China Throws Out South China Sea Rule Book
Comment of the Day

December 20 2016

Commentary by Eoin Treacy

China Throws Out South China Sea Rule Book

This article by Andrew Browne for the Wall Street Journal may be of interest to subscribers. Here is a section:

During the Cold War, rules of the road, diligently adhered to, prevented accidents that might have brought the U.S. and the Soviet Union to war. China and the U.S. have been working on similar protocols. Last week’s apparently calculated act of lawlessness, though, changes the game.
Between Mr. Trump’s cavalier approach to China’s sacred cows, and China’s new disdain for legal niceties, expect regular eruptions. China is clearly testing U.S. resolve.

A shift in strategy assumes of course that the decision to snatch the drone came from the top rather than a rogue commander, though the latter possibility is just as ominous: It would raise questions about Mr. Xi’s sweeping reorganization of the armed forces designed to impose greater Communist Party control.

Mr. Xi’s administration has declared “maintaining stability” to be its top task for 2017 as the economy sputters. Now, the challenge from Mr. Trump to Beijing is forcing both countries into uncertain waters. Mr. Xi’s navy has just literally and figuratively rocked the boat.


Eoin Treacy's view

Here is a link to a PDF of the full article.

Change doesn’t come easily and for a decade just about everything went right for China. Its economy was growing faster than any other. Hundreds of millions of people were lifted out of poverty and into the middle classes. China’s new consumers are feted all over the world and Hollywood blockbusters pander to Chinese sensibilities. Meanwhile the USA went through a massive credit crisis, was mired in two unproductive wars in the Middle East and Afghanistan, while Europe has spent almost a decade wallowing in the misery of austerity. 

A sense of inevitability has entered Chinese discourse surrounding expectations for the country to retake it historic dominant position on the global stage. Media talks more about the G2 than the G7 and Xi has very definite aspirations toward a robust military. This is particularly true since it may act as a salve to national pride during the ongoing transition away from infrastructure and exports led development. A point I’ve made previously is that a country does not spend hundreds of billions of Dollars on its military without someone musing on whether all these new toys actually work. 

Meanwhile despite Chinese derision of democratic processes we have ample evidence this year that democracy does work. Electorates are quite capable of identifying the rot in their systems and when pushed far enough will ruthlessly excoriate it. In our personal and trading lives hubris is to be avoided at all costs because it is perhaps the greatest inhibitor to rational decision making. Nevertheless, when powerful elites have become so satisfied with the status quo that they cannot contemplate a challenge to their authority they represent the epitome of the master in Hegel’s master-slave dialectic

Capturing a US naval drone is clear provocation and is in all likelihood a riposte to Trump’s call with the president of Taiwan. Tit for tat provocations are not a constructive way for two nuclear-armed global powers to interact. It looks like 2017 is going to be one of the most tumultuous years in geopolitics in quite some time as China’s rise is tempered by a newly assertive USA.


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