Monday, 7 July 2014

China’s Xi rides the Korean wave

Chinese President Xi Jinping’s first trip to South Korea is being watching closely in several capitals, amid an increasingly right-leaning Japan and American perceptions that Beijing seeks to impose a new security architecture in the region with itself at the center.

The landmark visit has garnered much attention in light of Xi’s break with traditions set by former Chinese leaders, such as Hu Jintao and Jiang Zemin, who prioritized ties with North Korea by visiting Pyongyang before Seoul. Though attempts at high-level dialogue have been made, North Korean leader Kim Jong-un has yet to meet Xi, or any other foreign head of state.

Despite the traditionally close ties between Beijing and Pyongyang, who fought on the same side during the Korean War, Xi’s visit really doesn’t come as much of a surprise. His country’s ever-expanding economic cooperation with Seoul, which covers areas ranging from trade, finance, science, technology and energy, is a pragmatic decision grounded in modern strategic realities.

Xi will be accompanied by a huge business delegation of representatives from over 100 emergent Chinese companies, such as e-commerce giant Alibaba, telecommunication firm Huawei, Internet giant Baidu, and the heads of China Telecom, China Unicom, and China Southern Airlines.

Chinese firms clearly see the vast potential for IT cooperation, especially in areas such e-commerce and internet-related businesses, while the country’s tech enterprises look to companies such as Samsung, LG and Hyundai as attractive and innovative business models.

Since establishing diplomatic relations just over two decades ago, Beijing has become Seoul’s largest trading partner, largest export destination and largest source of imports. Bilateral trade has surpassed $270 billion last year, rising 7 percent per year on average, more than South Korea's trade volume with the United States and Japan combined.

People-to-people relations have also improved dramatically, and studies say that the favorability of China among the South Korean public is currently at its highest point ever. It’s no surprise then that Seoul and Beijing are ironing out a free trade agreement to broaden their economic ties, and more than ten negotiation sessions have already been held.

Xi and his South Korean counterpart President Park Geun-hye will ink more than 10 joint documents to usher in deeper cooperation, including the setup of a won-renminbi currency market as a response to the growing international use of the Chinese renminbi, which was the second-most widely used currency in global trade finance in 2013, behind the US dollar.

The agreement would bypass the dollar and make the renminbi directly exchangeable with the Korean won, with the intention of reducing exchange-rate risks for companies engaged in bilateral trade, and to a lesser extent to curb the appreciation of the won by reducing the US dollar inflow.

If both parties can harmonize their macroeconomic policies as Beijing attempts to internationalize the renminbi, financial analysts also say it could help prepare Seoul prepare for any financial turbulence that may result from the eventual scaling back of US quantitative easing measures.

In the political sphere, there is likewise no shortage of issues to discuss. Xi’s visit comes just as Japanese Prime Minister Shinzo Abe announced his administration’s reinterpretation of his nation’s pacifist constitution, which would allow the Japanese military to engage in conflicts overseas for the first time since the Second World War.

There is unsurprisingly a broad domestic opposition among the public in both China and South Korea; both are nations that have historically bore the heaviest brunt of a particularly ruthless brand of Japanese imperialism and colonialism.

Seoul and Beijing are on the same page in viewing these changes as a troubling departure from the long-standing postwar security architecture, while Washington has given Tokyo carte blanche to abandon pacifism as it attempts reorder its priorities toward the Asia-Pacific to counter China’s regional clout.

The most high-profile political issue on the table remains the handling of inter-Korean relations, where Beijing is a key stakeholder. There is certainly some truth to perceptions that Chinese officials are frustrated with North Korea, primarily in its insistence on developing nuclear weapons, and its reluctance to follow the advice of Chinese figures that have encouraged Pyongyang to more rapidly reform and open its economy.

China is the target of much Western criticism over its reluctance to economically pressure North Korea by stringently enforcing sanctions and other punitive measures, and many of these analysts remain hopeful that Beijing will come around and put its thumb down on Pyongyang.

This isn’t going to happen. China’s brand of foreign policy philosophy values non-interference in the internal affairs of others, mutual non-aggression, and mutually beneficial economic development. Beijing rejects the use of economic sanctions as a principle, and respects the rights of states to live in their own way.

Both China and South Korea want to see a nuclear-weapons-free Korean peninsula, but the approach taken to achieve that is what sets them apart. Since coming to office early last year, President Park has lacked pragmatism in dealing with Pyongyang, and has showed little interest in a major policy shift away from the antagonism of her predecessor, Lee Myun-bak, who oversaw the worse period of inter-Korean relations in modern times.

Pyongyang, despite the frequent demonstrations of bellicosity and saber rattling, has made several offers and attempts over the past several months geared toward dialogue and diffusing military antagonisms, all of which Seoul has showed scant interest in. China has consistently called for a scaling back of annual US-South Korea military drills that raise inter-Korean tensions to fever pitch.

Beijing believes that North Korea has legitimate security concerns that every state in entitled to, and it undoubtedly does, but the Chinese position remains that the nuclear issue can only be broached through the platform of the six-party-talks, which have been stalled since 2009. China is giving Pyongyang the cold shoulder to some extent, but it continues to promote investment and trade in the country.

The North Koreans are cautiously pursuing reform by opening free-trade zones in provinces throughout the country to experiment with an economic model that works, which if successful, would help improve the livelihoods of average citizens. Normalizing economic relations with regional players would by extension thrust Pyongyang into becoming more accountable, while reducing giving it a greater incentive to normalize political relations.

Seoul can clearly benefit by taking a non-antagonistic position and encouraging a ‘developmental dictatorship’ model, which is the kind of regime that Beijing ultimately wants to see in Pyongyang, which would in any case be far preferable to the status quo.

Xi Jinping is attempting a delicate diplomatic waltz through the complicated geopolitical landscape of Northeast Asia, and though China’s policy towards Pyongyang will not likely yield to Western opposition, the Chinese leader is now attempting to ride the Korean wave back to the six-party talks.

This article appeared in the July 08, 2014 print edition of The Malaysian Reserve newspaper. 

Nile Bowie is a Malaysia-based political analyst and a columnist with Russia Today. He can be reached at nilebowie@gmail.com.