War by Other Means
Page 44
37. “Pro-Independence Investors Not Welcome.”
38. Chi-hung Wei, “China’s Economic Offensive and Taiwan’s Defensive Measures,” China Quarterly 215 (September 2013): 644.
39. Ibid., 645.
40. Keith Bradsher, “Election Outcome in Taiwan Buoys Stock Market,” New York Times, March 25, 2008.
41. Beijing has offered its official support on multiple occasions, including in 2003 and again in 2005, when Chinese President Hu Jintao reassured the Taishang that the business leaders have an important part to play in strengthening cross-strait relations. Tanner, Chinese Economic Coercion against Taiwan.
42. Sofia Wu “Taiwan Eyes Currency Swap Pact with China,” Focus Taiwan, November 11, 2013.
43. Jing Song, “Taiwan Nears Formosa Bonds Landmark,” Finance Asia, December 4, 2013; Kathryn Chiu, “Formosa Bonds of Mainland’s State-Owned Banks Hit GreTai,” China Post, December 10, 2013. Note: While renminbi (or RMB) is the formal term most often used by the Chinese government for China’s currency, the term “yuan” refers to the actual unit and is also frequently used interchangeably with RMB. The two are used interchangeably in this book.
44. RMB deposits in Taiwan are the second-largest among foreign currency deposits on the island, ranking behind the U.S. dollar but ahead of the yen and euro. RMB settlements handled by the Taipei branch of the Bank of China alone, for instance, amounted to RMB 700 billion at the end of 2013, while remittances surpassed RMB 290 billion. See “Taiwan Eyes Currency Swap Pact with China.”
45. Debby Wu, “Taiwan Dives into the Competition for ‘Hub’ Status,” Asian Review, December 4, 2014.
46. “Chinese Firm Signs Tainan Milkfish Deal,” Taipei Times, March 5, 2011.
47. Du Yu, “Chinese Delegation Comes Fishing,” Taipei Times, February 25, 2012.
48. Ibid.
49. The Investment Commission of Taiwan’s Ministry of Economic Affairs announced in 2013 stricter rules for investment projects by Chinese companies, including the right to refuse any investments that are politically sensitive. Justina Lee and Argin Chang, “Taiwan Restricts Chinese Investment amid Trade Pact Review,” Bloomberg Business, November 13, 2013.
50. For an overview of these events, see Jonathan Spangler, “Taiwan and the Future of the Cross-Strait Service Trade Agreement,” Diplomat, March 27, 2014; Jenny Hsu, “Thousands Protest Taiwan’s Trade Pact With China,” Wall Street Journal, March 30, 2014; Austin Ramzy, “Concession Offered, Taiwan Group to End Protests,” New York Times, April 7, 201; Michael Gold and James Pomfret, “Over 100,000 Protest in Taiwan over China Trade Deal,” Reuters, March 30, 2014.
51. The agreement’s many opponents worry it will leave Taiwan vulnerable to increased political pressure from Beijing if Chinese state-owned companies are able to own Taiwanese hospitals, supermarkets, and taxi companies. “The Chinese Communist party’s ‘united front’ policy emphasizes the use of money to buy loyalty,” as Michael Anti, a prominent political commentator on China, explained to the Financial Times in June 2014. Anderlini, “Thousands of Taiwanese Rally against Closer Ties with China.”
52. “Army Says Mainland Cyberattacks Thwarted,” Liberty Times, March 14, 2000; John Leyden, “Taiwanese Engineer ‘Assisted Mainland Hackers,’ ” Register (UK), May 27, 2004; “Hackers Attack Taiwan Military News Agency Ahead of Drill,” Agence France-Presse, July 20, 2000.
53. Russell Hsiao, “Critical Node: Taiwan’s Cyber Defense and Chinese Cyber-Espionage,” China Brief 13, no. 24 (December 2013).
54. Ibid.
55. Sarah Mishkin, “China Rejects Allegations It Hacked Taiwan Networks,” Financial Times, April 29, 2013.
56. Tanner, Chinese Economic Coercion against Taiwan, xvi.
57. Where Chinese attempts to capitalize on this interdependence are coercive, it will mean costs for both sides. To take one example, both countries would suffer if China were to withhold rare earths, which are extracted in China and sent to electronics manufacturers in Taiwan (and it would likely spell an end to Apple products that are “assembled in China” and “designed in California”). But the dependencies are far greater for Taiwan. Taiwan’s economic livelihood, as well as its national security, requires that Taipei secure the surrounding waters and have access to global sea-lanes. The island’s population is almost entirely dependent on imports for energy and highly vulnerable on food imports. China’s desire for regional maritime dominance and Taiwan’s recent rejection of cooperation with China to advance Chinese maritime territorial claims could put Taiwan’s access to global sea-lanes in jeopardy. See, e.g., Dean Cheng, “Taiwan’s Maritime Security: A Critical American Interest,” Heritage Foundation, March 19, 2014.
58. In 2012, Taiwan’s trade represented 140 percent of GDP and was valued at over $650 billion, making it the world’s nineteenth-largest trader even though it is only the twenty-eighth-largest economy in the world. Joshua Meltzer, “Taiwan’s Economic Opportunities and Challenges and the Importance of the Trans-Pacific Partnership,” East Asia Policy Paper Series no. 2, Brookings Institution, January 2014.
59. Gordon G. Chang, “Fatal Attraction: China’s Strengthening Partnership with North Korea,” World Affairs Journal, May/June 2011; Evan Osnos, “Lips and Teeth,” Letter from China blog, Atlantic, November 24, 2010.
60. Jaewoo Choo, “Mirroring North Korea’s Growing Economic Dependence on China: Political Ramifications,” Asian Survey 48, no. 2 (March/April 2008): 344–345.
61. Dick K. Nanto and Mark E. Manyin, “China–North Korea Relations,” Congressional Research Service, December 28, 2010.
62. Choo, “Mirroring North Korea’s Growing Economic Dependence on China,” 348; Bates Gill, “China’s North Korea Policy,” United States Institute of Peace Special Report, July 2011.
63. Beina Xu and Jayshree Bajoria, “The China–North Korea Relationship,” CFR Backgrounder, Council on Foreign Relations, August 22, 2014. Estimates for North Korea’s trade dependence range dramatically, with some South Korean statistics stating that China accounts for 90 percent of North Korea’s global trade. However, Bonnie Glaser, an expert on China at the Center for Strategic and International Studies (CSIS), reasons this figure is likely too high. Transcript, “China and Japan’s Perspectives on North Korea,” Council on Foreign Relations meeting, October 21, 2014.
64. Fertilizers dataset (2002–2010), Food and Agriculture Organization of the United Nations, http://data.fao.org/dataset?entryId=d1a87a6c-37a8-43be-bfdc-c5cb398a1956; “China Sends Aid to North Korea despite Sanctions,” Radio Free Asia, May 14, 2013; Choo, “Mirroring North Korea’s Growing Economic Dependence on China,” 351; Seong Yeon-cheol and Park Hyun, “China to Resume Food Aid to North Korea,” Hankyoreh, May 16, 2013; “2012 Food Aid Flows,” World Food Program, http://documents.wfp.org/stellent/groups/public/documents/newsroom/wfp262299.pdf.
65. “朝鲜向中国售大量黄金, 金正日曾要求打死都不卖 [North Korea Sells Large Amount of Gold to China, Kim Jong Un Demands Sales],” China Sougou News, December 12, 2013; Huang Shurong, “Gold Sales Raise Questions over Possible N Korean Economic Crisis,” Want China Times, December 12, 2013.
66. Doug Bandow, “The Complex Calculus of a North Korean Collapse,” National Interest, January 9, 2014; Frank Sampson Jannuzi, “Can the United States Cause the Collapse of North Korea? Should We Try?,” Council on Foreign Relations, January 13, 1999.
67. Tania Branigan, “China’s Patience with North Korea Wears Thin after Latest Nuclear Tests,” Guardian, February 12, 2013; Jeremy Page, “China Builds up Its Links to North Korea,” Wall Street Journal, June 6, 2013; Jane Perlez, “China Says It Won’t Forsake North Korea, despite Support for U.N. Sanctions,” New York Times, March 9, 2013.
68. Jonathan Watts, “China Cuts Oil Supply to North Korea,” Guardian, March 31, 2003.
69. “China Didn’t Export Crude Oil to North Korea in Q1,” Yonhap News Agency, April 24, 2014; Dean Cheng, “The Odd Couple: China and North Korea,” National Interest, May 12, 2014.
/> 70. Koichiro Ishida, “China Holding Up Shipment of Iranian Petroleum to North Korea,” Asahi Shimbun, October 20, 2013.
71. Choo, “Mirroring North Korea’s Growing Economic Dependence on China,” 349.
72. Bonnie S. Glaser et al., Reordering Chinese Priorities on the Korean Peninsula (Washington, D.C.: CSIS, November 2012).
73. Miles Yu, “China Wins 50-Year Control of Strategic North Korea Port in $3-Billion Deal,” World Tribune, February 28, 2012.
74. These will include high-speed rail links running from Yanji to the North Korean border; Dandong and Sinuiju; and Beijing and Kaesong via Pyongyang. See Page, “China Builds Up Its Links to North Korea”; Christopher Green, “Hong, Jang, and the Mysterious Railroad Deal,” Sino-NK, December 12, 2013.
75. Lee Jong-Heon, “N. Korea Deal Would Barter Major Mines for China-Funded High-Speed Rail Network,” East Asia Intel, November 29, 2013.
76. Page, “China Builds Up Its Links to North Korea”; Green, “Hong, Jang, and the Mysterious Railroad Deal.”
77. Nathaniel Aden, “North Korean Trade with China as Reported in Chinese Customs Statistics: 1995–2009 Energy and Minerals Trends and Implications,” NAPSNet Special Reports, Nautilus Institute for Security and Sustainability, June 7, 2011.
78. Jane Perlez, “China-Korea Tensions Rise after Failed Venture,” New York Times, October 20, 2012; Elizabeth Economy, “Beijing’s North Korea Problem,” Diplomat, February 14, 2013.
79. Shannon Tiezzi, “China Keeping Close Eye on North Korea,” Diplomat, December 13, 2013; Drew Thompson, “Silent Partners: Chinese Joint Ventures in North Korea,” U.S.-Korea Institute report, February 2011, 4.
80. Choo, “Mirroring North Korea’s Growing Economic Dependence on China,” 367.
81. Stephan Haggard and Weiyi Shi, “Chinese Investment in North Korea: Some Data (Part I),” North Korea: Witness to Transformation blog, Peterson Institute for International Economics, June 30, 2014.
82. Page, “China Builds Up Its Links to North Korea.”
83. This is, of course, supplementing the Chinese role in development of these SEZs. See Park Seong Guk, “Chinese RMB to Be Legal Tender in SEZs,” DailyNK, September 27, 2012.
84. “China Aims to Kickstart N. Korea Talks,” China Daily, October 17, 2004; Mark Magnier, “Chinese Visitor Gives a Boost to North Korea,” Los Angeles Times, October 30, 2005.
85. “Classified documents seen by The Daily Telegraph show that Beijing has failed to act when confronted with evidence that Chinese companies are breaking UN Resolution 1874 and helping North Korea to build long range missiles” (Julian Ryall, “Chinese Firms Breaking UN Embargo on North Korea,” Telegraph, June 8, 2012); Malcolm Moore, “China Breaking UN Sanctions to Support North Korea,” Telegraph, April 13, 2013.
86. Hugh Griffiths and Lawrence Dermody, “Loopholes in UN Sanctions against North Korea,” 38 North, May 6, 2014.
87. Neil MacFarquhar, “North Korean Military Parts Were Intercepted, U.N. Says,” New York Times, February 26, 2010.
88. “A Glance at Seizures of North Korea Weapons Shipments,” CNN, July 16, 2013; Jay Solomon, “North Korea’s Illegal Weapons Pipeline Flows On,” Wall Street Journal, November 29, 2012.
89. Moore, “China Breaking UN Sanctions to Support North Korea”; Megha Rajagopalan, “China Says Banned Exports to North Korea Not Meant as Punishment,” Reuters, September 24, 2013; “North Korean Account Closed by Bank of China,” China.org.cn, May 8, 2013.
90. Moore, “China Breaking UN Sanctions to Support North Korea.”
91. Page, “China Builds Up Its Links to North Korea.” As Asia expert Max Fisher put it, ‘ “And it also uses the trade as leverage to reign in North Korea a bit; without that leverage, China worries North Korea’s provocations could go too far, leading to war. The regime’s collapse would likely end with Korea’s reunification under the South Korean government, which currently hosts tens of thousands of US troops. China doesn’t want that on its border.” Max Fisher, “This Chart Shows How North Korea Gets Away with Such Bad Behavior,” Vox, December 17, 2015.
92. Zhu Chao, “Unwavering China-Japan Economic Relations Hardly Do without Political Trust,” China Daily, November 22, 2013; “Geo-political Disputes and Economic Links Mark Sino-Japanese Relations,” China Post, January 8, 2014.
93. “Latest China-Japan Spat: Who’s Voldemort?,” New York Times, January 9, 2014; Keiichi Hayashi, “China Risks Becoming Asia’s Voldemort,” Telegraph, January 5, 2014; Liu Xiaoming, “China and Britain Won the War Together,” Telegraph, January 1, 2014.
94. “Who Really Owns the Senkaku Islands?,” Economist, December 3, 2013.
95. Robert Marquand, “Why the Past Still Separates China and Japan,” Christian Science Monitor, August 20, 2001; “China Reported to Cut Car Import Quota from Japan,” China Daily, June 4, 2001.
96. Jonathan Watts, “Violence Flares as the Chinese Rage at Japan,” Guardian, April 16, 2005.
97. “China Tells Citizens Not to Hold Anti-Japan Protests,” Kyodo, September 19, 2012.
98. “Further on Firms Saying China Tightens Customs Inspections from Japan,” Agence France-Presse, September 21, 2012; “Japanese Businesses Booted from Major China Trade Fair,” Japan Times, September 27, 2012; “Japan Tossed from Trade Fair,” Investor’s Business Daily, September 27, 2012.
99. Phred Dvorak, Atsuko Fukase, and Dinny McMahon, “China Banks Pull out of Meetings in Japan,” Wall Street Journal, October 2, 2012, cited in Reilly, “China’s Economic Statecraft.”
100. “News Summary: Island Standoff Hits Japan Business,” Associated Press, October 9, 2012; Richard Katz, “Mutual Assured Production: Why Trade Will Limit Conflict between China and Japan,” Foreign Affairs 92, no. 4 (2013): 22.
101. Keith Bradsher, “Amid Tension, China Blocks Vital Exports to Japan,” New York Times, September 22, 2010; Daniel Drezner, “Three Ways of Looking at Chinese Economic Statecraft,” Foreign Policy, October 20, 2010; Paul Krugman, “Rare and Foolish,” New York Times, October 17, 2010.
102. According to some reports, Japan was smart and able to circumvent China’s retaliatory measures. Beijing interfered with customs to prevent products made with rare earths or requiring rare earths from being shipped, forcing Japan to look to its neighbors and request that they purchase rare earths on Japan’s behalf and ship directly to Tokyo. Bradsher, “Amid Tension, China Blocks Vital Exports to Japan”; Keith Bradsher, “China Is Said to Resume Shipping Rare Earth Minerals,” New York Times, October 20, 2010; Bonnie S. Glaser, “China’s Coercive Economic Diplomacy,” Diplomat, July 25, 2012.
103. Keith Bradsher, “Specialists in Rare Earths Say a Trade Case against China May Be Too Late,” New York Times, March 14, 2012; Clayton Bradley Doss III, “Coercive Levers in Chinese Economic Statecraft: Attributed across Earth, Rarely Apparent,” Naval Postgraduate School, Monterey, Calif., 2012; Yuko Inoue and Julie Gordon, “Analysis: Japanese Rare Earth Consumers Set Up Shop in China,” Reuters, August 12, 2011; “Toyota to Make Hybrid Car Parts in China to Boost Sales,” BBC, September 5, 2011.
104. Ian Johnson, “China Takes a Sharper Tone in Dispute with Japan,” International New York Times, September 22, 2010.
105. Doss, “Coercive Levers in Chinese Economic Statecraft.”
106. Yun Zhang, “China’s Economic Statecraft and the Diaoyu/Senkaku Dispute,” Harvard Asia Quarterly 16, no. 1 (Spring 2014).
107. Ibid.
108. Jane Perlez, “China Accuses Japan of Stealing after Purchase of Group of Disputed Islands,” New York Times, September 11, 2012.
109. “Poll: Two-Thirds of Chinese Boycotted Japanese Goods over Senkakus Dispute,” Japan Times, January 6, 2013.
110. Tensions with China were an important contributing factor, although not the sole culprit, behind Japan’s deteriorating export performance in 2012; weak demand from Europe, for example, weighed on Japan’s worldwide export levels. See Ben Mclannahan, “Japanese Exports Hit by China Dispute,” Financial Times, October 22
, 2012.
111. “Japan Reports Worst September Trade Figures in 30 Years,” Telegraph, October 22, 2012; “Japan Nears Recession amid China Boycott,” Sky News, November 12, 2012.
112. “China Cuts Rare-Earths Mine Permits 41% to Boost Control,” Bloomberg Business, September 14, 2012; “China Uses Its Control of Rare Earth Minerals to Punish Japan,” Ottawa Citizen, September 23, 2012.
113. “China-Japan Dispute Takes Rising Toll on Top Asian Economies,” Bloomberg Business, January 9, 2013.
114. Jin Baisong, “Consider Sanctions on Japan,” China Daily, September 17, 2012; Ambrose Evans-Pritchard, “Beijing Hints at Bond Attack on Japan,” Telegraph, September 18, 2012.
115. World Trade Organization, Article XXI, “Security Exceptions”; Jin, “Consider Sanctions on Japan.”
116. Shen Hong, “Japan-Linked Shares Tumble in Shanghai, Hong Kong,” Wall Street Journal, September 17, 2012.
117. Li Jiabao, “Chinese Investment in Japan Drops 9 Percent,” China Daily, July 17, 2013.
118. Ibid., 12.
119. “Cyber-attack Stole Mitsubishi Warplane, Nuke Plant Data,” Asahi Shimbun, October 24, 2011; “Japan Defence Firm Mitsubishi Heavy in Cyber Attack,” BBC News, September 20, 2011.
120. Reilly, “China’s Economic Statecraft,” 10.
121. “With Eye on China, India and Japan to Bolster Defence Ties,” Times of India, January 7, 2014; Toko Sekiguchi and Yoshio Takahashi, “Japan, Asean Pledge to Work More Closely Together,” Wall Street Journal, December 15, 2013; Carl Thayer, “Vietnam’s Extensive Strategic Partnership with Japan,” Diplomat, October 14, 2014.
122. J. Berkshire Miller, “With Eye on China, Japan Ramps Up Pacific Island Security Ties,” World Politics Review, June 4, 2015.
123. Reilly, “China’s Economic Statecraft,” 10.
124. Ibid.
125. Ibid.
126. Ibid.
127. “The Dragon’s New Teeth,” Economist, April 7, 2012; “China’s Aggressive Stance Reveals Lack of Coordination,” Yale Global, December 5, 2012.