
Under Beningo Aquino III’s presidency, some US aircraft and warships stopped in the Philippines on their way to patrols in the South China Sea. Lorenzana also said that President Duterte will probably not allow that to continue in order to “to avoid any provocative actions that can escalate tensions in the South China Sea. It’s unlikely.”
This change in policy comes on the heels of Duterte proposing a marine sanctuary and no-fishing zone be placed in the middle of the contested Scarborough Shoal last month. He told the media that he planned to sign an executive order declaring the zone and had discussed the matter with his ‘counterpart from China.’ Should Duterte issue the executive order it would reassert Philippine sovereignty over that area. A move like that will undoubtedly cause friction with China and puts Thursday’s comments by Lorenzana into a more coherent context perhaps. Removal of material support for US freedom of navigation exercises in exchange for China’s acceptance of the proposed Scarborough Shoal sanctuary.
Regardless of intentions and actions, it is clear that Duterte is playing a very shrewd game of geopolitical poker. His hand is nowhere near as strong as he would like. Much to his chagrin, the Philippines are not a major power in the South China Sea dispute. Manila has neither the political or military capital to influence the intentions and actions of the US and China in the region. Cozying up to China will bring short term benefits. However, China will act when it ready to act and in a manner that benefits its own national interests first and foremost. When that happens, Duterte will have minimal influence over the situation. His only viable option will be to tacitly approve of whatever plans Beijing has in mind. The same can be said for his stance with the United States.
To put it another way, Duterte is punching above his weight and if he is not wary, the US will not be there to administer a standing eight count if needed.