Sunday, 28 August 2011


News reporting, and news analysis and commentary by pundits regarding the 'timing' of the Chinese test of the first flight of the prototype J-20 stealth aircraft is predictable in the US and western mainstream media. If I was a newspaper editor, or a TV or radio news producer, I too would opt for the same semi-sensational nationalist, moderately militarist angle that 'sells' with the public, namely, castigating China for testing the J-20 prototype while the US Defense Secretary was on an official state visit. However, it is not at all unusual for governments to conduct military tests right before or even during high-level official visits if they wish to send a symbolic message to their counterpart and/or third parties. 

Without the benefit of Chinese official internal memos between ministries, news reporters, analysts and pundits base their interpretations of what took place on their own political, ideological, or professional affiliation. One can only speculate of what message Beijing wanted to send to Washington (Japan, Russia, Taiwan, and South Korea) by conducting the J-20 aircraft test while US Defense Secretary Robert Gates was visiting Beijing, and a few days before President Hu Jintao was scheduled to meet with Obama in Washington.

Beijing could have postponed the test, and there is a very remote possibility that the Peoples Liberation Army (PLA) conducted it without informing the president, indicating a disconnect between the military and civilian leadership. This theory has been a long-standing favorite theme in the West, although it is a theory for which there is lack of hard evidence. Nevertheless, China deliberately chose to go through with the test (official explanations about the weather and scheduling issues notwithstanding), recognizing that it would not sit well with the US, and knowing that it would send a strong message to the entire world about rising Chinese military power.

Gates claimed before a public gathering in Japan that the PLA did not inform President Hu Jintao about carrying out the test. This seems highly unlikely because China is not Turkey or some Third World nation where the military enjoys a preeminent role over civilian leadership. This is not to deny that the PLA is a very powerful force in Chinese society, although in the last decade or so the PLA's role in political institutions has been reduced, there has been a sharper division of civil and military elites, and the PLA has become more professionalized while military budgets increased, all in an attempt by the civilian leadership to concentrate power in its own hands.

Arguing that the PLA embarrassed the civilian leadership and demanding a moratorium on N. Korea nuclear and Intercontinental Ballistic Missiles (ICBM) tests (program to be completed within five years), Gates was sending a message both to Pyongyang and Beijing about what constitutes a threat to US strategic interests, about what is and what is not acceptable military balance of power in East Asia. In my view, he was fully justified to make such a public statement, given the close alliance between US and Japan, Taiwan, and South Korea, and given Beijing's obvious demonstration of military power. The degree to which news reporters and analysts understand the substance behind the rhetoric is a separate issue.

At the very least, Gates' claim was intended to express public disapproval mostly for the 'consumption' of US and global public opinion, as well as to apply pressure on Hu, who chairs the Communist Party's Central Military Commission, to impose greater control on the PLA. Despite the vast changes of the PLA, American Cold Warriors in and outside of government associate the PLA with the Cultural Revolution and with Chinese hardliners, when in fact decisions rest with the civilian leadership. Gates also used the opportunity to protest the slow negotiations for N. Korea and new developments in China that impact on the Asian strategic balance of power. Given that Gates visit in China coincided not only with the J-20 test flight, but far more significant with the Ministry of Land and Resources purchase of 11 rare earth mines, the question for news reporters, analysts, and pundits is whether they focus on the issue of lesser value to the US and China.

Just as there was a global struggle for control of minerals, especially strategic minerals, during the Cold War (concealed behind ideological rhetoric on the part of both the Communist bloc and the West), similarly there is a struggle in the 21st century for access to rare earth resources. Given that China controls 97% of the world's rare earth resources; given that about 40% of same resources until recently were black market operations; given that the Hu regime regards rare earth resources as key to future economic and military development, and given that Beijing announced that it was cutting exports of same by 35% (far less than the West deems needed to meet current demand), the US govt.  has every right to complain about the side issue of J-20 and PLA influence in policy. Again, how the media manages to rally public support for such issues is another issue, one that does not necessarily reflect the actual merits of the disagreement between US and China.

The rare earth resources issue is also tied to Chinese policy of providing financing to foreign businesses interested in signing multibillion dollar contracts for construction of everything from high-tech factories to commercial inter-oceanic vessels. In short, China took a page right out of the US Export-Import Bank way of doing business to make sure that its economy benefits well into the 21st century; a policy that also applies to rare earth resources in the form of value-added products benefiting Chinese manufacturing and defense. 
Used for everything from hybrid-car batteries to missiles, China has been using the rare earth resources (terbium, dysprosium, yttrium, thulium, lutetium, neodymium, europium, cerium, and lanthanum) that some have called "industrial MSG," or the "21st century gold" to lure foreign investment in high tech sectors into the country and limit the export of the precious raw materials. The concern is about China’s Ministry of Industry and Information Technology proposal to sharply curtail, in some cases ban, export of these resources, thus forcing capital investment to come to China and affording it an advantage over its competitors.

Rare earth resources are a major bargaining chip for China; a resource that affords Beijing considerable leverage that worries not just the US but Japan and the EU (all of them rear earth resources beggars) who are seriously concerned about the future of their industrial defense sectors in comparison with China's. Beijing is also using the rare earths issue linked to J-20 in order to influence US arms sales to Taiwan, especially in the wake of the solidification of the US-Japan-S. Korea military alliance to counterbalance N. Korea for which no solution can emerge to the North-South antagonism without Beijing's cooperation. 
The US is well aware that the Chinese are using N. Korea to send a message that China determines the balance of power in Asia and wants the US to lessen its military aid to Taiwan ($6.4 billion in sales in February 2010). Another area of US-China competition that could and probably will eventually evolve into cooperation is space exploration, especially given the importance that Boeing and GE place on Chinese contracts. China cannot make progress in GPS and space exploration without US government and private sector cooperation. Both countries are using the considerable leverage they each have to gain optimal benefits in their interdependent relationship.

Naturally, the US and its allies are trying to use all their leverage, and they have immense leverage as China's customers and suppliers of raw materials and technology it lacks, in order to maximize influence in commercial, fiscal, monetary, trade, and strategic policy. In this struggle for influencing policy, the US and the West have tried using the inordinate pollution generated by rare earth resources, a rather weak argument given that the US history with the Kyoto Protocol and overall history toward environmental standards that it has used as a tool to prevent other countries from industrializing - at least as far as those polluting are concerned. Both Washington and Beijing realize that the only constructive road for the mutual development of both and the rest of the world is 'business-like' negotiations, free of ideological baggage and old Cold War rhetoric that only slows down cooperation.

China needs to continue to purchase not just US government bonds, but bonds of weak Eurozone members so that advanced capitalist countries continue to function under a regime of relatively low inflation and sustainable pattern of balance of payments transactions, a goal that also serves China's economic interests. China also needs to adjust its monetary policy so that it does not have an unfair competitive advantage with its trading partners, while it expects its trading partners to ease restrictions on technology transfers and to share their technology (everything from aerospace to energy and information tech); this despite concerns about military applications of such technologies. 
Just as the US and EU have a relationship based both on competition, at times antagonistic, and cooperation, similarly China needs the US and its partners as much as the latter need China. The question is to what degree would the political leadership, now and in the future, of China, US, Japan, and EU would pursue enlightened co-existence and cooperation policies, instead of opting for confrontation at any level from economic to diplomatic, or even the unthinkable indirect military conflict over a third country like N. Korea?

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