The Big One.
Trump meets Xi again, with great expectations.
U.S. President Donald J. Trump and Chinese President Xi Jinping have yet another hotly anticipated face-to-face meeting this weekend. The two leaders will speak on the sidelines of the upcoming G-20 Osaka Summit, marking the first serious attempt between Washington and Beijing to resume talks over trade and other issues since the collapse of trade-related talks in early May. Since that breakdown in talks, the trade war has escalated and expanded to other domains, notably the technology sector following U.S. action against Chinese tech giant Huawei.
The usual cast of supporting characters -- Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer, and U.S. Treasury Secretary Steven Mnuchin -- have been talking behind the scenes to set the groundwork for a potential deal.
The story of the trade war has already had plenty of ups and downs, bouts of escalation and deescalation, new attacks and truces. Whatever lies ahead, the imposition of U.S. tariffs on China and retaliatory moves by Beijing has already altered global commerce and the calculations undertaken by smaller economies caught in a storm amid the two preeminent global economics locking horns.
As Trump and Xi convene in Japan, I wouldn’t expect a deal to materialize, but perhaps yet another truce. Trump has demonstrated a tendency to do better in addressing world leaders’ concerns in a face-to-face setting and may appear conciliatory in person.
Something to watch for will be any signs that the president will temporarily stay ongoing U.S. action against Huawei, perhaps by extending the existing temporary license for the Chinese tech firm to continue importing U.S. components until August. That won’t have many supporters across the U.S. administration and might make U.S. efforts to convince allies to ditch Huawei more difficult, but Trump has shown deference to Xi’s concerns along these lines in the past (see: ZTE).
Finally, there’s the rest of the U.S.-China agenda beyond trade. The G-20 Trump-Xi engagement is expected to be focused and limited in nature. After Xi’s surprise trip to Pyongyang last week, there’s an expectation that the Chinese president may position himself as an interlocutor between North Korean leader Kim Jong Un and Trump. For that to happen, Trump and Xi would have to clear the trade hurdle to mutual satisfaction. I wouldn’t count on that happening in Osaka.
Bottom Line: The Osaka G-20 Trump-Xi meeting offers yet another change at a truce, but don’t expect a big deal.
Introducing Diplomat Risk Intelligence.
I’m excited to introduce a new offering from The Diplomat. Diplomat Risk Intelligence is the new consulting and analysis division of The Diplomat, the Asia-Pacific’s leading current affairs magazine. To learn more, click here.
East Asia.
Last week, Chinese President Xi Jinping became the first Chinese leader in some 14 years to visit North Korea. His trip was afforded the rare status of a “state visit” by the North Koreans, surpassing the “goodwill visit” moniker that Xi’s predecessor Hu Jintao was afforded in 2005. The Diplomat’s Editor-in-Chief Shannon Tiezzi aptly summed up the major public outcome of the visit:
With no public announcements on deals or agreements, the only concrete takeaway was that Xi and Kim both reaffirmed their commitment to a political solution to longstanding issues on the Korean Peninsula.
The visit has been a fairly long time in the making. Recall that Xi had first accepted Kim’s invitation to visit Pyongyang during their original meeting last March. Between that first meeting, the two met three additional times on Chinese soil. Last week’s summit marked the first meeting between the two since the collapse of the Hanoi summit between the United States and North Korea. Moreover, it was highly likely that 2019 would mark a banner year in bilateral ties given that it marks the 70th year of diplomatic ties between the two countries. (Kim Il Sung established diplomatic ties with the newly founded People’s Republic of China in late-1949.)
While the theme of socialist solidarity and strong China-North Korea relations was certainly at the forefront of the presentation of the summit by state media in both countries, difficulties continue to linger below the surface. North Korean mistrust of China, in particular, continues to linger, even as cooperation in a range of areas continues. (For one deep dive, I’d recommend Adam Cathcart’s recent look in The Diplomat at the naval ties between China and North Korea.)
The summit leaves quite a bit out of the public eye, including the extent to which Kim and Xi actually discussed strategic questions related to the future of the Korean Peninsula and how those conversations might factor into the upcoming U.S.-China meeting at the G-20.
Bottom Line: The Xi-Kim festivities in Pyongyang left much out of the public eye.
All Eyes on Hong Kong: June 2019 is a watershed moment for “One Country, Two Systems,” the supposed basis of China’s post-1997 relationship with Hong Kong. As more than 1 million Hongkongers took to the streets, global attention zeroed in on the city. The protesters succeeded in staying the adoption of a controversial Extradition Ordinance put forth by Chief Executive Carrie Lam with Beijing’s support, but the struggle for Hong Kong’s identity continues. At The Diplomat, Florence Mok looks at the long string of events that led to this month’s spectacular protests.
Southeast Asia.
In the last issue of this newsletter, I discussed my impressions from this year’s Shangri-La Dialogue. One of the core themes at this year’s dialogue pertained to how small and medium-sized countries in the Asian region can cope effectively with U.S.-China competition. Along these lines, many states in Southeast Asia have already come to regard the much-discussed Indo-Pacific concept/strategy/region -- it means different things to different powers -- as a thinly veiled attempt to contain China.
Well, this week, the Association of Southeast Asian Nations (ASEAN) finally chimed in with its official take on the Indo-Pacific. The group released an outlook on the concept just weeks after the U.S. Department of Defense unveiled its own Indo-Pacific Strategy Report (Note: I dissect the ISPR in more detail in the upcoming issue of The Diplomat’s e-magazine. Subscribe to that here if you don’t already.)
The Diplomat’s Southeast Asia hand Prashanth Parameswaran took a look at the new ASEAN Indo-Pacific outlook, concluding that “the stakes are also arguably higher than ever for ASEAN to overcome its internal divisions and fashion an Indo-Pacific approach that is viewed as credible not just within the organization, but among external partners.”
To be clear, the ASEAN Outlook, released so far as a five-page document, is a work-in-progress. As Prashanth underscores, the grouping is looking at this new Outlook as a possible source of “momentum” in driving further initiatives within ASEAN to render the 10-member grouping’s view of the Indo-Pacific more concrete.
Don’t Miss It: The Philippines took a major step this week in the 5G realm. As my colleague Prashanth described it, “the Philippines moved forward with what effectively would constitute the rollout of Southeast Asia’s first 5G broadband service with Huawei’s involvement.”
Bottom Line: ASEAN is getting more serious about taking a stand on the Indo-Pacific, but work remains.
Asia Defense.
The first serious high-level U.S.-India interaction since the start of Narendra Modi’s second term began is taking place this week. U.S. Secretary of State Mike Pompeo is in New Delhi where he met with his newly appointed counterpart, S. Jaishankar on Wednesday. The two men discussed a range of issues, and among them was the ever-persistent issue of India’s deal with Russia to purchase the S-400 surface-to-air missile system. Per the Countering America’s Adversaries Through Sanctions Act (CAATSA), India would be sanctioned for transacting with Russia. Last year, part of China’s military establishment were sanctioned under the same act for purchasing Russian-made military material, including the S-400. (In the Chinese case, the sanctions were activated specifically after the S-400 units were delivered.)
Answering a question on the looming CAATSA threat in a joint press conference with Pompeo, Jaishankar simply said that India would do what was in its national interest. "We have many relationships...they have a history. We will do what is in our national interest and part of that strategic partnership is the ability of each country to comprehend and appreciate the national interest of the other," Jaishankar said.
India, meanwhile, believes it should receive a waiver given the publicly stated criteria by the United States. It’s far from clear if India will be able to sway the Trump administration. Days before Pompeo’s trip, U.S. Principal Deputy Assistant Secretary for South and Central Asia Alice Wells said in an official testimony before the U.S. House of Representatives that not only could the S-400 “effectively could limit India’s ability to increase our own interoperability,” going through with the sale might have broader implications on U.S.-India ties. “At a certain point, a strategic choice has to be made about partnerships and a strategic choice about what weapons systems and platforms a country is going to adopt,” Wells said.
As Vinay Khaura and Aman Thakker have highlighted recently in The Diplomat, the prospects for U.S.-India ties are not as rosy as they once were. The S-400 issue is one among many, with India also concerned about the consequences of U.S.-Iran tensions, U.S. withdrawal from Afghanistan, and the withdrawal of preferential bilateral trade status with the United States.
Military Firsts: If you missed it, the Japan Maritime Self-Defense Force, for the first time, will be joining the United States and Australia in this year’s iteration of the Talisman Sabre exercise.
Don’t Miss It: In a notable development, a China Coast Guard vessel took the unusual step of shadowing a foreign naval vessel in the Taiwan Strait. Matthew Fisher discusses the incident here. “A Chinese coast guard vessel recently came within about 700 metres of HMCS Regina during a rare transit by a Canadian warship through hotly disputed waters in the South China Sea and Strait of Taiwan.”
Bottom Line: India won’t swerve from its decision to purchase the S-400 and the U.S. likely won’t issue a waiver, setting up a stumbling block for bilateral ties that had long been on an upswing.
Extras.
Reuters reports on a survey showing that more than half of all Chinese consumers have started to actively avoid U.S.-made products amid a surge of economic patriotism due to the trade war.
Book Recommendation: I’ve been reading Washington Post foreign correspondent Anna Fifield’s new biography of North Korean leader Kim Jong Un, The Great Successor: The Divinely Perfect Destiny of Brilliant Comrade Kim Jong Un. The book is well-written, detailed, and paints a picture of a leader determined to remain in charge of his country at all costs. Above all, it suggests that Kim won’t be one to relinquish his nuclear weapons anytime soon -- certainly not as the result of a diplomatic process.
Please do feel free to reach out with comments, tips, and feedback at ankit@thediplomat.com and follow me on Twitter at @nktpnd and The Diplomat at @Diplomat_APAC.