Economic, not military, rivalry for US and China

By Satur C. Ocampo
At Ground Level | The Philippine Star

No matter the military muscle-flexing both by China and the United States (along with Japan and other US regional allies) in relation to the ongoing maritime dispute in our part of the world, all parties concerned must emphasize the primacy of resolving the disagreement through diplomatic, peaceful means – specifically via the UN Convention on the Law of the Sea.

Thus it’s encouraging that, at the hearing in The Hague by the UN Permanent Court of Arbitration on the “merits and remaining issues of jurisdiction and admissibility” of the Philippine case against China, seven countries sent observers and were allowed by the court. These are Australia, Indonesia, Japan, Malaysia, Singapore, Thailand, and Vietnam.

(The hearing is billed as Round 2. In Round 1 earlier this year, the court ruled that it has jurisdiction over the case. China has refused to participate in the proceedings, but sent its position paper to the court.)

Malaysia and Vietnam also have maritime claims in the South China Sea. (Japan has territorial dispute with China over islets in the East China Sea.) A ruling in favor of the Philippines will enhance Malaysia’s and Vietnam’s claims too. China adamantly declares it “will not accept the arbitration,” but having signed the UNCLOS documents, it ought to abide by the convention’s processes and decisions.

The Philippines’ main argument before the arbitration court is: China’s alleged historic-rights claim of sovereignty over 90 percent of the South China Sea under its “9-dash-line” map has no legal basis under the UNCLOS. The argument is backed up by numerous historical documents and ancient maps.

If China’s 9-dash-line were to be left unchallenged, the Philippines would lose 80 percent of its Exclusive Economic Zones as defined under the UNCLOS. Similarly, Malaysia would lose 80 percent and Vietnam 50 percent of their EEZs, according to an extensive study by Supreme Court Justice Antonio Carpio. Indonesia has also warned China that it will go to court if its Natuna Islands (whose surrounding waters reportedly hold Southeast Asia’s largest natural gas field) are covered by the 9-dash-line.

There are thus converging national interests among the concerned Asian nations to support the Philippine challenge before the arbitral court – more so if the court will uphold it. In such an event, international public opinion must be harnessed to convince China to accept the ruling as a responsible regional power and as a signatory to the UNCLOS.

Back to the issue of military muscle-flexing over the South China Sea – or over the much wider area of Asia-Pacific – in light of America’s plan to deploy in the region 60 percent of its maritime and other military forces by 2020. The shift from Europe and the Middle East, under Obama’s “pivot to Asia” scheme, is aimed at “engaging” China’s rise as regional economic and military power. The consequent US-China arms race must not be allowed to culminate into war, as some observers warn may happen, invoking the “Thucydides trap” – the attendant danger of war when a rising power rivals a ruling power (about which I wrote two weeks ago).

The dire consequences of such a war can be unimaginable, not only for the protagonists. It can be even more so for the people of the Asia-Pacific nations, whose governments both powers seek to win over into their rival geo-economic projects: Barack Obama’s Trans-Pacific Partnership and Xi Jinping’s Free Trade Area of the Asia-Pacific.

Given the current state of the world’s two biggest economies – and the American people’s trauma and anti-war mood induced by their government’s costly still-ongoing wars of aggressive intervention (in Afghanistan and Iraq, and its “war on terror” now focused against the Islamic State) – they ought to concentrate more on their respective economic problems.

• The US has been stuck in a “tortoise recovery” from the 2008-2009 global financial-economic crisis, which stemmed from the excessive greed and abusiveness of its giant banks and oligopolies. The federal government had to bail them out at the expense of America’s poor and middle classes. US national debt has soared to $13 trillion (74 percent of its GDP), of which $1.3 trillion is owed to China.

• China is struggling to manage the slowdown and adjustments of its economy – which has been growing rapidly over two decades and lifted 700 million Chinese from poverty but badly degraded its ecology. The slowdown has adversely affected global economic growth. With $3-trillion in gross international reserves, China aims to internationalize its currency (the yuan), to make it convertible, like the US dollar and the European euro.

About this Chinese goal, Bangko Sentral deputy governor Diwa C. Gunigundo was quoted as saying: “It is crucial for economic and financial reforms to be sustained to cement China’s intent to internationalize the yuan. If these goals are realized, a strong China is good for both the Asia-Paciic region and the global economy.”

A hardly-known fact is that China and the US have been holding annual high-level talks to enhance mutual trade and investments, and related issues for over 30 years now. That’s since 1983, when they established the US-China Joint Commission on Commerce and Trade. Every year 16 working groups meet to tackle varied issues; their work is reviewed at the high-level talks wherein agreements are hammered out.

In their 2014 and 2015 talks, the US panel reported gains from agreements on agricultural market access, intellectual property rights protection, legal protection for US firms, innovation policies, competition law enforcement, pharmaceuticals and medical devices, information technology, tourism, and statistics. Yet China enjoys a trade surplus of $218 billion this year.

Can’t the leaderships of China and the US be deflected from warmongering and indulge themselves instead in making as much money as possible from each other’s giant economies?

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Published in The Philippine Star
November 28, 2015

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