Prime Minister Abe, China, and "Generational Theft"

David Lazarus and Michael Hiltzik, business columnists for the LA Times, are two good reasons to read the paper.

Their columns serve as oases of actual reporting, analysis, and informed opinion amid the ongoing desertification of newspapers’ straight news operations.

Hiltzik’s February 27 column on the “generational theft” meme, Seniors vs. Kids Claim is a Sham, is a noteworthy example:

The generational theft trope has already been receiving a vigorous workout in the press. Earlier this month, the Washington Post gave great play to a study by the Urban Institute stating that the federal government spends $7 on the elderly for every dollar it spends on kids. As we shall see, this is true as far as it goes, but it doesn't go nearly far enough to render an accurate picture of government spending.
…
This is also a bedrock argument of the anti-deficit organizations, such as Fix the Debt, associated with hedge fund billionaire Peter G. Peterson. For decades he has pursued a wearisome and spectacularly self-interested campaign to cut Social Security and Medicare benefits for the working class so taxes won't go up too much on the wealthy.
…
So here's the truth about the "generational theft" theme: It's wrong on the numbers and wrong on the implications.

Let's start with that 7-to-1 spending ratio on seniors versus children. Among the flaws in the calculation is that the vast majority of government dollars spent on children comes from state and local governments, which pay most of the cost of education. On a per capita basis, state and local spending on kids swamps the federal government's spending 8 to 1.

Moreover, there are twice as many children 18 and under as seniors 65 and over (this 2008 figure also comes from the Urban Institute report). Put the numbers together and you discover that spending by governments at all levels in 2008 came to about $1 trillion on seniors and $936 billion on children. In other words, very close to 1 to 1.

The notion underlying the comparison of spending on seniors and children is that "if you save a dollar on Social Security it would be transferred automatically to children," observes Theodore R. Marmor, an emeritus professor of public policy at Yale and a long-term student of social welfare programs. He traces this notion to deficit hawks and dismisses it as "not naive, but cynical."

That's because most of the spending on seniors is in Social Security and Medicare, and therefore has been largely paid for by those very beneficiaries over the course of their working lives.

The “generational theft” meme is relevant to my current piece in Asia Times, which concerns Prime Minister Shinzo Abe’s recent trip to Washington to promote his Abenomics/”Japan is back” economic and foreign policies.

My unworthy suspicion is that Prime Minister Abe is something of an opportunistic hack and his program of domestic stimulus, export promotion through yen weakening, and enhanced defense spending through China-bashing will enrich the LDP’s well-heeled backers but leave everybody else holding the bag.

Paul Krugman hopes not, since Japan is now the only Keynsian harbor in a sea of austerity, and offers the best chance to show the world that economic growth is best achieved through through a combination of government spending and inflationary expectations, not spending cuts.

However, as can be seen from the ATOl piece, Abe has also been peddling the “generational theft” meme which means when the stimulus bill comes due, he probably figures that economic growth is not going to be able to cover it.  Instead of adding to Japan’s colossal national debt, I suspect that Prime Minister Abe intends to stick Japan’s large and expensive cohort of oldsters with the check instead.

“Generational theft” is not a favorite of the Obama administration (for that matter, neither is Prime Minister Abe), so I find it interesting that he plugged this disliked right-wing talking point during his trip.  Maybe, Abe wanted to shore up Japan’s political support among the conservative, anti-Obama commentariat as he prepares for some more aggressive foreign policy moves vis a vis China in the face of U.S. government resistance.

This piece appeared on ATOl on February 27, 2013.  It can be reposed if ATOl is credited and a link provided.

Japan's Abe raises ghost of glories past

Prime Minister Shinzo Abe aspired to Churchillian eloquence during his visit last week to Washington. According to the LA Times, what came out sounded more like a Terminator/MacArthur mashup: "I am back, and so shall Japan be."

Foreign Policy's The Cable blog presented a different, more flattering, but somewhat incorrect version:

"I am back!" Abe declared forcefully to the hundreds of experts, officials, and reporters assembled in the basement of the Center for Strategic Studies Friday afternoon. "And Japan is back."

A look at the video reveals that Prime Minister Abe began his address with the awkward remarks reported by the LA Times and concluded his speech with the sole affirmation "Japan is back", having over the course of his 20-minute speech miraculously accomplished his goal of restoring the Japanese nation to greatness. [1]

Fans of the US "pivot to Asia", apparently including The Cable, were enthusiastic about the speech, which included Abe pointing to the commemorative blue ribbon on his lapel to highlight the absolute priority he gives to rescuing Japanese abductees in North Korea (and rejection of engagement with North Korea), declaring the global character of the North Korean nuclear threat, putting forward his country as a democratic promoter of rules-based behavior on the seas, and capping with the applause lines: "I make a pledge. I will get back a strong Japan. Strong enough to do even more good for the betterment of the world."

Others might have regarded Abe's remarks as a rather creepy mix of pivot-pandering meant to ingratiate his administration to the Obama administration, and a jingoistic affirmation of Japan's determination to avoid "second tier" status by a more assertive security and military posture against North Korea and a certain unnamed non-democratic Asian power with the initials "PRC".

Remarkably, Abe-skeptics apparently include the foreign policy team of the Barack Obama administration, as Peter Ennis of Dispatch Japan wrote:

[F]ew people in the Obama administration know Abe, and top officials are somewhat skeptical that Abe ... will be able to restrain ... nationalist impulses and act with a clear strategic vision for stability in the region. As Michael Cucek pointed out recently, Abe himself declared in his "new" book (a virtual reprint of an earlier tome) that his return to power is not simply a replacement of the discredited Democratic Party of Japan (DPJ), but "is a fight to return the country called Japan to the hands of the citizens of Japan from out of the grip of postwar history." Abe's long-standing "history denier" perspective has not changed. ...

Abe had assumed, mistakenly, that his return to office, and that of his Liberal Democratic Party (LDP), would be met with cheers in Washington, that an "anything but the DPJ" attitude prevailed. While greater political stability is certainly welcomed by Obama administration officials, many in Washington were pretty happy with the foreign and security policies of the DPJ's Yoshihiko Noda, who is clearly more moderate than Abe. ...

Abe had initially hoped to trumpet his plans to lift Japan's self-imposed ban on the exercise of the right of collective self-defense, and make clear publicly that Japan would use its missile defenses to assist the United States in the event North Korea launched a ballistic missile aimed at US territory. Abe assumed the new policy would be welcomed in Washington.

That was not the case. The Pentagon, of course, would welcome the defense planning and operational flexibility that would come from Japan exercising its right to collective self-defense. But US officials were concerned that a demonstration of support for such an initiative by Abe could be misinterpreted as endorsement of the prime minister's broader domestic agenda, including revision of the Constitution, which could unnecessarily anger Beijing.

As Prime Minister Abe advertised his unshakable resolve to reassert Japan's "first tier" status, the US media also noted some anxious backing and filling. Abe felt compelled to get into China's grill about the Senkaku Islands dispute in a Washington Post interview setting the table for his meeting with President Obama, claiming the PRC had a "deeply ingrained" need to challenge neighbors over territory.

The PRC's Ministry of Foreign Affairs laid into Abe:

"It is rare that a country's leader brazenly distorts facts, attacks its neighbor and instigates antagonism between regional countries," Chinese Foreign Ministry spokesman Hong Lei said. "Such behavior goes against the will of the international community. ... We have solemnly demanded the Japanese side immediately clarify and explain."

Global Times went with "China Heaps Scorn on Shinzo Abe Remarks" and added the interesting nugget:

Echoing the Chinese side's requirement for immediate clarifications, Japanese Chief Cabinet Secretary Yoshihide Suga explained Friday that the newspaper misquoted Abe's remarks and had caused a misunderstanding.

I thought this might be a piece of ingenious Chinese self-consolation, also known as a lie, but it was true, as the Washington Post confirmed in an article titled "Japan says Abe's quotes about China in Post interview were 'misleading'":

"There is no comment made by the prime minister as saying that China wants to clash or [have] collision with other countries," Chief Cabinet Secretary Yoshihide Suga said. "As I said, as the prime minister said, we value mutually beneficial relations with China based on strategic interests."

The United States is unlikely to be impressed by the Japanese government's transparent desire to present itself to the US as the unshakable axis of the pivot, while rather abjectly backpedaling vis a vis the PRC. Also, the prominent play that the Washington Post gave to this embarrassing story seems indicative of the bemused contempt with which the Obama administration regards the seemingly endless parade of Japanese prime ministers that it has witnessed over the past five years.

It is also open to question how seriously the Obama administration takes its own proposal for the "Trans Pacific Partnership" or TPP, the "high standards" free-trade zone that will exclude China and reward the Asian democracies for their willingness to risk the PRC's economic retaliation by aligning with the US pivot to Asia.

The root problem of the TPP is that everybody wants to boost exports, including the United States. The official line as the LA Times reported is that the US and Japanese economies are complementary, "except for cars". The report went on to state: "Japan's biggest imports from the US are airplanes and corn, while America's largest imports from Japan are cars, aircraft parts and printing machinery."

Perhaps the solution is for both countries to discard the automobile altogether and rely on Adam Smith's law of comparative advantage to fill their garages with the appropriate mix of airplanes and printing presses. [2]

However, for Prime Minister Abe, in a nation in which the political lifetime of prime ministers has recently been measured in weeks and months, not years, the vagaries of North Korea, the ongoing phony war over the Senkakus, or the pie-in-the-sky dreams of a Trans Pacific Partnership are not the tickets to national resurgence.

Central to Abe's political strategy is to breathe some life into the stagnant Japanese economy through "Abenomics", a combination of 10.3 trillion yen (US$112 billion) in infrastructure spending and a loosened monetary policy that will pump 36 trillion yen in extra currency into Japan's economy in a bid to achieve an inflation rate of 2%.

Beneath the brave theoretical talk of Abenomics and jumpstarting investment through the creation of inflationary expectations, the core of the current government's economic strategy is a not particularly sophisticated or principled exercise in monetary policy: print money in excess of economic growth, thereby triggering inflation to devalue the currency, boost exports, and reduce the real costs of servicing Japan's impressively large national debt.

The political downside of this scenario is that Japan's fixed-income old folk will bear the burden of the reduced purchasing power of their inflated yen. This is a price that the LDP appears increasingly willing to accept, as reflected in Finance Minister Taro Aso's widely reported recommendation:

Taro Aso, the finance minister, said on Monday that the elderly should be allowed to "hurry up and die" to relieve pressure on the state to pay for their medical care.

"Heaven forbid if you are forced to live on when you want to die. I would wake up feeling increasingly bad knowing that [treatment] was all being paid for by the government," he said during a meeting of the national council on social security reforms. "The problem won't be solved unless you let them hurry up and die." [3]

Prime Minister Abe clearly shares Aso's mindset, although he declared that he wants to empty the bank accounts of the oldsters, not necessarily yank out their IVs. In his remarks to the CSIS, he made the case for elders sacrificing their savings, presumably by paying out of pocket for luxuries like medical care, so that the young could enjoy lower tax rates: "The big savers, mostly aged population, must be able to give their money to the younger generation with smaller tax burden."

The weakened yen promises to make things difficult for Japan's neighbors, both friends and strategic competitors, as well as its senior citizens. The most immediate victim of a weak yen is South Korea. In the official security equation, South Korea is a steadfast democratic partner in the Asian security alliance; in Abenomics, the it looks more like the competing exporter whose lunch Japan hopes to eat first.

Incoming President Park Geun-hye is not amused, according to Reuters:

"... the global economy hasn't recovered from recession yet our companies are having more trouble as the weak yen offensive is following," she said at a meeting with the Korea Employers Federation on Feb 20, according to her YouTube site.

Her remarks have gone down well with those suffering most from Abe's hyper-easy monetary policy that has seen the won jump 5% this year versus the yen after a 23% gain in 2012. South Korean and Japanese firms compete against each other in a range of products, from cars to televisions and computer chips. [4]

As for the PRC, its distorted economy and overextended banks are not going to have an easy time of it if the weakened yen cuts into Chinese exports - both to Japan and into competing markets. This might be a feature of Abe's geopolitical strategy as he tries to come up with an economic riposte to the damage that China has inflicted on Japan's exporters and enterprises over the Senkakus dispute.

If and when the LDP wins the upper house elections in July and secures a mandate to drive the yen to 100, we'll see if the PRC's leadership will respond to the challenge with a profound economic restructuring toward efficiency, accountability, and domestic demand, or simply throws more infrastructure money at the economic and social problems associated with slacking exports.

Or China might decide Japan deserves a taste of its own medicine, and returns to its old, yuan-depreciating ways. That would not be a good thing.

In the worst case, known as "beggar thy neighbor", everybody else follows the example of the major economic powers and devalues their currencies, leading a global rush to the bottom resulting in goodness knows what, but perhaps to a sag in purchasing power for the world's consumers, not just Japan's inconvenient oldies, and a new global recession.

Count Stephen King, chief economist of HSBC, among the Cassandras: "Mr Abe's policies may ultimately deliver the goods but there is a very good chance that, instead, his measures will only lead to further global financial instability, in turn triggering an increase in economic nationalism," King wrote. [5]

There has been a chorus of public anxiety, led by Brazil and Germany, expressing concerns about an imminent currency war, and behind the scenes insistence at the Group of 20 of a "don't ask don't tell" reticence by Japan on the obvious but not openly acknowledged linkage between its inflation, currency devaluation, and export-promotion goals.

The United States, possibly because it is the first and biggest offender (with three rounds of quantitative easing and a commitment to increased inflation) has been markedly silent. The European Union, on the other hand, is still maintaining what one might, with a straight face, refer to as the "responsible stakeholder" attitude, opposing the mercantilist adventurism of Washington and Tokyo.

There is considerable poo-pooing of currency war anxieties in the financial press - along the lines of "the IMF is there to relieve the misery of unwise and unlucky laggards in the currency revaluation game" - but the New York Times' Harry Campbell seemed to have the most honest take on the situation:

Bigger, more mature countries are responding to their own economic downturns by adopting easy money policies. But the problem is that the emerging market economies can't respond with similar effectiveness because of their own economic or political issues. [6]

Said "economic and political issues" are the unwillingness to lose exports, revenues, and jobs to US and Japanese exporters. The US and Japan, by flooding the money supply, are inflicting a massive stress test on the world economy, particularly the "emerging market economies".

A look at the nationalist truculence of Japan's LDP does not inspire confidence that the powerful tool of the monetary policy of one of the world's largest economies will be carefully and responsibly wielded. When informed of German reservations, the attitude of Abe's close associate and inflation advocate, Kozo Yamamoto: Bring it on! "If they think Japan has gone too far, then they should try it themselves," said Yamamoto. "That's what a floating exchange rate system is for." [7]

Paul Krugman, who abhors austerity/budget balancing talk and is a vigorous advocate of deficit spending and inflationary monetary policy as a solution to America's slow-growth headache and, therefore, supportive of Abenomics, paid the LDP the mother of all backhanded compliments:

[Abe] is not anybody's idea of an economic hero; he's a nationalist, a denier of World War II atrocities, a man with little obvious interest in economic policy. If he's defying the orthodoxy, it probably reflects his general contempt for learned opinion rather than a considered embrace of heterodox theory.

But that may not matter. Abe may be ignoring the conventional wisdom on spending, and bullying the Bank of Japan, for all the wrong reasons - but the fact is that he is actually providing fiscal and monetary stimulus at a time when every other advanced-country government is too much in the thrall of the Very Serious People to do something different. And so far the results have been entirely positive: no spike in interest rates, but a sharp fall in the yen, which is a very good thing for Japan.

It will be a bitter irony if a pretty bad guy, with all the wrong motives, ends up doing the right thing economically, while all the good guys fail because they're too determined to be, well, good guys. But that's what happened in the 1930s, too ...

Krugman, loath to violate Godwin's Rule against invoking the name of a certain German dictator in contemporary debate, fails to mention that the "pretty bad guy" who did "the right thing" in bootstrapping his country out of the Great Depression was one Adolph Hitler.

As for Japan, perhaps we can now relaunch the yen as "Official Currency of the Japan Sole Prosperity Sphere". What could possibly go wrong?

Notes:
1. For video of Abe's speech, see here.
2. U.S., Japan focus on trade to boost both economies, LA Times, February 22, 2013.
3. Let elderly people 'hurry up and die', says Japanese minister, Guardian, January 22, 2013.
4. Weak yen adds to woes confronting South Korea’s Park, The Star, February 26, 2013.
5. Abenomics Risks Deepening Global Financial Turmoil, HSBC Says, Bloomberg, February 26, 2013.
6. 'Currency War’ Is Less a Battle Than a Debate on Economic, DealBook, New York Times, February 19, 2013.
7. Abe Ally Yamamoto Says Currency Devaluation Spurs Growth, Bloomberg, February 15, 2013.

Will the PRC Abandon North Korea?

Nope.

In my current piece for Asia Times Online (reproduced below) I argue that the PRC leadership has, for better or worse, reconciled itself to a nuclear North Korea, since the alternative—the Korean peninsula unified under a pro-US democracy—is unattractive both economically and strategically.

So I was rather nonplussed—actually I felt kind of stupid, mingled with the queasy suspicion that I had committed a floater before a worldwide audience--when Sinocism posted a link to a Financial Times op-ed by a CCP theorist, Deng Yuwen, titled China should abandon North Korea.  

However, not to worry.  Deng apparently fills the reformer/contrarian seat as deputy editor at Study Times, a journal of the CCP’s Central Party School.

He is an active op-ed presence in the Chinese domestic media and achieved a certain notoriety when his lengthy critical appraisal of the Hu Jintao era—Legacy of the Hu Jintao/Wen Jiabao Regime  --was posted at Caijing and then got yanked.  Deng plows the familiar if admirable furrow of between-the-lines reformers, as can be gleaned from a translation by Eric Mu of Danwei of the “ten challenges” that Hu and Wen left for the incoming team.

In other words, his op-ed is probably an outlier and not reflective of CCP policy, as is indicated by the anxious look over the shoulder flavor of the “next best thing” hedging in his last paragraph:

Considering these arguments, China should consider abandoning North Korea. The best way of giving up on Pyongyang is to take the initiative to facilitate North Korea’s unification with South Korea...

The next best thing would be to use China’s influence to cultivate a pro-Beijing government in North Korea, to give it security assurances, push it to give up nuclear weapons and start moving towards the development path of a normal country.

Having said that, the fact that Deng placed the piece in the Financial Times in the first place is an indication of the impatience that Chinese reformers feel about the North Korean alliance in particular and, one assumes, the CCP’s resistance to a more accommodative stance toward the US and its “responsible stakeholder” priorities in general.

[This piece appeared at Asia Times Online on February 22, 2013.  It can be reposted if ATOl is credited and a link provided.] 

North Korean nukes: A useful stage device
By Peter Lee

In a time of leadership transition in both countries, the US is dangling "responsible stakeholder" bait in front of China on North Korea. However, there appears to be a muted but fierce debate inside the US foreign policy community on how to make the bait tempting enough for the People's Republic of China (PRC) leadership to bite.

The inconvenient and irritating character of the North Korean nuclear and missile program is apparently something that everyone, with the natural exception of the DPRK (Democratic People's Republic of Korea, North Korea) leadership, can agree on.

Therefore, the idea is frequently bandied about that the PRC should exercise its unequalled leverage over the DPRK and institute the embargo on food, fuel oil, international banking facilities, or overall trade that will bring the North Korean regime to its knees, if not to its senses.

Evan Osnos of the New Yorker singlehandedly transported this idea into the bizarro quadrant with his suggestion that the PRC deploy its cutting-edge hacking abilities to inflict a "Stuxnet"-style attack on North Korea's nuclear facilities.

This apparently was not a passing fancy on the part of Osnos. He diligently canvassed various pundits on this clever scheme, only to be met with the politest of rebuffs.

Beyond the lack of a law of war/imminent threat justification for a pre-emptive cyberattack - something which does not exercise the American commentariat overmuch in this post-Stuxnet day and age - the flaw in this, and any other "PRC cuts the DPRK off at the knees" strategy can be revealed by a brief consideration of the consequences of a financial or material embargo under two likely scenarios:

First scenario:
DPRK resists but quickly collapses. South Korea takes over most or all of the peninsula, seizes the economic opportunities now monopolized by the PRC, supplants Japan as the region's pro-Western economic and military powerhouse and frontline democracy on China's doorstep.

Second scenario:
DPRK survives but harbors a natural and undying enmity against the PRC. It reaches out to the US and ROK. Through collapse or unification, South Korea takes over most or all of the peninsula, seizes the economic opportunities now monopolized by the PRC, supplants Japan as the region's pro-Western economic and military powerhouse and frontline democracy on China's doorstep.

The PRC had a chance to consider these extremely attractive options in 2010, when the DPRK allegedly sank the Cheonan, and China was invited to join the United States and the ROK (Republic of Korea, South Korea) in a concerted beat-down of North Korea through a UN sanctions process.

Then president Hu Jintao decided he preferred an alternate future in which North Korea remained a profitable quasi-province, useful buffer, and sphere of influence, and was excoriated by President Obama for "willful blindness" for his inability to see things the right i.e. US way.

Will incoming president Xi Jinping see things any differently?

There are certainly rumblings by China's more sophisticated foreign affairs pundits that the PRC should abandon the "Pariahs R Us" model of foreign affairs, which appears to be crumbling as Myanmar sidles into the Western camp, Sudan becomes a bifurcated basket case, and the Iranian economy is ground down by sanctions.

The Western press has seized on these remarks, as well as mutterings by some of China's notorious "netizens", who apparently feel that the honor of the Chinese nation is soiled when it is summoned to leap to the defense of Kim Jung-eun's embarrassingly grubby and dysfunctional regime.

At the same time, the Obama administration appears to be enticing the incoming Xi Jinping leadership team with visions of a reset in the generally fraught US-PRC relationship.

The PRC is regarding the prospects under incoming US Secretary of State John Kerry with some optimism. Secretary Kerry, who as Senator Kerry was a front-line advocate of normalization of relations with Vietnam, seems more inclined to take a "glass half full" rather than "glass half empty" view of the PRC's socialist shortcomings in democracy, human rights, and open markets.

There is some hope that the selection of John Kerry reflects President Obama's desire for a correction away from the antagonism and relentless friction that characterized Hillary Clinton's pursuit of the pivot.

A Xinhua stemwinder speculated:

Some analysts believe that Obama is now trying to rectify [former secretary of state Hillary Clinton's] "extreme" behavior toward China, and "fine tune" the "rebalancing" policy. Kerry becomes the best person to act in this regard because of his moderate conduct style [1]

. As the Obama administration has entered its second term - and the China slots at the National Security Council, State Department, and the Department of Defense have not been definitively filled - the US government has been less inclined to get into China's face on the myriad points of friction between the two powers.

The United States has been conspicuously passive in observing the current exercise in Senkaku brinksmanship, confining itself to urging both parties to step back and lessen tensions, and largely ignoring the spectacular economic and diplomatic mugging that Japan has suffered at the hands of the PRC.

In a discrete olive branch, the US national security apparatus let it be known that it was downgrading the PRC from a "Priority One" to "Priority Two" espionage target, rather counterintuitively it would seem, given the heightened emphasis on Chinese hacking, thereby eliciting howls of dismay from US defense hawks.

Also, the US State Department went out of its way to invoke the six-party "group", made up of the Koreas, China, the US, Russia and Japan, if not the "talks" as the forum for discussions with North Korea. This was in sharp contrast to 2010 circumstances, where the US and ROK joined forces to bypass the PRC and take the Cheonan issue to the UN Security Council instead.

From the February 12 press briefing:

You know that we've all said for quite some time that the Chinese have the most influence within the six-party group. That's obvious given their well-intermeshed economic relationship with the DPRK. That's why, among other reasons, it's so important for us to stay closely linked up with China, and why the Secretary's made it a priority to work well with his new Chinese counterpart. [2]

The message seems to be that Xi Jinping is being given the chance to take a leadership role on the DPRK account and show the world it can make some progress on the intractable North Korean issue, thereby allowing the PRC to accrue some "responsible stakeholder" cred.

Unfortunately, the North Korean issue is something of a poisoned chalice for the PRC. The DPRK's missile and nuclear weapons shenanigans are transparently intended to enable direct engagement with the United States, not reinforce Chinese suzerainty.

If the United States withholds engagement with through the six-party talks until the PRC is able to wring some gratifying concession out of the DPRK, Chinese initiatives for restraining North Korean adventurism are probably going to go nowhere and do little to enhance the PRC's regional prestige or "responsible stakeholder" credentials.

Furthermore, denuclearization of the Korean peninsula is not seen by China as a gigantic win that itself justifies the risks.

Over at the Washington Post, Max Fisher tried to boil down the Chinese objectives for North Korea to six little words: "no war, no instability, no nukes". Having delivered this concise aphorism, unfortunately, Fisher had to spend a considerable part of the article shoehorning "no nukes" into the fact that China has demonstrated little determination to compel the DPRK to denuclearize.

To the contrary, as Professor Cai Jian of Fudan University told Korea Times, there are signs that the PRC is resigning itself to the existence of the DPRK as a nuclear weapons power.

"So, now there is a debate in China that we should be realistic with the changed situation and focus our attention on how to manage Pyongyang's nuclear weapons, instead of preventing it from developing them, which is already a lost cause," Cai said.

Another Chinese analyst with a state-run think tank in Beijing echoed the view. "Look. How many of China's neighboring countries have nuclear weapons? India has them. Pakistan has them. Russia has them too. So, China doesn't give too much attention to whether North Korea is a nuclear state or not," he said on condition of anonymity.

"China can accept another neighbor who has nuclear weapons," he added. [3]

Actually, the PRC's position might be better described with five little words: "What's in it for me?" In the world of quid pro quo diplomacy, President Xi might expect some concessions in return for taking the risky and destabilizing step of compelling North Korea to denuclearize.

However, it is difficult to imagine the Obama administration giving China the kind of benefit it really wants: acknowledgement of the PRC's regional hegemon status by support of China's bilateral approach in its negotiations with Japan, Vietnam, and the Philippines over the various island disputes.

That is because multilateralizing the maritime disputes to create a fundamental security role for the US in East Asia is baked into the "pivot"strategy, and a turn away from the pivot to a more situational and less confrontational approach to US-China relations would be viewed as strategic backsliding.

There are distinct signs of a foreign policy debate on whether it is better to extort compliance or solicit cooperation from the PRC, one that President Obama's outgoing team still seems determined to win.

Even though Assistant Secretary of State Kurt Campbell, one of the creators of the "pivot" to Asia (though he prefers the term "rebalancing") is on the way out (actually on the way over to his old perch at the "Center for a New American Security"), he gave China's - and Secretary Kerry's - diplomats some food for thought by sharing his views on "core interests" in an "exit interview" with Asahi Shimbun:

Q: Back in November 2009, when President Obama visited China, a historic phrase was inserted in the joint statement: "The two sides agreed that respecting each other's core interests is extremely important." But this reference to "core interests" disappeared from the next joint statement, when China's president, Hu Jintao, visited the United States in January 2011. What happened?

A: I believe that the concept of "core interest" is subject to much misunderstanding and has led to fairly serious tensions between the United States and China. The idea that if a country declares an area a "core interest," then somehow it is no longer a subject for discussion with other countries, I don't think that approach is very effective in 21st-century diplomacy. [4]

This passage undoubtedly elicited some thoughtful annotation at the PRC's Ministry of Foreign Affairs.

Traditionally, "core interests" has been the foundation of the PRC's foreign policy. Taiwan and Tibet - and resistance to any independence talk - are "core interests" that any interlocutor is expected to respect.

There was a gruesome blowup of the "core interests" debate during the first annus horribilis of US-PRC relations, 2010.

The US diplomatic team told reporters that the PRC has extended the "core interest" formulation to the South China Sea, which was taken as an assertion by the aggressive PRC hegemon that it would use military force to advance its claims - and provided the pretext for US injection into the South China Seas (SCS) island disputes at ASEAN.

The situation was considerably muddied by the facts that the PRC never publicly affirmed the application of the doctrine to the SCS, was committed to freedom of navigation and bilateral approach on SCS issues (as opposed to the "outside interference" it absolutely rejects in its traditional "core interest" areas of Tibet and Taiwan), and had previously attempted to repurpose "core interests" as a statement of priorities (like economic development) which the PRC hoped would be respected by the international community, as opposed to red lines that China would absolutely not brook being crossed.

Regardless of its scope and subtleties, the PRC's "core interest" formulation seems to be anathema to the Obama administration, which hangs its hat on "norms-based" or "rules-based" diplomacy, by which respect for all "core interests" - including that PRC bugbear, "sovereignty and non-interference in domestic affairs of other states" - are conditional upon adherence to "core principles", such as democracy, open markets, freedom to connect, and so on.

I, for one, wonder if Secretary of State John Kerry is more inclined to the traditional horse-trading approach to diplomacy implied by the "core interest" formulation, as opposed to the "rule-based" absolutes that obsessed former former secretary Hilary Clinton and, I believe, preoccupy President Obama in his quest to make sense of the world and define a leadership role for the United States within it.

Maybe Kurt Campbell's statement should be seen as a shot across Secretary Kerry's bow, as well as China's, to declare that reaffirmation and possible expansion of the "core interest" formulation is a creeping challenge to the "core principle" that the US should repudiate.

"Core interest" pushback was also central to an earnest op-ed penned by Nina Hachigian at the Center for American Progress, another sympathetic think tank, to guide secretary Kerry (in addition to invoking the guidance of pivot great helmswoman Clinton, it helpfully included a draft speech for Kerry to deliver to the Chinese, accurately but presumably inadvertently reproducing the eye-glazing prose with which "Big John" delivers his thoughts):

Many analysts in China are working to give content to Xi's call for a new type of great-power relationship. Some preliminary ideas center on calling on the United States to halt actions - such as selling arms to Taiwan - that infringe on China's "core" national security interests. While visions based on dramatic changes to longstanding US policy are not likely to fly in Washington, the Obama administration would do well to offer its own ideas of what could work as a future vision of US-China relations.

The Obama administration's suggestion could begin with this: A peaceful future is one in which the United States and China, along with the other major powers, are embedded in a web of laws, norms, and institutions. Such an international architecture can draw boundaries around the two nations' natural rivalry.

When each side is sure that the rules are fair and followed, competition need not be hostile. Forums for dispute resolution - such as the one in the World Trade Organization - can channel frictions. And collaboration will be easier when both countries know that they are shouldering a fair share of the burden along with other nations.

The basis for this future vision lies very clearly in the ground that the Obama administration has already laid. Secretary Clinton has articulated many times the importance of a rules-based system and how important China's support for it is.

In evaluating who will have the upper hand in US China policy, it should be remembered that the conciliatory, somewhat pompous Kerry was President Obama's second choice for secretary of state.

The first choice was United Nations Ambassador Susan Rice, champion of the Libyan intervention, advocate of a broader interpretation of R2P ("responsibility to protect"), and all-round scold of the PRC and other authoritarian misfits at the UN.

Ambassador Rice fell victim to the confirmation process - and the Republican compulsion to demonstrate to its traditional white base that, if it could not defeat Obama in the presidential election, it could at least deny some other black person a high government office.

When Rice withdrew, Obama called on Kerry, who was unopposable, not necessarily because of his whiteness or his congenial policy views, but because of his role as chairman of the Senate Foreign Relations Committee and his ability to call on his Republican colleagues for support.

Tea-leaf readers will draw their own conclusions about the closeness of Obama and Kerry. For me, a perhaps telling detail was that Kerry was chosen to impersonate Mitt Romney in the preparation for the first (disastrous for Obama) presidential debate, but reportedly ended up sounding more like Kerry - a politician famously in love with his own voice and unwilling to end the romance by finishing a statement - than the jittery, soundbite-scattering Romney.

If, in his heart, President Obama blames Secretary Kerry for the near catastrophic loss of his debate mojo, perhaps he will entertain the secretary of state's councils but not necessarily heed them.

I think that President Obama, a cerebral, intense, and rather remote man who has never succeeded in establishing a rapport with the CCP apparatchiks who run China, is very much in tune with Clinton's aggressive, strategic approach to Asia embodied in the formulation of the "pivot to Asia".

In this case, the inducements that the Obama administration is willing to offer for Chinese support on North Korea are probably negative: cooperate on North Korea and we won't be as hard on you on the core principles involved in the South China Sea, the Senkakus, intellectual property, and cyberwarfare.

In other words, if the anti-core interest view point prevails in the White House, Secretary Kerry will be unable to deliver substantive advantages to President Xi Jinping beyond the intangible psychic benefits of having played by the rules.

That, it is safe to say, not the kind of payback that excites President Xi.

Clearly, the Chinese foreign policy commentariat is already bracing for a return to the bad old days typified by Obama's first term.

On February 17, Xinhua ran a think piece that downplayed the PRC's role in the North Korean nuclear issue, and belittled expectations that China should be responsible for improving the DPRK's behavior: From "Chinese experts see US-DPRK antagonism as root cause of nuke test":

The United States should reflect seriously on the latest nuclear test of the Democratic People's Republic of Korea (DPRK), which was caused by long-standing antagonism between the two countries, Chinese experts said.

After the DPRK's nuclear test earlier this week, some Western media said China's policy toward the country has proven to be a failure, a straw-man fallacy refuted by Chinese experts and scholars.

Unless Kerry is able to convince Obama to make some major changes in US policy, probably the only progress US-China policy will make is backwards - back to the confrontational certainties of Obama's first administration.

Notes:
1.How will John Kerry deal with China?, CCTV, February 2, 2013.
2. US State Dept Daily Press Briefing - February 12, 2013.
3. China to acknowledge N. Korea as nuclear state, February 13, 2013.
4.INTERVIEW/ Kurt Campbell: China should accept US enduring leadership role in Asia, February 9, 2013.

Can Everybody Shut Up About the Senkakus?

Prime Minister Abe was compelled to get into China’s grill about the Senkakus dispute in a Washington Post interview setting the table for his meeting with President Obama, claiming the PRC had a “deeply ingrained” need to challenge neighbors over territory.

The PRC's Ministry of Foreign Affairs laid into Abe:

“It is rare that a country’s leader brazenly distorts facts, attacks its neighbor and instigates antagonism between regional countries,” Chinese Foreign Ministry spokesman Hong Lei said. “Such behavior goes against the will of the international community. . . . We have solemnly demanded the Japanese side immediately clarify and explain.” 

People’s Daily ran with the ball under the heading “How Japan Misleads the US”, proving that the PRC will not hesitate to take offense any time Japan makes an overt play for US strategic support against China—and will avoid criticizing the US on the issue in order to work the wedge between Tokyo and Washington a little deeper.

Global Times went with China Heaps Scorn on Shinzo Abe Remarks and added the interesting nugget:

Echoing the Chinese side's requirement for immediate clarifications, Japanese Chief Cabinet Secretary Yoshihide Suga explained Friday that the newspaper misquoted Abe's remarks and had caused a misunderstanding.

I thought this might be a piece of ingenious Chinese self-consolation a.k.a. a lie, but it was true! as the WaPo confirmed in an article titled Japan says Abe's quotes about China in Post interview were 'misleading':

“There is no comment made by the prime minister as saying that China wants to clash or [have] collision with other countries,” Chief Cabinet Secretary Yoshihide Suga said. “As I said, as the prime minister said, we value mutually beneficial relations with China based on strategic interests.”

The United States is unlikely to be impressed by the Japanese government’s transparent desire to present itself to the US as the unshakable axis of the pivot, while rather abjectly backpedaling vis a vis the PRC.  Also, the prominent play that the Washington Post gave to this embarrassing story seems indicative of the bemused contempt with which the Obama administration regards the seemingly endless parade of Japanese prime ministers that it has witnessed over the last five years.

As long as Abe is going to try to play the pivot card, no matter how haltingly, the PRC will be happy for an additional excuse to grind away at Japan’s economic and political resolve, Sino-Japanese reset be damned.

I’m not particularly interested in the Senkakus.  By geographic logic, I’d say they belong to Taiwan. 

Here, courtesy of Wikipedia, is a map showing where the Senkakus/Tiaoyutai/Diaoyutai Islands are.  

They are close to Taiwan and only close to Japan if one ignores the immense distance between them and the Japanese mainland and concentrates on some tiny islands in the Ryukyu chain instead.

This map doesn't show it so clearly, but the islands are comfortably on the Eurasian continental shelf, and are separated from their purported Japanese brothers in the Ryukyu chain by the Okinawa Trough.

As Wikipedia tells us, the Senkaku contretemps therefore requires that the identity of the Okinawa Trough itself be put into play:

The existence of the Okinawa Trough complicates descriptive issues in the East China Sea. According to Professor Ji Guoxing of the Asia-Pacific Department at Shanghai Institute for International Studies,

China's interpretation of the geography is that"...the Okinawa Trough proves that the continental shelves of China and Japan are not connected, that the Trough serves as the boundary between them, and that the Trough should not be ignored ...."

Japan's interpretation of the geography is that "...the trough is just an incidental depression in a continuous continental margin between the two countries ... and that any legal effect of the trough should be ignored ...."

Enthusiasts for ambiguity will be overjoyed to learn that the truth is somewhere in between! as can be gleaned from Okinawa Trough: Origin of a Back Arc Basin, a joint study of the seismic and magnetic characteristics of the geology of the trough by US and Taiwanese oceanographers.

The rock composing the bed of the Okinawa Trough is originally continental crust, so score one for Japan!

However, the Okinawa Trough itself was formed by ongoing, violent geologic action associated with the subduction (descent) of the Pacific oceanic plate into the Ryukyu Trench on the east side of the Ryukyu Islands.  The heat and ruckus associated with the melting of billions of tons of oceanic basalt bowed up the continental crust into an arc, which then collapsed into the Okinawa back arc or trough.

This action was accompanied by the shattering of the continental crust structure of the local seabed, and intrusion into the seabed of the Okinawa trough of igneous rock melted off the Pacific plate as it disappeared into the earth's crust.

As a result of the igneous upwelling, the Okinawa Trough seafloor is not stable as befits a hunk of continental crust that happens to be underwater.  Instead, it is exhibiting the spreading effect characteristic of ocean basins, an effect which is continuing to this day, giving the Okinawa Trough an ever more dominant character as a dynamic, basaltic seabed as more of the melted Pacific plate wells up into it.

So the Okinawa Trough represents the border of the Eurasian continental shelf and the beginning of a transition zone of violent, high-speed geologic events associated with the Pacific plate's subduction and the creation of the Ryukyu Islands out of volcanic activity, leaving the Senkakus by themselves on the continental shelf i.e. Chinese side of the equation.

So score one for China!

But some of the Senkakus are also volcanic, presumably created by localized upwelling from the Ryukyu Trench subduction process...and some are "rocky outcroppings".

Call it a tie!

Well, maybe score Senkaku geology an outright win for China.

China took the step of claiming the Senkakus as part of the PRC's continental shelf propers in a report filed with the UN's Law of the Sea treaty organization.

Japan apparently thinks that China has the geographic upper hand, as it has asked the UN not to rule on China's submission, as Reuters reported in January:

In a letter to the commission, Japan's U.N. mission argued that China's submission should not be considered.

"There is no doubt that the Senkaku Islands are an inherent part of the territory of Japan in light of historical facts and based upon international law. The Senkaku Islands are under the valid control of Japan," it said.

 Embarrassing for Japan, which has few claims to the Senkakus on the basis of propinquity, geology, or history, and has to rest its case based upon the acquisition of the islands during the less-than-fondly recalled extension of the Rising Sun brand into East Asia during the 1895-1945 period and the somewhat muddled circumstances of their retention when the Japanese empire was dismantled--and for the argument that China has no defensible claim on the Senkakus and therefore never attempts to advance them in international venues.

Nevertheless, historical, geographic, and geologic claims butter no parsnips when it comes to the hot-button principle of sovereignty.

I hold the distinctly minority view that principles, be they moral, legal, or geographic, should have no place in the Senkaku issue.

On principle, the PRC is determined to make Japan pay the maximum possible price for standing on principle to defend its claim to the Senkakus.  So far, standing on principle has gained nothing for China, Japan, or the region other than contributing to a state of polarization that is extremely gratifying to proponents of simple-minded hairy-chested nationalism and to the guardians of US, Chinese, and Japanese defense budgets but is of little use to anyone who cares about peace and prosperity.  I suggest that, if China and Japan can’t agree on the Senkakus, they find something else they can agree on.

So can everybody just shut up about the Senkakus, already?

Unless we're talking about their interesting geology, of course...