Opinion | Janet Yellen's Asia tour illustrates the absurdity of US foreign policy
By Tom Fowdy
Yesterday, U.S. Treasury Secretary Janet Yellen commenced her so-called "Indo-Pacific" tour with a visit to South Korea, where she provocatively set a stage for calling for decoupling between US allies and China, demanding that they "reduce their independence on China" in certain areas, including strategic minerals (rare earth) and certain goods, such as semiconductors. Accusing Beijing of "exerting geopolitical leverage" and "economic coercion", Yellen then called for a process of "friend-shorting" whereby supply chains are shifted to "trusted partners".
The comments are nothing new, and have been a staple of US foreign policy for some time now, yet the Biden administration has recently hastened its effort into trying to push Asian countries to decouple from China, as demonstrated through the establishment of the "Indo-Pacific Economic Framework" (IPEC) grouping, which similarly talks about "supply chain resilience" (a code phrase for diversifying from China). The feasibility of this effort remains unlikely in totality, not least because of the limitations of geography and market dynamics, but it nonetheless represents how the US is increasingly shoehorning the geo-politicisation of supply chains, a critical reason why it forced through the Xinjiang Forced Labor Act.
A core pillar of US containment policy towards China involves preventing its rise and market dominance over strategic and technological supply chains that it might not be able to erode the primacy of the United States and its allies. Since the Trump administration, this has focused primarily on high-tech components such as semiconductors. This has included a dual pronged approach of a) denying China's access to these technologies in the bid to try and maintain US advantages and then b) to strongarm key technology companies in South Korea and Taiwan to force build excess capacity in the United States and other allied countries or regions.
The Biden Presidency has wholeheartedly embraced this policy, but has since added new aspects to it, aiming to also upend China's dominance in renewable energy goods and critical materials such as Polysilicon and Lithium (of which the weaponization of Xinjiang forced labor claims were critical to), whilst also adjusting the focus of America's approach from unilateralism to coalition-based politics, building groups of countries and securing common objectives in the bid to counter Beijing. Hence the creation of IPEC and a growing weaponization of the G7 and the Quad, amongst others.
But realities on the ground, beyond this ambitious rhetoric, are often different. Allies or not, the United States is demanding the cooperation of many countries who are not only in regional proximity to China itself, but also deeply economically integrated with Beijing in terms of trade and investment. China is the largest country, and the largest economy in the Asia-Pacific region, yet US foreign policy bridles an arrogance that the nexus of regional supply chains and the economy at large ought to revolve around its own preferences. This is of course a deeply ironic position to hold given Janet Yellen herself is publicly critical of US trade war tariffs against China and their impact on inflation, and will later pursue talks with China itself on this matter, speaking volumes about the feasibility of the matter.
It should be quite obvious that the other countries of Asia do not have the political or economic incentives to suddenly isolate China and absolve themselves in a solely US-centric system, one which only in fact comes with demands from the United States, as opposed to incentives. The White House demands supply chains reorder themselves along geopolitical lines, but does not offer any particular incentive or support in doing so. There are no offers of US expanded market access, no free trade agreements, no serious offers of investment (despite the endless merry-go-round of constantly rebranded Belt and Road alternatives) and no practicality in doing so.
Of course, there are other expanding markets in Asia too. In the case of South Korea, it might be observed that their economic dependence purely upon China is leaning to their disadvantage, as China's technological rise is eroding the market shares of Seoul's own Chaebol giants, such as Samsung. A number of South Korean newspaper op-eds have appeared recently expressing alarm that the surge in Chinese semiconductor production has undermined Korean exports in low-end nodes and wiped out their long-held trade surplus. This naturally forces Korean companies to seek out new markets, such as Vietnam. However, that is a business-driven decision, as opposed to "removing China from the picture" politically, showing how with development China's role does not fade away, but evolves. Economic integration creates of course a commercially fluid region, but the US doesn't want that, as the goal is about reversing globalization and regionalization at the behest of US interests in the bid to stop and isolate China altogether. However, this ultimately isn't practical, desirable or tenable, and is why in turn these efforts will ultimately come to naught.
The author is a well-seasoned writer and analyst with a large portfolio related to China topics, especially in the field of politics, international relations and more. He graduated with an Msc. in Chinese Studies from Oxford University in 2018.
The views do not necessarily reflect those of DotDotNews.
Read more articles by Tom Fowdy:
Opinion | Potential US restrictions on SMIC show the need for new foundational tech
Comment