Chinese assertiveness in the South China Sea has drawn global attention based on an assumed risk that, by accident or design, rival claimants to the region’s islets and shoals might plunge Asia into war. In China’s territorial disputes with ASEAN members – primarily Vietnam and the Philippines – Beijing’s military has no local peer save the US 7th Fleet, Washington’s vehicle for asserting its interpretation of free navigation rights according to the UN Convention on the Law of the Sea. However, Control Risks believes that it is actually North-east Asia, where China’s equally forceful muscle-flexing bumps up against larger, more capable military powers, that is the theater to watch with concern.

North-east Asia is fundamentally different, with more powerful nations, larger economies and deeper, darker historical enmities that raise this from a regional to a global risk. The overlapping quilt of claims and national grievances, pitting China against Japan, the Koreas against Japan, not to mention the two Koreas against each other, render issues more difficult to resolve.

The formal defense obligations Washington maintains with Japan, Korea and Taiwan create a ‘trip wire’ of the sort many have compared to Europe’s entangled alliances in 1914. Finally, the region incorporates some of the globe’s largest economies and trading states, with China and Japan the second and third largest economies in the world after the US, and South Korea rising quickly in 11th place. Add the importance of the supply chains that crisscross this maritime environment and the transmission mechanism for a small clash to infect the global economy is not hard to see.

US Defense Secretary James Mattis recently confirmed in a visit to Japan that its conflict with China over the disputed Senkaku/Diaoyu islands is covered by the US-Japan mutual defense treaty, clarifying an issue on which the Obama administration had deliberately sought to maintain some strategic ambiguity. The US position in what was previously a “grey area.” For several years now, China has been pushing the envelope over these disputed islands, which lie just east of Okinawa. In the last month, China has sailed its sole aircraft carrier through the Taiwan Straits and flown a heavy bomber between South Korea and Japan. In the past year, Japan has been forced to scramble its F-15 interceptors far more frequently due to Chinese incursions into its territory.

Beyond the specific territorial tensions, Sino-Japanese competition for influence across Asia is heating up. Historically, this rivalry has manifested more frequently on the Korean peninsula, where China and Japan have intervened repeatedly (most notably in the 1590s, 1890-1910, and of course, 1950). These incursions tend to accompany periods when one is waxing and the other waning.

Today, Xi Jinping’s China is clearly ascendant. By 2020, China will account for half of Asia’s GDP, and while its military is still no match for that of the US, the gap is closing. For reasons obvious to anyone who has ever watched Chinese television, China’s leadership can never back down in a conflict with Japan; the ‘founding myth’ of the China’s Communist Party is based on the defeat of Japan in the 1940s.

Meanwhile, Japan, in danger of eclipse, is governed by Prime Minister Shinzo Abe, a genuine right-wing nationalist whose grandfather was a wartime cabinet minister imprisoned by US occupation officials as a Class A war criminal. Abe is committed to revoking the ‘peace clause’ of the Japanese constitution that forbids it from engaging in military missions overseas. More than any other US ally, he has make headway in convincing the new administration of President Donald Trump to reconfirm the importance and depth of the US strategic military guarantee to Japan.

President Trump’s contradictory, seemingly off-hand statements about Washington’s obligations to its treaty allies has added a new layer of uncertainty. In spite of Mattis’ recent trip to the region, Trump’s words and actions challenging the “One China policy”, his questioning of the future of the 28,000 US troops billeted in South Korea, and a tweet that seemed to imply a willingness to preemptively strike North Korea over that country’s nuclear missile development, has the region on edge. The situation on the peninsula is further complicated by a series of strategic, political and commercial crises in South Korea that have brought the country to a standstill. Seoul is at odds with China over the deployment of systems on its territory, President Park has been impeached by the legislature and the biggest chaebol are beset by governance and succession crises.

No one yet knows how a Trump administration will react if challenged on any of these fronts. Nevertheless, what we’ve seen to date is a US administration that is predicating its electoral legitimacy on promised confrontation with ‘adversaries’ such as China and Iran. China, of course, has its own strategic agenda quite independent of what any US president may plan or do. Beijing will not necessarily wait for Washington to make the first move in this game and no modern Chinese leader can compromise on territorial issues. This bodes ill for regional stability in 2017.


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