Thoughts on the Sino-American Conflict in the Year of the Tiger

At midnight on Sept. 30, the bell on Washington’s Capitol Hill rang 12 times, signaling the end of the fall season in 2010. On Wednesday, the day before, American leaders passed the Currency Reform for Fair Trade Act bill, requesting that the American government exert pressure on China so as to appreciate the Chinese Renminbi. Although this bill has not yet been approved by the Senate, the fact that the House of Representatives has passed it has received objections from China.

Jiang Yu, Spokesperson of the Ministry of Foreign Affairs, expressed on Thursday that this bill will severely affect both countries’ trade relations. He also mentioned that China strongly opposes the U.S. Congress’ bill on the Renminbi. A few hours later, at 7 p.m. on Oct. 1 (Beijing time), a satellite named “Chang’e 2,” which was fully loaded with spying equipment and instruments, was launched from the satellite base in Xichang to the moon, 380,000 kilometers away. China does not seem to care about the United States’ demand for appreciation of the Renminbi, and has continued its deep space probing.

1. The Sino-American conflict began in the first month of the new year

Just after New Year’s Day in 2010, global information giant Google.CN encountered trouble in China. On Jan. 12, Google’s senior vice-president and chief legal adviser, David Drummond, announced on the company’s official blog that Google will no longer examine the search results generated by Google.CN. He said that if possible, in the weeks that followed, Google would be involved in discussions with China regarding a law that permits a search engine without filters. Drummond even claimed that Google.CN was previously hacked into, and if an agreement could not be reached, then Google would have to shut down Google.CN and its office in China. The conflict escalated over time. The already sensitive world of online information sparked discussions on the withdrawal of Google.CN from the Chinese market. On Jan. 19, U.S. Secretary of State Hillary Clinton intervened in the dispute between Google and the Chinese government. On Jan. 21, Hillary addressed the problem of freedom of speech on the Internet. She requested that the Chinese government carry out thorough and transparent investigations of Google’s recent hacking incident. With regard to Hillary’s request, the vice-minister of the Chinese Ministry of Foreign Affairs, He Yafei, rebutted that Google and other international enterprises should attempt to solve problems that they face through Chinese legislation. He believes that it would be a severe misunderstanding if the Google incident is seen in relation to both the United States and the Chinese government. Regarding the problem of network supervision, He Yafei expressed that supervision is normal for content that might threaten national security or that might be unhealthy.

Some commentaries thought Google withdrew from China because it was unhappy with China’s network controls and hacking incidents, but it also did not want to give up on the growing Chinese market. Hence, Google first decided to make its intention to withdraw public so that people would think Google was forced to due to Chinese laws and network controls. Google also wanted people, especially international people, to criticize China’s market for not being friendly and open enough, so that China would be forced to yield to public pressure, allowing Google to lobby for more benefits during its discussions with China.

That was not the end of the Google incident. On Jan. 29, Obama’s government announced its decision to sell $6.4 billion worth of military arms to Taiwan. The Chinese government immediately protested against this decision once the news was released. On Jan 31, China’s Ministry of Foreign Affairs expressed Chinese Minister Yang Jiechi’s perspective of the issue on its official website. Yang Jiechi expressed that the United States should take into account China’s position and respect China’s core benefits and concerns. As such, he thinks that the U.S. should immediately retract its mistaken decision and stop selling arms to Taiwan in order to prevent any damages to the Sino-American relationship. At the same time, China’s official media, Xinhua news agency, expressed that the United States’ decision would not only damage China’s national security and harmony, but would also hurt Chinese citizens’ national sentiments, and would severely disrupt Sino-American collaborations. To oppose the United States’ arms sales in Taiwan, China announced four counter-measures: 1) suspend bilateral visits between China and the U.S. that had been arranged under their military plans; 2) postpone exchange projects between China and the United States’ military; 3) postpone recently arranged consultations between the Chinese and American vice-ministers regarding strategic security and arms control; 4) enact a sanction on American firms that have participated in the sale of arms to Taiwan. Out of these four counter-measures, only the fourth acts as a significant penalty against the United States. China has even released the names of affected firms. They include the Lockheed Martin Corporation, the General Motors Company, the Boeing Company, the Grumman Corporation and the Raytheon Company. As China has never employed such a direct measure against American companies before, the United States has become more hesitant about its plans and has delayed some arms sales projects. For example, the project to sell new generation F-16 fighter planes to Taiwan has not been implemented yet.

2. Countless military exercises have been initiated by the Tian An incident

The Tian An incident that occurred in March this year, which involved the explosion of the South Korean navy’s submarine in the Yellow Sea, was very disheartening. However, no one knows why this incident occurred yet. After a series of investigations, the South Korean military concluded that this incident was carried out by North Korea. In order to prevent North Korea from acting rashly, South Korea announced on June 2 that the naval forces of South Korea and the United States will hold a series of collaborative military exercises in the Yellow Sea and in the sea in eastern South Korea. South Korea also announced that military personnel of the nuclear-powered aircraft carrier, the U.S. Navy’s seventh fleet named USS George Washington, will leave Japan’s Yokosuka base to participate in the exercise.

The Chinese military and people have expressed strong disapproval of this news because China thinks that the Yellow Sea represents grieving memories for Chinese citizens. Since it was the setting of the 1894 Sino-Japanese Jiawu Naval Battle, the Yellow Sea has become a very sensitive location that should not be easily abused by people.

On July 21, a spokesperson of the Chinese Ministry of Foreign Affairs responded to reporters that China strongly objects to foreign military usage of the Yellow Sea and other seas surrounding China for purposes that may affect China’s national interests. As such, China will pay close attention to any developments related to this situation. Under China’s close supervision, the American and Korean military held the first stage of their military exercises, coded as “Invincible Spirit,” off Korea’s eastern peninsula from July 25 to July 28. The USS George Washington and Korea’s Dudao participated in this exercise. Both parties sent out a fleet of 20 ships, 200 planes and 8,000 military personnel to participate in anti-submarine, missile test firing, search and rescue operations and so on. Thereafter, due to China’s opposition, the predetermined plan to let the USS George Washington participate in the second stage of the Sino-American military exercises in the Yellow Sea was forcibly cancelled, and replaced by operation “Ulchi Free Guardian.” In mid-August, only the Korean military took part in these exercises in Yellow Sea, which drew in 4,500 military personnel — the largest anti-submarine warfare exercise ever.

Since the USS George Washington could not participate in the Yellow Sea exercises at the beginning of August, it has led its formation into the South China Sea region. On Aug. 8, the USS George Washington reached the Vietnamese Danang, where many high-ranking officials boarded and toured the ship. From Aug. 11 to Aug. 14, the USS George Washington and its formation and the Vietnamese military held their first joint-military naval exercise in 15 years in the South China Sea. Although the main point of the exercise was to symbolize non-combat activities, USS George Washington commander David Lausman claimed that the South China Sea region does not belong to anyone, and as such, can be used by anyone. The Chinese have the right to act in the South China Sea, but every other nation in the world has that right as well.

With regard to the series of events that have occurred on China’s surrounding eastern Pacific region and the endless military exercises, China and military analysts believe that this may be representative of the United States’ shift in strategy to the East to preempt any military act from China. These events also show how strong the American military is in preventing China from taking any realistic action. Besides, according to Korean and Japanese media reports, the Sino-Korean military exercises have taken place every month since July of this year. American-Japanese military exercises will also take place in October this year, on one of Japan’s surrounding islands. The U.S. military is also working towards having a joint military exercise with India titled Operation “Cobra.”

3. Ministers of Foreign Affairs in South East Asia face off one another

On July 23, the 17th ASEAN Regional Forum was held in Hanoi, the capital of Vietnam. This forum originally served as the main avenue for officials to discuss security issues and cooperation in the Asian-Pacific region. Participants include nations within the ASEAN, China, the United States, Russia, Japan, South Korea and North Korea. However, the Tian An incident became the focus of the forum from the beginning. U.S. Secretary of State Clinton criticized North Korea for being too militant. She said that if North Korea wanted to improve its relations with neighboring countries and the United States, it must first abandon its provocative behavior. After Clinton’s comment was translated into Korean, the spokesperson of the North Korean delegation, Ri Tong-il, immediately rose to leave the forum, which caused a state of chaos.

Another climax was reached during the conference on July 24. On that day, 12 of the 27 participating countries (including countries that hold the right to the South China Sea: China, Brunei, Malaysia, Philippines and Vietnam) and representatives of the United States were discussing marine security issues and proposed greater multilateral talks on this issue. When someone brought up the problem of the Nansha Islands and the rapid modernization of China’s navy, Hillary commented that “the United States has a national interest in freedom of navigation, open access to Asia’s maritime commons and respect for international law in the South China Sea.” She mentioned later that “the United States supports a collaborative diplomatic process by all claimants for resolving the various territorial disputes without coercion.” Clinton’s comments were clearly directed at China. Chinese foreign minister Yang Jiechi immediately responded with a strong and emotional statement. Yang Jiechi’s speech was coherent and full of passion, and covered some of the following points: 1) the South China Sea situation is peaceful; 2) the South China Sea issue is not an issue between China and ASEAN; 3) the consensus by ASEAN on the South China Sea issue has been reached through friendly and peaceful discussions to protect the peace and stability of the South China Sea and to maintain good relations with neighboring countries; 4) China and ASEAN signed the Declaration on the Conduct of Parties in the South China Sea on Nov. 4, 2002, in order to encourage mutual trust among nations and to settle the dispute peacefully; 5) there are no problems with the South China Sea’s maritime freedom and security; 6) China has not threatened anyone in the South China Sea issue; 7) we should prevent the South China Sea problem from escalating into a increasingly global and multi-dimensional problem. According to reports, when Yang Jiechi ended his speech, there was an awkward atmosphere at the conference that signaled that Clinton and Yang Jiechi were clearly unhappy with each other.

After the incident, analysts stated that Yang Jiechi felt that this conference was like a pre-meditated attack on China. This is because Yang Jiechi announced in another discussion with Clinton prior to the conference that China hopes to resolve the issue during the bilateral dialogue, and will not accept any suggestions from other nations. However, China has consistently been dealing with the Nansha Islands issue from a one-to-one angle.

4. Conflicts regarding the Renminbi currency

Referring back to the Currency Reform of Fair Trade Act mentioned in the introduction of this commentary that was passed on Sept. 29, the United States has always been concerned that the Renminbi is undervalued. Since 2000, the United States has been trying different ways and methods to exert pressure on China to appreciate its currency. However, according to China, the appreciation of the Renminbi is not a sure way of resolving the United States’ economic problems. This is because from July 2005 to 2009, the Renminbi has appreciated 18 percent against the American dollar (from 8.3:1 to 6.8:1), but the United States trade deficit to China has continued to rise. Besides, China feels that the appreciation of the Renminbi would adversely affect the United States’ economy in reality, because an appreciation would only serve to increase product prices for American consumers. This certainly does not bode well for American citizens. Nevertheless, U.S. President Obama does not feel this way. He wants to adopt a firmer position against China, requesting that China should open more of its market to American exports, so as to create more employment opportunities within the United States. Some United States congressmen also think that China has manipulated its currency to gain an advantage over American exports. They request the passing of laws to penalize China, like imposing taxes on Chinese exports. For example, the Speaker of the U.S. House of Representatives, Nancy Pelosi, expressed that the currency bill will help Obama in his negotiations with China, and it clearly states that if China wishes to maintain stable economic ties with the United States, then China should follow this set of rules.

China immediately responded. Other than the objections put forth by spokesperson of the Ministry of Foreign Affairs Jiang Yu, the spokesperson of the Ministry of Commerce, Yao Jian, also claimed that investigations carried out based on exchange rates do not comply with regulations set by the World Trade Organization. Yao Jian also stated that China has never tried to gain an advantage by under-valuing its exchange rate. He hopes that the United States and other nations can evaluate this issue objectively so that they can make decisions for the benefit of the long-term development of Sino-American economic collaborations, as well as for the benefit of the United States.

Nonetheless, the public believes that this bill could trigger a currency war between China and the United States, which would not benefit either party, and hence would not be passed in the end. In addition, due to the upcoming U.S. congressional elections, it is less likely that this bill will be passed by the Senate in November.

5. Thoughts on the Beijing Olympics and Sino-American conflicts in the Year of the Tiger

2010 is the year destined for the highest frequency of Sino-American conflicts. This may be a result of luck associated with the Year of the Tiger, but may also be due to other objective factors.

On Feb. 14, the Phoenix Net screened a show featuring Mr. He Liangliang, who talked about his analysis of feng shui predictions in the Year of the Tiger, as well as his analysis of Zhou Yi Research Director Tan Degui’s predictions of China’s luck this year. He Liangliang said that this year is the geng-yin year, meaning that although many conflicts will occur, the political realm will be relatively stable. He mentioned that there will be droughts, and that the economy might be affected in August. However, the economy will continue developing and will not be in a state of crisis. As of today, almost an entire crisis had already passed. Summarizing the conflicts that this commentary had covered, it seems that Mr. Tan Degui’s words can be understood as: 1) the clash between the elements of earth and the sky have resulted in the high frequency of conflicts between China and the United States; 2) the clash between elements of gold and wood have resulted in droughts that many have witnessed; 3) the pressure of aged gold has resulted in the passing of the bill by the United States to force the Renminbi to appreciate. But is this all true?

Putting Zhou Yi aside, with regard to the economic, political and diplomatic conflicts that China and the United States have faced this year thus far, it seems like there is a tendency for fiercer conflicts to emerge. But perhaps we need to think more deeply about this matter. Firstly, the emergence of these conflicts has come alongside China’s rapid economic growth and seems to have arisen from the desire to suppress this growth. From this we can probably predict that in the days to come, as long as China maintains its economic growth, there will be more intense conflicts. Secondly, these conflicts seem to arise in different areas that are not only limited to the economic area, but also include the political, military and diplomatic areas. The only strange phenomenon is that in the recent Sino-American political conflicts, the human rights issue that has been most intensely debated previously did stand out. This may be because the Obama government has to deal with the most pressing domestic issue faced by the United States, their financial crisis. Thirdly, Sino-American military issues seem to be leading the front because of the United States’ strategic shift to the East. As evidenced by the Yellow Sea military exercises that this commentary has discussed, military conflicts may have occurred because the United States used third parties to tackle China and has benefited from it. Fourthly, it is important to note that Sino-American conflicts have usually been led by the United States, while China normally plays the defensive role. This may benefit China. This is because the party that gains the advantage usually has more time and space to observe and make calculated risks as to how to make counter-attacks. Last but not least, Sino-American conflicts have been instigated by economic benefits, and conflicts are most deeply rooted in economic concerns because the economy is the root of all evil. If it is not about suppressing your growth, then it must be about taking away some of the fortune you have.

As such, dealing with the future conflicts that China and the United States will face will test the intelligence, courage and determination of the leaders of both countries. Whether it be concealing one’s abilities or playing defense; whether it be wearing away the rock with water or firmly dealing with everything, both countries will have to think of winning as a starting point. This desire is especially strong for China, which has been dealing with such issues internally since 1840.

6. Conclusions

People usually believe that in a year, most of the successes would have already been laid down in the first three quarters, leaving the remaining quarter for enjoyment. This is the consensus in the West, particularly for the United States. Just think about it; apart from the elections in November, Halloween takes place at the end of October, Thanksgiving takes place at the end of November, and Christmas takes place at the end of December, and then a new year begins. Thus, I hope that no more conflicts will emerge in the remaining months left of the year, so that everyone can have a good rest during the holidays.