China Feeling the Sting as Global Tech War Heats Up

Thu, Oct 11, 2018 - 10:40am

Originally published at Geopolitical Futures

China is starting to feel the sting of international isolation. On Wednesday, the U.S. Treasury outlined plans to implement a stringent review system on foreign investment in 27 high-tech sectors deemed critical to national security, from telecommunications to aviation to biotech. The main target? China, of course. Beijing thinks the trade war with the U.S. is largely manageable from its end – so long as other countries don’t join the offensive – and politically unsustainable from the U.S. side. But the “tech war” is perhaps more problematic for Beijing. Not only does it have bipartisan support in the U.S., but other major economies are starting to limit Chinese investment in high-tech sectors as well. This strikes at the heart of China’s plans to modernize its economy and find a path to sustainable growth. Curiously, the South China Morning Post reported Thursday that Beijing may try to join the revived 11-nation (and soon to grow) Trans-Pacific Partnership, which focuses on facilitating investment in the bloc. It’d be a long shot, at best; joining would force Beijing to overhaul its state-led economic model – the sort of concession that the U.S. is demanding but that Beijing can’t stomach. Furthermore, several key TPP members see the pact as a way to contain China and would be deeply skeptical, to say the least, of any pledges from Beijing to change its ways. (After all, it sure didn't after joining the World Trade Organization.) But, if true, the report suggests that negotiations on another sweeping trade pact – the Regional Comprehensive Economic Partnership – aren’t going China’s way. It also hints at real anxiety in Beijing about being left out in the cold.

The U.S.-led “maximum pressure” campaign on North Korea begins to crack. Beijing and Moscow joined Pyongyang on Wednesday in calling for loosening U.N. Security Council sanctions on North Korea. The same day, South Korean Foreign Minister Kang Kyung-wha said Seoul was reviewing the sanctions it imposed on the North following a torpedo attack on a South Korean warship in 2010. (Another South Korean minister denied this Thursday, though he left open the possibility of a review in the future.) The U.N. sanctions were never going to be enough by themselves to force Pyongyang to hand over its nukes, and Beijing, with support from Moscow, was not going to allow them to take down the North Korean government. But both China and Russia have wanted to ensure what was passed at the U.N. was actually implemented and, by most accounts, have held up their end of the bargain. And the sanctions have given the U.S. considerable leverage to push for concessions short of denuclearization. The U.S. is clearly concerned about losing what leverage it has left. President Donald Trump said Wednesday that Seoul wouldn’t move forward with sanctions relief without U.S. approval. The South Korean foreign minister also said U.S. Secretary of State Mike Pompeo was unhappy with the agreement the two Koreas reached in Pyongyang on Sept. 20. The longer the U.S.-North Korean negotiations go on, the harder it will be for Washington to keep the international community united against Pyongyang.

Outside powers are doing what they said they’d do in northern Syria. Russia’s Foreign Ministry said Wednesday that more than 1,000 militants have left the demilitarized zone in Syria’s rebel-held region of Idlib, in line with the agreement Moscow made with Ankara in mid-September to create a 9-12-mile-wide (15-20-kilometer-wide) buffer zone. For its part, Turkey confirmed earlier reports that the zone had been cleared of heavy weaponry possessed by rebels. Turkish President Recep Tayyip Erdogan, meanwhile, said a series of recent spats between the U.S. and Turkey had delayed implementation of a deal the two countries reached in May over the withdrawal of Kurdish rebel forces from the northern Syrian town of Manbij, but that the agreement was not “completely dead.” This comes two days after Ankara announced that joint training for coordinated U.S.-Turkey patrols around the town had begun. The tensions among Russia, Turkey and the U.S. are real, but in Syria, at least, the respective interests of the three sides overlap enough to see these deals through.

Honorable Mentions:

  • U.S. Secretary of State Mike Pompeo said the U.S. will refuse any additional reconstruction assistance to Syria so long as Iranian troops remain in the country.
  • Belgian police arrested an Iranian diplomat on suspicion of involvement in a foiled plot to bomb an Iranian opposition rally in France in June.
  • International Energy Agency Executive Director Fatih Birol asked OPEC to increase oil production further, warning that instability in Venezuela and revived U.S. sanctions on Iran portend a shortfall.
  • Armenian Prime Minister Nikol Pashinyan has said he will resign by Oct. 16 to pave the way for snap parliamentary elections in early December.
  • Greece's defense minister, Panos Kammenos, proposed to his U.S. counterpart that the U.S. establish three additional permanent bases in the country.
  • India and Australia held their second “2+2” dialogue, involving the defense and foreign ministers of both countries, in Canberra.

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