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The Coronation of the China Dragon

No one can deny China’s destiny. Its rise has been forecasted for decades since state-owned corporations were given autonomy in the 1970s. In the following 30 years, its aggressive embrace of capitalism has made it the fastest growing economy in the world. According to The Conference Board, a global, independent business membership and research association working for the public interest, China’s contribution to the global GDP (gross domestic product) will surpass America’s by 2018.

Since the year 2000, the percentage of the economic output from the United States has declined. By contrast, China has been growing steadily since 1970, hitting 15.6 per cent in 2015. China’s contribution will reach 17.2 per cent by 2025 while America’s stake will decline to 14.9 per cent, said Forbes contributor Mike Patton. China’s rise had been attributed in part to its booming automobile industry, said Mr Patton. “China’s auto industry is thriving and should provide stiff competition for US auto manufacturers in the years ahead. Unless the US government levies high tariffs on imports to equalise prices between Chinese autos and those made in America,” said Mr Patton.

We have already seen the US make a stand with President-Elect Donald Trump. Automobile giant Ford reversed plans on a Mexico factory early this year to focus investment on its Michigan plant after Mr Trump threatened to slap high tariffs on Ford vehicles made in Mexico but sold in the US, reported news agency, The Daily Telegraph.

China-Bully-Illustration

(Photo: namvietnews)

China Bully

At the same time, China’s march for domination in its region has left many of its neighbours trampled in its wake. Its claim on the South China Sea – believed to be over oil and natural gas resources – has stirred bitter waters between Malaysia, Brunei, Vietnam, Taiwan and Indonesia.

After starting a campaign against the Vietnamese to vie for the Paracel Islands, China turned to the Spratly Islands, which had been claimed by the Philippines. Nearly a thousand Filipinos protested outside the Chinese consulate over China’s “gunboat diplomacy” after Chinese naval vessels took up positions near the disputed islands to force a standoff.

Even as the Philippines sought international arbitration, China had started on its plans to reclaim land, build up islands and put military installations on outposts throughout the busy waterway, reported The Financial Times. However, aside from complaining out loud about the “great wall of self isolation”, the US had no recourse against China as it takes small actions that did not warrant a strong response.

Manila’s counter to China’s claim lay in the small community of Filipinos living on one of the outcrops to the Spratly Islands. Filipino mayor of the Kalayaan Island Group (what the Fiipinos call the Spratly Islands) Eugenio Bito-Onon Jr. said the elementary school and (natives’) homes “were an exercise in sovereignty. By just living there, more than any military presence, it remained a Philippine island. Even though the United Nations Convention of the Law of the Sea (UNCLOS) – which China has consented to abide by – has ruled in Philippines’ favour in July, 2016, Beijing has rejected the proceedings as “illegal and illegitimate”.

It would also seem China does not care much for what the world thinks. “Its foreign ministry has said nearly 60, mostly tiny, countries support its decision not to take part in the South China Sea tribunal,” said Financial Times. But even then, the rhetoric was meant for Chinese ears rather than the international audience.

Countries in Southeast Asia have welcomed US military presence as a balance to China’s strongarm tactics. Regional players such as Singapore, Indonesia and even Vietnam, a country that harbours no love for America, have been carefully drawing closer to US military presence – without becoming outright allies so as to protect long-standing trade partnerships with China.

Philippine-Rodrigo-Duterte_China-Xi-Jinping-Handshake

(Photo: King Rodriguez/PPD via davaotoday)

Change of Heart

However, in a surprise move, Philippines – a long-time US friend – turned its back on Washington and opened the doors to Beijing last October. In a speech made during his visit to China, President Rodrigo Duterte said: “I’ve realigned myself in your ideological flow and maybe I will also go to Russia to talk to Putin and tell him that there are three of us against the world — China, Philippines and Russia. With that, in this venue, your honors, in this venue, I announce my separation from the United States. Both in military, not maybe social, but economics also.” This has raised concerns in America. US state department representative John Kerry had said President Duterte’s remarks were “inexplicably at odds with the very close relationship” between the two countries.

Philippines is not the only country in Southeast Asia to embrace Sino relations. Malaysian Prime Minister Najib Razak was next to visit Beijing. After returning with trade and investment agreements to the tune of US$34 billion, critics accused the Prime Minister of “selling off” Malaysia to China. Mr Razak said the accusation is “absurd and absolutely false”. Chinese Vice Foreign Minister Liu Zhenmin echoed the sentiment when Malaysian media asked if China was exercising ‘chequebook diplomacy’. “There is no such thing as using our financial muscle to improve ties,” said Mr Liu.

Despite efforts to downplay both events, China is evidently jubilant. Chinese President Xi Jinping said relations with Manila has emerged from “winds and rains” and in separate events welcomed relations with Malaysia, calling on both parties to “combine development strategies, and to lay a solid foundation for stronger trade cooperation”. One of Malaysia’s most palpable Chinese link was its US$13 billion Chinese loan to build the East Coast Rail Link, the “most expensive rail infrastructure in the world in its class”.

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(Photo: Illustration by @herbertrsim inspired by Publishing Perspectives’ Eagles vs. Dragons and the Battle for the Future of the Web)

Who Wins?

It would seem the Philippines has the upper hand in its dealings with Beijing. After all, it walked away with US$24 billion in funding and investment pledges, and China has allowed Philippine fishing boats access to the disputed Scarborough Shoal. Even though Mr Duterte’s predecessor Benigno Aquino Jr. had sought arbitration over China’s claim in the South China Sea, the vocal President had dismissed it as a “sheet of paper with four corners”.

At the same time, Mr Duterte’s change of attitude to the US after his return from China has kept relations with Washington alive. The President had said he is not breaking ties with the US, but merely seeking a more “independent foreign policy”.

Despite China’s posturing, it has not really won over ASEAN members. Asia’s “turn” to China is not a sudden pivot but a “natural strategic phenomenon” that can be traced back to the Cold War. It would be a mistake to “label Malaysia and the Philippines as ‘pro-China’ and, by default, ‘less friendly’ to the US” because of the recent deals, said Tang Siew Mun, Head of Asean Studies Centre at Singapore’s Iseas-Yusof Ishak Institute.

“It’s almost universal in every country: make profits and benefit from the relationship with China, but don’t make yourself choose between the US and China,” said Southeast Asian specialist Carl Thayer from the University of New South Wales in Australia.

It is a delicate balance of power between the US and China in Asia, with an almost equal distribution of loyalty among Asian countries. To maintain stauts quo, countries such as the US, Japan, Australia and Singapore have called for China to respect tribunal ruling and international law. But ultimately China is too important and too economically integrated to be ignored. If China gains control of the South China Sea, it can reap – and share – economic benefits. But it can also unilaterally shut out a country at its pleasure.

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