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1 ASIA MAIOR The Journal of the Italian Think Tank on Asia founded by Giorgio Borsa in 1989 Vol. XXV 2014 Engaging China / Containing China: Asia in 2014 Edited by Michelguglielmo Torri and Nicola Mocci

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3 ASIA MAIOR The Journal of the Italian Think Tank on Asia founded by Giorgio Borsa in 1989 Vol. XXV 2014 Engaging China / Containing China: Asia in 2014 Edited by Michelguglielmo Torri and Nicola Mocci I LIBRI DI EMIL

4 Asia Maior - la rivista dell ononimo osservatorio sull Asia fondato da Giorgio Borsa nel è stata classificata dall ANVUR come rivista di classe A per il settore 14/B2 (Storia delle relazioni internazionali, delle società e delle istituzioni extraeuropee). La continuazione delle attività di «ASIA MAIOR» è stata resa possibile dal supporto logistico del Centro Studi Vietnamiti di Torino, e dal sostegno finanziario della Compagnia di San Paolo di Torino. Asia Maior desidera inoltre esprimere un ringraziamento particolare a Sandra Scagliotti, per l appoggio da lei sempre dato alle attività dell associazione. Asia Maior è anche su internet: e dal suo archivio possono essere scaricati liberamente i volumi di Asia Maior. Co n il sostegno d e l l a Compagnia di San Paolo Co n il pat r o c i n i o d e l Di pa r t i m e n t o d i Li n g u e e Le t t e r at u r e St r a n i e r e e Culture Moderne della Università degli Studi di Torino Coloro che apprezzano questo volume possono contribuire a rendere possibile, se lo ritengono opportuno, la continuazione dell attività di Asia Maior e la pubblicazione dei futuri volumi annuali attraverso il 5x1000. È sufficiente, al momento della compilazione della dichiarazione dei redditi (CUD, Mod. 739, Mod. 749, Mod. I Mod. UNICO), apporre la propria firma nel riquadro dedicato al sostegno del volontariato delle organizzazioni non lucrative di utilità sociali, delle associazioni e fondazioni, indicando come beneficiaria l associazione «Asia Maior» e, nello spazio sottostante la firma, indicando il Codice Fiscale Grazie. Progetto grafico di Nicola Mocci e Michelguglielmo Torri 2015 Casa Editrice Emil di Odoya srl Tutti i diritti riservati ISSN ISBN: I libri di Emil Via Benedetto Marcello Bologna

5 Asia Maior is the journal of the «Asia Maior» think tank on Asia, founded by Giorgio Borsa in 1989 Asia Maior s Editor Michelguglielmo Torri Asia Maior s Associate Editor Nicola Mocci Asia Maior s Scientific Board: Guido Abbattista (Università di Trieste), Domenico Amirante (Università «Federico II», Napoli), Elisabetta Basile (Università «La Sapienza», Roma), Luigi Bonanate (Università di Torino), Claudio Cecchi (Università «La Sapienza», Roma), Alessandro Colombo (Università di Milano), Anton Giulio Maria De Robertis (Università di Bari) Thierry Di Costanzo (Université de Strasbourg), Max Guderzo (Università di Firenze), Franco Mazzei (Università «L Orientale», Napoli), Giorgio Milanetti, (Università «La Sapienza», Roma), Paolo Puddinu (Università di Sassari), Adriano Rossi (Università «L Orientale», Napoli), Filippo Sabetti (McGill University, Montréal), Giuseppe Sacco (Università degli Studi Roma Tre), Guido Samarani (Università Ca Foscari, Venezia), Gianni Vaggi (Università di Pavia), Alberto Ventura (Università della Calabria). «Asia Maior» s Governing Board Marzia Casolari (President) Enrica Garzilli Nicola Mocci (Vice President) Riccardo Redaelli Michelguglielmo Torri (Scientific Director)

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7 Co n t e n t s 9 Michelguglielmo Torri: Foreword «Asia Maior» and its Asia 15 Francesca Congiu: China 2014: China and the Pivot to Asia 43 Giulio Pu g l i e s e: Japan 2014: Between a China Question and a China Obsession 99 Ma r c o Mi l a n i Ba r b a r a On n i s: Penisola coreana 2014: «ombre» all interno e «luci» all esterno 137 Ma r c o Va l l i n o: Indonesia 2014: Joko Widodo e la sfida all élite del «new order» 151 St e fa n o Ca l d i r o l a: Malaysia 2014: Reforms and challenges in the year of flight MH Ni c o l a Mo c c i: Cambodia 2014: The continuation of the Hun Sen-Sam Rainsy political duel and the surge in social conflict 193 Vi ta l i a n o Civitanova: Thailandia 2014: nascita di una dittatura nel nome del re 207 Piergiorgio Pe s c a l i: Myanmar 2014: un processo di democratizzazione molto lento ma reale 223 Marzia Casolari: Bangladesh 2014: old patterns, new trends 241 Mi c h e l g u g l e i m o To r r i Di e g o Ma i o r a n o: India 2014: the annihilation of the congress party and the beginning of the Modi era 323 Enrica Garzilli: Nepal : breaking the political impasse 337 Da n i l a Be r l o f fa: Sri Lanka 2014: la continuazione del regime autoritario e la crescente insoddisfazione popolare 369 Ma r c o Co r s i: Pakistan 2014: gli attacchi al governo di Sharif e le tensioni con i militari 383 Diego Abenante: Afghanistan 2014: political transition without democracy? 401 Mat t e o Fu m a g a l l i: Kyrgyzstan 2014: The painful march towards the Eurasian Union as the lesser evil? 415 Fa b r i s s i Vielmini: Kazakhstan : surviving internal difficulties, facing external challenges 449 Fa b i o In d e o: Turkmenistan 2014: security concerns and unfulfilled diversification of export energy routes Re v i e w s 461 Pa o l o Pu d d i n u (a cura di): Un viaggiatore italiano in Borneo nel 1873, Il Giornale Particolare di Giacomo Bove (Parte I), Regione Piemonte, Provincia di Asti, Astigrafica 2014; Pa o l o Pu d d i n u (a cura di): Un viaggiatore italiano in Giappone nel 1873, Il Giornale Particolare di Giacomo Bove (Parte II), Ieoka, Sassari, 1999 (Nicola Mocci)

8 465 Gu p ta Ak h i l: Red Tape: Bureaucracy, Structural Violence and Poverty in India, Durham, NC: Duke University Press 2012 (Sara Bonfanti) 468 Ta d d Fe r n é e: Enlightenment and Violence. Modernity and Nation- Making, New Delhi: Sage Publications India, 2014, pp. LXVII/386 (Anadi Mishra) 472 Decolonization and the Struggle for National Liberation in India ( ). Historical, Political, Economic and Architectural Aspects/ edited by Thierry Di Costanzo and Guillaume Ducœur. Frank furt am Main, Berlin, Bern, Bruxelles, New York, Oxford, Wien: Peter Lang, 2014 (Marzia Casolari)

9 Foreword «Asia Maior» and its Asia This short foreword is an introduction both to the «Asia Maior» project namely a project which has been going on for a quarter of century and to the contents of the present volume, which is the latest but, hopefully, not the last offshoot of this project. At the end of November 1989, following the fall of the Berlin Wall, Professor Giorgio Borsa, then the doyen of Italian historians working on modern and contemporary Asia, became convinced that that momentous event was bound to have powerful repercussions not only in Europe, but also in the rest of the world, including Asia. 1 Accordingly, he gathered his pupils and some of the pupils of his pupils at the ISPI (the Italian Institute for the Study of International Politics) of Milan, and created an informal observatory which would keep track of the political and economic developments in Asia. The main task of the group was to publish a yearly volume examining the political, economic, and, if necessary, social developments of the main Asian countries and, periodically, of the Asian countries of lesser importance. 2 Both the group and the yearly volume took the name of «Asia Maior» (which, for several years was spelled «Asia Major»). 3 The name was de- 1 Professor Giorgio Borsa ( ) was less a historian of modern Asia than a world historian studying the deployment of processes such as the rise of nationalism and the making of the modern world in Asia. His most important work, La nascita del mondo moderno in Asia Orientale. La penetrazione europea e la crisi delle società tradizionali in India, Cina e Giappone (Milano: Rizzoli, 1977, 604 pp.), although untranslated into English, was extremely influential in Italy. In English, a synthetic assessment of the part of Borsa s work related to India and, more generally, his quite important modernization theory is given in Michelguglielmo Torri, Studies in Italy on Modern and Contemporary India, Storia della Storiografia/History of Historiography, 34, 1998, pp Borsa s habit of seeing the history of Asia as an integral part of the history of the world, researching the development in Asia of processes which were relevant in the history of the West, made it easy for him to realize that the fall of the Berlin Wall was bound to have worldwide consequences. Indeed, Giorgio Borsa was among the very few contemporary observers to immediately grasp the significance of that event. 2 Of course, the major or minor relevance of most countries is not permanently given, but depends on parameters subject to change. 3 As explained below, the term «Asia Maior» comes from Latin and, in Latin, the «j» does not exist. The spelling with the «j», introduced in the title of the first vol-

10 Michelguglielmo Torri vised by Borsa with reference to the fact that the ancient Romans used the term «Asia Minor» to define modern-day Turkey. Accordingly, in Borsa s conception, Asia Maior was that part of Asia extending beyond its Mediterranean portion. 4 In fact, for many years, the part of Asia on which the attention of the «Asia Maior» observatory was focused was Monsoon Asia, or what Italian scholars of Asia define as «Asia Orientale (Eastern Asia)»; this is an area including not only China, Korea and Japan, but also South and South-East Asia. Only later did «Asia Maior» gradually extend the field of its analyses to encompass Afghanistan, Iran and Central Asia. At the beginning of the present century, «Asia Maior» (the group) came to define Asia Maior (the geopolitical space) as comprising that part of Asia which borders Turkey and the Arab countries on the eastern side, and the Caucasian countries and Russia on the northern side. The method applied in the analyses included in the yearly volumes was that of the historian. Giorgio Borsa who led the «Asia Maior» group until his death in 2002 was not interested either in more or less pedestrian political and economic chronicles or the presentation of more or less exhaustive sets of statistical and economic data the usual stuff of so many yearbooks analysing a given country. On the contrary, what he wanted the «Asia Maior» group to produce were analyses which distinguished from the sea of facts what were, from a historical viewpoint, the key ones for understanding not only the period under review, but also the long-term trends manifesting themselves in the country under examination. This, of course, was not an objective easy to reach, and, indeed, has not always been reached by Asia Maior s analyses. However, the continuous endeavour to see the present as history in the making, and to understand it also by detecting its historical roots, has always been the distinguishing mark of the «Asia Maior» school. Not all the contributions published in Asia Maior in its 25-year history have come up to the exacting standards set by Giorgio Borsa; however, enough of them have been to retrospectively judge the Asia Maior endeavour as a success. Indeed, it is now possible to go back to analyses published 10 or 20 years ago and see how the political and economic trends then elucidated have played themselves out in the following years, up to the present. This is a feat that has been made possible also by the fact that following a rule ume, was the result of the mistaken adoption of an anglicized spelling. Afterwards, for reasons of continuity, the j-spelling was maintained up to the issue covering As, by now, the reader has undoubtedly realized, in this introduction the term Asia Maior is utilized in three different meanings: the observatory on Asia founded in 1989 by Giorgio Borsa; the geopolitical expression indicating a well defined part of Asia; the journal published by the «Asia Maior» observatory. In the first case (the observatory) the term is written between quotation marks; in the second case (the geopolitical expression) is written in ordinary printing type and without quotation marks; in the third case (the journal) is written in italics. 10

11 Fo r e w o r d originally set by Giorgio Borsa, and scrupulously followed since then in the Asia Maior chapters there are no predictions, no more or less sophisticated «scenarios» regarding the future, but, quite simply and quite humbly, though also quite importantly, the individuation of the relevant facts and their organization in historical sequences. The first Asia Maior volume was published in 1990, and, since then, the publication of the yearly volumes has regularly been going on, the sole exception being that of the year 2006, when no volume was published. That gap, however, was closed the following year, when, in 2007, a double volume appeared, analysing the biennium. 5 Indeed, at the end of 2006, the informal group created by Giorgio Borsa was transformed into a regular think tank, by a notary act. In that occasion, the name «Asia Major» for both the think tank and the volume was officially changed to «Asia Maior». By then, the original group of scholars gathered by Giorgio Borsa in November 1989 had profoundly changed, only one of its members the author of these lines still being part of it. A new generation of younger scholars had come to the fore. Nevertheless, the structure of the yearly volumes, the basic philosophy of the group and the methodological approach had been kept unchanged. When Giorgio Borsa conceived and launched the «Asia Maior» enterprise, his plan was to publish a yearly volume written by Italian scholars and aimed at Italian educated public opinion. In other words, Asia Maior s target was made up of Italians, not only scholars and university students, but diplomats, journalists, entrepreneurs and, more generally, educated people interested in either Asian or international affairs. As a consequence, Borsa wanted the yearly volume to be written not only according to the most exacting scholarly criteria, but in a clear language, devoid of any academic jargon. In course of time, Asia Maior, the yearly publication, came to be a reference point among Italian scholars and was increasingly categorized less as a yearbook than a scholarly journal. The process culminated in the decision by the ANVUR (the Italian authority in charge of evaluating the national system of higher education and research) to officially classify Asia Maior as a class A journal in the field of Asian Studies. Although, as noted above, the Borsa guidelines have been strictly adhered to, in recent years, inside what had by then become a regular think tank, the opportunity or, rather, the necessity to shift from Italian to English as the medium of communication was debated. Eventually and I dare say inevitably the decision was taken to shift from Italian to English, in order to widen Asia Maior s target from the Italian educated public to the Italian educated public plus the world scholarly community working on contemporary Asia. 5 A list of all the Asia Maior volumes is given in the appendix. 11

12 Michelguglielmo Torri For reasons which need not detain us here, it was decided that such a transition would be gradual, with the present volume being made up of chapters in English with an Italian abstract, and chapters in Italian with an English abstract. Asia is not even a valid geographical expression: there are no clearcut geographical features which set Asia apart from Europe, something which most geographers are well aware of. 6 Much more important is the fact that Asia has historically been the seat of several refined and complex cultures/civilizations. Each of them is as close to or distant from the other Asian cultures/civilizations as they are close to or distant from Western culture/civilization. 7 «Asian values», apart from being squarely based on the Confucian tradition and therefore alien to many Asian civilizations are nothing more than a felicitous catchword, a rhetorical device, without much basis in the ground realities of Asia, not even in those parts of Asia where, in the past, the Confucian tradition flourished. To the lack of geographical and cultural unity we must add the lack of economic unity. Asia Maior, as defined by the «Asia Maior» group, although more limited than geographical Asia, can nevertheless be divided into at least two main areas: that part which is rich in natural resources and scarcely populated, and the other part, which is poor in natural resources and densely populated. This division is strengthened by the fact that the latter part is characterized by the presence of states with strong and growing economies. 8 Finally, to the lack of geographical, demographical and economic unity characterizing Asia, one must add the lack of unity as far as the political systems of the several Asian countries are concerned. In this perspective, there is no similarity between India and Iran; China and Japan; the Philippines and Vietnam; Malaysia and Thailand, and so on. Indeed, one could claim that practically all kinds of political regime are nowadays present in Asia Maior, ranging from the biggest democracy in the world, India, to the most bizarre dictatorship on the planet, North Korea. 6 E.g., Martin W. Lewis, Kären Wigen, The Myth of Continents. A Critique of Metageography, Berkeley: University of California Press, For a classical statement of this point, see William H. McNeill, The Rise of the West. A History of the Human Community, Chicago: University of Chicago Press, 1963, and subsequent editions. 8 The exception to this categorization is Iran. Iran is densely populated, with a relatively strong economic infrastructure (although put under pressure by the USsponsored economic sanctions), and is rich in natural resources. 12

13 Fo r e w o r d All the above, although well known, has been said to point out the difficulty of finding a unitary theme which can characterize the political and economic developments in Asia, even in that lesser portion of Asia which is Asia Maior, during the short period of time which is the chronological framework of a single Asia Maior issue. However, although difficult, to find a unifying theme for the yearly Asia Maior issues can be useful in conveying a clear image of the strongest political and economic forces at play in the Asia Maior area during the period under review. For the present issue, covering the year 2014, this unifying theme has been found with reference to China. Thanks to its economic weight, China exercises a powerful pull on most Asian countries. This makes it imperative for the other Asian countries to adjust themselves to this pull. In each case, this adjustment is a function of an uneasy blending of two contradictory strategies: engaging China and containing China. Engaging China means to become part of the China-centred economic space; which brings obvious and, generally speaking, conspicuous economic advantages for those nations willing to do it. But China s increasing assertiveness, a function of its growing economic and military power, is seen as a danger by many of its neighbours. Indeed, it is a danger that many Asian countries bordering with China or, in any case, subject to its economic pull, want to minimize by a policy of containment, based on armed might and the building of a network of either formal or informal political and military alliances. This already complex situation is made even more complex by the fact that there are two major powers, from outside this area, which exercise a powerful gravitational pull on most (in one case) or many (in the other case) of the Asia Maior countries: the USA and Russia respectively. The USA, at least since Nixon s opening to China, have appeared to be constantly uncertain about engaging it, considering it as a «responsible stakeholder» 9 in the world order and an indispensable economic partner, or, by contrast, containing it, by building around it a powerful inhibitory framework, a function of the redeployment of US military might in the Asia-Pacific area (a strategy which has lately taken shape in the «Pivot to Asia» doctrine), and the building of a complex network of military agreements with the Asian countries neighbouring China and with Australia. One part of this same containment strategy is usually considered to be the US-sponsored attempt to implement the Trans-Pacific Partnership agreement (TPP), creating a new free trade economic space encompassing most of the Asia-Pacific countries, and excluding China. However, it 9 As famously urged by U.S. Deputy Secretary of State Robert Zoellick in

14 Michelguglielmo Torri can be argued 10 that the final objective of the whole TPP exercise is less to isolate China than to induce it to eventually enter the agreement, becoming part of a US-centred system. Russia, for its part, has an equally complex relationship with Asia Maior. This relationship is organized around two axes: one is the necessity to maintain or reassert its influence in that part of Asia formerly belonging to the USSR; the second is the necessity to avail itself of the support of China, avoiding the danger of becoming over-dependent upon it. Of course, engaging China/containing China are the two contradictory forces which have been moulding the system of international relations in Asia Maior for quite some time, and not only in the year under review. However, the choice to highlight the working of these forces in the title of the 2014 issue of Asia Maior is justified by the fact that some of its most important chapters are firmly focused on the examination of the relevance of the China-centred dynamics characterizing international relations in Asia. Indeed, this theme is dealt with particularly in the chapters focused on China and Japan, but also even if to a lesser extent in those dealing with North and South Korea, Malaysia, Cambodia, India, Kirghizstan, Kazakhstan and Turkmenistan. But, of course, international relations, although important, are only part of the picture. As always in the Asia Maior issues, a great deal of attention is given to the domestic reality of the single Asian countries, both at the political and economic level. At the political level, the analyses included in this issue reveal that two contradictory trends are apparent. On one side, 2014 has witnessed the military coup which has put an end at least for the time being to democracy in Thailand. On the other side, limited but concrete progress on the path to a full blown democracy has been seen in Myanmar and Nepal. More significant, as far as democracy is concerned, have been the general elections in India and the general and local elections in Indonesia. In both cases, the elections have marked a turnaround in the existing political situation, even if, at this stage, it is not yet possible to accurately judge the full extent of a change which, nevertheless, appears conspicuous. Finally, at the economic level, this issue s various chapters show that, by and large, economic growth is once again on the rise. Although decidedly less impressive than before the beginning of the world crisis, the economic growth of the major Asian countries is much faster than that characterizing Western countries. This means that Asian economic growth, in spite of being much slower than before, appears bound to alter the economic and therefore political relationship between Asia and the West. m.t. 10 As done by Francesca Congiu in the chapter on China in the present issue. 14

15 Ch i n a in 2014: Ch i n a a n d t h e Pi v o t t o Asia Francesca Congiu University of Cagliari 1. Introduction Differently from the approach used in the previous essays on China in Asia Maior, concerned especially with domestic politics, we have chosen here to privilege some aspects of China-US relations in order to investigate Chinese domestic politics and political economy through such a prism. The reasons for this preference lie mostly in the growing centrality this relation has acquired in the international geo-political and geoeconomic context as well as in regional contexts. In the history of the two countries relations, China always represented a main pillar in what a part of literature close to the International Political Economy and the history of international geo-economic relations has defined as the United States long-term project of a capitalistic world order. 1 At the turn of the 1900s, China already represented a very high potential market, strongly limited by a powerful and authoritarian state. With the advent of the communist government in 1949, that market became a lost opportunity. Only after about 30 years of frozen relations, was that pillar regained since 1979, that is, since the recovery of US-China diplomatic relations. Nevertheless, the US free trade project continued to face Chinese barriers and to look for the best strategies to break them down. In 2014, the relationship was marked by a substantial economic interdependence and by serious tensions at both economic and political levels. In a regional context already marked by maritime disputes (in the South and East China Sea) which were still giving rise to high military tensions among the countries of the area the United States gave new life to their Pivot to Asia while China pursued an assertive approach both on the geoeconomic and geo-political level. Both countries were carrying on those 1 Leo Panitch, Sam Gindin, The Making of Global Capitalism. The Political Economy of American Empire, London, New York: Verso, 2012; Mark T. Berger, The Battle for Asia. From Decolonization to Globalization, London: Routledge, 2004; Massimo Galluppi, Rivoluzione, controrivoluzione e politica di potenza in estremo oriente , Napoli: L Orientale, 2009; Joyce Kolko, Gabriel Kolko, I limiti della potenza americana. Gli Stati Uniti nel mondo dal 1945 al 1954, Torino: Einaudi,

16 Francesca Congiu foreign policy approaches that had already emerged in the previous five years. 2 There is no doubt the two approaches were self-perpetuating and it is not possible to establish a clear cause-effect connection between the two of them, unless we do not undertake very focused research. Nonetheless, the complexity of this relationship is well-mirrored in the then Deputy President Xi Jinping s words in February 2012 during a speech in Washington. Xi defined Sino-American relations as «a new type of major-power relations» (xin xing daguo guanxi). His aim was to re-balance a relationship where an emerging major power aimed for equal treatment while the other, still dominant, superpower tried to defend its position by maintaining the asymmetric relationship the former wanted to challenge. 3 Xi Jinping s idea was fundamentally based on four key points: 1) mutual understanding and trust; 2) respect for each other s core interests; 3) cooperation for the benefit of both countries; 4) enhancement of cooperation and coordination in international affairs and global issues. 4 The equal treatment issue also strongly emerged in the 2012 document by the then Deputy Minister of Foreign Affairs, Cui Tiankao (now Chinese Ambassador to the United States) and Pang Hanzhao. The document refers to a mutual equality which does not necessarily challenge the United States position: «Equality does not mean China will sit with the United States on exactly the same status [ ] Instead, either of the two countries should [ ] regard the other as an equal partner of dialogue and cooperation, try to put itself in the other s shoes, accommodate the other s concerns in a reciprocal manner». 5 On the other hand, in a 2013 paper by Wang Yusheng (former Chinese Ambassador to the Asia Pacific Economic Cooperation Organization) the Pivot to Asia was perceived as an American attempt at maintaining its hegemony over China. According to Wang, the US did not accept not being able to interfere in China s internal affairs anymore. China was indeed becoming so powerful that it was able to effectively defend its territorial integrity and its sovereignty. For that reason, the US needed to «[...] re-balance so as to maintain their 2 Francesca Congiu, La Cina sull orlo di una crisi politica e internazionale. L anno del 18 congresso del PCC, Asia Maior 2012; Dal G2 al Pivot to Asia. Le trasformazioni del rapporto Cina-Stati Uniti ( ), Francesca Congiu, Annamaria Baldussi, Barbara Onnis (Eds.), Le trasformazioni della globalizzazione in Asia orientale: nuove polarizzazioni e nuove gerarchie, Cagliari: Aipsa Edizioni, Andrew J. Nathan, The «New Type of Major Power Relationship»: An Analysis of the American Response, The 28 th Asia-Pacific Roundtable, 2-4 June 2014, Kuala Lumpur. 4 Xi Jinping, National Committee on United-States-China Relations, Policy Speech, Washington, 15 February 2012 (https://www.youtube.com/watch?v=ioezuqffh0s). 5 Cui Tiankai, Pang Hanzhao, China-US Relations in China s Overall Diplomacy in the New Era, Ministry of Foreign Affairs of the People s Republic of China, 20 July 2012, (http://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/bmdyzs_664814/ xwlb_664816/t shtml). 16

17 Ci n a absolute superiority». Interestingly, in his above mentioned analysis of Xi Jinping s definition, Andrew Nathan sees in the US use of international law and in their pressure on China to respect those norms an instrument aimed at defending their present hegemonic position. 6 In this regard, Wang Yusheng writes: «US leaders have repeatedly claimed that so long as China abides by international rules and act like a responsible large country, U.S.-China relations will get better, stable or even become partners. The question is: what are the international rules? [...]». 7 In a long interview with Steve Inskeep of National Public Radio on 28 May 2014, US President Barack Obama underlined again how important it was to respect international norms, with specific reference to maritime disputes in East Asia: «[ ] what we [also] want is to be able to strengthen and constantly reinforce international norms because we believe, I believe, that America benefits when those norms are not only being upheld by us individually but where all countries buy in, where there is a sense that all of us benefit from some basic rules of the road. And China now as a rising power needs to be part of that responsibility of maintaining rules that maintain peace and security for a lot of countries». Later on, with regard to the countries involved in the disputes, he pointed out: «[ ] China is going to be a dominant power in Asia, not the only one, but by virtue of its size and its wealth, it is going to be a great power in Asia. We respect that. And we re not interested in containing it because we are in any way intimidated by China; we re concerned about it because we don t want to see constant conflicts developing in a vital region of the world that also, you know, we depend on in terms of our economy being successful. You know, those are a lot of markets out there, we sell a lot of goods out there, and, you know, we don t want to see these conflagrations that can end up impeding, you know, our own interests». 8 In 2014, the United States intention to propose the so-called Trans- Pacific Partnership Agreement (TPP) as a «model agreement» for all free trade agreements emerged with greater strength than previous years. This proposal could be considered as a part of a strategy to attract and discipline China by engaging it in a macro-regional neoliberal dimension as originally planned since the early 1900s. 6 Andrew J. Nathan, The «New Type of Major Power Relationship». 7 Wang Yusheng, Is it Possible for China and the U.S. to Build a New type Major-Country Relationship?, Chinese People Institute of Foreign Affairs, the 107 th Issue Spring 2013 (http://cpifa.org/en/q/listquarterlyarticle.do?articleid=254). 8 Transcript And Audio: President Obama s Full National Public Radio Interview (http:// 17

18 Francesca Congiu 2. The «Trade Issue» in US-China Relations: the US Perspective Since US-China normalization, the extent of bilateral trade has significantly increased from $2 billion in 1979 to $562 billion in China has become the US second biggest trading partner, third biggest export market and main source of imports. Besides, China was the leading foreign holder of American bonds, which amounted to about $1 billion at the end of It is worth emphasizing that the incomparable growth of the Chinese economy was, from the perspective of International Political Economy, a transnational phenomenon of growing interdependence between the Chinese market and international corporations, leading to the deeper and deeper integration of China into a global economy dominated by US corporations. In the first ten years of the 2000s the US continued to dominate the strategic sectors of the global economy: the four biggest corporations in the fields of hardware and software technology, aerospace and military as well as oil production were American. And so were fourteen out of the sixteen biggest global corporations in the pharmaceutical and healthcare industry and services and nine out of ten corporations in the field of global financial services. 10 Between 1995 and 2005, China received a massive flow of foreign direct investments, as it was a favourite destination in the subcontract supply chain of global production networks and about two thirds of its export growth can be attributed to the Chinese subcontractors of the American corporations. 11 According to the 2013 report of the American Chamber of Commerce in Shanghai, in spite of a GDP drop below 8%, China still represented a growing market with a lot of potential for American companies. In 2012, the United States exported goods to China for a total of $111.8 billion, which is an increase of about 476% compared to According to the report, these exports led to the creation of about 544,000 jobs in 2012 and the extent of such exports could not but grow thanks to the progressive expansion of the middle class and, consequently, of consumption: «U.S. companies are well positioned and have an enormous opportunity to tap China s explosion of consumer growth capturing billions of dollars [ ]». 12 The same potential was attributed to the services sector. American 9 Wayne M. Morrison, China-US Trade Issues, Congressional Research Service, 5 December 2014, p. 2 (https://www.fas.org/sgp/crs/row/rl33536.pdf). 10 Leo Panitch, Sam Gindin, The Making of Global Capitalism, pp Pan Chengxin, What is Chinese About Chinese Business? Locating the Rise of China in Global Production Networks, Journal of Contemporary Asia, 18, 58, 2009, pp The American Chamber of Commerce in Shanghai, Viewpoint. U.S. Competitiveness in China. Opportunities and Challenges in America s Fastest Growing Overseas Market, Shanghai, 2013, p. 4 (http://www.amcham-shanghai.org/amchamportal/infovault_ library/2013/viewpoint-2013-us-competitiveness.pdf). 18

19 Ci n a pharmaceutical companies in particular took a special interest in the Chinese market. They foresaw that by 2017 this market would be second only to the American one, for a number of reasons: the extension of health insurance to 95% of the population; the middle class growth; the aging of the population. The Chamber of Commerce stated that the Chinese government policies were «creating a larger pool of prospective customers for US healthcare products and services». 13 The trade deficit was still strongly in favour of China. In the first eight months of 2014 it increased 4.1% compared to the previous year to a total of $216 billion. 14 With regard to the investment sector, American official data reported the foreign direct investment flow from China to the United States to be greater than the inverse flow for the first time in 2014, while according to Chinese official data this overtaking had already happened a few years earlier. 15 From the viewpoint of US business and politics, the major issue concerning US-China trade relations was the Chinese incomplete transition to a free trade economy. China s entry into the international neo-liberal system was thus unsatisfactory because of the pervasive role of the state. The Chinese economic system was still a hybrid model that was frequently defined as «state capitalism». 16 The main targets of these critiques were the Chinese state-owned companies (SOEs). Chinese SOEs were considered extremely and unfairly competitive both in the Chinese domestic arena and in the global market. Furthermore, as a result of Obama s incentives on direct foreign investment inflows, more and more Chinese SOEs were active in the US domestic market and, as a matter of fact, constituted a direct threat to domestic enterprises. The 2012 report by the US-China Economic and Security Review Commission (USCC) included a whole section on Chinese state-owned companies and their impact on the US economy. The report emphasized the contrast between privatization attempts over the course of the 1990s and the opposite trend which has been particularly evident since the beginning of the 2008 global recession. Therefore, in recent years Chinese SOEs were perceived more and more as political actors and strong and unfair global competitors. The report mentions a 2011 speech by the then Secretary of State, Hillary Clinton, which well illustrates the official US viewpoint on China s economic system: «We confront a special set of strategic challenges from the growing wealth in state hands today. Governments are entering markets directly through their cash reserves, natural resources, and business 13 Ibid., p US and China Economic and Security Review Commission (USCC), 2014 Report to Congress, November, 2014, p Ibid., p. 62; Morrison, China-US Trade Issues, p Ibid., p

20 Francesca Congiu they own and control and they are shaping these markets not just for profits, but to build and exercise power on behalf of the state». 17 Among the commission s several witnesses, Washington lawyer Timothy Brithbill stated that China «more than any other country has created massive stateowned and controlled national champions that will compete unfairly with private enterprises [ ] the rise of state involvement in the global economic arena is a significant threat to pure free market system and the free flow of private capital». 18 Apparently, this system was to blame for a sort of Keynesian tendency: «State-owned companies may not be required by their government owners to pay taxes or dividends or even make profit if the primary goal of government owners is to provide employment [ ]». 19 Furthermore, the Chinese political system, state interventionism and autocracy were all equally considered a comprehensive global threat to neo-liberalism and democracy: «State capitalism is the most formidable foe that liberal capitalism has faced so far [ ]. Across much of the world, the state is trumping the market and autocracy is triumphing over democracy». 20 The competitiveness of Chinese SOEs was regarded as unfair for a number of reasons: those companies had preferential access to Chinese national banks (low interest loans and debt forgiveness); they were easily allowed government grants; they bought land at a lower price than private companies; they had preferential access to and lower prices for raw materials; and they had preferential access to public procurement (China had not joined yet the World Trade Organization s Agreement on Government Procurement). Because of this, US corporations operating within China were left at a disadvantage. For instance, the public procurement sector was an exclusive territory of local companies, and strategic sectors like steel, telecommunications, oil and natural gas presented barriers to foreign investments. Basically, foreign goods, services and investments faced a general discrimination: «[ ] there is typically no market of 1.3 billion [people] for American exports and firms operating within China; there is whatever the SOEs leave behind [And] if considered strategic, an entire sector can be closed [to imports]». 21 The American Chamber of Commerce in Shanghai, for example, reported on the US pharmaceutical and healthcare industry. According to the 2013 report, China was trying to keep American companies out of its domestic market in many ways: with regard to medical devices, China required standards which were different from those recognized internationally; for what concerns drugs, many foreign treatments were not reimbursed and were thus 17 USCC, 2012 Report to Congress, November, 2012, p Ibid., p Ibid., p The Visible Hand, The Economist, 21 January USCC, 2012 Report to Congress, p

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