SinoInsight 1
Geopolitical tensions, which appeared to calm after Xi Jinping made reform commitments to President Trump on Dec. 1, are on the rise again recently.
Dec. 18:
- Xi delivered a speech to mark the 40th anniversary of the PRC’s reform and opening up that championed Marxism and the Party’s leading role in the regime instead of signaling a reform intent (for more on the speech and what it entails, see here).
- Hudson Institute scholar Michael Pillsbury told Fox News that Xi’s speech was a “surprise” and “bad news” because he had earlier heard from Chinese sources that Xi wasn’t going to mention Marxism and was going to instead talk about intellectual property and foreign company ownership reforms. Pillsbury speculates that there was a more “reform-oriented” draft speech which was struck out by “hardliners.”
- According to Taiwan’s defense ministry, four PLA bombers and fighters flew east from Huiyang air base in Guangdong Province toward the Pacific Ocean and passed through the Bashi Channel between Taiwan and the Philippines. The Taiwan air force scrambled jets to prepare to intercept. Also, the Taiwan defense ministry detected two PLA Navy vessels passing through the Taiwan Strait. This is the first time since June that the PLA dispatched forces near Taiwan.
Dec. 19:
- The U.S. and China accused each other of undermining the world trading system at the World Trade Organization. U.S. Ambassador Dennis Shea said that current trade problems were caused by “the fundamental incompatibility of China’s trade-distorting, non-marketeconomic regime with an open, transparent and predictable international trading system.” Meanwhile, China’s Hu Yingzhi said that “China absolutely refuses to be the scapegoat and excuse for unilateralism and protectionism.”
- North Korea wrote in its state newspaper that Pyongyang won’t denuclearize with the U.S. first “removing all elements of nuclear threats from the areas of both the north and the south of Korea and also from surrounding areas from where the Korean peninsula is targeted.” A day earlier, U.S. special envoy to North Korea Stephen Biegun said that America is considering easing a travel ban to allow U.S. aid workers to deliver humanitarian relief to North Korea.
OUR TAKE
1. We wrote on Dec. 13 to “expect to see turbulence in Sino-U.S. relations during the 90-day period of trade talks.” The “backsliding” from China and North Korea is within our expectations.
Given PRC-DPRK historical relations, Pyongyang is not as close to Beijing or is as willing to subjugate itself to its larger communist neighbor as most commentators would believe. However, Kim Jong Un will try to play both the PRC and the U.S. to maximize his benefit. With Xi Jinping’s “hardline” reform anniversary speech, Kim might be sensing an opportunity to revert to “petulance” to get a better deal from the United States.
Pyongyang’s “backslide” should become a non-issue if Washington holds firm in dealing with the PRC.
2. Beijing’s “backslide” is more troublesome and trickier to handle than Pyongyang’s.
We wrote in our China 2018 outlook that Xi Jinping will face challenges to his authority from the CCP factional struggle and the CCP system. And tensions in this “triumvirate” have escalated considerably this year, culminating in Xi’s reform anniversary speech.
Xi is caught in a “Catch-22” with regard to reform given the nature of the CCP system. To push reform, Xi needs to consolidate power inside the CCP and place the Party above all. But because Xi’s power is derived from a strong Party, he risks losing power through the implementation of structural reforms and market liberalization, which are the antithesis of Marxist ideology and CCP norms.
The CCP factional struggle further complicates any effort by Xi to enact reforms. We have explored the Xi-Jiang struggle and what it means for reform in previous articles (see here and here). Xi’s factional rivals can also use the CCP system to challenge and constrain him. Put another way, Xi is stuck between a rock and a hard place.
3. To ensure success at the end of the 90-day trade talks, the Trump administration must look for solutions to target the CCP hardliners and give enough breathing space for Xi and the reform-minded officials to get things done on their end. Washington can consider stepping up pressure against the PRC on all fronts, especially against CCP officials who perpetuate gross human rights abuses in China. The U.S. can also consider using cultural power to counter CCP ideological warfare at home and abroad.
