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With Obama Away, the Chinese Play

With Washington shut down and President Obama pulled away from trade negotiations in Asia, China is making an aggressive pitch to Washington's trading partners in the region.

Inter Press Service

As the U.S. struggles with a weeks-long government shutdown which has threatened the country’s economic recovery and forced President Barack Obama to cancel a series of high-stakes visits to Asia, China has instead taken the centre-stage, boosting ties with Asian neighbours and promising multi-billion trade and investment deals.

Amid rising geopolitical tensions in the Western Pacific, Obama’s scheduled trip to Asia was meant to reassure allies and reiterate Washington’s commitment to regional stability. Moreover, Obama was also expected to make a strong pitch for the Trans-Pacific Partnership Free Trade Agreement (TPP-FTA), which aims to cover 12 Pacific Rim nations that collectively constitute about 40 percent of the global economy and a third of its total trade.

But facing a domestic political crisis, with the U.S. Congress blocking implementation of the Affordable Care Act, the White House announced Obama’s decision to not only skip state visits to Malaysia and the Philippines, but also trips to the Asia Pacific Economic Cooperation (APEC) as well as Association of Southeast Asia Nations (ASEAN) summits in Indonesia and Brunei.

In Obama’s absence, Chinese President Xi Jinping took the limelight, becoming the first foreign leader to deliver a speech at the Indonesian Parliament and serving as the keynote speaker at the APEC Summit (Oct. 7-8).

To up the ante, Xi offered to set up a 50 billion dollar Asian Infrastructure Investment Bank which is set to rival the U.S.-Japan-led Asian Development Bank (ADB) as the continent’s primary source of development aid.

“China will firmly uphold regional peace and stability and help cement a foundation for a win-win situation in the Asia-Pacific,” declared Xi at the APEC Summit. He emphasised China’s role as Southeast Asia’s top economic partner and its emergence as a regional powerhouse. “China cannot develop in isolation of the Asia-Pacific, and the Asia-Pacific cannot prosper without China.”

Throughout the summit, Xi astutely glossed over China’s deepening territorial disputes with neighbouring countries, namely Japan, Vietnam and the Philippines, while emphasising the resilience of the Chinese economy and the depth of its interdependence with Southeast Asian neighbours.

Intent on undermining the TPP, a centerpiece of Washington’s pivot to Asia that ostensibly excludes China, Xi also pushed for the Regional Comprehensive Economic Partnership (RCEP) free trade agreement (FTA), which aims to consolidate already existing regional FTAs into an overarching trade arrangement, with China very much at its centre.

The ongoing TPP negotiations, which have been criticised for their lack of transparency, have met strong domestic opposition across member countries, especially in Asian countries such as Japan, Malaysia, and Vietnam. The TPP is widely characterised as a corporate-driven FTA, which aims to stringently uphold intellectual property rights, allow foreign companies to override domestic laws and sue member states, curtail consumer access to basic goods and services, and place restrictions on or/and dismantle state-owned enterprises.

“The TPP is designed as a second-best alternative to promote corporate interests via free trade given the stalemate at the World Trade Organisation,” Dr. Walden Bello, a renowned expert on trade-related issues, told IPS. “The benefits of trade accruing to corporations whatever their nationality with what will soon become the world’s biggest economy will undermine the U.S.’s geo-economic objective.”

Equipped with almost 200 billion dollars  in foreign aid budget, China has become the prime economic force in Asia. While cautiously welcoming Beijing’s increased economic footprint, with Xi declaring a 1 trillion dollars China-ASEAN trade target by 2020, Southeast leaders are, however, less impressed with Washington.

“Obviously we prefer a U.S. government that is working than one that is not, and we prefer a U.S. President who is able to travel and fulfill his international duties to one that is preoccupied with domestic preoccupations,” lamented Singapore’s Prime Minister Lee Hsien Loong, prodding Washington leaders to get their act together.

“And America has to continue to be engaged in this region because it plays a very important role which no other country can replace, not China, not Japan, not any other power.”

Immediately after the APEC Summit, Chinese Premier Li Keqiang, in turn, took the mantle of leadership at the ASEAN Summit (Oct. 9-10) in Brunei. After months of hectic negotiations over establishing a new regional Code of Conduct (CoC) to peacefully resolve territorial disputes in the South China Sea, many were hoping for concrete indications of a diplomatic breakthrough.

With China earlier this year agreeing in principle to re-open negotiations over a CoC, there were expectations of new announcements on the contours of the proposed code, the composition of the technical group in charge of drafting its guidelines, and a detailed timetable for its conclusion. Among Southeast Asian states such as the Philippines, which are locked in a bitter territorial dispute with China over a variety of features in the South China Sea, there was a great sense of urgency for a major diplomatic development.

Despite incessant efforts by major regional leaders from Japan, Australia and the U.S. (represented by Secretary of State John Kerry), however, there was hardly any sign of China softening its territorial stance, with Premier Li emphasising how China is “unshakable in its resolve to uphold national sovereignty and territorial integrity.”

Alarmed by China’s assertive stance, and with little indications of the ASEAN collectively standing up to China on the territorial issue, Philippine President Benigno Aquino and his Vietnamese counterpart Prime Minster Nguyen Tan Dung held a meeting on the sidelines of the summit aiming to coordinate their efforts in preventing a conflict in the South China Sea and peacefully resolving disputes.

As a telltale of the depth of bilateral tensions, Aquino’s efforts to reach out to his Chinese counterpart was rebuffed, while Filipino and Chinese diplomats reportedly quarreled over the wording of a paragraph regarding the territorial disputes in the ASEAN-China joint statement.

The Philippines, currently negotiating an expanded U.S. rotational military presence on it soil, was hoping for President Obama to back its territorial claims and dissuade China from further territorial assertiveness.

But amid Washington’s shutdown and Obama’s absence, China was busy courting Southeast Asian states and elevating its regional profile by offering massive trade and investment incentives.

Richard Heydarian is a contributor to Inter Press Service.

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