Commentary: Vietnam's 'bamboo policy’ is an asset as the US, China come calling

CAMARADERIE AND BROTHERHOOD

China is watching its Communist neighbour’s increasingly closer relations with Washington with interest. After Biden’s visit, Vietnamese President Vo Van Thuong travelled to Beijing in October to meet with Xi. The Chinese leader told him that the two countries have developed a deep friendship of “camaraderie and brotherhood”, and that they should regard the bilateral relationship as a priority in their respective foreign policies – a veiled reference, or a reminder perhaps, of keeping ties strong, no matter how much the US comes knocking.  

Beijing has long-standing economic relations with Hanoi, but could do more to bring big-name Chinese companies to invest, Nguyen Quoc Cuong, a former Vietnamese ambassador to the US, told me from Hanoi.

“China is lagging behind some other countries, namely the US, in this regard. Personally, I would like to see big names like the Chinese versions of Apple or Intel in the high tech space, and the digital economy investing more here.”

But while using economic incentives to gain political leverage may be what the great powers are trying, it’s unlikely the strategy will be that straightforward. Vietnam will continue to be guided by a foreign policy that has allowed it to strike relationships with countries that are often at odds with one another. 

It’s not just about managing the US and China, Lye Liang Fook, senior fellow at the Singapore-based ISEAS-Yusof Ishak Institute, told me.

“There is a new upgraded relationship with Japan as well. This visit by Xi is another indication of Vietnam’s delicate balancing act, but it also shows how the country has been been striking a healthy equilibrium with the major powers.”

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Commentary: How will Henry Kissinger be remembered in Southeast Asia?

HENRY KISSINGER’S WORLDVIEW

In trying to understand the enigma of the man, we have to understand his worldview. Dr Kissinger was the ultimate practitioner of realpolitik pragmatism. For him, morality had little place in the arena of world politics where power served as its prime currency.

If anything, excessive preoccupation with moral arguments were a distraction from – if not an obstacle to – the larger objective of peace, which to him was ultimately about avoiding the kind of great power conflagration that brought about World War II. To achieve this objective, difficult decisions would have to be made which, to Dr Kissinger, left little room for sentimentality.

This leads to a second point: To Dr Kissinger, the chief actors in the script of global politics were the great powers. Throughout his time in office during the terms of US presidents Richard M Nixon and Gerald R Ford, Dr Kissinger was consumed by Cold War competition with the Soviet Union and principally, the question of how to prevent a major nuclear conflict without compromising American interests and security.

It is from this prism that some of the US’ most controversial policies during those years, many attributed to him and that have tainted his legacy, should be viewed, such as the toleration of right-wing dictatorships in Latin America, complicity in violence in Bangladesh and the bombing of Cambodia.

KISSINGER’s IMPACT ON SOUTHEAST ASIA

With these aspects of Dr Kissinger’s worldview in mind, what were his contributions and connections to Southeast Asia? After all, if indeed his preoccupation was with great power politics, how did he view a region that comprised small and medium-sized states?

As national security adviser and later also secretary of state to US presidents Nixon and Ford, Henry Kissinger served during the most turbulent years of recent Southeast Asian history, when Soviet and Chinese-supported communist movements threatened to take over many governments in the region.

While communist insurgencies raged across Southeast Asia, it was in Vietnam where the threat was most urgent. Indeed, as early on as the presidency of Dwight D Eisenhower, the US was already seized by the prospect that the fall of Indochina to communism would allow the ideology to spread across Southeast Asia. This became known as the “domino theory”.

Dr Kissinger was instrumental in crafting and executing American policy at the height of the Vietnam War. He would oversee further escalation of the war, both in terms of the number of US troops deployed and also the expansion of the war to Cambodia, which he thought necessary in order to weaken the Vietcong.

Nevertheless, the ballooning cost of the war, mounting American casualties, and President Nixon’s promise to scale down US involvement, compelled Dr Kissinger to pursue secret negotiations with North Vietnam for the US’ eventual withdrawal.

Both he and his North Vietnamese counterpart, Le Duc Tho, were awarded the 1973 Nobel peace prize for their efforts. Mr Tho declined it, and Dr Kissinger never went to Oslo to collect his for fear of widespread protests given how unpopular the war had become.

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Commentary: China seeks to lessen developing countries’ reliance on the US dollar

CHINA LOOKS TO INCREASE THE POWER OF ITS CURRENCY

Measured against the vast tide of foreign currency transactions undertaken each day, Argentina’s yuan-for-pesos swap in August was a drop in the bucket. However, it should be seen as just the latest of numerous similar deals that Beijing is doing around the world that are designed to increase the power of its currency, known as the RMB in the markets.

The People’s Bank of China has been busily working similar swap arrangements, most notably with Russia in a deliberate strategy to help evade sanctions that have blocked it from tapping its own international reserves held in other entities.

The arrangement with Russia is almost certainly China’s biggest swap line – and it’s growing. Following the withdrawal of Visa and Mastercard, Russian banks currently issue credit and debit cards linked to China’s Union Pay system.

At last count China had signed these deals – more formally known as bilateral currency swap lines (BSLs) – with no less than 41 countries for a total notional value of US$554 billion.

There is nothing anything inherently sinister in a BSL – the Reserve Bank of Australia, for example, signed one with China years ago. The underlying principle behind a BSL is to avoid the kind of liquidity crunches that happened during the COVID-19 pandemic, but also to smooth out trade payments.

Until recently BSLs had no, or little, political motivation. They were purely mutually beneficial, technical arrangements. But that is changing as Beijing aims to erode the hegemony of the dollar in world markets, by default the anchor currency in a turbulent sea. As a well-researched 2022 paper by the Atlantic Council, an American think tank, points out:

“While these BSLs can be used to meet RMB (or other local currency) liquidity needs, the motivation behind these [Chinese] agreements has been to settle bilateral trade and investment transactions in RMB (or other local currencies) in order to gradually reduce the reliance on the US dollar in bilateral transactions both for political reasons and to avoid the volatility of the dollar value of local currencies due to changes in US Fed monetary policy.”

In pursuit of this long-term plan, in quick succession China has created a network of BSLs in the region it intends to dominate. Between South Korea, Singapore, Indonesia, Malaysia and Thailand, China has built up swaps to the tune of US$92 billion that will help spread the yuan throughout the fastest-developing nations in the world.

“The motivation here is to foster local currency settlement arrangements of the bilateral trade of each of these countries with China,” explains the Atlantic Council.

This can be a mutually convenient arrangement, but there is a more subtle purpose and that is to lessen reliance on the greenback by, as with Argentina, providing an alternative settlement currency. That’s why currency traders sometimes refer to the yuan as the “redback”.

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Commentary: US will only have itself to blame if China’s economic influence in Asia grows

LIVING AND DYING BY DOMESTIC POLITICS

The IPEF was challenging to negotiate from the outset, its demands and constraints a product of US domestic politics.

The lack of access to the US market removed a key incentive from the American negotiating toolkit. It was an effort to avoid a sensitive political issue: American public opinion has become generally less supportive of free trade due to the perception that cheap foreign goods are displacing American products, especially in key swing states and unions.

Believing that “deep trade liberalisation” failed to protect American jobs and capacity, Biden’s administration bucked decades of free trade promotion to aggressively subsidise favoured industries in its competition with China. US$39 billion in manufacturing incentives was allocated under the CHIPS Act alongside US$370 billion in investments for clean energy under the Inflation Reduction Act to grow the US industrial base.

Meanwhile, labour and environmental standards were always a hard sell to partners such as Vietnam and Indonesia. These US demands tapped on these growing sentiments against free trade.

A common rallying call was that trade deals need to ensure strong labour and anti-dumping standards so American workers can compete on a “level playing field” – not just with Chinese workers, but with supply chains linked to China as well.

Yet, the IPEF was still vulnerable to the domestic forces it sought to appease. As a White House initiative, the IPEF was unlikely to garner financial support from a split Congress and could also be cancelled with a simple executive order by a future president.

Negotiators likely understood that the odds were stacked against them. The timeframe to complete IPEF negotiations was also relatively short at two years, compared to seven years for the TPP.

Ultimately, after months of disquieting rumours, the end came when the finish line was in sight. Pushback from lawmakers, such as Senator Sherrod Brown who is facing a tough re-election campaign, derailed negotiations on the trade pillar, leaving IPEF on life support.

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Snap Insight: Biden-Xi meeting - the real issues of contention in US-China ties are far from settled

MORE CONTENTIOUS ISSUES FAR FROM SETTLED

For China, the meeting came at a time of significant economic slowdown. Progress would look like US messaging that it was not pursuing a strategy of “decoupling” or an all-out economic war. It was also looking for reassurance from the US that it does not support Taiwanese independence.

The bigger issues of contention, such as Taiwan (amid Mr Biden’s reiteration of the US’ unchanged commitment to a one-China policy), trade restrictions or China’s role in global conflicts, remain far from settled.

No amount of dialogue between the two nations’ leaders is likely to change these.

Looming in the background of the summit is the 2024 US presidential election, with Mr Biden trailing in the polls against the expected Trump candidacy. With more than 80 per cent of Americans expressing a negative view of China, any concessions around trade would be politically disastrous, even when a lifting of restrictions could achieve something the US public wants – lower inflation.

POSSIBLY THE LAST BIDEN-XI MEETING

For the Chinese, a change in the US administration offers a complicated picture. A better working relationship with Mr Biden might not count for much if this could be their last meeting.

A second Trump presidency portends a more intensified trade war and restrictions on China. At the same time, in contrast to most Republican presidential candidates, Trump has not taken a clear position of support towards Taiwan.

A decrease in US support for Ukraine, as Trump has indicated he favours, could remove one of the more uncomfortable elements in Xi’s “no-limits” partnership with Russian President Vladimir Putin.

For the rest of the world, the summit offers some hope that a return to dialogue between the superpowers may help smoothen the bumpy future of US-China relations. 

Trisha Craig is Vice President (Engagement) and Senior Lecturer of Social Sciences (Global Affairs) at Yale-NUS College. The views and opinions expressed herein are those of the author(s) and do not represent the views and opinions of Yale-NUS College or any of its subsidiaries or affiliates.

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Commentary: What mattered most to China about Australian PM Albanese’s visit

The economic agenda was equally important to Beijing, given the difficulties China is currently facing.

Given the nature of Australia-China trade, there is a limit to the punitive measures China can impose on Australia. In fact, despite the tensions that existed with Australia under the Morrison government, overall bilateral trade has continued to grow, reaching nearly A$300 billion (US$192 billion) in 2022. This shows how complementary the two economies actually are, as well as the resilience of these economic ties.

This is what Chinese leaders and the media emphasised during Albanese’s visit and why they were highly critical of the idea of “decoupling” or “de-risking” from China’s economy.

They characterised “decoupling” as going against free trade and protectionism, but in reality, Beijing is deeply concerned over any specific measures that restrict trade in the high-tech sector, such as with semiconductors. The US and its allies have been increasingly adopting such restrictions in recent years.

THE IMPORTANCE OF WHAT WASN’T SAID

What wasn’t discussed much in the Chinese media was the gap between what Beijing presented as a successful visit and what was actually achieved.

One could argue both sides talked about the obvious – for example, that bilateral relations have more or less stabilised, compared to how they were 18 months ago. As China expert Richard McGregor astutely observed, Albanese was “pushing on an open door”.

This is not to belittle the progress made so far. The intention of both governments to resume and strengthen the many dialogues between officials from their countries is important – even critical – in “resetting” the relationship. These channels of communication are incredibly important during times of crisis as a way of managing disputes and avoiding conflicts from spiralling out of control.

Though resetting the relationship was a definite aim in the long term, there were also significant takeaways in the short term. This can be seen in how the state media coverage downplayed AUKUS and conflicts in the South Pacific, where China’s influence has raised alarm bells in Canberra and Washington.

China has signalled its displeasure over AUKUS and continues to consider it a major impediment to further improvement of bilateral relations. But Xi told Albanese they could work together on regional security challenges.

Where there are efforts to cause disturbances in the Asia-Pacific region, we must firstly stay vigilant, and secondly oppose them.

And in the Pacific, the Chinese side is seeing an opportunity for the two countries in terms of regional economic development – how Australia and China can both contribute.

Jingdong Yuan is Associate Professor of Asia-Pacific Security at the University of Sydney. This commentary first appeared on The Conversation.

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Commentary: South China Sea isn’t the place to play ‘game of chicken’

On the one hand, China may be forced to show its hand by undertaking more forceful actions to stop the missions. On the other, doing this would risk direct confrontation with American forces. This puts China between a rock and a hard place.

All eyes will also be on Washington to see if it demonstrates less-than-desired resolve to back up a formal treaty ally. Yet a joint escort for resupply runs would strain existing capacities and potentially enter direct confrontation with the Chinese.

Manila appears more wary, having stressed that China’s aggressive behaviour to date would have to be assessed in determining the applicability of the mutual defence treaty with Washington.

That said, the possibility of a joint Philippine-US effort to resupply Second Thomas Shoal would become higher if Beijing shows no or little inclination to stand down from its aggressive blockading actions. It would therefore behove China to refrain from escalating beyond what it is already doing, lest it decides to gamble in a “game of chicken” to further test American resolve.

Unless of course, Beijing concludes that Washington will be the first to blink. This would definitely set the two powers on a course of collision in the South China Sea.

Collin Koh is senior fellow at the S Rajaratnam School of International Studies, based in Nanyang Technological University, Singapore.

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Commentary: Joe Biden’s unsung shift on China

As Biden’s national security adviser, Jake Sullivan, this week pointed out: “High-level and repeated interaction is crucial to clear up misperception … and to arrest downward spirals that could erupt into a major crisis.” 

Nothing fundamental has changed about US-China rivalry. Chinese vessels and aircraft continue to intimidate others in its vicinity. America is tightening curbs on outward investments to China, and further restricting Chinese investments in the US.

Xi could cross the line by supplying Russia with military materiel in its war on Ukraine. With some reason, Xi continues to think that America wants to keep China down.

The more they can converse, however, the lower the existential risk. By my count, Sullivan has spent about 20 hours talking to Wang in Vienna and Malta during the past few months, which is as much time as a patient might spend with their therapist.

It is harder to read bad faith into your adversary when they are objecting civilly to you in private.

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Commentary: Xi-Putin Belt and Road meeting highlights Russia’s role as China’s junior partner

Perhaps the most instructive aspect of the visit was Putin’s explicit acknowledgement of the different roles played by Moscow and Beijing in international politics.

Putin described the Russia-dominated Greater Eurasian Partnership (GEP) – a concept Moscow has promoted as a response to the Belt and Road Initiative (BRI) that would fuse the Eurasian Economic Union with the BRI – as a regional or “local” project. Meanwhile he happily described the BRI as “global” in scale.

For the past decade, Russian policymakers and experts have consistently held up the GEP as symbolising Russia’s equality with China. Russian foreign minister Sergei Lavrov has described it as “the creation of a continent-wide architecture”.

Putin’s words, coupled with the lack of any meaningful results of the meeting (bar a contract on food and agricultural products which has yet to be confirmed by Beijing), illustrate the extent to which Russia’s war against Ukraine has deepened the asymmetry between the two powers.

HOLDING BACK?

The lack of genuine progress on the issue of the Power of Siberia-2 pipeline, which will transport gas from Russia’s Yamal gas fields, which used to supply Europe, via Mongolia to China, was further evidence of this asymmetry. Xi was kind enough to express hope that the project could proceed quickly. But he did not outline any concrete steps in that direction.

China’s agreement, if confirmed by a contract, would have been the most clear signal of Beijing’s strategic support for Russia, especially given Gazprom’s shrinking European market. By prolonging negotiations, China seems to be trying to extract specific concessions from Russia, related to the price of gas, possible Chinese ownership of gas fields in Russia, or Beijing’s acquisition of shares in Gazprom.

Meanwhile, in May, China revived the prospect of building the so-called section “D”, enlarging the capacity of the Central Asia-China gas pipeline system, which will bring gas from Turkmenistan via Kyrgyzstan and Tajikistan to China, emphasising China’s other sources of energy supplies.

While continuing to offer Moscow political support and not interfering with Chinese companies’ attempts to take advantage of the exodus of Western companies to increase their presence in the Russian market, Beijing has clearly attempted to prevent any embarrassment related to Russia. A gas contract would have overshadowed the BRI summit and generated a strong reaction in the US and Europe, potentially strengthening China hawks in the West.

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Commentary: Xi and Putin's no-limits partnership is becoming a one-sided affair

A JUNIOR-XI-JINPING PARTNER

Putin, who is now obviously Xi’s junior partner, is also expected to visit Beijing, indicating that Russia and China have a common goal in mind when it comes to putting an end to the western-dominated international order and limiting US and Western influence in what they both see as their wealthy interest zones across Eurasia.

Russia continues to emphasize its ties to China, in part because it has some other options besides countries that are considered to be international pariahs like North Korea and Iran.

Trade along the New Eurasian Land Bridge, an inland road connection between China and Europe that was once a significant transportation route for Chinese exports to European markets, has been significantly reduced by American sanctions against Russia in response to Moscow’s warfare against Ukraine.

Instead, transportation roads avoiding Russia have become more significant, such as the Middle Corridor, which connects China with the EU via central Asia, the Caspian Sea, and the South Caucasus. Soviet hopes for closer ties between the BRI and Moscow’s post-Soviet financial consolidation program, the Eurasian Economic Union, have also been dashed by this.

It is significant that Putin was invited to visit Beijing by Xi, but it is also noticeable that this is not just a intergovernmental matter. Putin’s trip to Moscow does, at best, give the Russian president a chance to speak with Xi in the margins of the summit intended to commemorate the BRI— a project that is closely related to him personally— in contrast to his trip there in March.

China also has and pursues different alternatives in its international relations. At the APEC conference in San Francisco in November, there is still a chance that US President Joe Biden and Xi will cross paths. Josep Borrell, the head of the EU’s foreign plan, also traveled to China, perhaps to get ready for an EU-China summit later this year.

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