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- Lockheed’s stock value increased a few days prior to the July 8 announcement of the THAAD deployment in South Korea, and has increased over 4% since, far outpacing its peers.
- Lockheed’s stock value increased a few days prior to the July 8 announcement of the THAAD deployment in South Korea, and has increased over 4% since, far outpacing its peers.
Official news sources in China have claimed that plans to deploy the Terminal High Altitude Area Defense (THAAD) anti-ballistic missile system in South Korea are pushing China, Russia, and North Korea into closer relations, what I would call a de facto authoritarian alliance. “Now facing common threat to their national security imposed by Washington and Seoul,” according to a Xinhua editorial, “China and Russia, along with other regional countries [read: North Korea], will have little choice but [to] come closely together to address the issue.” China is the only country, of these three, not currently subject to international economic sanctions, yet it is driving the conflict in Asia. The international community should impose such sanctions before Asia spirals into military conflict. Not doing so encourages continued risk-taking on the part of China.
On the flip side of this authoritarian alliance, Chinese, North Korean, and Russian belligerency is uniting the Asian democracies. Japan and South Korea, along with the U.S. and Australia, are increasingly tough on China and North Korea. In what is spiraling towards a potential military conflict , or at the very least an arms race and media war, South Korea plans to have the U.S. deploy THAAD in its territory, and Japan wants to speed up purchase of a THAAD system under its own operational control. THAAD is the latest issue to unite the U.S., Japan, South Korea, and Australia, against China and North Korea, which are increasingly isolated from world public opinion.
On July 11, North Korea threatened a “physical counter-action” upon South Korea's announcement of the THAAD deployment sites, a step which South Korea took two days later on July 13. While North Korea specializes in cheap talk, the threats are becoming increasingly frequent. North Korea's first missile launch into Japan's exclusive economic zone on August 2 was uncomfortably close, and is driving Japan to speed up proposals to purchase its own THAAD system.
The prime contractor of THAAD is
Meanwhile, U.S. investors are increasingly nervous not only about China’s belligerent international antics, but about its growing debt, which is now 250% of GDP. If trade follows the flag into regions, it follows the flag out as well. Watch for increased capital flight from China in the coming months.
On August 6 and 7, China dispatched 14 government vessels and up to 324 fishing boats to the Senkaku (Diaoyu) Islands in the East China Sea, claimed by Japan. The proximity in time and place of these actions by North Korea and China in the East China Sea suggest that they could be coordinated. China has also sent more than a dozen naval vessels, potentially hundreds of fishing vessels, and H-6K nuclear-capable bombers to Scarborough Shoal, near the Philippines, this week. Scarborough Shoal is only 256 km from Subic Bay in the Philippines, where U.S. forces are now returning.
South Korea’s strategy of close military alliance with the U.S. could be profitably utilized by other Asian countries. U.S.-South Korean defense cooperation includes the remarkable and nearly unprecedented provision for U.S. control of South Korean military forces in the event of war. This increases rapid response to threats, and the deterrent value of the alliance with respect to North Korea and China.
But South Korea's close alliance with the U.S. should be strengthened through a European-style network approach to defense alliances. Given the increasing threat from China and North Korea, developed democracies in the Asia-Pacific are ripe for a stronger multilateral alliance system to replace the current U.S. hub-and-spoke system. With further Asian crises, of which the region has no lack currently, we should see a stronger democratic alliance system emerge in the Asia-Pacific -- perhaps one that could eventually be linked to NATO in Europe.
Even without an official multilateral alliance in Asia, the lilliputians are taming China’s pretensions of regional hegemony. South Korea’s THAAD deployment is the latest in a general trend towards a tougher stance against China in which most Asian countries have played a part.
The Philippines won its case against China at the Permanent Court of Arbitration in the Hague on July 12. In August, diplomats and military officers revealed that Vietnam had armed its islands in the South China Sea with sophisticated GPS-augmented inertial navigation system rockets capable of precise 10-meter targeting and a 150-km range. The Vietnamese rockets have the capability to target Chinese artificial islands in the South China Sea. Japan scrambles fighter jets and naval vessels dozens of times per month to match Chinese and Russian air and sea patrols in and over its maritime territory. The U.S. executes regular Freedom of Navigation patrols near Chinese-occupied artificial islands. Taiwan voted for a pro-independence party in January. Even Malaysia and Indonesia, generally among the more pro-China of ASEAN countries, have shown a lack of patience with China recently. In march, Malaysia’s defense minister threatened a “pushback” against China on the South China Sea issue. Indonesia’s President visited the disputed Natuna Islands in June. Both countries support stronger ASEAN statements on the South China Sea.
China has a long way before it gets “hegemony” over Asia. The only Asian countries of note to remain quiescent on China are now Thailand, Laos, Mongolia, Brunei, and Cambodia. As should be immediately clear from this list, what support China does get is primarily transactional or from authoritarian regimes. Thailand’s military has ruled the country since a coup in 2014, and needs Chinese diplomatic support. Plus, China is Thailand’s top export destination. Mongolia is landlocked and needs cooperation from China (or less conveniently, Russia) for access to the sea. Brunei and Singapore, two of Asia’s smallest and most authoritarian of countries, are sitting on the fence and stay quiet on most controversial issues related to China. Singapore’s biggest export destination is China. A decrease in 1% of China’s growth rate is estimated to decrease Singapore’s growth by 1.4%. Brunei depends on China not to interfere with its oil extraction in the South China Sea. Laos and Cambodia obtain extensive development aid from China, which is linked to political concessions. On July 15, for example, China announced $600 million in aid to Cambodia. On July 26, Cambodia blocked an ASEAN statement on the South China Sea. In general, Cambodia also takes a strong pro-China stance on Taiwan and extradition issues, and has benefited handsomely from China’s development largesse since the 1950s.
Despite a lack of international support, China is doubling-down on its attempts to gain hegemony in Asia, leading to an arms race, media battle, and high risk of military conflict. Wang Yi, China’s Foreign Minister, has the world’s toughest job: herding cats into a dog kennel. As indicated above, Asia is dividing into new alliances, mostly based on whether a country is democratic or authoritarian, and to what extent economies are interlinked. As these new alliances reify, with the democratic alliance far more powerful, the possibility of military conflict, or at least a new cold war with China as the primary adversary, is not out of the question. And, as military conflict becomes more likely, China’s fair-weather friends and investors will disengage.
Depending on how one sees President Obama’s foreign policy, his cool statesmanship has avoided war, or alternatively, his near lame duck status and visible weakness against China has invited authoritarian aggression.
All of that is about to change with the next President, so China and North Korea would be well advised to calm down, support international law, and seek peace rather than minor territorial wins. Hillary Clinton is a hawk, and Donald Trump thinks Japan and South Korea can and should get nuclear weapons. Some influential individuals agree. Whether Asian democracies go nuclear depends on China’s decisions today.
The real win-win solutions are through internal economic growth and cooperative international trade, not zero-sum military conflict over territory. China, North Korea, and Russia need to get smart, and fast. It is time for them to leave their sabre-rattling behind, and rejoin the international community. The alternative should be stronger economic sanctions, but could be worse.
