DON’T ALLOW CHINA TO SNATCH AWAY TPP FREE TRADE PACT
The modus operandi of China’s rulers never changes, whether it be one of the imperial dynasties of yore or the communist dictatorship of today: use deceitful means to triumph in all competitions or conflicts. At this stage, Japan must particularly be on the lookout for what China has up its sleeve as it seeks to expand its sphere of influence.
China has been deceiving the US since the normalization of diplomatic relations in 1979. China joined the World Trade Organization (WTO) in 2001 thanks largely to Washington’s backing. At the time, Beijing made many empty promises, such as reducing the number of state-owned corporations and eliminating unfair government subsidies and preferential tax measures in due time. Over the years, the advanced economies of the world have found themselves lured to China through these false promises and the attraction of artificially suppressed wages. Taking advantage of these unfair circumstances, Chinese companies have been able to make excessive profits and lift the economy as a whole. Having thus managed to become the world’s second largest economy with a powerful military, China is now blatantly forging ahead with a strategy to push the US aside and replace it as the world leader.
If China wishes to surpass the US, however, she will have to win Japan over. I suspect that China now believes it has managed to take the first step toward co-opting Japan, its biggest trading partner and the world’s third largest economy.
On November 15, Japan signed a 15-nation agreement to join the Regional Comprehensive Economic Partnership (RCEP), which constitutes the world’s largest free trade bloc, with the 10 member nations of ASEAN (Association of South East Asian Nations) and Australia, China, New Zealand, and South Korea. A key Japanese government official well versed in the process leading to the pact’s signing had this to say:
“The ASEAN side, especially Vietnam which hosted this year’s summit, was very positive about signing the agreement. Honestly, Japan could not but follow suit, as we feared that Japan would end up alienating ourselves in this region if we continued to oppose it.”
Throughout the negotiations, begun in 2001, Japan had serious concerns about the chances of China dominating the mammoth economic bloc across the vast expanse of the South China Sea and the Western Pacific. The original plan was to comprise the 10 ASEAN nations plus the region’s three major economies—Japan, China, and South Korea. But Japan insisted on including Australia, India, and New Zealand as well. India, the world’s largest democracy, is also the world’s second most populous nation and is expected to surpass China in population in the not too distant future. Japan earnestly wanted India to join in order to block China from playing a dominant role.
The Japanese plan was progressing smoothly until last year, when India, which had been angry about its worsening trade deficits with China, decided against joining the bloc. India had other problems with China, including bloody border clashes. As it turned out, Japan had to sign the pact without having been able to persuade India to change its mind.
China’s Outrageous Assertions
For a comprehensive multi-national economic bloc, the RCEP hasn’t set very ambitious standards. For instance, its tariff elimination rate is held at 91%, with ambiguous rules restricting unfair business practices. There is a world of difference between the RCEP and the 11-nation Trans-Pacific Partnership Agreement (TPP), which Japan led to agreement in December 2018, boasting a 99.3% tariff elimination rate and vowing to stringently monitor state-owned corporations. But it is a fact that the RCEP is a US$26.2 trillion economic bloc accounting for 31% of the world’s gross domestic product (GDP) and 30% of the world’s population (2.2 billion people). That China will occupy a dominant position in this bloc will have serious implications.
On November 18, Chinese Premier Li Keqiang discussed the significance of the new trade agreement from a Chinese perspective: “The RCEP is the embodiment of the common will of the region to secure multilateralism and free trade…It will help stabilize both the supply chain and the industrial chain of member nations.”
Li’s remarks constitute China’s challenge to the US, simple and clear—tantamount to declaring that China is different from the US, which views the other nations of the world only from an “America First” perspective; that China alone is entitled to become the true leader of the world; and that the American era is ending and the Chinese era is dawning.
In order to replace the US as the hegemon, China has yet to overcome a host of hurdles. For one thing, it will have to get a firm grip on the South China Sea and the Western Pacific, and expand the Chinese sphere of influence by joining the TPP. That Xi Jinping expressed a readiness to join the agreement on November 20 can correctly be interpreted as a sure sign that China is ready to “highjack” the US en route to world hegemony.
China obviously envisions a path to economically dominate the world through an RCEP minus India and a TPP minus the US. To achieve this grand strategy, China must first take Japan in together with the TPP. The Japanese government, business world, and we Japanese ourselves must sternly realize that China is now specifically targeting Japan and its industries.
On December 1, China’s new export control law (ECL) took effect, entitling China to take retaliatory measures against economic activities by countries and regions that endanger “Chinese national security or interests” (Article 48). China claims the law also applies to Japanese companies, as stipulated in Article 44 that “organizations and corporations outside China” be held accountable for the law. Retaliatory measures include criminal penalties.
China earlier announced a bill entitling it to go to war—not only when its citizens are harmed or its territory is attacked but also when its core interests are threatened. And now, China has gone to the extent of imposing criminal punishment on any foreign corporation that threatens its interests outside China—i.e., all the world’s corporations, so long as China determines that they are harming its interests. But this isn’t the first time that China has come up with an outrageous claim that one of its domestic laws simultaneously applies to the international community. Nobody could imagine China going this far.
Entry into the World Trade Organization (WTO) in December 2001 was China’s first step toward its abusive use of the world’s open economy. A close look at the process of the protracted WTO negotiations reveals the zeal, tactics, and strategy peculiar to the Chinese. Zhu Longji, then the premier tasked to supervise the negotiations, had been purged with Deng Xiaoping in 1970 by Mao Zedong during the Cultural Revolution, and had lived under the fear of death for some 20 years. The old warrior who survived the ordeal with fortitude grappled unswervingly with China’s entry into the WTO as vice premier and premier 1991-2003.
China’s Strategic Objective: Driving Wedge between Japan and US
On his visit to the US in April 1999 during the final phase of the WTO negotiations, Zhu delivered an address before a group of representatives from the American business community.
When Brent Scowcroft, President George Bush’s National Security Advisor 1989-1993, asked if a rising China would become America’s rival, Zhu gave a lengthy reply, effectively stressing: the overall gap between the US and China was large and China had only a small nuclear arsenal and meager GDP. It would take decades for China to close the gap, but its growth would mean a huge market for the US. Therefore, China’s rise would be in America’s interest. The US ought to regard China not as a threat but as an opportunity.
Zhu told every American VIP he met that the US trade deficits were not of China’s own making, explaining that the profits from its trade with the US was only a small portion of the total US deficits. Zhu repeatedly stressed that the real problem for the US was Japan, which he claimed was garnering huge returns. Clearly, China even then already defined driving a wedge between Japan and the US as its strategic objective.
Astute though he was, Zhu inadvertently made several slipups in his remarks before Americans, showing his true colors as a Chinese communist leader unable to speak beyond the confines of the communist doctrine.
During an interview with Peter Khan, publisher of The Wall Street Journal, on April 2, 1999, Zhu was asked about a young Chinese man standing in front of a tank during the Tiananmen incident in 1989: “What do you think of the man? Was he being brave…or foolish? Was he misguided?” Zhu shot back: “There is another photograph that left a deep impression on me. It’s a photo of a young naked girl in Vietnam, running on a road in a bombed area. But there’s one thing entirely different that everyone should think about: The man faced the tank but the tank didn’t crush him. It avoided him…”
Khan, who did not refute Zhu’s account, should have pointed out that the tragedy that fell upon the little Vietnamese girl happened during the bloody war between the US and North Vietnam. In Tiananmen Square, the Chinese government murdered its own citizens. Although the young man himself luckily escaped unharmed, the communist government went on killing thousands or even tens of thousands of its own citizens. The world doesn’t know exactly how many. Khan should have pointed out the indefensible culpability of the Chinese government for these mass killings.
We must pay close attention to the relationship between Japan and China going forward. Foreign Minister Toshimitsu Motegi and his ministry must deliver a stronger message to China regarding matters of Japan’s national interests, specifically pertaining to the Senkaku Islands. During a recent joint news conference in Tokyo, Chinese Foreign Minister amplified without reserve China’s position regarding the Senkakus. Motegi failed to deliver a robust rebuttal. Motegi and the Foreign Ministry must step up their game.
(Translated from “Renaissance Japan” column no. 930 in the December 10, 2020 issue of The Weekly Shincho)