Monthly Archives: July 2016

The Hague II

Last week the Permanent Court of Arbitration (PCOA), a panel of five legal scholars established by The Hague Peace Conference, ruled in favor of the Philippines in a challenge it filed in 2013 against China’s claim to sovereignty over much of the South China Sea. The ruling was immediately hailed by many Western countries, including the US, as a total repudiation of China’s Nine Dash Line (NDL), which China regards as demarcating its sovereign territory.

The Philippines’ claim was based on the United Nations’ Convention on the Law of the Sea (UNCLOS), to which China is a signatory. UNCLOS grants all countries territorial borders of 12 nautical miles extending from their shoreline to the open ocean. It further grants Exclusive Economic Zones for an additional 200 miles.

The Western media has largely reported on the challenge and the ruling as if it were so cut and dry as to deny any room for interpretation and condemning China for refusing to recognize or accept the result. The European Union threw its support behind this position at a summit over the weekend.

Very few Western media outlets, however, have even attempted to explain the logic behind China’s position. It’s actually pretty simple. China argues that the PCOA has authority over maritime economic disputes, but the issue of the NDL is an issue of sovereignty, not maritime commerce. The PCOA, as a result, has no authority in the matter and any dispute between the parties should be resolved through good faith negotiations between the two countries.

I am certainly no expert in maritime disputes or questions of national sovereignty. As a writer, however, I do know that words are imprecise at best. They are a tool for improving the efficiency of communication but always open to interpretation.

Does China have a valid point? Well, its argument seems to make some sense but I’m not the one to say who is right and who is wrong in this dispute.

I do think that the PCOA did not help establish its legitimacy by criticizing the environmental impact of China’s island building. Environmental oversight is clearly not within its charter and China is surely not the only country to reclaim shoals and reefs. (Virtually all of Holland and much of New Orleans should, if left to nature, be underwater.)

As I have noted before, most importantly, I don’t see how China’s leadership can possibly back down at this point. By insisting that this is a black and white dispute, therefore, the West is not helping to settle the dispute; it is only backing China into a corner. It’s hard for me to see how that will contribute to peace and stability in the region.

Over the weekend, in fact, China announced that it will conduct military exercises off the coast of Hainan Island, which no one disputes China’s sovereignty over, and that the area will be closed to all naval and aviation traffic from Tuesday until Thursday.

The US response is yet to be known. If the US sails warships through the area, or spy planes over it, all in the name of maintaining free navigation for the little guys who can’t stand up to China, things could escalate fast. China is no longer afraid of the US.

And nothing would change.

Of one thing I am sure. If the West believes that this ruling will cause the Chinese people to pressure their government to back down, that’s simply not going to happen. If anything the ruling may cause people to pressure the government to act more decisively in defending its claim, as it has now begun to do.

That can’t be good for global relations at a time when the world is already a mess. The West needs to bring China into the global fold, not isolate it or alienate its people.

China has already signaled its willingness to open a dialogue with the Philippines. Why not let them try?

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Photo Copyright: VanderWolf-Images

Dispute in the South China Sea: Ruling Expected Soon

On July 12 the Permanent Court of Arbitration (PCOA), a panel of five legal scholars established by The Hague Peace Conference, will release its decision on a maritime dispute filed by the Philippines against China in 2013. The dispute involves China’s “Nine Dash Line” (NDL) that defines China’s territorial claims over much of the South China Sea, including areas concurrently claimed by other countries in the region, including the Philippines.

The Philippines’ claim is based on the United Nations’ Convention on the Law of the Sea (UNCLOS), to which China is a signatory. It grants all countries territorial borders of 12 nautical miles extending from their shoreline to the open ocean. It further grants Exclusive Economic Zones for an additional 200 miles, an area which the NDL penetrates in some locations.

China, for its part, refuses to recognize the authority of the PCOA in this dispute and has refused to participate in the hearings. It has also repeatedly and quite emphatically said that it will not be bound by its ruling, which many expect will be in favor of the Philippines.

The Chinese believe that such territorial disputes should be settled through dialogue between the two countries and has offered to meet face to face with the Manila government for that purpose. The US, however, has actively campaigned for acceptance of the PCOA’s ruling throughout the region and has parked two carrier groups in the region as a show of strength and resolve.

So, what will happen if the ruling goes as expected?

I am quite confident that the Chinese will not back down. I don’t see how they can. They have too much invested in the issue to back away now. China has actively been building man-made islands throughout the South China Sea to support its territorial claims and President Xi Jinping has been vocal and resolute, at home and abroad, about the depth of his resolve on the matter.

And there is one issue that trumps all others – a growing and ironclad sense of nationalism among the Chinese people. They want strong leadership and President Xi knows it.

What many Westerners don’t fully appreciate is what the Chinese call the Century of Humiliation, which began with the Opium Wars and ended when the Communists defeated the Nationalists in 1949. It was a period during which China was quite literally raped, pillaged, and carved up by aggressive foreign powers. With their newfound wealth, military might, and global standing the Chinese people have a deep emotional commitment to never let it happen again. And who can blame them?

What the Communist Party of China fears more than anything else is social instability. The Chinese people have shown throughout history that they are willing to make incredible sacrifices in the name of regime change when they don’t believe their lives are improving. And a very big part of what the Chinese find important in life is respect.

Now enter the US. The American government argues that it is the only country that can be trusted to maintain navigational freedom in the South China Sea. In addition to being more than a little arrogant – even insulting – this strikes me as disingenuous.

After all, the US is not a party to the current dispute. And would anyone seriously argue that the Philippines is in a position to uphold maritime freedom more effectively than China?

Perhaps more importantly, for anyone who has been following the US presidential election, neither presumptive candidate comes off as all that trustworthy or committed to international peace and freedom. Imagine you are sitting in China or the Philippines and watching this debacle of an election unfold. Would you be inclined to support American control of an area that borders your most populated and economically important coastal cities?

Given the current state of American politics, in fact, it’s hard to believe that President Obama could muster much support among the American people for any armed conflict with China.

Given all of these considerations, does it really matter who is right and who is wrong in this dispute? In the real world we currently live in I don’t think it does. History is a movie, not a post card. Territories have never stood still over time. Just look at the history of the US, which began as a relatively small enclave of 13 colonies, all of which were taken by force, not granted by an arbitration committee of legal experts.

I’ve never seen much sense in futility and this is no exception. The US has little to gain by muscling its way into this debate and the reality is that China has put no restrictions whatsoever on maritime trade through the region. If it did that might be a game-changer but what rationale does it have for doing so short of some foreign power with a powerful navy threatening its key coastal cities by their proximity?

That’s particularly true given what is happening in Taiwan at the moment. China considers Taiwan to be a renegade province and is committed to a ‘one China’ policy. To date, however, the new President of Taiwan, Tsai Ing-wen, has yet to endorse that policy, resulting in considerable friction between Beijing and Taipei.

The US is an ally of Taiwan, of course, and it will lose considerable good will and bargaining power to resolve any escalating dispute with Beijing if it takes China to task over a bunch of atolls in the South China Sea.

The US has enough on its plate. This is one dispute I think we should stand down on.

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It’s the Process, Stupid!

Those of you who have my read my blog or my books know that I consider Westerners to have a largely deductive worldview while the Chinese have a largely inductive worldview. As a result, Westerners, particularly corporations, worship rules and processes. The Chinese tend to ignore them and focus solely on results. (Have you ever driven a car there?)

Technology, of course, has only worsened the Western obsession with rules. Computers allow us to codify the rules and remove any flexibility to ignore them or work around them. The computers rule. The workers are merely there to carry out their demands.

I recently came face to face with this new normal and it convinced me that this infatuation is costing the US economy billions of dollars in revenues and completely frustrating the customer at the same time. Ask any ten people you know if customer service has improved in the US and I’m betting the majority will say, “Are you kidding? Nobody cares about the customer anymore.”

Employees, on the other hand, have bought into the rules obsession. In part that’s because it has been drummed into them and they know they could lose their job if they knowingly ignore corporate policy. In part it’s just easier. You don’t have to think. You don’t have to make judgments. You just follow the rules. It’s far more stressful to actually have to work with customers than it is to sit at a computer all day.

As I have written previously I just moved into a new townhome in the US. And it has no shades or curtains on any of the windows. I don’t like the resulting transparency. And my neighbors certainly don’t like it. It’s inconvenient to say the least.

So I went to one of the big box American DIY stores and ordered window shades for my entire townhome and signed up for the installation service. And paid, of course, the entire amount up front.

They said it would take about two weeks for the window treatments to arrive and when they did I was to call them and schedule installation. That seemed like an awful long time to me given that these were all standard shades from one of the biggest companies in the business and the windows in my townhome are all a standard size.

But, after a moment of longing for China, where the shades probably would have been installed that day, I went on my way.

Two weeks have now passed and all but two of the shades have arrived. All of the shades for the bedrooms, which is really where I need them most, are here, sitting on my living room floor.

So I went to the famous big box American retailer and asked if the installer couldn’t come and install what I have. At least then I can sleep in a little in the morning and the neighbors don’t have to watch my bedroom routines. (It’s actually been very inconvenient as I have gone out of my way to be discreet while changing clothes and such.)

When I posed my query, however, a manager at the huge retailer, who can’t be more than twenty-five years old, immediately told me that they would not schedule any installation until all of the blinds were there. Period. And she pretty much snapped at me, like I was being a total pain in the _ss.

No discussion. She immediately went back to her computer where she was undoubtedly fulfilling the requirements of some corporate process, leaving me there to ponder my unfortunate circumstances.

I wanted to say, “How about if I give the installer an extra $10,000 in cash to come out a second time?” I didn’t, however. I could tell it would only make her even more condescending and she might even get me kicked out of the store.

Here’s how this would have played out in China, however.

The installer would have come to my home every time a shade was delivered – by choice – because he doesn’t get paid until he installs the shades (He doesn’t work for the store; he’s an independent contractor.) and he knows intuitively that cash flow is what business is all about.

Under any circumstances the manager would have discussed options and attempted to bargain a mutually acceptable solution. “We don’t normally do that but I understand how inconvenient your situation must be and I’ll send the installer out if you’re willing to pay an extra $100 for his travel time.”

And I would have. I’m smart enough to know that there is a cost for the installer to travel to my home and I would have gladly paid the fee in exchange for a little privacy.

But that didn’t happen.

Perhaps what bothered me most, however, was that the manager was more than a little smug about the whole thing. ‘There, I’ve enforced the rules because I have that power. You’re only a customer. My boss will be very happy with me and you – while, I don’t care. You can’t get me promoted.’

Having lived in both China and the US I can tell you that American business is leaving a lot of money on the table. People don’t want to shop. It’s a pain in the butt. And it’s no wonder that when they do shop they increasingly go online to do so.

Where does it all end? The processes will eventually take over and we won’t need stores or the people they employ any more. They won’t be able to do anything even if they are there.

Or some enterprising and practical young man or woman (maybe an immigrant) will finally figure it all out and develop a business model with few systems and even fewer processes. He or she will have to trust their employees, of course, but I’ll bet those employees will generate twice the revenue the current process-slaves do.

In the meantime, I’m still waiting for my shades. Or, more to the point, my neighbors are still waiting for my shades.

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