East Asian Policy

US-China relations appear to have attained a more practical and realistic footing following the meeting between Chinese President Xi Jinping and US President Donald Trump at the Mar-a-Lago retreat in April 2017. At the meeting, they elevated their existing bilateral talks to a more comprehensive framework and agreed to unveil a 100-day economic plan. Trump further expects China to play a bigger role in reining in North Korea.

Trade relations between China and the United States continue to strengthen. Meanwhile, widening bilateral imbalance persists, as China becomes increasingly central in the Asian production network. New trends have emerged since 2011. China’s trade with its immediate neighbours have weakened in relative terms and the importance of process trade declined. China’s surging trade surplus is increasingly domestically originated. Bilateral economic relations face many challenges, especially when the new US administration has stronger inward-looking tendencies.

The Abe cabinet enjoys rich tangible political resources particularly in the aftermath of the overwhelming victory in the Upper House election in July 2016. However, Abe is also constrained by the less visible intangible uncertainties of his intangible political resources. From the perspective of Japanese internal dynamics, Sino-Japanese relations tend to be on a track of new normal of continued tension with low intensity and sustained dialogue of low quality.

Japan and the United States have agreed to discuss a post-Trans-Pacific Partnership (TPP) bilateral trade framework during the Abe-Trump meeting in February 2017. The bilateral trade talks will be a significant step for Japan to remain economically connected to America. To reward Japan’s support of Trump’s economic agenda, the United States has promised to defend Japan, including the disputed Senkaku islands.

Xi Jinping and Li Zhanshu share many similarities and formed a bond as rooky party secretaries in counties in Hebei province in the 1980s. Xi brought Li to Beijing in 2012 and Li played a key role in drumming up support for Xi to become the “core” of the Chinese Communist Party leadership. Li is expected to join the next Politburo Standing Committee and play a more prominent role in Xi’s second term.

Appointing a naval officer to command the Southern Theatre indicates the relative importance of the South China Sea to the People’s Liberation Army (PLA), mainly in terms of its strategic location and its deep depth, immense space and unfettered transit to the Western Pacific for operating PLA Navy’s strategic nuclear submarines and major surface ships. For the reshuffling of naval leadership, functional and technical expertise-based, or professional criteria may play a primary role.

There is growing resentment towards globalisation in the West. The Chinese leadership has leveraged on the various international platforms to promote China’s approach to global economic development. Promotion of its “Belt and Road” initiative overseas marks China’s attempt to put its own stamp on globalisation. Nevertheless, China still has much to do domestically in promoting the open economy at home before it could be a credible leader of economic globalisation.

After the 2008 financial crisis, the International Monetary Fund realises that reforms are needed to reduce the reliance on the US dollar as the only international reserve currency. It began to nurture super-sovereign reserve money where SDR (Special Drawing Rights) is the most favourable candidate. Joining SDR will push forward China’s exchange rate reform to meet the standard of a real international reserve currency, which requires more skilful domestic and international policy coordination.

The high unemployment rate in China’s Uighur community has been cited as a factor for the occurrence of a series of ethnic violence. Uighurs are disadvantaged in the job market mainly because of their poor Mandarin language ability. They are socially insulated from the Han-dominated business networks, and are less proactive and enterprising in work than Han. Overall, the unemployment issue of Uighurs is a product of multiple causes, which requires a comprehensive policy plan.

China has stepped up efforts to improve its environment quality including the improvement of a legal framework and enforcement of environmental laws and regulations. It has also embarked on promoting green development. While China had won the battle against poverty and set an example for developing countries, whether it could do the same in its battle against pollution remains to be answered.