The escalating arms race in South East Asia, China and Japan and the impact on rare earths
The perception of a growing Chinese aggression in East Asia is driving local powers to seek closer ties to Washington to counter a widespread perception of Chinese expansionism. The Philippines, which spent the better part of the 90’s trying to drive the US away, closing down the largest US base in the Pacific, are trying to lure the American military back to the region. More importantly, as far as the tensions over the Senkaku/Diayou Islands dispute is concerned and the related tensions between China and Japan, even Filipinos who remember the trauma of the violent Japanese occupation during World War II are advocating for greater Japanese rearmament. The Philippines are taking advantage of a recent statement from President Obama, which was largely missed by the media. Indeed, during a visit to Tokyo at the end of April, Obama said that if China were to attack the Senkaku Islands, U.S. forces would counterattack alongside Japanese ones. The Japanese Prime Minister Shinzo Abe was eager to secure this support and the message suggests that the White House is clearly taking a pro-Japanese stance in the Senkaku dispute.
Get our daily investorintel update
During his visit, President Obama visited a sushi restaurant with the Japanese leader, addressing him by his first name ‘Shinzo’. Obama delivered some greetings in Japanese “konnichiwa” and above all he pronounced the magic word most Japanese wanted to hear “Senkaku”, avoiding the islands’ Chinese name altogether. As far as the Japanese government is concerned, Obama is fluent in their language. Obama stated that these islands, as historically administered by Tokyo, fall under American protection guaranteed by the bilateral US-Japan security treaty. Obama stressed that this has been the White House’s consistent position but Beijing would have surely noted that the pronouncement was made in Tokyo during a meeting that was deliberately choreographed to reinforce the strong bond between the US and Japan. Indeed, China has already reacted, making it clear that it does not recognize the applicability of the Japanese-American defense treaty to the Senkaku/Diayou. The only sour note was the failure of the US and Japan to conclude a framework for bilateral free trade negotiations within the Trans Pacific Partnership. Obama asked Japan to grant greater access to American agricultural products and cars.
Back in Manila, just before President Obama arrived for his visit, the US and the Philippines signed a 10-year military pact (Enhanced Defense Cooperation Agreement) that will allow the US military to gain access to a series of bases while being able to deploy aircraft and warships in various airports and ports. The Agreement and renewed US military presence in the Asia-Pacific region is to ensure “the freedom of navigation” in the eastern seas. Evidently, the “Senkaku” dispute falls into the greater scope of the agreement. Indeed, the Philippines’ government wants US support for its own territorial disputes with China, which relate in particular to the Spratly Islands and Scarborough Shoal. In one case, Manila brought the matter before the international arbitration tribunal in The Hague – which Beijing said it would refuse to honor. Meanwhile, The Philippines are the most determined country in South East Asia to thwarting Beijing’s ambitions, even at the cost of being forced to endure incurring economic repercussions. Obama said the pact with Manila will help promote regional security, improve the training of the armed forces and improve the response to any natural disaster. China, however, considers this another example of an American desire to contain its ambitions. In February, Philippine president Benigno Aquino – compared the Chinese to Hitler’s aggression against Czechoslovakia in 1938.
China has responded by fostering various agreements with Iran…
Japan will surely take advantage of the Philippines’ concern over Chinese hegemonic pretensions to regain prominence in the South China Sea and East Africa within a multinational framework – backed by the United States. This contrasts with the individualistic approach taken on by various countries in the region from South Korea to Australia and others, engaging in random military buildups to confront the common fear of Chinese expansionism and North Korean threats. Japan, rather, wants a more complex approach that combines military expansion with access to economic opportunities, trying to ensure the growth of its business activities abroad, especially through the defense of their trade routes preferred , first of all those who cross the South China Sea and the Straits of Malacca. This policy sharply contrasts with Japan’s reliance on Chinese rare earths. It does, however, suggest that Japan will become even more active in promoting new rare earth sources and processing facilities. China, which plans to challenge the World Trade Organization’s ruling against its policy of trade restrictions on rare earths, will have more reason to treat these elements as strategic.
Modern weapons from guidance systems to actual hardware fabrication require rare earths and a handful of similar critical metals, the market for which China has been allowed to dominate. In the future, the kind of magnets made using rare earths will be even more important for military applications. Consider the ‘railgun’. This is the new type of weapon could be supplied to the U.S. Navy will by 2016. The railgun works on the principle of electro-magnetic force, rather than an explosive charge to propel a projectile. The idea is to take advantage of a difference in electrical potential between two parallel rails in which the electric current flows, whilst inserting between two projectiles. A railgun deployed on a warship could deliver a lethal blow from a distance of well over 110 nautical miles. It requires several rare earth magnets. In the summer 2013, the U.S. Office of Naval Research awarded BAE Systems a contract to continue development on a high-powered electromagnetic railgun. The railgun is a mere example of the fact that the geopolitical framework in Asia is evolving in the shape of a new arms race, which will have economic and trade repercussions. China’s dominance in the production of rare earths will become an even more important incentive for the West and its allies to secure new sources.