Monday, October 7, 2013

Dysfunctional Power by Erick San Juan

Dysfunctional Power by Erick San Juan

The latest superpower dysfunctional spectacular, aka the US shutdown, has forced US President Barack Obama to cancel an entire Asian trip. First, the White House announced Obama was shutting down the Philippines then Malaysia, supposed stars of the "pivoting to Asia". Then it was finally confirmed, he was also shutting down the Asia-Pacific Economic Co-operation (APEC) summit in Bali on Tuesday and the ASEAN (Association of Southeast Asian Nations) and East Asia summit next Thursday in Brunei. That leaves Chinese President Xi Jinping to bask, unrivaled, in center stage glow.  (Source: China: We don't do shutdowns by Pepe Escobar, 10/04/13)

President Barack Obama missed the chance of engaging hands-on with the countries in the region in his re-balancing policy which concerns China and in pushing further his “already infamous Trans-Pacific Partnership (TPP) with Malaysia which is actually perceived as a corporate 'racket' that is a great deal for US multinationals but not exactly for Asian interests. TPP is the American answer to China boosting its already massive business ties all over Asia”. (Ibid)

And as for the Philippines, the government and those kowtowing to Uncle Sam’s whims were all disappointed for the cancellation of Obama’s visit. But this does not mean that the greater access agreement to the country’s military bases will not push through because the Pentagon is still very much in tune with its pivot to Asia.

China in the center stage

So, in the absence of Washington’s head, in the end it was left to Xi to stage yet another Southeast Asian triumph. Beijing may offer Kuala Lumpur a wealth of investment without pesky TPP-style interference on how the country runs its state-owned enterprises or how it dispenses government contracts. And on top of it, Xi got a personal shot at trying to get Malaysia on his side in the negotiations about the Code of Conduct for the South China Sea.

President Xi Jinping actually accomplished a lot in the absence of his ‘rival’ in the region and once again used its soft power operation in the process. As what Pepe Escobar cited, Xi became the first foreign leader ever to address the Indonesian parliament in Jakarta. He stressed that Beijing wanted by all means to boost trade with ASEAN to a whopping US$1 trillion by 2020 and establish a regional infrastructure bank.

His message, in a nutshell: China and "certain Southeast Asian countries" must solve their wrangling over territorial sovereignty and maritime rights "peacefully". As in, we will discuss that messy South China Sea situation (he made no direct reference to it in his speech) but don't let that interfere with our doing serious business in trade and investment. Who is ASEAN to say no?

Beijing has already agreed to discuss a legally binding Code of Conduct in the South China Sea with ASEAN. A working group met last month in Suzhou. Four of the 10-member ASEAN (but not Indonesia) are involved in the South China Sea dispute - which, predictably enough, is all about unexplored oil and gas wealth. The Philippines will keep accusing Beijing, as it did last month, of violating  for the moment the informal Code of Conduct. Indonesia has volunteered as mediator. It won't be a rose garden, but the fact is China and ASEAN are already talking.

Beijing has scored yet another milestone in its soft power and peaceful rise in the region sans Washington’s leader. Although some pundits say that China now owns America (already?). And that “in the future, China will employ millions of American workers and dominate thousands of small communities all over the United States. Chinese acquisition of U.S. businesses, set a new all-time record last year and it is on pace to shatter that record this year.

The Smithfield Foods acquisition is an example.  Smithfield Foods is the largest pork producer and processor in the world. It has facilities in 26 U.S. states and it employs tens of thousands of Americans.  It directly owns  460 farms and has contracts with approximately 2,100 others.  But now a Chinese company has bought it for $ 4.7 billion, and that means that the Chinese will now be the most important employer in dozens of rural communities all over the U. S.

Thanks in part to our massively bloated trade deficit with China, the Chinese have trillions of dollars to spend. They are only just starting to exercise their economic muscle.

It is important to keep in mind that there is often not much of a difference between “the Chinese government” and “Chinese corporations”.  In 2011, 43 percent of all profits in China were produced by companies where the Chinese government had a controlling interest in. 

Last year a Chinese company spent $2.6 billion to purchase AMC entertainment – one of the largest movie theater chains in the United States.  Now that Chinese company controls more movie ticket sales than anyone else in the world. 

But China is not just relying on acquisitions to expand its economic power. “Economic beachheads” are being established all over America. For example, Golden Dragon Precise Copper Tube Group, Inc. recently broke ground on a $100 million plant in Thomasville, Alabama.  Many of the residents of Thomasville, Alabama will be glad to have jobs. It will also become yet another community that will now be heavily dependent on communist China.

And the list goes on and on… When you total up all imports and exports, China is now the number one trading nation on the entire planet. Overall, the U.S. has run a trade deficit with China over the past decade that comes to more than 2.3 trillion dollars. China has more foreign currency reserves than anyone else on the planet. It now has the largest new car market in the entire world. China also produces more than twice as many automobiles as the United States does. After being bailed out by U.S. taxpayers, GM is involved in 11 joint ventures with Chinese companies. China is now the number one gold producer in the world. It also produces more than 90 percent of the global supply of rare earth elements. And China is now the number one supplier of components that are critical to the operation of any national defense system.

Just to sum it all up, while the US does shutdowns, China does business.

This is just part of the big picture. We have to gather our act together and have a reality check that to engage militarily with China is really suicidal. In our local lingo-"KWARTA O KAHON?"

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