Tag Archives: Xi Jinping

Don’t Believe China’s Trade Hype

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Don’t Believe China’s Trade Hype

Beijing runs with the G-33—poorer, protectionist-minded WTO laggards.

By Greg Rushford

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Don’t expect much progress in dismantling global trade barriers from the World Trade Organization’s meeting in Buenos Aires this week. The Trump administration will take most of the blame. American trade negotiators have even said they will refuse to sign the customary ministerial declaration expressing support for the “centrality of the multilateral trading system.” The U.S., as WTO Deputy Director Alan Wolff noted, is “sitting this one out.”

In the absence of American leadership, all eyes are on Chinese President Xi Jinping. Mr. Xi has missed no opportunity to declare his support for the WTO’s mission of advancing free trade. He acknowledges that China has benefited greatly since becoming a WTO member in 2001.

“We should uphold multilateralism and pursue shared growth,” Mr. Xi declared last month in a speech to Asia-Pacific business leaders in Vietnam. His remarks were well-received—in clear contrast to Mr. Trump’s insular America First exhortations at the same forum. Global economic leadership is a key part of Mr. Xi’s “Chinese Dream.”

 But going by China’s actual record in the WTO, Mr. Xi will have to dream on. Despite the glowing free-trade rhetoric from Beijing, inside WTO negotiating rooms China is hardly a champion of free trade. Instead, the Chinese run with the G-33, a group of poorer, protectionist-minded WTO laggards—the likes of South Africa, Venezuela, Zimbabwe and India.

These countries tailor their negotiating positions to longstanding grudges against their former European colonial masters, as well as rich Americans. They support China’s assertion that it remains a developing nation deserving of “special and differential treatment” when it comes to dismantling trade barriers.

In the WTO’s thorny agriculture negotiations, for example, China and India stand together in demanding that rich Europeans and Americans dismantle trade-distorting subsidies. Yet they demand that “developing” countries be allowed to continue propping up tens of millions of subsistence farmers indefinitely.

Beijing insists that it made enough concessions on lowering agriculture tariffs and subsidies when it joined the WTO in 2001. When the WTO held its ministerial meetings in Bali in 2013, the Chinese and Indians won the “temporary” right to circumvent their existing legal restrictions on exceeding their (wasteful) domestic support programs. In Buenos Aires, they will push for the permanent right to prop up their globally uncompetitive farmers.

Beijing is also resisting an initiative to curb governmental subsidies that contribute to overfishing. In 2002 a group of WTO members led by Australia, New Zealand, Iceland and Chile established the so-called Friends of Fish to try to reach consensus. But China wants a carve-out to protect its subsidies and insists that countries be allowed to police violations themselves—an approach that threatens the collapse of already depleted global fishing stocks.

China has also failed to join the WTO’s Government Procurement Agreement. Forty-seven advanced economies have opened bidding on more than $1.7 trillion of their governmental contracts to foreign competition. China entered negotiations to join the GPA in 2002. The big news from the WTO’s 2011 ministerial meetings in Geneva was that Beijing would sign on. But that deal has never materialized, while talks drag on and on.

While Chinese rhetoric doesn’t square with the country’s record in the WTO, Beijing’s performance is not all negative. After arduous negotiations, Beijing joined the Information Technology Agreement, where 82 WTO members have agreed to slash tariffs on trade in high-tech goods.

 China also slashed average tariffs on industrial products to less than 9%, and has promised early action to slash its 25% auto tariffs. Chinese officials from President Xi on down vow that China will continue to play a “constructive” role inside the WTO.

Just how constructive depends on whether Beijing continues to seek special treatment at the expense of its partners. This week’s meeting might begin to shed light on an important question: Is Mr. Xi’s free-trade talk worth more than scoring political points against Donald Trump ?

Mr. Rushford edits the Rushford Report, an online journal that tracks trade politics.

What Rodrigo Duterte Is Giving Up

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The Philippine president is determined to forge closer ties with China — but at what cost?

BY GREG RUSHFORD

OCTOBER 17, 2016
Since he took office on June 30, Philippine President Rodrigo Roa Duterte — also known as “Duterte Harry” — has earned international notoriety for a harsh anti-drug campaign that has led to the extrajudicial killings of more than 3,600 alleged traffickers around the country. The crackdown has alarmed the European Union, the United Nations, and the United States. At one point Duterte called Barack Obama “a son of a whore,” later telling the U.S. president “to go to hell” after Washington dared to criticize the murders. Sooner or later, Duterte has vowed, he will “break up with America,” the Philippines’ longstanding treaty ally and security guarantor.

There’s one international power that doesn’t seem particularly bothered by Duterte’s excesses. “The Chinese side fully understands and firmly supports the Duterte administration’s policy that [prioritizes] the fight against drug crimes,” said Chinese Ambassador to the Philippines Zhao Jianhua in a speech last month. He went on to express his satisfaction at the “friendly interactions’ between the two countries since the new president began his term, predicting that the sun “will shine beautifully on the new chapter of bilateral relations.”
If anything, the ambassador may have understated the matter. This week Duterte is set to meet Chinese President Xi Jinping in Beijing, where the two are planning to sign a range of high-level bilateral agreements that will dramatically boost trade and investment between the two countries. Nor is their new friendship restricted to business. The visit comes just days after Duterte declared an end to joint Philippine-American naval patrols in the strategically sensitive waters of the South China Sea, where China has been steadily expanding its presence despite rival claims by Manila and other countries. The 65-year alliance between the U.S. and the Philippines has never looked so fragile.The 65-year alliance between the U.S. and the Philippines has never looked so fragile.

So why the shift in policy? On one level, Duterte’s desire to seek friendship with the Chinese reflects a willingness to appease Beijing’s aggressive stance in the disputed waters. Chinese Coast Guard warships armed with machine guns and water cannons have harassed Philippine fishermen, preventing them from earning their livelihoods in their traditional fishing grounds in the South China Sea (90 percent of which China claims as its own). Chinese dredges have been deployed well within the Philippines’ 200-nautical-mile exclusive economic zone, where they have destroyed irreplaceable coral reefs to build airstrips and naval bases aimed at enhancing Chinese offensive power. China has also forcibly prevented Filipinos from developing valuable oil, gas, and mineral resources that they’ll need in the coming years to power their electricity grid. “I will not go to war” over such matters, Duterte has declared.

On July 12, just short of two weeks into Duterte’s presidential term, an international tribunal in The Hague ruled that China has been acting in violation of Beijing’s sworn obligations under international maritime law. The litigation was brought in 2013 by Duterte’s predecessor, Benigno Aquino Jr., who sought to use the rule of law to rally international opinion to pressure the Chinese to respect Philippine sovereignty. Now Duterte appears to be signaling that he’s willing to overlook the tribunal’s findings if China is willing to do a deal.

There are various explanations for Duterte’s eagerness to seek a compromise. Some of those who know the president well suggest that the pivot is rooted in the left-of-center ideology he has professed in his past, which left him with a residual suspicion of the West (and Americans in particular). Duterte openly admires one of his former college professors, Jose Maria Sison — the founder of the Communist Party of the Philippines and its armed wing, the New People’s Army. Others point out that Duterte, who has several times threatened to declare martial law, has praised authoritarian leaders like former Philippine strongman Ferdinand Marcos. And besides China’s President Xi, Russia’s Vladimir Putin has been wooing the Philippine president with suggestions of cheap financing for Russian attack helicopters.

Meanwhile, Duterte and his foreign secretary, Perfecto Yasay, have been courting the support of business elites who favor closer relations with Beijing. In his career as a lawyer, Yasay represented the interests of Chinese-Filipino tycoons who have good connections in Beijing. Yasay, who brought no foreign policy experience to his position, has also been careful to speak respectfully of the Chinese — while telling an audience of Washington, D.C. insiders that Filipinos no longer want to be America’s “little brown brothers.”Filipinos no longer want to be America’s “little brown brothers.”

Among Yasay’s prominent clients has been Lucio Tan, one of the country’s richest men, who Duterte has said was one of the first to urge him to seek the presidency. While little-known outside Asia, billionaire Tan — who was born in China’s Fujian province and is considered on the mainland to be a “patriotic” Chinese — is one of the most controversial figures in Philippine political circles. He was one of the original so-called “Marcos cronies,” who became rich thanks to the tax breaks and other government subsidies granted in the 1970s by Ferdinand Marcos.

After Marcos was deposed in 1986, a series of successive Philippine prosecutors sought unsuccessfully to recover Tan’s allegedly ill-gained wealth. Today, he is chairman of Philippine Airlines, the country’s flagship carrier, and has extensive holdings in banking, mining, tobacco, beer, hotels and property development. He’s also made some major investments in China, which have clearly earned him the goodwill of Beijing. When Chinese presidents come to Manila, they always stay in one of Tan’s hotels.

Though there’s no evidence that Duterte is financially beholden to Tan — the president says he turned down the tycoon’s offer of cash and the use of aircraft during the campaign — they share a strong interest in closer ties with the Chinese. During his campaign, Duterte received an especially warm welcome from the Federation of Filipino-Chinese Chambers of Commerce and Industry, of which Tan is an honorary chairman. Along with the Chinese ambassador, Tan was one of the first prominent visitors Duterte received after his election victory.

In his eagerness to establish close economic ties with Beijing, Duterte has also said he is looking to revive various Chinese-Philippine joint ventures that were envisioned a decade ago during the presidency of Gloria Arroyo. The most notable project on Arroyo’s watch involved a $329 million telecommunications contract with China’s state-owned ZTE Corp. But Arroyo’s hopes to forge closer economic ties with China were derailed by various allegations of pay-offs that involved ZTE, Arroyo herself, and members of her entourage. Authorities in Manila recently dropped graft charges against Arroyo and her former colleagues, and her four-year house arrest has been lifted. Duterte has insisted that he had nothing to do with those decisions, though he had publicly offered to pardon Arroyo, in any case.

While no corruption allegations have surfaced in the new Duterte administration, the concerns about the adverse consequences of doing business with China remain. As Philippine professor Aileen Baviera has observed, the ZTE deal “was an example of how Chinese wealth … can undermine already weak institutions and government norms in a recipient country.”

While some members of the Manila elite worry that Duterte’s campaign of extrajudicial killings threatens to corrode the hard-won rule of law, Filipino-Chinese businessmen are among the most vocal defenders of the president’s drug war.Filipino-Chinese businessmen are among the most vocal defenders of the president’s drug war. And a tycoon from mainland China, Huang Rulun, who first acquired his wealth while living in the Philippines, has pleased Duterte by volunteering to pay for a new internment camp for thousands of drug users who have surrendered to police rather than fall victim to the slaughter.

While Duterte is currently riding high in public opinion polls, signs of a backlash are already starting to emerge. A notable indicator came last week when respected elder statesman and ex-President Fidel Ramos — whom Duterte has said would be a special envoy to China — publically expressed deep concerns about where the new Philippine leader is headed. Ramos lamented that “Team Philippines” is losing, “and losing badly.” Also last week, Supreme Court Justice Antonio Carpio even felt it necessary to remind Duterte that to surrender Philippine sovereign rights would be an “impeachable offense.”

Indeed, if Duterte continues on his current course — downplaying the legally binding decision of the Hague tribunal and watering down his own country’s territorial claims — his honeymoon with voters could end quickly. The Philippines remains one of the most pro-American countries in the world; in one recent survey, a whopping 92 percent of the population held positive attitudes towards the U.S. And some of the most pro-American Filipinos are to be found in the military, which looks to the American security relationship to counter Chinese bullying — which might help to explain why Duterte has been busily showering top officers with favors and cash.

Collaborator

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 Last week marked some memorable history being made — and some key dates perhaps fraught with deeper historical significance than either Philippine President Rodrigo Roa Duterte or China’s Xi Jinping would care to be reminded of.

On Oct. 17, Xinhua reported that the president of the Philippines — then enroute for an official state visit to China — had admitted he would not fight for his country. “There is no sense in going to war” to recover Philippine territory that Chinese forces have seized in the South China Sea, Rodrigo Roa Duterte had declared. “There is no sense fighting over a body of water.” Also on Oct. 17, Duterte told Hong Kong’s Phoenix Television that he wanted to hold war games with China — and no longer with the Philippines’ longstanding treaty ally, the United States. “I have given enough time for the Americans to play with the Filipino soldiers,” he said.

On Oct. 20, speaking in the Great Hall of the People, Duterte delivered on what he had promised would be the “defining moment of my presidency,” sticking the knife into the Americans. “In this venue, your honors, in this venue, I announce my separation from the United States.” Duterte went on to say this: “I’ve realigned myself in your ideological flow and maybe I will also go to Russia to talk to [President Vladimir] Putin and tell him that there are three of us against the world — China, Philippines and Russia.” America, he added, “has lost.”

Also on Oct. 20, a triumphant-looking President Xi delivered his part of the bilateral bargain. In return for the Philippine president’s willingness to look the other way regarding Chinese naval- and air bases in the South China Sea, Beijing would start delivering more than $13.5 billion of soft loans and an array Chinese-controlled joint development projects to fill Duterte’s begging bowl.

Professor Erwin Tiongson of Georgetown University’s Walsh School of Foreign Service and a man with a keen historical eye, helps put last week’s chronology in a fitting context. October 20, as Duterte was venting his scorn for Americans in Beijing, marks the 72nd anniversary of Gen. Douglas MacArthur’s landing in Leyte. Five months later, a future President Rodrigo Roa Duterte would be born into freedom — on the island of Leyte.

The historical record is silent — and Duterte himself has not responded to a written invitation to clarify it — on how his parents, Vicente Duterte and Soledad Roa Duterte, might have celebrated when the Americans freed them from foreign aggression. We don’t know (yet) whether Vicente and Soledad were among the brave Filipino patriots who harassed Japanese forces on Leyte and passed valuable intelligence on to the U.S. Sixth Army — or whether they, like others, were collaborators. But we know what to call the son, who has admitted he is eager to look the other way in the face of foreign aggression, in return for money.

Also on Oct. 20, while Duterte was venting his spleen against Americans in the Great Hall of the People, the U.S. Embassy in Manila dispatched Col. Kevin Wolfla to Leyte. The decorated U.S. Army attaché spoke to an audience in the town of Palo that had gathered to mark the 1945 Leyte Gulf landing. “Our relationship with the Philippines is broad and our alliance is one of our most enduring and important relationships in the Asia-Pacific region,” Col. Wolfla (rightly) noted. “It is a cornerstone of stability for over 70 years.”

The Philippines News Agency reported that Leyte Gov. Dominico Petilla “repeatedly thanked the US for its role in the Philippines’ liberation and massive assistance of the US government after super typhoon Yolanda.” The governor’s mother, Palo Mayor Remedios Petilla, “assured that US officials will always be invited in future Leyte Gulf Landing celebrations,” the news report added.

Seventy two years after the landing that set the stage for the largest naval battle in history — and the liberation of the Philippines, Filipinos still mark the date with a MacArthur Landing Memorial National Park. And it turns out that President Duterte has a most personal reason to remember American sacrifices for his country. But for reasons that have yet to be explained, Rodrigo Duterte’s historical memories are shorter.

Duterte was born on Leyte on March 28, 1945. While his mother was giving birth, Japanese forces sunk an American submarine, the USS Trigger, which had been patrolling in Japanese waters. Eighty-nine Americans under the command of CDR David Rickart Connole lost their lives that day. The Trigger had already sunk “at least fifteen enemy vessels for a total of more than 85,000 tons of shipping,” according to the United States Navy Submarine Force Library and Museum, in Groton, Connecticut. Motor Machinist’s Mate First Class Constantine Guinness, one of the Trigger’s intrepid men, had captured the Trigger’s spirit with a poem: “I’m the Galloping Ghost of the Japanese Coast.”

The names of the Trigger’s crew are also remembered in the missing-in-action memorial in the USS Bowfin Submarine Museum and Park, in Honolulu, Hawaii. Duterte’s foreign secretary, Perfecto Yasay — who has also been busy expressing his disdain for Americans these days — was living in Hawaii with his family when his old friend Duterte tapped him for the Department of Foreign Affairs. As I reported in a column published on ForeignPolicy.com on Oct. 17, Yasay has professional ties to Filipino-Chinese tycoons with high-level connections in Beijing.

Duterte has not responded to questions as to whether he has ever been to the American Cemetery in Manila. Tucked away on 152 peaceful green acres, the cemetery honors the memories of the 16,632 Americans and 570 brave Filipinos who are buried there — and whose lives will be eternally marked by their sacrifices to free the Philippines from foreign occupation. There is also a chapel and a memorial honoring 36,285 Americans, Filipinos and other members of the allied armed forces who were killed in action — including the eighty-nine Americans from the Trigger who died the day Duterte’s mother gave birth.

There are other dates worth contemplation as the Duterte presidency continues down its anti-American path. But one stands out.

On September 9, 1945, Japanese forces surrendered in China. President Xi Jinping and other senior members of the Politburo like to pretend that China’s armed forces threw out the Japanese. The chest thumpers in today’s Beijing are loath to acknowledge that Americans, Australians, British, New Zealanders, Canadians and others also had their hands in that victory, to understate the matter considerably.

The missing date in the chronology is the time that China helped another country secure its liberty, at the cost of considerable Chinese lives. That’s because such a historical event has yet to happen.