Sunday, June 02, 2013

Japanese Bonds and China’s Shrinking Asymmetric Options

Sinocism kindly posted a link to my piece on China’s Japanese bond holdings, with an admonitory comment questioning my conclusion.  The relevant graf  (Sinocism comments in bold):

I have a feeling that China has decided that, in the face of US military superiority, Abe’s success in building strategic ties with India as well as China’s other, smaller regional antagonists, and advances in the anti-China Trans Pacific Partnership alliance of Pacific democracies (plus Vietnam and Myanmar) a key weapon for the PRC as it confronts the pivot is that China is a creditor nation—and the US and Japan are debt superpowers // perhaps this is a risk to Japan, or at least China wants Japan and the rest of the world to believe it is a risk to Japan, but at this point it is hard to believe the “China debt threat” meme when it comes to the US. the numbers just do not support it
I should make it clear that I am not an advocate of the “China debt bomb” theory of US-China relations a.k.a. Chineez ownz r muneez and will rule us!

It would be a) ineffective and b) economic suicide for China to use its ownership/purchase/sale of US government debt to make an overt threat against the United States.

Japan, as Sinocism points out, may be another matter.

However, I think there is a more important point here.

Chinese strategy is to punch asymmetrically against US strengths, avoiding military confrontation (an area of absolute US superiority) for areas of US weakness.

The Chinese situation, therefore, is more complicated that the model of head-to-head deterrence that prevailed during the Cold War.  Back then, it was a matter of maintaining overall parity in conventional military terms (here’s a nice discussion of how the USSR tried to match up with NATO in Eastern Europe)  and, on the strategic side, counting how many missiles and warheads each side had.

Deterrence was a nice, predictable business of parity, transparency, and engagement.

With an asymmetric threat, the element of parity is gone.  When one side develops a capability, the other side won’t necessarily develop a mirror image counter capability in response.  It might strengthen a capability in a completely different area. 

Instead of a simple head count of troops, tanks, warheads, and missiles multiplied by an effectiveness/availability factor, strategists are comparing apples and oranges.  

Instead of converging on certainty, the doctrines and capabilities of the two sides diverge over time, potentially increasing instability instead of reducing it.

During the George W. Bush years—truly halcyon years for the PRC in retrospect—the US neglected its strategic economic interests in favor of self-destructive military adventures and China made tremendous geopolitical and economic gains in Southeast Asia, Africa, and South America.  Even in the Middle East, the focus of America’s sound and fury, the PRC has entrenched itself in Iraq and Iran.

The Obama years have been years of rollback.

More to the point, the Obama administration has moved to confront and deny China in its preferred asymmetric spaces. 

For instance, the United States has relied on its capability to project a lot of military power to frame Asian affairs as a security narrative, one that demands US leadership and adherence to US-defined goals and norms such as “freedom of navigation”—even though “freedom of navigation” has nothing to do with the territorial disputes roiling relations between China and its neighbors and, indeed, is a norm that is respected and valued by every Asian state including China and challenged only by the United States (which has promoted the “Proliferation Security Initiative”, which enables interception of transiting vessels in order to search for and confiscate weapons of mass destruction).  

China had counterprogrammed with regional trade and investment, advancing to my mind a more accurate narrative that Asia was a pretty safe and peaceful place, and this situation should be secured by more extensive and intensive integration between the PRC and the surrounding states on the basis of non-interference in internal affairs.

The Obama administration took aim at China’s economic strategy with the Trans Pacific Partnership regional trade pact.  The TPP was conceived as a China-excluding regime that would shift the economic focus of the Pacific states away from China and to the West, thereby denying China the economic leverage and diplomatic influence in smaller states a.k.a. the soft power it relied on in countering the United States.

An interesting subset of the asymmetrical struggle is cyberwarfare.

The United States was a co-conspirator in the world’s first acknowledged act of cyberwarfare, the insertion of the Stuxnet virus into Iranian nuclear facilities.  The PRC, on the other hand, has apparently limited its cyber activities to a massive espionage program and has eschewed genuine cyberaggression.

Nevertheless, the Obama administration has, at least for the purposes of media consumption, encouraged the dishonest conflation of “cyberespionage” and “cyberwarfare” and is using the furor to pressure China to accept cyber “rules of engagement”.

In this context, the comments of Patrick Cronin of the Obama administration’s preferred think tank, the Center for a New American Security, are instructive:

“The 2008 global financial crisis and overcommitment of U.S. forces in Iraq and Afghanistan served to accelerate the perception of China as the next superpower and the decline of America,” he said. “The gradual global awakening to China’s cyberespionage heightened doubts about America’s power, a foundation on which regional security has rested since the end of World War II.”

“Gradual global awakening” = bullshit.

Make that total bullshit.

The “gradual global awakening” was actually the Obama administration’s careful and methodical escalated rollout of the “China cyberthreat” product since November 2011.

If anything, the US attack on purported Chinese cyberwar activities is pre-emptive.

In the military area, only in cyberspace does the PRC have the faintest hope of approaching parity with the United States in the near term.  In other words, pretty much the only asymmetric riposte that China possesses to US military power is its cyber capabilities.

And now the Obama administration has conducted a carefully-executed two year campaign whose objective is to circumscribe China’s covert cyber capabilities.

Remember, if the transparency and engagement that the United States is demanding over cyber war rules actually come to fruition and something closer to parity is achieved under the traditional concept of deterrence (i.e. thanks to these yearly get togethers we each know what the other guy’s got and now we’ve all got basically the same stuff), the PRC has lost.

In fact, it has lost big time since the US will have successfully whittled away at pretty much the only conceivable area of Chinese advantage in the military sphere.

So when I read the continual calls by the United States for engagement, like this:

Speaking to reporters on his plane en route to Singapore on Thursday, Hagel said that the U.S. must find ways to work with the Chinese and other countries to develop rules of the road and a better understanding among nations for the use of cyberspace.

"These are issues that we're going to deal with, frame up, put right at the top of the agenda," said Hagel, who is expected to have the brief meeting with the Chinese on the sidelines of a session at the Shangri-La Dialogue. "There's only one way to deal with these issues — that's straight up."

...and this:

 “Thank you for mentioning China several times,” said [Maj. Gen. Yao Yunzhu, director of China-America defense relations at the Chinese military’s Academy of Military Science] to Hagel, drawing laughter and muttering. U.S. officials have long said their growing footprint in the Asia-Pacific region is not meant to offset China’s military might, Yao said, but noted that “China is not convinced.” 

Hagel said the United States is hoping to build a more constructive relationship with China by fostering closer ties between their militaries. 

“The only way you can do that is you talk to each other,” Hagel said. “You have to be direct with each other.” 

…I also laugh and mutter.  (I love that “…and muttering” phrase.  God forbid it be reported straight up that a Chinese general could get an intended laugh out of an audience at US expense).

Anyway, to bring this discussion full circle, Obama administration economic rollback has been quite successful in countering China’s asymmetric gambits in soft power.  The facts that China is now also in confrontation with Shinzo Abe’s hostile administration in Japan, India is taking Japan’s side, and it looks like the RCEP will be sidelined in favor of the TPP, are probably making China’s strategists more than a little bit nervous.

Beyond consoling themselves that in the long run, China will triumph in Asia as a matter of its sheer size, agreeing to cyberwarfare talks with the US, and reaching out to the United States and the detested TPP (see: China hopes for transparent U.S.-led TPP talks) , China’s strategists have to take another look at the short (and shrinking) list of asymmetric advantages it enjoys vis a vis its antagonists.

What’s left as a possibility for the PRC to exercise leverage?  

Well, there’s China’s creditor status.  

Yeah, better take another look at that thing.

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