Foreign Investment in Critical Areas like Nuclear Power Need a Formal Vetting Process


LSE Business Review, October 11, 2016

One of the first decisions taken by Theresa May as prime minister was to delay deciding on the £18 billion Hinkley Point nuclear power project. Because it was a centrepiece project as part of former chancellor George Osborne’s “Golden Age” of closer bilateral ties with China, the issue was instantly politicised, provoking an intense debate in Parliament and across government departments. Defenders of the deal included the Chinese embassy and foreign ministry, which came out publicly to apply pressure on May over the issue.

Meanwhile, those close to the prime minister – formerly home office secretary – pointed out the security risks to Britain’s critical national infrastructure and national security. In the end, a face-saving compromise was reached: the Sino-French consortium would go ahead with the deal with Her Majesty’s Government keeping a majority stake in the company to calm nerves within the security agencies.

The fact that it was a Chinese company which provoked the issue was not incidental: Chinese companies – private and state-owned – have become increasingly active in investing and acquiring businesses and assets in economies across the developed world, particularly in the US (no.1), Australia (no.3), and the UK (no.1 in Europe). In 2014, the FT noted that China’s outbound investment had exceeded its domestic investment and the country was on its way to becoming the world’s largest cross-border investor. As the Hinkley Point debate was flaring up here in London, Australian Treasury Minister Scott Morrison announced that two separate Chinese bids to lease Australia’s largest electricity grid would be blocked for “national security” reasons. It is obvious that May is not alone in her concerns.

To some, China’s focus on infrastructure has a nefarious side: after all, national defence and intelligence agencies depend on critical national infrastructure (CNI) to do their job. To others, China’s focus on CNI is the result of its own domestic economy, which is heavily weighted in favor of big, capital-intensive infrastructure projects. Whatever the case, it is certain that many more private and state-owned Chinese investors will seek to purchase stakes in British companies and infrastructure. Some of these – like stakes in the UK’s hotel industry are clearly benign. Others – like the bid for Global Switch, Britain’s largest data centre, may have repercussions for national security, in the wake of the UK MOD’s move to cloud computing. It may also have privacy concerns as a recent NATO report suggests that China is behind many hacks in the West and is said, by Stratfor, to have the largest domestic mass surveillance apparatus of any country.

Regardless of the answer, the need is clear in the UK for a more formal process than has taken place up until now. Australia and the United States – two of the largest recipients of Chinese investment – have long had treasury-linked agencies to deal with the foreign investment and security: the Committee for Foreign Investment in the United States (CFIUS) and the Foreign Investment Review Bureau (FIRB).

Naturally, their approach may or may not be a right fit for the UK, which has a strong culture of unregulated investment, but it would benefit both Government and business to initiate some sort of discussion on what is currently a very grey area. Such a review process would calm nerves on both sides – including those of Chinese investors who may have been riled by Hinkley Point. Clearly, Britain wants Chinese investment and even welcomes it within certain parts of the national infrastructure, but not all of its parts. What is most needed, according to Malcolm Rifkind – former Chairman of the Intelligence and Security Committee – is oversight, “This project went from consideration to contract, without ministers even hearing about it. There must be some sort of accountability with deals of this nature.” Under Rifkind, the ISC produced a strongly critical report in 2013 on the BT-Huawei deal in which BT was supplied components by a company said to have links with the Chinese military.

Prime minister May could best start this conversation in the Cabinet Office and bring members of the security community and business community together in order to hammer out the powers and processes of such a review body. One idea is to make it a committee or subcommittee within the cabinet office, with its own staff. The committee might be composed of business leaders or senior bureaucrats from within relevant ministries, Trade, Treasury, Ministry of Defence and the Home Office. Staffers could be seconded from among these same ministries. Certainly, the Treasury would have to have a large stake in any organization to give it traction, perhaps as Chair. Then there is the question of what it would do: in short, it would create guidelines for firms which operate inside Britain’s critical national infrastructure. It would also investigate adding new areas – particularly those in newly-developing technologies and computing – to areas of sensitivity. Whether it would be given teeth, or simply remain an advisory body – depends very much on whether May can rally her cabinet around the idea to pass legislation in Parliament. Either way, the committee could bring clarity to a gray area.

Creating such a committee makes sense for the UK at the moment. The number of Chinese investments into British infrastructure are only set to rise, and the UK is reconfiguring its EU-dated regulations. While the watchword of the day for many concerned British companies will be “continuity”, this process of rewriting the UK’s legal framework does provide Prime Minister May an opportunity to create a formal review process. Furthermore, a process might remind the UK of the need for investor diversity.

Winnie King, Professor of Chinese International Political Economy at Bristol University states, “The UK needs to frame its approach in terms of Brexit: “Now that we have left the bed of European supra-national governance, we shouldn’t just jump into bed with another big actor. We need to diversify.”

A recent report by the Oxford Review of Economic Policy has challenged some of the myths around Chinese infrastructure projects. The UK has had the fastest growing economy in the Group of Seven for the past four years. It deals in high value, not high volume goods, and its manufacturing includes luxury smart high-tech firms like McLaren, Deep Mind, and others. Britain has remained competitive and in the top 10 global economies by remaining open to foreign investment: a review process will not change that. But it will make future investment more open-eyed and transparent.

RUSI Commentary, August 11, 2016
China’s determination to gain control or assert its possession over various remote islands in its adjacent seas may seem inexplicable. But there is a perfect logic to what China is doing – much of this relates to the way the country’s communists seek to bolster their domestic legitimacy

The situation in East Asia has become increasingly troubling; for those watching the global economy, the fact that China and Japan, the world’s second and third powers, are engaging in a showdown over a few tiny islands not only seems ludicrous but also reckless, since any potential conflict could do serious damage to precarious recovery from the global financial crisis.

Last week, Japan claimed that a flotilla of more than 230 Chinese fishing vessels and eighteen coastguard ships entered Japanese waters around the disputed islands, called Senkaku in Japan and Diaoyu in China. Given their lack of running water and economic activity, it is not even certain that the islets would be afforded island status, especially after the recent finding by the Permanent Court of Arbitration rejected China’s claims in the South China Sea. So why do both states want the islands so much and why is China risking the global economy and conflict with Japan for patches of land not much larger than a football pitch? The explanation lies in recent Chinese history and how the Communist Party perceives it.

In 1989, the Communist Party barely survived the Tiananmen Square unrest. Following the crackdown, it developed a three-way strategy, which it has since boldly followed.

First, it enacted a massive ‘patriotic’ education programme, which sought to identify China with the Communist Party. It played up the narrative of victim, pointing to the ‘century of humiliation’ by foreign powers, including European and Japanese imperial interlopers. And while these approaches are based in fact, they miss the point that China the victim has also been China the perpetrator in such cases: it has in its long history attempted to invade and conquer its neighbours, particularly Korea and Vietnam, many times. As Bill Hayton, an expert on Chinese maritime claims, has asserted, disputes about the South China Sea or the Chinese-claimed Diaoyu Islands are really about recovering from the perceived loss of face that China endured in the past. Thus, the public is strongly supportive of the claims, and the insertions of large flotillas into contested waters – such as last week – buttress this Communist Party’s desire to be the sole defender of Chinese claims, and the sole avenger of previous wrongs.

Second, China’s Communist Party decided after crushing the Tiananmen protests that communist ideology was no longer enough to provide legitimacy, and set about a daring innovation in the 1990s – mixing the nationalist agenda with Deng Xiaoping’s economic reform, while restraining political reform. In other words, it concluded that if it provided enough refrigerators, televisions and opportunities to travel to exotic destinations, the public would submit to the total rule of the Communist Party. As well as the carrot, it also used the stick of repressing internet freedoms, censoring the media, and curtailing anything that might infringe on the absolutism of the party within the Chinese state. Kerry Brown, a China scholar, notes that President Xi Jinping’s rise has not been at the expense of the party, and although he has attacked its corrupt elements, his purpose is to strengthen the arty.

One only has to note the recent wave of trials of Chinese lawyers, such as Wang Yu and Zhou Shifeng, affiliated with political rights’ groups, to conclude that the party is serious about holding power and crushing dissent. However, if the Chinese public is to accept such repression, the party reasons that it must continue to deliver something in the realm of public wealth. The push to reform the economy falls into this category, but it also has a security strategy for harnessing nearby wealth and resources by claiming the valuable South and East China Seas fishing grounds, some of the richest in the world. Attempts to ban Vietnamese and Philippine fishing fleets are part of this strategy. So is the possibility of rich undersea gas fields in the East China Sea, an additional lure. For the party, securing these resources is directly linked to regime security.

Third, the Communist party has developed a strategy to push China into a position of East Asian superiority, and to do this, it has to prise the US from the region. Aware of the ‘Thucydidean Trap’, by which rising powers provoke a conflict with already-dominant powers, China’s strategy would seem to be to go about achieving its objective through indirect means. Looking purely at Beijing’s actions over the past decade, it would seem that Chinese military thinkers have decided the best way to expel the US as a regional power is by incrementally taking de facto control of the trade route that feeds the US’s allies.

Beginning with European ports and Middle Eastern oil terminals, the most strategically sensitive route moves goods and energy products worth $5 trillion annually through the Indian Ocean, past the Malacca Straits and through the South and East China Seas. China’s effort to dominate this vital route is achieved by slicing into the territory of smaller South China Sea states, with each initiative based on the calculation that Washington would not dare risk a war over territories non-essential to the US national interest. And Beijing’s calculations are likely correct. Projecting military power from those islands gives China de facto control of the region’s largest trade route. Enough – Beijing reasons – to compel regional powers to bandwagon with China.

If on the way, it must risk conflict with the US and Japan, China will do so, although it will attempt to avoid direct confrontation. Many of the issues that continue to bedevil the region arose in 1989, as a result of the route the Communist Party took in trying to ensure its survival. Its three-fold strategy of promoting nationalism and economic growth at the expense of political reform, and the development of a greater Chinese strategy for the region, has landed the nation in its current situation.

The inner corridors of power in Beijing see nothing wrong with this grand strategy. After all, it has been highly successful: the party remains dominant in China, and is still closely identified with the health and prosperity of the nation. China’s economic and military growth has allowed it to begin to reorder the region to suit its own preferences. The question is how far will it go, and at what point will it cause an unpredictable reaction from the US, Japan, or neighbouring states. And although no-one outside China can predict this, neither can any Chinese official.

Are Japan and the UK Trading Places?


The National Interest, July 18, 2016

At times, British and American policymakers and academics have wondered if Japan might become the “Britain of the Far East” by playing a larger role in foreign affairs, more supportive of the liberal rules-based system, and more in line with American global security strategy. Britain would have responsibility for the Western hemisphere, while Japan covered the Asia-Pacific. However, as the past decade has seen an emboldened and increasingly capable Japan attempting define a role for itself in global security, the same period has seen a UK seemingly less able or less willing to shoulder its responsibility. A combination of post-Iraq and post-Afghanistan war-weariness saw Parliament usurp Prime Minister Cameron’s attempt to intervene in Syria in 2013, while Brexit and the slight chance of a second Scottish referendum have created political chaos in Westminster, raising the possibility that Britain may be too consumed by internal affairs to take part in foreign policy for the next three to four years.

Of course, the machinery of government will go on, but Britain’s loss of focus occurs at a time critical to the liberal international order. On one flank, China pushes hard to gain de facto control of one of the world’s most strategic shipping lanes, and in doing so establishes a baseline for its attitude toward international law and smaller powers. On the other, Russia continues to mobilize itself domestically with nationalism and anti-Westernism, in a seeming attempt to recover its Cold War–era buffer zone of satellite states. Though Theresa May as the new Prime Minister has shown some resolve – with regards to Trident – the recent Permanent Court of Arbitration ruling passed by virtually unnoticed in Whitehall, immersed as they were in the formation of the new Cabinet, the Turkish Coup, and the terror attack in Nice.

Despite the UK’s apparent drift, Tokyo and London are optimal allies for the United States. Based off of the continents to which they belong, they have never quite fit into those continents, culturally or politically, showing instead a preference for naval power. Both are comparatively economically powerful within their regions, technologically advanced and governed by liberal democratic systems, sharing similar values to the United States. Because of those values, both have been traditionally strong financial supporters of the United Nations, as well as pillars of the slew of financial international government organizations that collectively made up Bretton Woods. That American policymakers occasionally compared them is not surprising.

The most famous instance of this analogy was within the influential 2000 Armitage-Nye Report, which by suggesting the parallel gave Tokyo an attractive and recognizable template to emulate. Despite skepticism that Japan would ever shift its defensive posture from the easy-riding Yoshida Doctrine, toward collective self-defense or contributing forces to conflicts outside the Asia-Pacific, Tokyo has taken a long slew of incremental steps in both directions and developed new security ties with Australia, India and even the United Kingdom. While some would argue that these steps are still extremely limited, the fact remains that Prime Minister Abe’s “proactive contribution to peace” is a long way from former Prime Minister Miyazawa Kiichi’s insistence that Japan only had a “pretense of a foreign policy.”

As the United Kingdom reels from the June 23 Brexit referendum and struggles protracted Brexit negotiations and the possibility of a second Scottish referendum, it would appear that Japan is indeed becoming the “Britain of the East,” while Britain seems to be turning into a (Yoshida-era) “Japan of the West.” For it is quite clear that protracted negotiations required for exiting the European market, combined with the hasty search for new foreign trade agreements with economic powers such as the United States, India, China and Japan, will take up much of the energies of Whitehall’s mandarins. While this should only take five years or so, it will nevertheless force a loss of focus for Britain’s elites on its security contribution in the world. The possibility of Scottish independence would only add to the misery, stripping it of many of its best capabilities at precisely the time when NATO, Europe and the world need them most.

It is possible that as a result of these repeated blows, Britain will seek to recover the “splendid isolation” of Lord Salisbury, sans empire, and sans splendor, focusing instead on trade and keeping aloof of continental goings-on. Or it might also seek to leverage its financial sector as a leverage between the old hegemon—the United States—and the world’s newest superpower, China. The third possibility, about which I have written previously, is that Britain could double down on its role as a pillar of the liberal international order. It has already demonstrated that Brexit will not stand in the way of its commitments to eastern Europe by committing to the stationing of troops there.

Coming a full circle, it seems that there is much that Japan and the United Kingdom might do together to add value to their capabilities at this time of uncertainty and change. There is already talk within London’s corridors of the desirability of an FTA with Japan, though this will doubtless take time to negotiate. The two are currently engaged in early defense-industrial cooperative development, and have been widening strategic and foreign policy discussions in the defense minister–foreign minister talks (2+2). The possibility for greater U.S.-UK-Japan trilateral cooperation opens up all sorts of possibilities within the intelligence, cyber and space sectors. Regardless of Brexit or continued incrementalism within Japan, both London and Tokyo have a large range of institutional and industrial assets at their fingertips. Both are also seeking closer ties with New Delhi at the moment, a further area of potential cooperation.

As we look toward the remainder of this summer, we see a China that is highly likely to build up its military assets in the South China Sea, ignoring the recent finding of the Permanent Court of Arbitration. Simultaneously, we might see calls from within the EU to drop the arms embargo on China from states that have vested industrial interests in doing so. Britain’s absence from the EU’s top tables could have a destabilizing effect on Asia’s already precarious balance of power. Perhaps London and Tokyo might craft a bilateral diplomatic venture within Brussels and the capitals of Europe in that eventuality.

There is something to be said about the UK losing its sheen precisely as Japan begins to step up to the plate as a contributor to global security, but for those who believe the UK is out for the count, should consider London’s pluckiness and the deep support among its population and foreign policy elites for many of the liberal values that undergird the international system. It also has a long history of maritime operations, intelligence and expeditionary warfare that make it a superb partner for Japan. The fact that both work closely with American forces and seek interoperability with NATO allies creates an even deeper synergy for bilateral cooperation. At a time of uncertainty and change, one can never have too many friends.

What Kind of Foreign Policy and Security Posture should a Post-Brexit Britain Adopt?

RUSI Commentary, July 4th, 2016


Although British foreign policy is likely to encounter a variety of hardships after the withdrawal from the EU, some of the options still offer interesting opportunities which should not diminish the country’s international standing and contribution.

The decision to leave the EU is now behind us. Ahead lie months, perhaps even years of wrangling – with the EU, with Scotland, and all the unpleasantness that both will entail. However, once the storm dies down – and eventually it will – Britons are going to have to decide what kind of power we want to be. We will have to try and answer what kind of role we want to have, and what capacities that role will require. We will have to imagine a Britain without Scotland, and attempt to construct a role that is commensurate with the scaled-down ambitions and capabilities. Thus,  Britain might look forward to three possible future postures. These are – in shorthand – Little Britain, Middleman, and Best Friends Forever.

The first posture involves a Britain that sees the world as an increasingly less friendly place, beginning a long gradual withdrawal from global affairs as a result. It might continue to be a formal ally of the United States, and perhaps even remain in NATO, but will only play the bare minimum role required to maintain those relationships, passing through crises as obliquely as possible. To all intents and purposes, the UK of this future will look like Cold War-era Japan, formally allied with the US, but offloading its responsibilities, a free rider on the efforts and resources of others. Instead of contributing to global security, it will allow its narrower interests to determine its actions, a parochial mercantilism taking pride of place in Whitehall. It will be Lord Salisbury’s ‘splendid isolation’ without the Empire and, perhaps, without the splendour. This would be the ‘peaceful shire’ Britain, with London leaving foreign policy to others, sipping tea and playing cricket on a pleasant Sunday afternoon.

The second posture might be called Middleman, and has some similarities with the first option in that mercantilism, writ large, begins to dominate Britain’s foreign policy calculations. Shorn of the size and confidence afforded it by membership to the EU, Britain will approach new developing markets with gusto and abandon. Seeing values as ‘unaffordable’, this Britain will swiftly jettison any pretence of shoring up the global liberal values system, seeing the modern international system as one large test of survival of the fittest. The Osborne Doctrine, so named for the Chancellor’s warm China engagement policies, will be accelerated and see London attempting to carve out a middleman role for itself between the old hegemon – the US – and the emerging one – -China. Counting on the UK’s certainty that only the City of London, with its knowledge and history of currency trading, can help Beijing internationalise the Chinese currency as a global currency Britain will dance between the various centres of power, attempting to play banker to the great powers. It could become Switzerland-Plus, attempting to exert power behind the scenes, without favourites or friends.

Finally, there is the Best Friends Forever scenario, which would see Britain bounce off the painful divorce with the EU with a renewed sense of purpose and identity as an upholder of Western liberalism. In this future, the UK will still have to run to new markets, such as India, China and others, but it will balance mercantilism with a strong emphasis on values and allies, doubling down on its NATO commitments in Eastern Europe and re-fortifying ties with Washington. This would see it re-engaging with old allies like Australia, and strengthening nascent security ties with democracies such as Japan India. Security diversity would become a part of British security posture and as with today, London would seek to bring together coalitions and groups of like-minded states whenever crises struck. This will see Britain becoming the ultimate middle power in security diplomacy and shoring up the rules-based system through strong support of Western allies and of regulatory norms relating to space and cybersecurity.

How viable are any of these three scenarios? Of course, as with reality, the future UK will exhibit aspects of all three at various times, and under different prime ministers. However, if any leader were to take Britain down the path of the first two, it would be great loss to the international liberal system. In many ways, the third option offers the most interesting and exciting possibilities under current circumstances. For those who worry about the US’s willingness to welcome the UK back into the fold, one might note that President Obama has already moved to reaffirm the importance of the special relationship in the wake of Brexit. Once away from the EU model, Britain – and its allies – might find new opportunities. The ‘Five Eyes’ intelligence-sharing arrangement has long been a pillar of global security for the Anglosphere. Policy elites in the UK might push to revitalise the Five Eyes at the political level, moving it beyond its shadowy corridors to a more strategic forum level. Five Eyes summits and working groups at the agency and ministerial level could become a viable vehicle for the UK and its closest allies to uphold the liberal order and at least tackle the growing Sino-Russian sense of revanchism. Modelled on the ad hoc minilateralism and trilateralism currently seen in the Asia Pacific, a Five Eyes arrangement could even consider one-day creating a pathway to closer association for long-standing liberal allies like Japan, Sweden, Denmark, and the Netherlands.

While some kinks may need to be ironed out in the special relationship with the United States, Britain’s urban educated elites have more in common with American liberalism than they realise. Whether or not he can acknowledge it, Jeremy Corbyn is more likely to find his soulmate in a Bernie Sanders rather than in a Vladimir Putin. And his followers are more likely to find their beliefs in social diversity, social justice and human rights reflected in the US’s own progressive society than in a Russia that outlaws homosexuality or a China that imprisons human rights lawyers.

The UK should remember its interests, but also note that these need not be purely commercial. Values and old alliances are a part of British identity. Although the UK faces doubtless hardship ,it could also be on the cusp of exciting opportunities and possibilities.

How the US Views China’s Rise

An Extract from P.62 of an LSE IDEAS Publication, May 18, 2016


No other power excites debate about emerging powers among American policymakers and academics quite like China. Its incredible economic growth and military modernisation has increasingly defined American foreign policy in the post-Iraq space, promoting an increasing preoccupation with Asian and maritime security. It has raised both day-to-day policy challenges, as well as deeper theoretical challenges on the peaceful rise of powers in history. This debate has often pitted those within the realist tradition against neoliberal institutionalists.

The history of China in American policy has an interesting arc. Following the Tiananmen Square crackdown in 1989, Sino-American ties underwent a deep freeze. Despite this, the George H.W. Bush presidency (1989-1993) encouraged the resumption of high-level political ties and vetoed attempts by Congress to link the political relationship to progress in human rights. There was a belief that economic liberalisation would lead to political liberalisation. Until that time, American policy would hedge against two outcomes: a friendly, liberal China and a strong, challenging China.

This binary reveals itself in the varying articles about China in the early 1990s. Was Asia ripe for rivalry?’ Aaron Friedberg’s pessimistic 1993 International Security article thought so. Others, like David Shambaugh, wondered if the US should enact an engagement policy or containment policy. Some like Patrick Cronin, Kenneth Lieberthal, and James Shinn have argued for various forms of engagement, which deeply coloured Clinton policy on China. Others like Arthur Waldron, Gideon Rachman, and Gerald Seagal recommended ‘constrainment’ or varying forms of containment. This debate spilled over into the policy community, in what became known as the ‘Red Team/Blue Team’ debates. ‘Blue Team’ members included congressional sta ers, journalists, and policy academics who were hawkish on China, while ‘Red Team’ members preferred engagement and accommodation. Blue Teamers painted the 1996 campaign finance controversy (in which the Chinese government attempted to influence US domestic politics through donations to political campaigns) as a sign of growing Chinese influence in Washington. In Congress, they publicised accounts of Chinese defence-related espionage – as described in the 1999 Cox Report – and sought to show how growing Chinese military capabilities would make it a threat one day, requiring from 2000 annual reports from the Defense Department and the US-China Economic and Security Review Commission. The 1995-6 Taiwan Crisis and 1999 Belgrade bombing seemed to raise China’s threat profile, though trade was delinked from security issues.

The incoming G.W. Bush administration in 2001 was deeply sceptical of China, seemingly justifiably after their first crisis; the P-3 Incident off of Hainan Island (in which their was a mid-air collision between a US Navy signals intelligence aircraft and a Chinese Navy fighter jet). The administration’s attitude softened in its second term as Robert Zoellick attempted a charm offensive from the State Department, initiating the ‘responsible stakeholder’ approach.

In the wake of the 2008 Financial Crisis, the Obama administration seemed to follow the Zoellick approach, with James Steinberg emphasizing the management of tensions as China underwent what Chinese President Xi Jinping called ‘the great revival of the Chinese nation.’ However, there was a growing perception in Washington and regional capitals that Chinese ‘assertiveness’ had risen in the face of accommodation, which led to a backlash in the second term.

The Rebalance to Asia, or ‘Pivot’, rolled out in 2011 is intended to invigorate American leadership in the region and while it is not aimed at China, there is no doubt that China’s rise plays a part in its conception. It’s built around the three pillars of economic, security, and political engagement, and have seen a large uptick in activities between the US and its allies, between the US and China, and between the US and ASEAN member-states.

American writing on China has increased immensely, commiserate with its standing as the world’s next largest economy and military power. Writers have tended to come from two groups: China-watchers and IR scholars/security experts. China watchers like Iain Alastair Johnston, Harry Harding, David Lampton, David Shambaugh, Kenneth Lieberthal, and Michael Pillsbury have tended to adopt culturally nuanced approaches to policy, basing their analyses on cultural, linguistic, and network familiarity within China. Their tone varies widelybetweenShambaugh’s,‘TheTangled Titans: the United States and China’, and Pillsbury’s warning, ‘One Hundred Year Marathon’. Others ponder the efficacy of American policymaking, like Harry Harding’s ‘Has US China Policy Failed? Those who have a more general IR background focus on the US-China relationship or rising power debates. This includes a wide range of academics and practitioners, including Henry Kissinger, Henry Paulson, James Steinberg and Evan Medeiros, who advocate a ‘wait-and-see’ approach. Others like Aaron Friedberg, John Mearsheimer, Ashley Tellis, Robert Kaplan and Peter Dutton predict or seek to explain growing tensions and competition.

Over the past decade, much of the debate has been on whether the engagement policy vis-à- vis China has been successful in the long-term. Harry Harding’s Washington Quarterly piece, ‘Has US China Policy Failed?’, traces the reasons for American disappointment in China, looking at Washington’s hopes for political liberalisation inside China as well as the expectation that Beijing would become an active supporter of the international system. The fact that under Xi Jingpin, political control has been tightened over the media, over universities, and NGOs has played into this disappointment. As for a global role, China’s willingness to create regional organisations like Regional Comprehensive Economic Partnership (RCEP) and the AIIB are seen as challenging to American interests, while its maritime disputes with American allies Japan and the Philippines are dramatically increasing regional insecurity.

To read the full report, please follow link.

Should Obama Apologise in Hiroshima?

The National Interest, May 16, 2016


Now that President Obama has announced his intention to visit Hiroshima later this month, many have debated whether he will proffer regret or apologize for the dropping of two nuclear weapons on Hiroshima and Nagasaki by the United States in late 1945. Should he apologize? Given his past speeches in Cairo, Obama has been criticized by some conservative media in the US as America’s “apologist-in-chief”, prompting the White House and Ben Rhodes to declare that the visit is to be “forward-looking” and it will “highlight his continued commitment to pursuing the peace and security of a world without nuclear weapons”. Despite this, the current debate on Obama’s visit raises all sorts of questions about modern understandings of history, and apology-politics in general. To what extent should state leaders apologize for historic crimes committed before them? Should the United States apologize for its misdeeds? Should it apologize for Hiroshima and Nagasaki in particular?

Certainly, of the two, Japan has a long history of making apologies. Japanese Prime Minister Shinzo Abe has grappled with the historical legacy of Japan’s conduct during the Second World War and his own vision for Japan. He has been more successful at proffering regret to the United States and Australia, but less successful with South Korea and China. His speech to the Australian Parliament in July 2014 expressed “sincere condolences”. His speech to US Joint Houses of Congress in April 2015 expressed “deep repentance” and “eternal condolences”. In both speeches, Abe seemed to acknowledge Japanese responsibility for instigating the war, though his language was constrained by the domestic political realities of his conservative supporters in Tokyo. Prior to these speeches, his views on the Kono Statement, and affiliation with Japanese historical revisionists like Toshio Tamogami raised the possibility that Abe agreed with such accounts. Chinese observers – for geopolitical rather than academic reasons – attempted to shape an isolating narrative around Japan because of these debates, but were stymied by Abe’s nuanced approach from 2014 onwards.

What of the United States? As the leading hegemon, victor in the Second World War, and victor in the Cold War, should it apologize for actions it has carried out in the past? Many would agree with Walter Benjamin that “History is written by the victors.” However, this is less and less true in the modern world as liberal norms values affect expectations of state behavior in international politics. One only has to consider the whole range of “critical studies” in Western universities to see that in some states, at least, history has become a deeply contested area, continuously open to debate and self-criticism. Though open to abuse, this is ultimately a positive thing, enabling societies to move past historic grievances. Furthermore, is it really true that only winners write history? Turkey after the First World War, (vis a vis Ataturk, and the Armenians). Though North Korea lost the Korean War, it still teaches that it was the South who started the Korean War. Russia after the end of the Cold War continues to teach its own version of history. These are but a small sample of states that maintain and protect – often using legal means – their own historically regressive narratives.

What is the American relationship with its own past? As has been implied by the above examples, the domestic nature of the regime often determines the state’s attitude to history, though sadly some liberal states have flirted with state control of textbooks. The United States is a liberal democratic power with a strong set of ideals and values, which it ascribes to in its foreign policy behavior. It does not always live up to its own standards, but very often civil society, American academics and journalists will swiftly point this out in the public arena. Like Japan, the United States has apologized for its past. Few foreigners will know that the US has apologized to native Americans and Hawaiians a number of times for historical grievances.  While it has not yet dealt with the US-Philippine War, it has attempted to redress the stripping of benefits from Filipino soldiers, who served on the American side in the Second World War. Clearly, Americans increasingly believe that it should face its history head-on apologize for past grievances. What of the nuclear bombing of Nagasaki and Hiroshima? Should the United States apologize for those specific acts? Here the answer – like Abe’s speech to Congress – should be more nuanced.

Japan is one of the US’ closest allies. It has played an extremely positive role in international society since the end of the Second World War and is a strong supporter of the liberal international order and its attendance infrastructure. It is also deeply important partner in American security strategy for the region. However, things have not always been thus. President Obama could take a pragmatic line with his Japanese audience in Hiroshima and remind them of the ethical, strategic, and geopolitical reasons for dropping the nuclear weapons. The classical argument – from the American side – is that the US was fighting a ‘just war’ against Japanese aggression. A stronger ethical argument was that the bombings actually saved lives. The idea that Operation Downfall (the planned invasion of Japan) would cost millions of casualties is bolstered by the large numbers of casualties involved in the invasion of Okinawa (150,000 casualties in three months). It is also bolstered by the fact that the bombings were the crucial element in Japan’s Emperor Hirohito’s push for peace. Obama might have argued that both targets were hubs of military industry. He might also have argued that a costly invasion of Japan might have led to Soviet involvement, and ultimately the Cold War partitioning of Japan into two halves. Given Korea’s continued dismemberment, it is impossible to gloss over the human suffering that such an event would have cost Japan in the long run.

However, the most important function of any apology is the implicit promise that one will not repeat the offensive behavior. Without this commitment, apologies are meaningless. Prime Minister Abe’s speeches in both Australia and the United States both held that implied commitment. Japan– he stated – valued “freedom and democracy”. It held “human rights and the rule of law dear” as “a member of the Western world” and would never again “fall back onto force or coercion.” Japan – he said clearly – had changed. President Obama’s decision to speak on nuclear non-proliferation is thus a masterful stroke of symbolism. It expresses regret, without having to face the apology debate head-on. It is, within itself, a form of apology. It is a nuanced, thoughtful approach to the whole historical debate that permeates Asia Pacific narratives of the Second World War and speaks to the sense of pain that Japanese still feel on the bombings, without putting forward the pragmatic arguments above. Though these remain valid on the American side, using them is unlikely to serve a healing function. There is a danger that his visit panders to some elements within Japan who see the bombings as symbols of Japan’s victimization. Such narratives derive from revisionists, who tend to overstate Japanese suffering and underplay American, Chinese and allied suffering. However, if handled correctly, President Obama’s presence in Hiroshima, his message of peace, and nuclear non-proliferation will provide their own balm to the wider nation of Japan and its very real sense of suffering. If one considers the needs of the US-Japan Alliance for what promises to be a rocky regional future, such a conversation – between allies – is vital to the long-term strength and integrity of that commitment. What could be more American than a face-to-face attempt at closure between two old friends?

Book Review: Intimate Rivals: Japanese Domestic Politics and a Rising China 


RUSI Journal, April 2016

No country feels China’s rise more than Japan. With this simple assertion, Sheila A Smith takes us through a superb and badly needed analysis of the current state of Sino–Japanese relations in Intimate Rivals: Japanese Domestic Politics and a Rising China. She argues that for the past forty years, the relationship has been built on the premise that economic interdependence is the key to postwar reconciliation between the peoples of both nations. And in many ways, the bilateral economic relationship has produced astounding results. Between 1972 and 2004, Sino– Japanese trade increased 161-fold, from $1.04 billion in 1972 to $167.89 billion in 2004. Between 1994 and 2003, Japan was China’s largest trade partner, and by 2005, China comprised 20 per cent of Japan’s trade. In many ways, China’s rise has rested partly on Japanese investment, trade and official development assistance. So why have relations soured so dramatically over the past decade?

In trying to answer this question, Smith uses foreign-policy analysis to uncover the domestic drivers of Japan’s China policy. She is well equipped to take this approach: using her extensive contacts, her list of interviews in Japan includes no less than four prime ministers, four foreign ministers, and a large number of cabinet secretaries, senior bureaucrats and academics. Furthermore, her seat in the Council on Foreign Relations – a prestigious Washington think tank – means that she understands the policy and research communities. She was able to secure access to many prominent Japan and China experts based in the US; these included the likes of Elizabeth Economy, Kurt Campbell and Jeffrey Bader, among others. With this wealth of inside sources, combined with excellent research skills, she delves deeply into a range of issues from economic interdependence, to territorial disputes, to food-safety concerns; in doing so, the author takes a hard look at the role that history plays in the bilateral relationship.

The story she tells in the relationship between Tokyo and Beijing seems to be one of repeated missed opportunities. The leaders of both nations never missed an opportunity to miss an opportunity, to borrow Abba Eban’s phrase. In 1992, she writes, Japan’s leaders put their misgivings to one side and agreed to send the country’s emperor and empress to China on a state trip. At a welcoming dinner at the Great Hall of the People, the emperor spoke of ‘the unfortunate era when our country caused immense pain and suffering to the Chinese people’ (p. 42). His unprecedented words could have heralded a new era of Sino– Japanese relations. Instead, President Jiang Zemin used his 1998 visit to Tokyo to berate Japan for its history at a state dinner hosted by Japan’s emperor and empress. Televised nationally in Japan, Jiang’s harsh speech put the relationship back in the freezer. More often than not, relations between the two countries have been characterised by missed opportunities like this one, with leaders on both sides pandering to the worst elements of their domestic base.

The regular visits of Japanese prime ministers to the Yasukuni Shrine – on which the names of Class-A war criminals are inscribed – have become a perennial problem for the two countries and are a case in point. Junichiro Koizumi – perhaps one of Japan’s greatest prime ministers of the past forty years – made annual visits to the shrine, which regrettably have become traditional. Attempting to sidestep Korean and Chinese sensitivities, he insisted the issue was purely domestic. However, since the museum attached to the shrine contains a highly revisionist account of Japan’s imperial history, visiting Yasukuni became more than just honouring Japan’s war dead; it was a place for rejecting foreign criticism of the country’s war history. Koizumi’s win as leader of the Liberal Democratic Party was down – Smith believes – to his campaign promise to visit the shrine. For a man increasingly disenchanted with Japan’s pork-barrelling party-faction system, the trips to Yasukuni were essential to maintaining his hold over the party. However, the visits only seemed to justify those hardliners in Beijing who wished to use anti-Japanese sentiment for domestic purposes. It is odd that two states which have such close economic ties, and which share such close cultural and historical features would so consistently and grievously risk the Golden Goose upon which their mutual prosperity depends.

Smith dedicates a full chapter to maritime territorial disputes, since they have become so important to regional security and American naval policy over the past few years. Her account of the situation in the East China Sea is quite troubling. By her account, the issue was a slow-burning one in which the two sides went from shelving the dispute, to a gradual increase in coast- guard maritime activity, followed by the use of military patrols. Though both sides were initially willing to adopt an accommodating position on the Shirakaba/Chunxiao gas fields in a 2008 agreement, negotiations were stymied by a host of issues: first, there were the open-ended rules in the UN Convention of the Law of the Sea (UNCLOS) for demarcating exclusive economic zone boundaries, which led to other problems. There were large numbers of domestic actors – state and non-state – in both countries who advocated the most extreme interpretation for which UNCLOS allowed. In China, fishing commercial firms, coast guards, nationalist groups, and military planners all lobbied actively for the largest territory, while in Japan, the Ministry of Foreign Affairs struggled to maintain control of the issue, as Japanese nationalists and fishing firms became increasingly vocal over Japanese territorial rights. For those who follow the region, Beijing’s current focus on the South China Sea and disputes there has reaffirmed in Tokyo the idea that China is a revisionist power, intent on revising the post-war order using the implicit use of force. Frankly, that’s an interpretation that many in the US and the region have come to share, though with various caveats.

Smith’s book comes out at a time when China has risen as a great power in the region and seeks to reorder that region to suit its national security preferences. It also comes at a time when Japan seeks to find a role for itself more in keeping with its economic stature. At no other time in history have the two nations both been strong like this. It says much about the dynamic that both nations see the other’s efforts to integrate the region economically – the Regional Comprehensive Economic Partnership or Hatoyama’s East Asian Community – in binary terms. The success of one, seems to rob from the other. Smith’s book should be on the must-read list for anyone attempting to understand East Asia and the future of the global order. The relationship between the world’s second- and third- largest economies is an important case study of how China handles complex relationships and hints at its own vision for the world. On the more narrow issue of the bilateral, one sees a sad trend of missed opportunities for both sides to look forward – China could celebrate the fact that Japan has invested billions of dollars into its economy and build on that. Japan for its part, could resist the domestic pull of imperial-era nationalism and understand that its history is not purely a domestic issue. Given the complexity of these issues, it is good to have Smith on hand, guiding our understanding and shedding light on their domestic drivers. Useful for both policy practitioners and academics, this book is a must-have on one’s shelf.

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