Wednesday, October 24, 2018

The Cavaliers are Coming?

* Two US naval warships sailed through the international waters of Taiwan Strait on October 22. The decision was largely believed to send a strong signal to Beijing as the latter has been fortifying its military presence in the South China Sea. In addition, it could further escalate tensions between the two countries already consumed by a trade war threatening to get out of control.
* Despite strong opposition from the US, Japan, and neighboring countries in Southeast Asia, China's military buildup in the South China Sea has been going on for years. Previous US administrations have tried to put an end to Chinese advances in the region, with very little, if any, concessions from Beijing. Therefore, the Trump administration is now looking beyond just economics, trade and currency to identify new pressure points to bring the two sides back to the negotiation table.
*  Besides the obvious "freedom of navigation operation" assertion, there doesn't seem to be much of a strategic reason for Washington to do this, at this time. Beijing is certainly not happy about this. However, other than the usual rhetoric of "opposing any foreign interference on the Taiwan matter," Beijing is not expected to "go all out" on this issue, as long as it does not become a routine transit for US naval ships in the Western Pacific.
* Interestingly, there has been little media coverage in Taiwan and even less discussion of the matter in other public forums. The DPP administration might have privately welcomed the US naval transit through the Taiwan Strait, but the official response has been limited and restrained. With the mayoral elections just a month away, no one knows for sure how the Taiwan electorate would react to the US naval transit. Any one-sided, self-congratulatory gestures could backfire. If nothing else, this might have been a Christmas present too big, too early.

Tuesday, October 23, 2018

The World According to.....

* US President Donald Trump confirmed last week that the US planned to withdraw from the 1987 Intermediate-range Nuclear Forces Treaty (INF). Apparently one of the reasons for doing so was that the Russians have been in breach of the INF for years. According to Trump, previous US administrations failed to do something about it, so pulling out of the INF was inevitable and necessary.
* At the same time, the US plans to "develop those weapons" amidst a Chinese arms buildup in the Pacific. This was not the first time that the Trump administration had withdrawn from an international treaty, but the first on an arms- and security-related agreement. 
* The worldwide reaction was swift and to the point. The EU and its leaders warned of a new round of nuclear arms race if the withdrawal became fact. On the other hand, Moscow made it clear the planned US withdrawal from INF was "dangerous." In addition, some international security experts see the withdrawal as "a loser all around," particularly taking the blame for ending the INF and distancing allies in Europe and Asia.
* The domestic reaction in the US was mixed. While some Republican lawmakers cautioned the Trump administration that the withdrawal could unravel other disarmament agreements, others supported  the administration's position as "absolutely the right move." It remains unclear, however, if  the administration would actually follow through on last week's pledge to pull out of the INF. Things are expected to become clearer after US National Security Advisor John Bolton meets Russian President Vladimir Putin on 10/24.
* Though unexpected, more and more countries and leaders are no longer surprised by Trump administration's moves to "remedy past wrongs" and, again, put "America first." Though treaty violations are a concern in any international agreement, withdrawal may not be the only, or the preferred, option. Considering these moves are potentially destabilising to an international order that has been in place for decades, picking up the pieces and regroup afterwards may present challenges increasingly formidable in a multipolar--no longer unipolar--world.
* With mid-term elections in the US just two weeks away, some believe these planned moves are equally for, if not more, domestic consumption to show that the administration is "tough" on treaty violators and is not afraid to stand up for America. It may be China on trade and Russia on arms control, but the message is the same--the US will no longer be taken advantage of. With national interests first and foremost, the chipping away of American credibility and responsibility internationally does not appear to be a factor in top decision making circles in Washington.

Thursday, October 18, 2018

Taiwan's Mid-Term Elections/Part 2

* Mayors and magistrates around Taiwan and on the offshore islands of Kinmen and Matsu--altogether 22--are up for reelection on November 24. It is the first islandwide election since President Tsai Ing-wen and the Democratic Progressive Party (DPP) took over in May 2016. Many regard the upcoming local contests as a "mid-term election" for the DPP administration.
* Currently the ruling DPP has a clear numerical advantage with 13 seats, while the Kuomintang (KMT) is holding six and the Independents has three. Because of the difficulties in cross-Strait ties, economic sluggishness, particularly in tourism and retail sectors, and the uncertainty shadowing over the escalating trade war between the U.S. and China, it does not present a particularly promising outlook for the ruling party.

Political Party
Number of Mayors/Magistrates
Democratic Progressive Party (DPP)
The Kuomintang (KMT)
Total up for Reelection

* Despite DPP's subpar performance, the opposition KMT does not appear primed to make significant gains, mostly because of the lack of unity and the long-held image as the party reluctant to make changes and reforms. However, the KMT does have some charismatic mayoral candidates this year that may generate the necessary voter interest and momentum to register an overall victory. Most particularly, Kaohsiung's Han Kuo-yu and Hou You-yi of New Taipei City seem to be the "stars" of this islandwide campaign. The KMT is hoping that they can emerge as lead campaigners to assist fellow KMT candidates caught in tighter races.
* Another interest phenomenon is the political "resurrection" of former President Ma Ying-jeou. As one of the most sought-after campaigners within the pan-Blue camp, Ma seems always have a packed schedule with rallies and speeches, particularly on weekends and holidays. This is something unthinkable maybe just a year ago. Some have speculated that Ma may launch another presidential bid in 2020 if the KMT performs well in November. Though Ma has kept mum on the subject, it remains a distinct possibility, especially if the KMT cannot unite behind a single candidate. As such, Ma may be the most plausible alternative for the pan-Blue.  

Wednesday, October 17, 2018

Taiwan's Mid-Term Elections/Part 1

* Taiwan will hold mayoral elections around the island on November 24, 2018. In addition, the Central Election Commission (CEC) will stage islandwide vote on as many as nine referendum proposals. Voters aged 18 and over may get as many as 14 ballots in some places. In terms of both the number and range of issues, it marks another first in Taiwan's young democracy.
* The nine referendum proposals cover a wide range of issues. Some are on the island's sources of energy, while others are related to same-sex marriage and protection under the law. Most of these issues are very divisive in Taiwan, with no clear consensus either way. Weather, hence voter turnout, on November 24 will be a key factor in the fate of these approved proposals.
* Out of the nine approved referendum proposals, the most controversial is the one on whether Taiwan should attend the 2020 Tokyo Olympics under the name "Taiwan," instead of "Chinese Taipei," as agreed to by all sides in the Nagoya Agreement of 19179. The Republic of China (ROC) government on Taiwan subsequently accepted the "Chinese Taipei" designation in 1981. Ever since the 1984 Winter Olympics, Taiwan athletes have been able to attend Olympics and compete in international sporting events under the name "Chinese Taipei."
* Even if the "name-change"referendum proposal gets majority support in November--which is a tall order itself under the current Referendum Law--there is no indication that such a name change from "Chinese Taipei" to "Taiwan" appears imminent or even likely. In fact, the referendum vote may backfire on Taiwan and her athletes amidst deterioating relations across the Taiwan Strait. Beijing will probably interpret the referendum vote as part of the"creeping independence" scheme by the DPP administration. In addition to applying strong pressure to block the name change, Taiwan athletes may lose their right to compete in the Tokyo Olympics if the referendum proposal is deemed contrary to the 1979 Nagoya Agreement.
* Though the ruling DPP has repeatedly stated its neutrality on these referendum proposals. Beijing is not convinced that the independence-minded DPP has not played a role behind the one on name change. Irrespective of the results on November 24, the deepening distrust between Beijing and the DPP would likely frustrate any attempts at post-election reconciliation and make the ongoing cross-Strait standoff the "new normal" across the Taiwan Strait.

Sunday, October 14, 2018

Not a Currency Manipulator

* According to its internal findings, U.S. Treasury Department does not plan to label China as a currency manipulator in its upcoming report on foreign exchange rate practices of major countries.
* This is an important piece of good news amidst escalating tensions between U.S. and China over trade and related issues.
* Though it's not yet an all-out war over trade and tariffs, there is no end in sight as to how far, and how long, the dispute will continue. Any positive movements by either side are desperatedly welcomed and needed.
* With U.S. midterm elections just three weeks away, no substantive concessions or policy shifts are expected from either side. The standoff will likely continue until, at least, the elections are over.
* The planned second summit between U.S. President Donald Trump and North Korean leader Kim Jong Un and the G20 summit at the end of November will both be good indicators of where, and how, this bilateral relations will evolve in the coming years.   

Saturday, October 13, 2018

When Patience is Running Thin...
* US Vice President Mike Pence delivered a sharp, pointed speech--targeted at China—earlier this month at the Hudson Institute. From the ongoing US-China trade war to the long-running concern over human rights abuses in China, it was Washington's first official, public display of extreme frustration, even anger, with a vital player--a partner on so many regional and global issues--seemingly destined toward an eventual showdown.
* The speech was confrontational and reflected the long-held mistrust Washington has had toward Beijing not just this year, but for decades. Beginning with allegations that China is influencing US public opinion and attempting to interfere in the upcoming midterm elections, it spelled out an elaborate list of Chinese actions--in and out of the US--that Washington found deeply disturbing. Under President Donald Trump, according to Pence's speech, that was about to change, as new steps are being taken to forge "a new consensus" across America on its relations with China.
* In addition to voicing anger toward Beijing in so many different areas, Pence's speech was undoubtedly designed to exert more pressure on the world's second largest economy. Beyond the tariffs already imposed, Washington is ready and prepared to pursue steps to, among other things, protect the intellectual property rights (IPRs)--the foundation of its economic leadership--and scrutinize Chinese investments in the US.
* On the other hand, an US-China arms race appears inevitable, as both sides have substantially increased their military budgets for modernizing their respective military and space programs. Given China's expansionist behaviors, it also means the US will not quickly retreat from the Asia-Pacific region. Instead, the Trump administration is rallying support and build bonds with nations "that share our values across the region from India to Samoa." As such, the likelihood of friction, and possible conflict, may also increase.
* Though the tone was deliberate and harsh, the speech delivered a conciliatory ending and left the door open for the two sides to return to the negotiation table. Based on the experience in renegotiating trade agreements with Mexico and Canada, Washington probably anticipated that Beijing would have, and should have, returned to negotiation by now. Since Beijing has been unusually resilient and equally retaliatory on tariffs, Washington might have felt more pressure was needed before the rapidly deteriorating bilateral ties drift beyond the point of no return.
* At the core of the ongoing dispute, it is all a matter of "face." Under pressure domestically, the Trump administration had to "do something" to halt the runaway trade deficits with China and the rampant unfair practices ranging from demands of technology transfer to outright IPR theft. But Washington is also wary of the long-term impact on its own economy, especially since the Congressional midterm election is just weeks away. While nobody wants to see the escalating trade dispute becomes a runaway train, neither side would offer any concessions nor reach a compromise before the new makeup of Congress is set.
* The upcoming G20 summit, scheduled for November 30-December1 in Buenos Aires, could provide a good indicator of how long the US-China confrontation would persist. Speculations abound if Trump and Chinese President Xi Jin-pin would meet during the summit. There are efforts underway to make the much-anticipated summit a reality, but nothing is set in stone yet. Hopefully cooler heads in both capitals will prevail and figure out a way to end the ongoing trade dispute between the two superpowers.