China Response to Hacking Indictment Indicates Rash Leadership and Need to Expand NATO to Asia

 

Russia and China are currently conducting naval  exercises near Shanghai. In 2013, Russia and China conducted similar exercises near Vladivostok. From right, China's Yantai Type-054A missile destroyer, Yancheng Type-054A missile destroyer, Wuhan Type-052B guided missile destroyer and Lanzhou Type-052C air defence missile destroyer take part in the fleet review during the "Joint Sea-2013" Sino-Russian joint naval drills at the Peter the Great Gulf near Vladivostok in Russia on Wednesday, July 10, 2013. A Chinese fleet consisting of seven naval vessels participated in the "Joint Sea-2013" Sino-Russian joint naval drills scheduled for July 5 to 12. The eight-day maneuvers focus on joint maritime air defense, joint escorts and marine search and rescue operations. (Photo By Sheng Jiapeng/Color China Photo/AP Images)

Russia and China are currently conducting naval exercises near Shanghai. In 2013, Russia and China conducted similar exercises near Vladivostok. From right, China’s Yantai Type-054A missile destroyer, Yancheng Type-054A missile destroyer, Wuhan Type-052B guided missile destroyer and Lanzhou Type-052C air defence missile destroyer take part in the fleet review during the “Joint Sea-2013” Sino-Russian joint naval drills at the Peter the Great Gulf near Vladivostok in Russia on Wednesday, July 10, 2013. A Chinese fleet consisting of seven naval vessels participated in the “Joint Sea-2013” Sino-Russian joint naval drills scheduled for July 5 to 12. The eight-day maneuvers focus on joint maritime air defense, joint escorts and marine search and rescue operations. (Photo By Sheng Jiapeng/Color China Photo/AP Images)

Journal of Political Risk, Vol. 2, No. 5, May 2014.

By Anders Corr, Ph.D.

China is using a very blunt and escalatory instrument — threatening general deterioration in military relations — to respond to a limited issue of Chinese individuals stealing trade secrets. On May 20, the United States Justice Department indicted five People’s Liberation Army members for hacking United States commercial data.  The remarkable speed with which China responded the following day, and at the highest level, suggests that commercial hacking is an officially-approved state policy on the part of China. The Chinese threat of reduced military cooperation and thereby deteriorating military relations is clumsy in that the Chinese would look better had they simply launched an investigation of the individuals — an investigation that they could later claim shows the indictment as baseless. The broad Chinese threat of deteriorating military relations invites an increase in US military attention to Asia — exactly what the Chinese should be trying to avoid. The clumsiness of the Chinese response to the indictments indicates a rash Chinese leadership prone to irrational military strategies, with consequent market volatility and political instability. The US and its Asian allies should respond with a measured forward deployment of military forces, and redoubled diplomatic energy towards greater alliance cooperation, including between Asian allies and NATO.

For legal and political reasons, the US will not be able to simply withdraw the indictment. It would increase the perception of an increasingly weak US foreign policy. This will lead Chinese diplomats to retaliate in some manner, further decreasing stability between the US and China. Expect mutual diplomatic retaliation to exert downward pressure on the Yuan (compensated by People’s Bank of China buying of Yuan), as well as downward pressure on Chinese stock indexes, including SHCOMP, CSI-300, Bloomberg China-US 55, and HSCEI. Expect Chinese index losses to increase with every additional diplomatic spat that ensues, and to slowly recover during periods of diplomatic quiet. Continue reading

South Korean public opinion shifts towards independent nuclear capability

Gallup opinion polls conducted following North Korea’s third nuclear weapons test found that approximately 64% to 66.5% of South Koreans believe South Korea should develop an independent nuclear weapons capability. They want the capability to defend against North Korea if the United States unexpectedly withdraws its security commitment to South Korea (New York Times).

The United States is fully committed to the defense of South Korea, and North Korea is well aware of this fact. For this reason, South Koreans should not be overly concerned with the latest North Korean antics. The United States stands firmly with its ally South Korea.

Nevertheless, South Koreans are understandably uncomfortable having an unpredictable and highly belligerent nuclear-armed neighbor to the North. South Korean nuclearization would be a major blow to nonproliferation of weapons of mass destruction (WMD). The nonproliferation regime works because member countries show self-restraint by not developing independent nuclear weapons. Rather, they entrust their defense to a close security partnership with the United States, NATO, and other friendly alliances.

If the strength of the alliance is not apparent to the voting population of a non-nuclear country — in this case South Korea — then it is incumbent upon the stronger member of the alliance to take greater measures to display that commitment. These measures should include improved specification of treaty obligations, greater numbers and quality of forces deployed to South Korea, higher levels of South Korean inclusion and diplomatic collaboration in U.S. foreign policy decision-making, and improved diplomatic relations overall through improved trade relations. Deepening all facets of the relationship between South Korea and the United States will enhance the trust required for South Koreans to place the security of their nation in the hands of the United States.

Not taking proactive measures to improve the trust of South Koreans in the United States risks nuclearization of South Korea, which by example, will exponentially increase the risk of further global WMD proliferation. South Korea is a highly respected member of the international community. South Korean nuclearization will erode the taboo against proliferation, making it seem a respectable option for many small and medium-sized nations. We cannot afford the increased risk of nuclear war that this entails.