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Is China a security threat to the liberal international order?

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People’s Liberation Army’s parade in 2015. Licensed under Creative Commons.

China has enjoyed tremendous economic growth over the last thirty years and is on course to remain a key growth engine for the world’s economy. This economic success has enabled China to bolster its military and to take a more active role on the global stage. Leader of China’s Communist Party since 2012, Xi Jinping has envisioned a new “Chinese dream” that would restore China’s lost national greatness. This desire, coupled with global ambitions, has generated a large amount of anxiety in the Western world and Asia, where China’s neighbors are wary of its intentions. That anxiety has translated into several security issues, which can be critically assessed through the lens of realism.

Offensive realism and China’s intentions for regional hegemony

According to realists, the world is in a state of anarchy as there is no central authority. Furthermore, realism emphasizes that the main international actor is the state. Survival is a states’ primary goal, and it can rely only on its security posture as cooperation in the international system is not assumed. Thus, realist state behavior is sometimes referred to as ‘the security dilemma,’ which leads to the capacity building of defense and offensive capabilities within each state, leading to further insecurity. As a subset of realism, offensive realism seeks to maximize the amount of power. For offensive realists, security trumps prosperity as the only safe position is dominance.

As such, offensive realism is a relevant lens to use when assessing China as a security threat, as there are multiple signs that China is seeking to challenge the current international order by becoming the global super power. Indeed, China aims to maximize its military might by building capabilities that translate into insecurity for its regional neighbors and the U.S.

Conversely, Mearsheimer argues, “if China continues to grow economically, it will attempt to dominate Asia.” By 2035, Bloomberg Economics stated “China will have overtaken the U.S. to become the world’s biggest economy“. Some others argue that China faces domestic pressures such as slower economic growth rate and an aging population. But given China’s demography, it is only a matter of time before China surpasses the U.S. both economically and militarily. Also, the U.S. is labeling China as the number one threat to its national security as China builds capabilities to dominate the U.S. and the rest of the world.

A key driver in China’s desire to challenge the international order is nationalism. Chinese nationalism emphasizes the ‘century humiliation’ – a period of Western interventionism in China between 1839 and 1949. China’s nationalist sentiment is seen especially through Xi Jingping’s ‘Chinese dream’ to restore its rightful place as the natural leading world power and contributes to China’s lingering anger and resentment toward Japan and the United States.

China’s Offensive Capacity Building

In the last thirty years, China’s defense spending has grown exponentially to reach $178 billion in 2020. This increase can be explained by the strong performance of its economy and its intention to expand its influence. However, the Chinese government has been inconsistent in reporting its defense budget and has been criticized for its lack of transparency. Some analysts estimate that an extra 33% should be added to get the right level of spending, raising the military expenditures to $230 billion. As the recent white paper about Japan’s Defense highlights, this exponential growth, coupled with a lack of transparency, creates greater concern for states neighboring China. Thus, those conditions create some uncertainties regarding China’s intentions and fuel an arms race as China’s military developments continue to destabilize the balance of power in the region.

China has been steadily investing in offensive capabilities that will allow China to project its power. China is bolstering its “Anti-Access/Area-Denial” (A2/AD) capabilities with additional amphibious helicopter dock ships, anti-ship missiles, and its latest DF-17 hypersonic missile – the first system of its kind to be operational in the world. It has also developed some indigenous capabilities such as fifth generation fighter aircraft (i.e., the J-20 and J-35), comparable with the U.S. F-35 stealth aircraft. Furthermore, China plans to double its stockpile of nuclear warheads in the next decade. While its reserve will remain way below the current U.S. nuclear warhead stockpile (200 versus 3,800), which shows China’s global power ambitions as it seeks to build the most extensive nuclear warhead stockpile in Asia.

Aligned with offensive realism, the development of a blue-water navy will allow China to globally project its power. While some may argue, this development is consistent with the rise of economic power, it is essential to note that the level of China’s blue-water navy capability is in line with its hegemonic ambitions. China has now completed two aircraft carriers with a third in construction. Furthermore, Captain James E. Fanell – former Director of Intelligence and Information Operations for the U.S. Navy’s Pacific Fleet – estimates that China will almost double its submarine fleet to reach 110 units by 2030. To address its global ambitions, China is building blue water capabilities faster than Washington can, which demonstrates China’s determination to overtake the U.S. in that aspect. China’s ambitious space program is another area of concern as it seeks to dominate both access and presence in outer space.

Power Competition? China’s Power in the Asia Pacific

According to John Mearsheimer, China is devising its own version of the Monroe Doctrine, much as the U.S. did in the Caribbean and the Gulf, as well as Imperial Japan in the 1930s. To achieve global hegemony, China will seek to push the U.S. out of the Asia-Pacific region. This policy is in line with the offensive realism’s school of thought and the type of military capabilities China is currently building. Indeed, a blue water navy would be instrumental in pushing China’s territories’ boundaries and transforming the South China Sea into a “Chinese lake.”

One of the most strident security threats that China represents is its assertive and revisionist behavior in the South China Sea. In 2009, China claimed an area called the “nine-dash line,” which extends way beyond China’s territorial waters and overlaps with territories belonging to Vietnam, Philippines, Brunei, Malaysia, and Taiwan. This area, where transits 80% of China’s oil imports through the Strait of Malacca, bears strategic and geopolitical importance. Besides hosting significant oil and gas resources, it is an area of deep water where Chinese nuclear-powered attack and strategic submarines can navigate with stealth. Furthermore, China has been building airstrips and military bases in the South China Sea to strengthen its ability to project power, raising security tensions with its ASEAN neighbors.

Another severe security issue in the region is China’s claim over Taiwan’s sovereignty. China has launched a “gray zone” warfare, which entails a reunification with Taiwan without firing a single shot. China has been threatening Taiwan with almost daily multiple aircraft sorties toward Taiwan’s airspace, amphibious landing exercises, naval patrols, cyber-attacks, and diplomatic isolation. China has been employing a similar strategy regarding its territorial dispute with Japan in the East China sea, prompting Tokyo to strengthen its Self-Defense Forces.

In addition to its regional revisionism, China has global ambitions with the Belt and Road Initiative (BRI) to expand its sphere of influence in the world. For example, China is gaining more influence at the United Nations, strengthening its ambition to challenge the international status quo. For example, China is leveraging the UN system to support its BRI under the guise of UN Sustainable Development Goals (UN SDGs). In addition of leading four UN specialized agencies, China was seeking to gain control of the World Intellectual Property Organization (WIPO). The move sparked some concerns amid multiple violations of property rights through a state-led campaign of cyber exploitation attacks.

In line with offensive realism, the U.S. has been engaged in a containment policy (i.e., Obama’s pivot to Asia, 2012) and is building a coalition with their partners to check Beijing, as the U.S. does not tolerate a peer competitor. However, this containment policy could increase security competition between the U.S. and China, leading to further insecurity: the more the U.S. try to contain China, the more assertive China could become.

To conclude, offensive realism demonstrates that China is a significant security threat to the U.S. and its neighbors in Asia to the extent that it seeks to challenge the status quo by becoming a regional hegemon. While offensive realism shows a pessimistic view of China’s rise, it is also a realistic one. Despite China’s growth recent slowdown, it remains on track to become the leading power globally.

China’s Defense budget’s exponential growth, coupled with a lack of transparency, creates high-level anxiety about its real intentions: does China seek to preserve its survival or desire to become a hegemon? All signs point at the latter, generating significant levels of insecurity with the U.S. and its Asian neighbors.

Chinese cyber coercion in the Asia-Pacific? Recent cyber operations in South Korea, Hong Kong, and India.

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Photo by Markus Spiske on Unsplash

Writings on Chinese cyber operations tend to focus on cyber espionage and the stealing of state secrets for China’s military modernisation. Comparatively in discussions of cyber operations, cyber coercion and Chinese cyber coercion are infrequently mentioned. This has to do with the ambiguity surrounding the definition of cyber coercion and the challenges of attribution.

Chinese cyber coercion is understood as a subset of what is known as weishe. Weishe is, in direct English translation, understood as “deterrence”, but is conceptually understood as a combination of compellence and deterrence. In theory, cyber coercion thus operates by compelling actors through cyber operations to produce an effect called deterrence wherein actors are deterred from decisions that are harmful to China’s interest. This role of compellence in cyber deterrence is made clearer when contrasted to the cyber deterrence strategies discussed so far in the  United States and the United Kingdom. The use of cyber deterrence in the respective countries appears mostly in reference to a retaliation to a cyber-attack or in building domestic resilience to make an attack costly. In contrast, in the Chinese context, compellence and deterrence are one, the role of compellence is encouraged, and a cyber–attack does not seem to be a prerequisite to the use of cyber deterrence.

The theoretical understanding of weishe, however, is imperfect in practice. Whether deterrence is truly a component of weishe is subject to disagreement and is debated amongst Chinese analysts. If this is the case, then what lens should be used to analyse potential Chinese cyber coercion?

Observed practice of cyber coercion may be a more helpful lens than its theoretical counterpart. Observed practice can include the combination of vague threats, an implied actor, and an implicit desired behaviour. In a greater layer of complexity, consistency across the elements’ contents is not necessary. For instance, cyber coercion may include explicit threats, an implied actor, and an explicit desired behaviour. Therefore, observed practice captures a more detailed variation of what is understood as cyber coercion—something which is illustrated in the following three cases.

The cyberattacks against South Korea in 2017 illustrate one of the clearer cases of Chinese cyber-coercion, specifically cyber-enabled economic coercion. It also demonstrates the use of cyber deterrence to deter a country from choosing a political decision that is judged as harmful to China’s security. On February 7, 2016, officials from the United States and South Korea announced discussions on deploying Terminal High Altitude Area Defence missile defence system (THAAD). Beijing, however, disapproved of the X-band AN/TYP-2 band radar system which would allow for approximately a 3,000 miles detection range. This would mean potential US military monitoring of activity in China and the undermining of China’s nuclear deterrence.

In correspondence to the announcement of THAAD, there were reported increases in cyber intrusions. In the first half of 2017, there were over 6,000 cyber intrusions from China against the South Korean Foreign Ministry’s servers which was an increase from the 4,600 in 2016.  Furthermore, Lotte Group, a South Korean-Japanese conglomerate was also attacked. Chinese internet protocol addresses took parts of Lotte Group’s storefront offline for several days, and Chinese e-commerce sites stopped co-operation with Lotte. This has been connected to Lotte Group permitting the South Korean government to use its golf course to deploy THAAD. South Korea did end up agreeing to limitations on THAAD, but it is difficult to say whether this was uniquely due to the cyber impacts because of the presence of other coercive levers. For instance, the Chinese government shut nearly all of Lotte’s physical stores in China. Cyber coercion, however, does signal great displeasure, and the intentions can be perceived as the use of compellence to deter further plans regarding THAAD.

Whilst the THAAD case outlines more clearly what happened and who the suspect is, other potential cases do not. Cyber operations in Hong Kong and India demonstrate cases of an explicit threat, an implied desire, and an implied actor.

Over the course of Xi Jinping’s rule, a tighter grip has been imposed on Hong Kong and protests have become more dangerous to participate in. Joshua Wong and Agnes Chow, who were the faces of Hong Kong’s protests against the Chinese Communist Party’s grip, are now imprisoned. The 2019-2020 Anti-Extradition Law Amendment Bill Movement, which was a series of movements against the Extradition Bill, coincided with the emergence of HKLeaks—a doxing website which appeared in  late August 2019. The website doxes anti-government protestors, revealing people’s personal identifiable information (PII) such as headshot, social media handles, phone numbers and their misdeeds. The threat is explicit in that it threatens an individual’s privacy and makes the struggle for a freer Hong Kong even more costly. There have even been instances of malicious targeting. In one case, a doxed female reporter from Apple Daily, a Hong Kong tabloid known to criticise the Chinese Communist Party, started receiving threatening calls.

The argument that China is behind this is difficult to build, although there are very subtle implications behind HKLeaks that tie it to state-sponsored actors and potentially to the Chinese state. Aside from China’s interest in Hong Kong, looking at who or what HKLeaks is connected to is informative. HKLeaks has been linked to social media accounts similar to those taken down for being fake accounts linked to state-backed actors, which were also used as a tactic in disinformation campaigns against Taiwan. Some information of who the state could be is found in anecdotal evidence. According to an alleged victim of HKLeaks, they gave a “fake address I’ve never given to anyone” to Chinese police at the Hong-Kong and China border when returning from a business trip from mainland China. His address afterwards appeared on HKLeaks. Whilst the link between cause and effect is unclear, these disparate points of evidence could arguably form a weakly implied Chinese state as actor.

HKLeaks is also positively viewed and engaged by the Chinese state. For instance, the official Weibo account of China’s state-owned TV network, “published a video showcasing the HKLeaks website, and urged followers to ‘act together’ and ‘tear off the masks of the rioters’”. This post was then shared by “the Weibo accounts of local Chinese police, local media outlets, branches of Chinese Communist Youth League, and others.” Again, the actor cannot be established, but there is certainly a perception of an implied actor, an implied (or explicit, depending on one’s perception) desire to stop the protests and the threat of the violation of privacy and potential harm to the individual. This arguably forms a cyber coercion, rendered perhaps more threatening by the ambiguity on how members are being doxed and by not knowing the exact actor.

The case of the Mumbai power outage in October 2020 is a similar case where there is implied Chinese involvement. However, connections to the Chinese state around this topic is slightly clearer and less speculative. Speculation of China’s involvement is found across Foreign Affairs, NY Times, and The Diplomat, and domestically amongst Indian officials. The main source of information, however, is from a report by Recorded Future, a private cybersecurity company. On February 28 2021, Recorded Future published a report which demonstrated a connection between Red Echo, a Chinese state-sponsored group, and the installation of malware into civilian infrastructure such as “electric power organisations, seaports, and railways.” This cyber intrusion is thought to connect with the border conflict occurring at the time and has led to speculation about the connection to the Mumbai power outage. According to retired cyber expert Lt. Gen. D.S. Hooda, the power outage has acted as a signal from China to indicate “that we can and we have the capability to do this in times of a crisis.” Such a signal draws parallel to the cyber intrusions concerning South Korea and THAAD.

All three cases demonstrate the inherent limitations in analysing cyber coercion (as deterrence through compellence.) Even if China is implied from political context and from malware, building a case to clearly identify the Chinese State’s direct involvement is difficult to build without clear attribution. Nevertheless, if China is definitively involved, the utility of being an implied actor may be helpful with information operations elsewhere wherein appearing benign is used to gather support of the country. The case of Mumbai and South Korea also bring up interesting questions for compellence and deterrence, with China potentially being seen to blur the two. Cyber coercion overall remains somewhat enigmatic. The ambiguity is likely advantageous for the actor(s) behind the acts of cyber coercion. Ambiguity helps reduce chances of liability, which permits for a more peaceful (less conflict inducing) approach to manipulating and shaping another state to one’s desires.

Sino-ASEAN relations: a marriage in crisis?

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The 18th ASEAN-China Summit in Kuala Lumpur, November 2015 , Licensed via Creative Commons

The partnership between China and ASEAN countries has seen its ups and downs.

The period between 2003 and 2013 was hailed as a “Golden Decade” of Sino-ASEAN relations, where the two parties built political trust and strong economic ties. Concurrently, the decade between 2014 and 2024 was optimistically introduced as the “Diamond Decade”, with ambitions to further promote partnership and friendship between the two. However, events did not proceed as either had hoped. Instead, during the so-called Diamond Decade, the once prosperous relationship has become a rocky marriage. Geographical neighbors with an ongoing territorial dispute in the South China Sea, China and ASEAN nations have recently grown mutually suspicious and, after the harmony of the Golden Decade, the Diamond Decade seems to have ended in a vicious cycle of distrust.

Dialogue between ASEAN and China began in 1991. By 2002 the two began to work towards a free trade agreement. Eventually established in 2010, today the ASEAN-China Free Trade Area (ACFTA) is the world’s largest FTA by population, and the third largest by economic size, after the North American Free-Trade Area (USMCA) and the European Union (EU). China and ASEAN countries have also proved highly complementary in energy cooperation, with ASEAN countries richness in natural resources met by China’s insatiable demand for enormous amounts of energy to power its economic machine. Indonesia, Malaysia, and Brunei are abundant in oil and gas, while Vietnam, Laos and Myanmar boast hydropower resources. China National Offshore Oil Corporation (CNOOC), China National Petroleum Corporation (CNPC), and Sinopec, have participated in oil and gas production since the 1990s in countries like Indonesia, from land and shallow water to deep sea. Thus, where ASEAN countries lack proper infrastructure, China provides oil and gas exploration technology.

Unfortunately for both sides, economic cooperation is not enough to tie together a geopolitical relationship. Over recent years, having become the dominant regional power, China has implemented a “Push and Pull Strategy” towards ASEAN countries. Through the territorial disputes in the South China Sea, China “pushes” and advances its position at the expenses of ASEAN interests, displaying growing assertiveness. While, on the other side, China “pulls” ASEAN countries towards its orbit, using massive development projects such as the Belt and Road Initiative. Thus, in the eyes of ASEAN countries, Beijing today represents an emerging threat while remaining a key trading partner – a source of opportunities, and a source of challenges. The union between China and ASEAN countries continues, yet in the Diamond Decade the spectre of doubt starts to creep in.

The US Navy, US Coast Guard, Royal Malaysian Navy, and Malaysian Maritime Enforcement Agency are sailing side-by-side in the Strait of Malacca. Photo Credit: US Pacific Fleet, licensed via Creative Commons

The intervention of major powers in the region has added a new layer of complexity to the situation, dividing the region even further. The Quadrilateral Security Dialogue, also known as the Quad, has recently been revitalized, as anti-Chinese sentiments have hardened not only in the United States, but also in Australia, India, and Japan. Additionally, the navies of France, Germany, UK, and the Netherlands are deploying naval forces to the South China Sea to support Quad activity. Recently, the warships of India, Japan, Australia and the US have been exercising near the Strait of Malacca, which is a key waterway for Beijing, with 80% of its oil supply passing through it. If tensions in the region were to escalate, this narrow passage could be strangled by China’s rivals, affecting Beijing’s energy security, a possibility that former Chinese President Hu Jintao branded the “Malacca Dilemma”. In order to reduce its dependence on the Strait, today China is searching for new land routes for its energy imports, especially through its Belt and Road Initiative. To achieve this, Beijing has turned to ASEAN countries, planning huge investments in Southeast Asian infrastructure. Myanmar, for example, will host the China-Myanmar Economic Corridor (CMEC), a section of the Belt and Road Initiative that is intended to connect the oil trade from the Indian Ocean to China via Myanmar, thus reducing Chinese dependence on the Strait of Malacca.

“Don’t force us to choose”, ASEAN countries have repeatedly asked. Unfortunately, as US-China tensions flare up time and again, neutrality doesn’t seem a viable option. The bloc seems to follow an ambivalent policy. Some of the 10 member states, like Cambodia, Laos, and the Philippines, opted to stay in the Chinese orbit, hungry for economic gains. Others, like Vietnam and Singapore, appear more interested in Western protection against a rising China, and tend to align with Washington. Although these positions are likely to shift over time, the only certainty is that ASEAN is now trapped in the middle of a power struggle. However, there might be a way for Southeast Asian countries to escape the trap. ASEAN nations could choose to collaborate with middle powers such as Australia and Japan, thus creating middle-power agency and reducing the need of a binary choice between the US and China. They could therefore keep their security ties with the US, while at the same time maintaining their economic relations with China.

ASEAN originally emerged as a response to the tensions of the Cold War, when a confrontation between capitalism and communism could threaten the balance of the newly independent states of Southeast Asia. Quite ironically, today the ASEAN region, and the South China Sea in particular, are again becoming a proxy for great power competition. This could split ASEAN countries along different ideological lines once again, just as happened during the first Cold War. Trapped in the power struggle of the 21st century, they now find themselves walking a tightrope. Unlike the Golden Decade, the Diamond decade seems to be one of uncertainty, where the union between China and ASEAN nations is increasingly vulnerable to the forces of geopolitics.

U.S. governmental incentives on semiconductors are central to Great Power Competition

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Photo by Laura Ockel on Unsplash

Microchips, also called semiconductors or integrated circuits, can be thinner than a human hair and smaller than a postage stamp, but their power can be immeasurable. They play a significant role in the advancement of the consumer technologies sector and, most importantly, in the development of more sophisticated branches of technology with potentially significant implications for national security, such as Artificial Intelligence (AI) and quantum computing. Therefore, although domestic and foreign policy might not always be connected, in the case of the U.S. semiconductor industry, domestic decisions are vital both for U.S. national security and for the evolution of great power relations in general, and U.S.-China relations in particular.

The largest chipmaker in China, the Semiconductor Manufacturing International Corporation (SMIC), was added to the U.S. Entity List by the Trump administration in late December 2020 as a final move of the toughest measures taken towards Beijing, fearful that the Biden administration would soften the policy towards China. Biden, however, has not only dismantled such tough decision on the technology front, but his administration is also working on domestic measures around the semiconductor industry that will be central to U.S.-China technological competition.

In September 2020, the National Defense Authorization Act for Fiscal Year 2021 (NDAA) came into law, authorising investments in both domestic chips manufacturing incentives and in advanced microelectronics research and development. Soon after Biden took office, the Semiconductor Industry Association (SIA) followed up by stressing the need for the new U.S. administration to prioritise funding to such provisions. This came in light of the sharp decline in the U.S. share of the global chip manufacturing, which can affect the U.S. ability to produce newly advanced technologies vital to strengthen both U.S. military capabilities and its great power status overall. In fact, although the United States is the currently the global leader in semiconductors, owning around 47% of the global chips market share, U.S. chips manufacturing has been decreasing, and this might affect the American leadership in the sector already in the medium run. According to SIA, while in 1990 the United States accounted for the 37% of the global chip manufacturing, in 2020 this share has fallen to 12%. By contrast, China’s share has increased from 2% to 15% between 1990 and 2020, and it is expected to grow up to 24% in 2030, surpassing both South Korea, Taiwan, and Japan. In the same period, the American allotment in global chip manufacturing is expected to decline to 9% if governmental intervention will not be put in place.

This shift is the result of both lower incentives for the U.S. semiconductor sector and tougher measures towards China undertaken under Trump. The Covid-19 pandemic has further aggravated the situation, eventually bringing chips under the spotlight in U.S. government. The high increase in demand for consumer technologies – mainly laptops and smartphones – during the pandemic has led to a critical chips supply shortage in the U.S., leading Biden to sign an executive order that received bipartisan support in Congress in late February. The order authorised the use of $37 billion to foster the American manufacturing of semiconductors, and has furthermore launched a 100-day review on the status of supply chains in four areas that are essential to American competitiveness: semiconductors; key minerals and materials extracted from rare earths; pharmaceuticals; and advanced batteries. The order was signed the day after U.S. Senate Majority Leader Chuck Schumer declared to have directed lawmakers to draft a package of an additional $100 billion as part of a bipartisan bill to implement the NDAA by fostering research and investment in U.S. manufacturing in key high tech areas – not only semiconductors but also Artificial Intelligence and quantum computing – in order “to out-compete China and create new American jobs”.

The crucial passage to rebalance the geopolitics of semiconductors and strengthen American technological competitiveness face to China, thus, lies in American domestic politics. The review launched with Biden’s signature of the executive order is aimed at diversifying and fortifying supply chains, and the SIA insisted particularly upon increasing American chips manufacturing through the mobilisation of federal incentives. About 44% of U.S.- headquartered firms are located in the United States, but the cost to build and operate a front-end fabrication facility (fab) in the U.S. is 25% – 50% more expensive than in other alternative locations. Singapore, for instance, which hosts the majority of U.S. chips fabs based abroad (17%), has introduced hiring credits and a reduced tax rate in the semiconductors manufacturing sector, while American incentives of this kind are almost non-existent. For this reason, the measures announced by Biden and Congress play a very important role in increasing U.S.-made chips and thus fortifying American leadership in the sector by avoiding a shortfall of the U.S. share in the global chip manufacturing at a time when China’s will surely increase as a result of the plan to reach the self-sufficiency in semiconductors outlined in China’s 14th Five Year Plan.

This turn in the American semiconductor policy, however, should not be analysed through a ‘new Cold War’ lens, as China is not only the biggest U.S. competitor in chips manufacturing, but it is also a top costumer of the U.S. semiconductor industry. According to a report from the Boston Consulting Group, prohibiting U.S. chips sales to China could cause the loss of around $80 billion to the U.S. semiconductor industry, compromising the U.S. long-standing leadership position with a loss of about 18% in the American global market share of microchips. For the U.S., the solution to face the challenges posed by China on the high-tech side is found not only in a tougher policy towards Beijing, but in the U.S. semiconductor policy, which will in turn have important side effects on U.S.-China policy. As the Biden administration is likely to adopt a tough but multilateral approach to China – not only on technology but also on a variety of transnational challenges – the oculate application of the resources recently announced by the U.S. government on chips manufacturing can be pivotal both to the maintenance of the U.S. power status and to the re-definition of great power competition.

Vietnam: a power on the rise?

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By Carlotta Rinaudo

The lush vegetation of the Mekong Delta (Credit: Carlotta Rinaudo, 2017)

In April 1975 the Vietnam War was over. Roads and bridges were left in rubble, and orphans were walking barefoot in the streets of Saigon. Following the war, the US had imposed a trade embargo prohibiting any commercial dealings with Vietnam, isolating the country from international trade. 

Unsurprisingly, in the early 1980s Vietnam was one of the poorest places on earth. The Vietnamese Communist Party adopted a centrally planned economy that led to stagnant agricultural production, explaining why a country covered with lush paddy fields had to import rice from abroad. One-fifth of the Vietnamese population was on the brink of starvation, and electricity was available only 4 hours per day. 

This situation changed in 1986, when the country opened to the world. Vietnam launched a set of reforms known as “Doi Moi”, successfully replicating the Chinese model: the country would preserve its single-party system while shifting towards a market-based economy. These reforms quickly boosted the economy and attracted massive Foreign Direct Investments. If a few years before Vietnam had had to import rice from abroad, by 1989 it had become the second largest rice exporter in the world. 

Over recent decades, Vietnam has presented itself as a good international citizen, earning recognition and respect within the ASEAN group. It has signed a wide array of bilateral trade agreements, while joining the WTO, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and recently, the Regional Comprehensive Economic Partnership (RCEP). In 2019 it took a mediating role in global diplomacy by hosting the second Trump-Kim summit in Hanoi, and in 2020 it assumed the ASEAN chairmanship while successfully handling the Covid19 pandemic. Hanoi was in fact praised for giving one of the world’s best responses to the pandemic, quickly introducing a massive program of contact tracing while mobilizing the Vietnamese society in a collective fight against the virus.
These factors suggest that Vietnam is walking the path of a rising middle power, demonstrating a growing ability to shape international events in three particular areas: the global supply chain, the South China Sea, and the realm of 5G technologies.

Vietnam’s place in the global supply chain

Amidst the China-US trade war, many multinational companies have been looking to relocate their supply chain outside of the Chinese mainland, adopting a “China Plus One” business strategy. In this context, Vietnam has emerged as the ideal “Plus One” candidate, thanks to its ability to offer solid infrastructure coupled with a large low-wage workforce. Nike and Samsung have been outsourcing their production to Vietnamese factories for years, and recently Apple has started to assemble its AirPod earphones on Vietnamese soil too. This is not to say that “Made in Vietnam” will ever be able to replace “Made in China”:  Vietnam doesn’t have the capacity to become the new factory of the world. To Vietnam’s 55 million manufacturing workers, China has 800 million; and while Ho Chi Minh City’s container port can accommodate 6 million containers annually, Shanghai reaches 40 million. Yet, in a “China Plus One” world, Vietnam has been able to emerge as a valid alternative, thereby securing an important position in the global supply chain. 

Vietnam in the South China Sea

According to scholar Do Thanh Hai, Vietnam’s psyche has been shaped by its cyclical and perennial struggle against Chinese invasions from the North. This traditional Vietnamese perception of China remains in the country’s consciousness. Vietnam often sees China not as a conventional neighbor, but, rather, as a force of nature – “like floods and storms that feed into the deltas (…) to which Vietnamese, like reeds, must at once bend while remaining firmly intact.”

Aware of its military inferiority, Vietnam does not seek direct confrontation with its northern giant, instead it resists, “firmly intact”, protecting Vietnamese interests. 

When, in 2014, China deployed one of its oil rigs in Vietnamese waters, Vietnam responded with a policy of “cooperation cum struggle”, displaying extraordinary pragmatism. First, Vietnam resolutely responded by raising global media attention to China’s assertiveness in the South China Sea, therefore internationalizing and securitizing a bilateral issue. Then, when China pulled the oil rig back, Hanoi sent its officials to Beijing to heal their diplomatic ties. 

Although this approach might appear unusual, Vietnam only revived an old tradition of the past, when, after a territorial dispute, it used to send symbolic homages and annual tributes to Chinese emperors in order to secure peace, harmony, and recognition. This policy of “cooperation cum struggle” is a mix of soft and hard methods that helps Vietnam escape a battle it cannot win, while vigorously standing up for its own territorial sovereignty. 

While other Southeast Asian countries like Brunei, Malaysia and the Philippines have now softened their attitude in the South China Sea, Vietnam is increasingly perceived as the ASEAN champion that can contain Chinese maritime ambitions. This security leadership role has been widely acknowledged by the international community, with countries like Japan offering their support and providing offshore patrol vessels to Hanoi. With regards to China, Vietnam is indeed “bending like reeds, while remaining firmly intact.”

Vietnam in the technological race

Not only did Vietnam not include Huawei in its 5G network: Hanoi built its own domestic infrastructure and appears ready to deploy it for commercial use by 2021. Viettel, a Vietnamese state-owned telecom company, has collaborated with Ericsson to create its own 5G technology, and plans to expand the product to Myanmar, Laos and Cambodia. Hanoi has also provided a cheap mass access to the Internet for its citizens, while aiming to become a key player in e-commerce and online payment methods. After Ericsson, Nokia, Huawei, Samsung and ZTE, Viettel is the sixth producer in the 5G race, an impressive result for a country that 40 years ago was not able to keep up with food shortages.

Conclusion

A latecomer to the international community, Vietnam is now increasingly emerging as a regional middle power: it is well-integrated in the world economy, it operates on the front lines in the disputed waters of the South China Sea, and it is one of the only domestic producers of 5G technology. ASEAN was deliberately created to survive without a formal leader to ensure equality between its 10 member states – yet this has translated into mutual weakness rather than collective strength. For this reason, many scholars see in Vietnam a country that will be able to fill this leadership vacuum. From its isolation in the 1980s, Vietnam has come far: today, the vibrant streets of Hanoi tell the story of a place of possibilities.

 

Carlotta is a MA candidate in International Affairs at the Defence Studies Department, King’s College London. After completing her BA in Interpreting and Translation, she moved to the Middle East and developed a strong interest in the MENA region, North Korea, Cybersecurity, and the implications of the rise of China. Carlotta has written on a number of Italian publications on the Hong Kong protests and other forms of political unrest.