Both ends not against the middle

12 October, 2013
As appeared in TheStar.com.my

Keeping good relations with China and the United States

WHEN you are down, you know who your real friends are. The United States, which is hobbling from a number of self-inflicted injuries, will no doubt take note of those who are gleeful at its current trepidations, those who are disappointed, and those who are just plain scared.

Malaysia should come under the second category, but the outstanding success of Chinese President Xi Jinping’s official visit to Malaysia earlier this month, and US President Obama’s no-show for his scheduled visit afterwards, may encourage an imbalance in respect of relations with the two countries. Malaysia’s policy has been, and must continue to be, one of maintaining equally good relations with both.

Having said that, America’s domestic political paralysis, and the shutdown of its government, which kept President Obama in Washington and from attending important regional summits in Asia before making the long-awaited visit to Malaysia, have harmed US interests and standing. Perception of America has taken a turn for the worse in the region. The Jakarta Globe described the United States as a “Diminishing Superpower”.

On the other hand, China’s stock is rising. As the US wrestles with both economic and political decline, China has quietly but clearly been making substantive proposals relevant to the good life of the nations of South-East Asia.

As with Indonesia before, President Xi Jinping agreed with Prime Minister Datuk Seri Najib Tun Razak to lift bilateral relations to a comprehensive strategic partnership through a 5-year programme for economic and trade cooperation during his visit to Malaysia at the beginning of this month. Among others, this targets bilateral trade between the two countries at US$160bil by 2017 from the present US$95bil. China is already Malaysia’s largest trading partner, having replaced the United States four years ago.

Xi Jinping proposed during his earlier visit to Indonesia the setting up of an Asian infrastructure investment bank, with a Chinese commitment to funding it and an invitation to Asian governments to come on board. This has huge strategic significance.

The Asian Development Bank (ADB) estimates Asia needs US$8 trillion of infrastructure between 2010 and 2020, plus US$390bil for connecting regional infrastructure. There is an insufficiency of financing from traditional sources. This focused bank will help fill a gap in the next phase of Asia’s growth – infrastructure and urbanisation.

Add to this the big story of China’s own growing demand. Expected imports of US$10 trillion in five years. Infrastructure development and growth of second and third-tier cities (second-tier cities have a population of 10 million!). About 400 million tourists coming out of China. Drilled down into various economic activities, sectors and businesses, this is a huge growth story.

Not just Obama, where is America? It is easy to forget, in today’s reality and tomorrow’s prospect, the great American contribution that brought us, including China, to where we are. Even with warts and all, open minds and open markets – nothing short of a revolution in growth of the global economy since the second world war. Yet, there is today.

What are we getting from the United States? It would seem – as there is still a lot of investment, trade and security – not much more than words and invocation of high values against which America itself fails to measure up, like good governance. US Secretary of State John Kerry, who stood in for Obama, was stirring at the APEC CEO summit. Obama could only have done a shade better: we aren’t finished yet; don’t underestimate America; we’ll come roaring back.

What the United States proposes under the Trans-Pacific Partnership (TPP) will bring the kind of prosperity to Asia-Pacific even better than the one America inspired and provided the world since 1945.

Words. The past. What is the worth of American commitments at a time of its relative decline against China especially when its vaunted governmental system is in gridlock.

Truly, the Americans have to pitch it differently. The lustre of American exceptionalism is gone. We all do not want to become a kind of Chinese as we did a kind of American, but the Chinese lolly looks good. The world is now returning to its more natural order of Asian economic dominance after a 200-year Anglo-Saxon aberration, at least according to Singapore’s Kishore Mahbubani.

Yet his own Prime Minister Lee Hsien Loong was clear at that APEC CEO summit in Bali last week. Singapore wished to see a strong America and its continued presence in the region which would be good for Asia-Pacific. Clearly for balance. This has been a consistent Singapore position, echoed in Lee Kuan Yew’s most recent book, One Man’s View of the World (Straits Times, Singapore Press Holdings, 2013).

This despite Singapore’s extremely close relations with China, in Beijing’s present incarnation, based on Deng Xiaoping’s visit to the city state in 1978 which was one of the main inspirations of the Chinese leader’s modernisation policy. Singapore’s provision of logistical facilities for the US navy has not undermined these relations.

Malaysia’s relations with China are now as close as Singapore’s, trumping the city-state’s filial association with the Tun Razak family factor. However, there is no reason why we should go over the top by neglecting the close relations with America. Even if it is only John Kerry standing in for Barack Obama, the United States is making the effort in difficult circumstances.

The United States is the world’s most innovative nation. America is down but not out. It is still the largest economy in the world with the most powerful military forces.

Creative outcomes are flowing all the time, especially in information technology development and even in resource exploitation as with shale oil and gas. Muhammad Ali was knocked down by Henry Cooper but came back to win on points.

China is not the finished item. There are twists and turns ahead domestically as well as in external relations. It made a number of miss-steps over the South China Sea, getting assertive and provocative especially after its claims were pronounced as a “core interest” in March 2010, just like Taiwan and Tibet.

The nine-dash line claims for China 80% of the South China Sea, based on international law and “historical facts”, the latter not recognised by the UN Convention on the Law of the Sea. It is extra-legal, a claim to a kind of suzerainty which is expansive.

But just recently, really since early August (when China and Asean celebrated the 10th anniversary of their strategic partnership which began when China acceded to Asean’s Treaty of Amity and Cooperation in 2003), China has reasserted the economic worth and potential of that cooperation and, as we have noted, has made some truly significant initiatives to develop and deepen it. Apart from Xi Jinping’s visits to Indonesia and Malaysia, these have been repeated at the recently completed Asean summit in Brunei by Prime Minister Li Keqiang.

How will China behave in future? There are racial issues in Malaysian domestic politics, for instance, which might encourage China to exert some kind of pressure if they got out of hand.

China has not been reticent in using economic and trade pressure against the Philippines following their South China Sea spat, affecting for example banana exports from troubled Mindanao. But, after a bad 2½ years, China has now made a real and decisive turn to the good.

America, on the other hand, is paralysed not so much by bad economy as by bad politics. It has got to get its act together. Otherwise it will lose more ground. Then it might have to come roaring back – which would not be a good thing. American excess (and miscalculation) has been a problem, not just in our region. It has been harping on the South China Sea disputes as if nothing else matters. As if all it wants to do is to put China on the spot.

There is now talk of the debt ceiling that expires on 17 October being extended on a short-term basis, but the game of chicken is still on, as is the shutdown of government.

Fareed Zakaria contends lack of leadership in the Republican party is the main cause but whatever it is it is not one big tea party for the world. American word and trust is at stake.

Malaysia, with its good relations with the United States, can give good counsel. If not so much as to have weight to drive sense into Washington political lunatics, at least to get America to see issues in the round in the region.

US-China relations will determine the peace and stability of the region. A little bit of influence through good relations with both, also through Asean, can have a significant and positive impact on that peace and stability.

Of course it also serves the Malaysian interest. The prosperity, based on peace and stability, with China and America fully committed to the endeavour, will realise the full potential of Asia this century.