A Trade War Truce?

Japan's plans for the Izumo; Uyghurs and Central Asia; Japan-Russia talks

The Big One.

Who told who what in Buenos Aires?

So, there’s a truce in the U.S.-China trade war. Maybe?

U.S. President Donald J. Trump and Chinese President Xi Jinping met over dinner in Buenos Aires, on the sidelines of the Group of 20 leaders’ summit, and both sides walked away claiming that they had reached a deal. Reporters on the site of the dinner reported hearing applause at the conclusion of the meal, suggesting at least a mutual satisfaction. The problem in the days since that dinner is that it’s not clear if both sides share the same perception of what was agreed.

I reflected quickly on Saturday evening, right after the dinner, about what the arrangement—largely as announced by the White House—might mean. It certainly looked like a truce and neither side, in my estimation, had really given away the farm. Xi didn’t cave; no one quite expected him to. At the same time, the Trump administration managed to hold fast and use the credible threat of raising the existing 10 percent tariffs on $200 billion in Chinese goods to 25 percent to extract what appeared to be some commitments.

But from there, it appeared that China had entirely another understanding of what had transpired.

Readouts do normally vary between sides after a diplomatic encounter, of course, but Beijing made no acknowledgement of the very concessions that the Trump administration touted as being evidence of a decent deal—one that respected core American concerns. Critically, the 90-day period that the White House cited as an opportunity for the two sides to work toward a more comprehensive agreement, saw no mention in Chinese readouts. Meanwhile, the South China Morning Post reported that China had started censoring the U.S. embassy’s WeChat posts touting the trade agreement at Buenos Aires using the White House readout language.

All of this leaves the G20 agreement in an uncertain place. Markets, perhaps acknowledging this uncertainty, reacted initially with a fairly lukewarm positive turn before a precipitous fall on Tuesday U.S. time, as this newsletter was being written. (Something about Trump declaring himself a “tariff man” on Twitter perhaps didn’t sit right with investors?) The broader point stands with the trade war: the fundamental differences between the two sides are no closer to being ironed out.

Bottom Line: There’s considerable uncertainty around the commitments the United States and China gave each other in Buenos Aires. If the trade war is in a truce, we’ll find out when January 2019 comes around.

East Asia.

I hinted at this in the previous issue, but the issue of renewed Russo-Japanese talks over their mutual territorial dispute over the Kuril Islands merits a deeper look. In September, Russian President Vladimir Putin drew headlines for apparently shocking Japanese Prime Minister Shinzo Abe—an overstatement, perhaps—by proposing that the two sides finally resolve that decades-long dispute by entering talks toward a peace treaty “without any preconditions.” In short, the two sides have long been quagmired over this issue, relating primarily to the issue of sovereignty and the 1956 Joint Declaration between the Soviet Union and Japan. Japan wants to see the sovereignty of the disputed islands, which are currently administered by Russia, addressed, and Russia has refused to do that. At the East Asia Summit in November this year, Putin met Abe and the two hashed it out again, but there wasn’t any real progress apart from both leaders agreeing to “accelerate talks.” (Nick Trickett took a look at Putin’s EAS for The Diplomat.)

Since the EAS encounter, there has been some progress. This week, Abe anointed his foreign minister, Taro Kono, with the lead on the negotiations with Russia going into 2019. The goal remains a peace treaty. (A side note on Kono: it was his grandfather, Ichiro Kono, who signed the 1956 agreement with Nikita Khrushchev.) On the Russian side, Foreign Minister Sergei Lavrov will lead the charge.

The appointments and partitioning of portfolios, however, shouldn’t suggest that this time things will be different. What is different this time compared to previous attempts is that Russia’s attempts to economically galvanize its Far East with Japanese investment have come a long way and Japan has reciprocated. Cementing a peace treaty would probably unlock greater opportunities for both sides, but there’s a long list of issues to work through before getting there. Incidentally, I just returned from a trip to Vladivostok in the Russian Far East in late-November and a couple Russians who work on international affairs out of the country’s Far East saw similar benefits to resolving this issue with Japan.

For Tokyo, however, the primary issue will be a satisfactory resolution of the dispute, namely with the transfer of sovereignty of the four disputed islets to Japan. Getting there will mean swallowing tall Russian asks, which may include the exclusion of the islands from the U.S.-Japan Mutual Defense Treaty and the removal of sanctions that Tokyo agreed to impose on Russia in 2014 for its annexation of Crimea.

Bottom Line: Russia and Japan are back to talking about the Kuril Islands in a more serious way than they have in recent years, but there’s little reason to believe that this time will really be different.

South Asia.

December will be a big month for two of India’s neighborhood relationships. The newly elected president of the Maldives, Ibrahim “Ibu” Mohammed Solih, and the newly elected prime minister of Bhutan, Lotay Tshering, are both expected in New Delhi. With the Maldives, the Indian government will seek to capitalize on what turned out to be an unexpected opportunity. Where many had expected the country’s former, autocratic-leaning president, Abdulla Yameen, to manipulate state institutions and eke out victory in the September elections, Solih rose to the top on the back of unprecedented democratic turnout and enthusiasm. In his inaugural address in November, Solih pledged to improve and restore relations with India. (Indian Prime Minister Narendra Modi made his first trip to the Maldives to attend Solih’s inauguration.) The rapprochement between New Delhi and Male will be in full swing with Solih’s visit to India.

With Bhutan, matters are a little more nuanced. Last year, India and China found themselves mired in a standoff on a piece of territory on the Doklam plateau claimed by Bhutan and China; India, Bhutan’s close partner and security guarantor, stepped in to prevent Chinese construction activity in the disputed territory. While that standoff was resolved more than a year ago, the situation on the Doklam plateau remains tense, with the Chinese People’s Liberation Army having considerably upped its presence. For India and Bhutan, part of managing the relationship over the recent decade or so has been the issue of Thimphu’s outstanding territorial dispute with China. (India and Bhutan are the only countries among China’s land neighbors that have yet to finalize their borders with Beijing.) With Lotay Tshering, New Delhi will want to ensure that the relationship is properly calibrated under a new government and that Bhutan won’t be prone to make any territorial concessions to China that might harm India’s interests. (If you missed it, The Diplomat’s Sudha Ramachandran had a deeper dive on this very issue.)

Bottom Line: India’s neighborhood policy will be in the spotlight in December as the leaders of Bhutan and the Maldives head to New Delhi.

Worth Reading: The Hindu’s Suhasini Haidar makes the case that with Solih’s victory, India is recalibrating its neighborhood policy to the softer touch favored by the previous government of Prime Minister Manmohan Singh.

Southeast Asia.

It’s never too early to think ahead. In 2019, Indonesia, the world’s largest Muslim nation and a virtual primus inter pares in the Association of Southeast Asian Nations, will be holding a presidential election with big consequences. The contenders are familiar to anyone who followed the 2014 election, with the incumbent president, Joko “Jokowi” Widodo, coming up against retired general Prabowo Subianto. Over at The Diplomat’s ASEAN Beat blog, Ed Ratcliffe takes a look at the factors that’ll play the biggest roles in the lead-up to the election.

As with so many democratic elections in Asia and elsewhere, Indonesian voters may treat the upcoming presidential election as a referendum on Jokowi’s stewardship of the Indonesian economy since 2019. Prabowo has seized on this as an area of attack; Jokowi’s economic management has seen bumps, but his supporters point to external phenomena causing some of the biggest problems, including the strengthening of the dollar and the broader dip in the value of several emerging market currencies, including Indonesia’s rupiah. (The rupiah reached a 20-year low in October.)

Ratcliffe highlights an important domestic factor that’ll be at play this time that was less apparent in 2014:

Jokowi has faced repeated criticism over his religious credentials. In recent years political Islam has gained momentum in Indonesia, as groups pursue their interests through legal and democratic channels. These groups had a pivotal role in toppling Jokowi’s ally, Basuki Tjahaja Purnama or Ahok, in the 2017 Jakarta gubernational race, in favor of Prabowo ally Anies Basdewan.

To stave off these criticisms, Jokowi has turned to Ma’ruf Amin, the supreme leader of Nahdlatul Ulama, the world’s largest Islamic organization and a moderate body, to be his running mate.

Bottom Line: The countdown to Indonesia’s 2019 election, slated for April 17, is underway, with Jokowi set to face off against Prabowo.

Don’t Miss It: With the end of the ASEAN 2018 summit, SIngapore has turned over the chairmanship of the 10-country group to Thailand. Read Prashanth Parameswaran’s preview of the Thai chairmanship priorities for ASEAN.

Central Asia.

As China’s crackdown on Uyghurs in the Xinjiang Uyghur Autonomous Region (XUAR) attracts global attention, Central Asian states and polities are paying attention too. The ethnic and cultural linkages between China’s Uyghurs and the Turkic peoples  of Central Asia, in particular, give the issue salience in the region—not to mention that the geography of Xinjiang, which sits just east of Kazakhstan, Kyrgyzstan, and Tajikistan, leaves the issue literally one that hits close to home for these countries.

In previous editions of this newsletter, I discussed the remarkable case of Sayragul Sauytbay, the ethnic Kazakh Chinese citizen at the center of a geopolitically charged trial in Kazakhstan. Sauytbay was an ethnic Kazakh who risked being deported to Xinjiang, from where she’d escaped. (If you missed it, I discussed Sauytbay’s case with The Diplomat’s resident Central Asianist, Katie Putz, on a recent podcast.) Since Sauytbay’s case, awareness of the predicament of Uyghurs in China has grown across the region.

The Diplomat’s Katie Putz explores the issue in a recent article over at Crossroads Asia, examining multiple nongovernmental groups that have turned their eyes toward Xinjiang, echoing broader public interest in the issue in these countries. But as Katie notes, “Uyghurs have no other state that claims them and thus no other state to advocate for them.” The predicament for regional governments remains clear; across the board, all Central Asian governments have much to gain by setting aside the treatment of Uyghurs and continuing to engage with Beijing on a strictly commercial basis. That’s been tenable so far, but as Sauytbay’s public trial showed and as the growing public interest suggests, it may be more difficult going forward. One option, of course, is for regional governments to simply crack down on groups drawing attention to this issue, but they haven’t gone down that route just yet.

Something to Watch: EurasiaNet recently made the connection that a sitting Kyrgyz legislator’s brother was arrested in Xinjiang, where he was an academic. That may serve to escalate the Xinjiang issue in Bishkek.

Asia Defense.

The buzz continues to grow: Japan is reportedly planning on converting its Izumo-class helicopter destroyers into vertical and/or short take-off landing-capable aircraft carriers. There have been rumors of this modification being a possibility for a while and they gained particular traction in 2017. In late-November, Kyodo news agency reported again on developing Japanese government plans. The airwing would likely comprise the F-35B.

The Diplomat’s Robert Farley offers an additional question for Japan as it considers this path:

Thus, the decision to upgrade the Izumos necessarily suggests a follow-up question: Would Japan give serious thought to the construction of large fleet carriers after it has rebuilt its naval aviation experience with the Izumos? Since 2009, Japan has commissioned four large, flat-decked aircraft carrying vessels, beginning with the two 19,000 ton Hyugas and continuing with the two 27,000 ton Izumos. If, as it appears, Japan has determined that it is legally capable of operating fixed wing aircraft carriers, and that such carriers are operationally necessary, then it’s hardly a stretch to imagine that the next generation of Japanese aircraft carrier might approach something akin to a true fleet carrier, along the lines of the U.S. America class or the British Queen Elizabeths. Such a vessel could carry F-35Bs or, with appropriate construction, either F-35Cs or some variant of Japan’s developing fifth generation fighter.

Either way, the change would necessitate further constitutional changes in Japan. The Diplomat’s Daniel Hurst took a look at some of the challenges that may arise on that front:

The LDP has given up on its plan to present draft amendments to the constitution during the current Diet session, Kyodo News reported this week. That means the task may be deferred to the next Diet session in the first half of 2019. However, as experts have previously pointed out, constitutional revision may be difficult to pursue at a time when Japan is preparing for the abdication of Emperor Akihito, 84, at the end of April. An upper house election next summer could create uncertainty, with the possibility that Abe’s coalition loses its two-thirds supermajority. Constitutional changes require approval by two-thirds of the parliament and then a simple majority of voters in a national referendum.

Bonus: The United States has finally let the cat out of the bag on the nature of Russia’s Intermediate-Range Nuclear Forces Treaty violation. Last Friday, U.S. Director of National Intelligence Dan Coats outlined how exactly the Novator 9M729 missile—the ground-launched cruise missile the U.S. assesses as having a capability in the INF-proscribed range—ended up in violation of the treaty. It’s not strictly an Asia story, but it certainly has implications for Asian security. You can read my analysis of Coats’ statement here.


Miss Universe Singapore had a particularly interesting homage to the June 12 summit between Trump and Kim Jong Un, apparently.

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.