Kasumi Tanaka
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China’s Grand Stratagem to Take Over US World Hegemony:
What China Proposed to Putin

 

The US Policy Makers should be warned that China’s strategy to take over US world hegemony is underway, unfolding exactly as China has laid out. The United States is dancing, at its own detriments, on the palm of China with the music that South Korea plays. If the United States does not take any countermeasures, it will lose its largest Asian ally – Japan – and kneel before China before long.

It is world’s well-known fact that China has been keeping an eagle eye on an opportunity to seize US hegemony, especially now that its GDP and military spending secure the unwavering second rank in the world after the United States. And China is chasing-up fast. The world is now calculating the time before Chinese economy leaps to the forefront and de-facto takes over the ailing Super Power, the United States.

How does this translate into the new security order in East Asia? – China’s backyard and
Obama’s primary interest?

 

China’s Grand Stratagem Announced in Moscow

China told Putin’s Russia of its strategy to establish an unshakable hold of East Asia¹. At the trilateral security conference between Russia, China and Korea in Moscow in 2012, Guo
Syangan, vice-president of the Chinese Institute of International Affairs of the Chinese Ministry of Foreign Affairs, revealed its strategy to take over Senkaku (Diaoyu) Islands and Okinawa from Japan.

The Voice of Russia reports:

“By consciously escalating the territorial disputes with its neighbors Japan showed that it does not recognize the results of World War II, stressed Guo Syangan. … In his opinion, this is the reason why Japan must give up its claims not only for the South Kuril
Islands, Dokdo (Takeshima) and Senkaku (Diaoyu) Islands, but also for Okinawa.
Guo Syangan suggested forming a united anti-Japanese front that would include China,
Russia and South Korea. The USA should also be included in the front in order to force
Japan to recognize the results of World War II and give up its territorial claims to its
neighbors.”

In other words, China intends to play history cards to Japan, forming anti-Japanese coalition with Russia, Korea and the US, and to corner Japan into ceding the disputed islands to its neighbors. The consequences will not stop at these islands: it will be grave and far-reaching as this will signify that Japan would be de-facto taken under the Chinese sphere of influence.

“China portrays its claim on Senkaku as if it is originating from Japanese aggression during the war, covering up its unjustified territorial claim they first voiced in 1971²– a sly propaganda tactic,” explains Yoshinori Kitano, a prominent Japanese International Relations analyst. Deciphering Guo’s statement, he maps China’s strategy as follows³:

First of all, China will concert its efforts with Russia, Korea and the US to politically quarantine Japan by using history cards such as “aggression”, “Nanjing Massacre” and “Comfort Women” as China announced to Russia in the above conference. As the US is not yet so willing, China is vigorously pursuing propaganda campaign to frame Japanese Prime Minister Abe as “rightist”, “revisionist” and “nationalist” in the international community and alienate Japan from its strongest ally, the United States. Chinese propaganda does not stop at international level – it is also at working on the grass-root level within the United States. China’s “little brother”, South Korea, is mobilizing US public to build “Comfort Women Statues” in a country that has nothing to do with the issue and causing targeted bullying of Japanese / Japanese-American children in school. These statues, once built, will create enduring anti-Japanese sentiments among American people for generations to come, thus inflicting irreparable damages to the US-Japan
alliance. This is exactly what China is aiming for.

Once the US-Japan alliance is nullified, the second step for China would be to rob Japan of
Senkaku Islands and Okinawa by dangling nuclear card and/or by threatening with its
increasingly sophisticated military power. Japan, without an effective US alliance, is likely to succumb to China’s pressure.

Setting up a puppet government in Japan, the final step would be to create a united front
between China, Japan and Russia and destroy American hegemony – more precisely, dragging down the US dollar from its status of international currency, which is the single and the most important pillar of the US economy, the source of US political and military power as well as its worldwide influence. The day when the US dollar ceases to be international currency is the day the US economy will wreak havoc; and China will take over Asia by eliminating US influence. The implications are colossal in every aspect for the United States and the world.

 

China’s Ultimate Aim: Destroying the Dollar as International Currency

For more than thirty years, the United States has been running so-called “twin deficits”. That is, the combination of the US government’s budget deficit (alternatively called fiscal deficit) and its current account deficit (or mainly international trade deficit, among other factors), which are the largest in the world. The US government runs budget deficits when its expenses exceed its revenues, and it finances the deficits by selling US Treasury bonds. The current account deficits arise when a country imports more than it exports. Basically the United States has been spending more than it earns for more than thirty years, which is a privilege enjoyed by the United States alone, while any other country in the world would go bankrupt long time ago.

Let us look at what would happen to an ordinary country when it runs large trade deficits, let alone budget deficits⁴. Say, for example – Mexico: in January 1994, Mexico, the United States and Canada launched the North American Free Trade Agreement (NAFTA), which eliminated tariffs and other trade barriers between these countries for a significant portion of products. Consequently Mexico’s imports of US products drastically grew – more than Mexico’s exports to the United States. As American goods are paid in US dollars to companies based in the US and Mexican goods in peso to companies based in Mexico, the excess imports of US goods vis-àvis Mexican exports means the demand for US dollar is larger than the demand for Mexican peso, resulting in stronger dollar and weaker peso. Mexico’s trade deficits to the United States swelled; and the decreasing value of peso caused the price of imported goods to rise, causing inflation in the Mexican economy. The Mexican government thus intervened in the foreign exchange market to maintain peso’s value by buying pesos and selling dollars. However, by December 1994, Mexico’s dollar reserves hit the bottom and the government was forced to reduce the value of peso by 15%, causing capital flights, which in turn triggered peso’s free-fall in value and entered in a currency crisis. This drastic devaluation of peso caused the prices of imported goods to skyrocket in Mexico, causing hyperinflation and the contraction of its economy. Barely one year after NAFTA came into force, in 1995, Mexico’s GDP growth recorded-6.9%, and the inflation was 52%! Thus an ordinary country cannot keep running deficits because its currency will weaken to the point that it would cause havoc to its economy by capital flights, currency crisis and hyperinflation. Its currency becomes worth nothing more than paper; and people’s savings and assets denominated in the local currency would lose all their values. The economy will enter recession, or even stagflation.

If the United States were an ordinary country like Mexico, Thailand or Russia, then it would
have gone bankrupt long time ago – with the humongous twin deficits, the world would have lost confidence in the ability of the US government to repay the debts and thus in the dollar as well, which would take a nose-dive to the bottom. In such a case, foreign investments would flee the American economy; the US Treasury bonds would find no buyers; the numerous imports would skyrocket in price, causing hyperinflation which makes dollar-denominated assets worthless; the US economy would plummet into dire poverty; massive starvation and armed conflicts could occur. The US economy would be in chaos, with serious repercussions to the world economy. What’s more, the United States would lose its worldwide political and security influence; and China would drive the US out of Asia. This is the ultimate objective of China – to make the United States an ordinary country and rip off all its political, economic and military power. This is the final step of the strategy announced by China in Moscow in 2012; and its plan is already in action, making progress in China’s favor. The only reason the United States has managed to avoid this nightmarish scenario so far and is able to run the world’s largest deficits for more than thirty years without going into bankruptcy is due to the dollar’s status as international currency. China is aiming to oust the dollar and make its yuan the most widely used international currency, thus acquiring considerable influence over the United States, Europe and the rest of the world along with significant economic privileges that come with the status.

The twin deficits are America’s “Achilles heel”. Below we will see the mechanism with which the United States manages to float, and where China would attack on the day it acquires Japan under its influence. Recent attempts by China and Korea to create a rift between the US and Japan, by flashing history cards like Yasukuni or Comfort Women statues, are part of this game.

Essentially, the ultimate objective of the United States is to prevent the dollar from steep
devaluation, which would cause a chaos as seen above. The stability of dollar is sustained by 1. its status of international currency, and 2. its system of capital reflux into the US economy⁵. How does it work? And where in these systems are vulnerable to Chinese attacks?

1. Pillar One of the Dollar’s Stability: International Currency

Simply put, an international currency is a currency accepted in international transactions around the world – for example, trade settlements between the United States and a third country, or between third countries. National banks hold the US dollars as foreign currency reserves for potential interventions in foreign currency markets. Many individuals around the world keep their assets in the form of US dollar to hedge against a potential inflation and the consequent loss in the value of their national currencies. This is particularly notable in countries whose currencies are unstable or which have experienced hyperinflation and a serious loss of currency value. Thus the greatest advantage of being an international currency is the continuously high demand for the currency in the world, which sustains dollar’s value despite deficits. In the case of the United States, approximately $1.29 trillion are in circulation worldwide as of October 1, 2014⁶,despite the trade deficits of 130.3 billion (Q2 2014)⁷ and the budget deficit of $486 billion⁸.

Another major privilege of international currency is the settlements of international trade in its own currency and financing of its deficits by printing the dollars, with which the United States enjoys higher economic growth and a better living standard than what would otherwise be possible. As the United States keeps printing the dollars, its money supply increases; consequently the value of dollar decreases. The advantage of the international currency is that the devaluation is slow and gradual, as its demand remains high in the world. However, if the United States does not address the twin deficits and keep printing the dollars for their payments, one day in the long run, the value of dollar falls to the point that the world would no longer trust it as stable and worthy means of storing assets. This is when the US dollar will fall off from the status of international currency. The United States becomes an ordinary country, which needs to earn foreign currencies to settle trade like any other country. The devaluation of US dollar makes the purchase of foreign currency and borrowing from other countries increasingly expensive, causing deficits to balloon, which in turn devalues the dollar even further and the vicious cycle continues (called “deficit spiral”). The US would surely go bankrupt in this case.⁹

Therefore, what the United States fears the most is the reduction in the demand for its dollar. The matter of greatest importance to the United States is to maintain a strong and stable dollar; and China’s offensive is to reduce the demand for dollar by promulgating the use of its Yuan in the cross-border trade settlements, simultaneously imposing Chinese currency as the future international currency replacing the dollar. International Business Times reports¹⁰: “The Chinese Yuan surpassed the euro in October (2013) to become the world’s second-most-used currency in international trade and finance”. Although the dollar’s share in trade settlements is by far the largest (81.1 percent) while the yuan’s share lags far behind at 8.7 percent (as of end 2013), the speed at which Chinese yuan is rising is formidable: the yuan’s share in January 2012 was only 1.9 percent, increasing over four-fold in two years. The article continues: “Aiming to reduce its reliance on the U.S. dollar and increase the yuan’s global clout, China has taken several measures, including establishing offshore renminbi centers and entering into bilateral swap agreements (BSAs) with several countries to promote the international availability and accessibility of the currency.”

 

2. Pillar Two of the Dollar’s Stability: Reflux of the Dollar into the US Economy¹¹

With this extraordinary stability of the US dollar thanks to its status of international currency, the US government has created a mechanism of capital reflux into its economy, retrieving some of its money supply from the world and increasing the demand for the dollar. By maintaining the US economy and its capital market attractive to foreign investors, the US government reinforces the world’s demand for US dollar. The dollars that were printed and paid to the world come back to the US economy in the form of investments. The principal means of capital reflux are the sales of stocks and US Treasury bonds; maintaining high interest rate; and conducting foreign exchange interventions. As will be shown below, Japan’s contribution to maintaining the value of US dollar is considerable; if China’s scenario becomes a reality, that there will no longer be
an open and faithful support from Japan.

Since 1995, Japan has been keeping the interest rates of less than 1 percent, which has gone down to less than 0.01 percent¹², inducing Japanese capital to flow to the United States whose rates are always much higher than Japan’s. Japan uses its trade surplus to buy US Treasury bonds, which marked a record high in November 2013 ($1.1864 trillion) after China’s $1.3167 trillion¹³. In 1980s Japan’s major private asset holders such as life insurance companies and financial institutions bought significant amount of US Treasury bills, followed in 1990s by public sector asset holders like Japan Post Bank (the world’s largest holder of postal and personal savings), Japan Post Insurance (world’s largest non-banking assets), and Japanese Government Pension Investment Funds (world’s second largest after the Social Security Trust Funds of the United States¹⁴). Japan has been one of the main supporters of US financial stability for the last four decades. These massive purchases of US Treasury bonds have been keeping the US interest rates from rising too fast, thus contributing to the prevention of deficit spiral.

Furthermore, Japan has been supporting the value of US dollar by extensive foreign exchange interventions for the last four decades since the fall of Bretton Woods system in 1971. For example, since 1993, every single foreign currency intervention Japan has conducted has been the purchase of the US dollar, except during the Asian currency crisis from 1997-1998, when the value of the dollar was injuriously high for the global economy¹⁵. From January 2003 to March 2004, Japan has bought ¥ 35 trillion worth of US dollar (approximately USD 330 billion) when its annual deficit was ¥ 30 trillion. In January 2004 alone, the intervention cost Japan USD 60 billion (¥ 6.8 trillion purchase of US dollar); in October 2011 alone, it purchased USD 80 billion (¥8.07 trillion purchase of US dollar). The Japanese government put forward the protection of Japanese competitivity in the international market as the reason for the interventions; however the scale is so massive given the cost incurred to Japan’s financial health that the explanation is not credible. The truth is: Japan helps the US dollar float because the US-Japan security alliance is the pillar of Japanese security. Without going into details, one can safely demonstrate various economic concessions Japan has been making towards the US for the reasons of national security. If their security alliance breaks down, any mobilization of Japanese capital would be yet another diplomatic card for China. This fact could significantly undermine the market’s confidence in the dollar, potentially speeding the dollar’s demise.

Some economists claim that the US is “too big to fail”: as the US economy has been the major engine of the global economy, they claim that no one, including China, would dare let the US fail and devastate the global economy. In the short- to mid-term, it is true, however not in the longterm. Unless the United States finds solution to its monumental “twin deficits,” one day without doubt the dollar will fall from its privileged status of the international currency. Central banks around the world have already started diversifying their foreign currency reserves, and China has been aggressively promoting its Yuan as currency of international settlements. In the current tide of erosion in the dollar’s supremacy, the United States should be fully aware of the importance of maintaining strong alliance with Japan.

 

China’s Strategy in Realization –Succeeding to Create a Rift in the US-Japan Relation –
Case of Propaganda Offensive “Yasukuni”

Looking into the evolution of the world politics since Guo’s declaration of Chinese strategy at the trilateral conference between Russia, China and Korea in November 2012, we see China’s plan has been slowly materializing into reality: China managed in early 2014 to create a rift between the US and Japan by accusing Prime Minister Abe for visiting Yasukuni Shrine, concerting international public opinion against Japan to push towards its political isolation. Note that Japanese Prime Minister’s Yasukuni visits are not new: successive Prime Ministers visited the shrine every year since the end of the war until 1987, when Yasuhiro Nakasone, then the Prime Minister, stopped the visit after his tenth visit. Ryutaro Hashimoto visited once; and Shinichiro Koizumi visited six times¹⁶.

Did their visits create a fissure in the US-Japanese relation? No. But Abe’s visit did, due to
China’s increased propaganda ability backed by its rising power and the relative decline of the United States.

When Koizumi visited the shrine, the US took the stance of non-intervention. The US
Ambassador to Japan Thomas Schieffer told to the press: “that Japanese leaders were not
radicals despite their visits to the shrine and foreigners should let Japan settle the issue by
itself”¹⁷. He continued : “I am confident the people of Japan will come to a conclusion that will be able to honor those people without embracing the cause” of militarism, and added: “I too believe that Prime Minister Koizumi and Foreign Minister (Taro) Aso are not people who are radicals or embrace right-wing philosophies“. The State Department spokesman Sean McCormack told at a press conference: “These are going to be decisions that Japanese politicians and Japanese prime ministers are going to have to make for themselves,” and that “But we think it is important that the countries of the region, Japan, China, South Korea as well as others look to the future and to try to build good constructive, neighborly transparent relations.¹⁸“

However, Abe’s visit to the shrine caused a fury of international criticisms, and the US joined the camp.US Media reported a “growing chill” between the allies ¹⁹ , “Mr. Abe’s dangerous revisionism”²⁰, that the United States was “was ‘disappointed’ that Abe had taken action that will ‘exacerbate tensions with Japan’s neighbors’” ²¹ , “Looming disharmony between the two governments”²², “A big setback” in the two countries’ relation²³. China has successfully framed Abe as “right-wing”, “militarist” and “revisionist” in international public opinion. This is not a reality – Japan has no risk of pursuing “militarist-expansionist” policy as it has maintained and continue to maintain a military expenditure of  approximately 1% of its GDP for the last 60 years (0.99% in 2013), which is low compared to the other G8 countries who spend between 1.01% and 3.81% of their GDP²⁴.

Here I do not argue about the validity of criticisms against Abe’s visit; but rather, I attempt to demonstrate that China’s strategy is unfolding exactly as it has envisioned – quarantining Japan on international level and jeopardizing the US-Japan relation. The US and Japanese Policymakers should be aware of China’s intentions as well as the long-term ramifications: the downfall of US military superiority in East Asia and consequent Chinese hegemony. China will challenge the US dollar’s status as international reserve currency with its largest US Treasury reserve in the world and Japan’s second largest. China keeping the American economy in hostage, the US will be forced to kneel down to China.

 

China’s Strategy in Realization – Breaking of the US-Korea Security Alliance and Winning Over of Korea

Moreover, the US Policymakers should be conscious that its security pillars in East Asia is
already breaking down in China’s favor: first, the US-South Korea alliance is de-facto on verge of falling apart; and second, the US-Japan alliance in serious peril due to increasingly hostile American public opinion towards Japan. Let me explain:

Takabumi Suzuoki, a respected Korea expert, points to two major events that marked South Korea’s decisive shift towards China²⁵. Keep in mind that South Korea is an economy heavily dependent on international trade (56.2% of its GDP in 2011²⁶) and its export to China is by far the largest, making up 30%²⁷ of its total while the US export occupies only 10%. Furthermore, China is also the main guarantor of Korea’s currency swap, which is the lifeline of Korean foreign currency liquidity in times of crisis. One definite indicator of South Korea’s shift towards China came in December 2012, when these countries agreed to apply their bilateral currency swap on their trade settlements²⁸, which allows their companies to settle trade directly in their own currencies without transacting in US dollar- a provocative move to undermine the US Dollar’s status as international currency, and thus it means a challenge to the foundation of US worldwide influence and hegemony.

The second indicator of Korea’s alienation from the US alliance is found in its defense politics²⁹. In 2012, South Korea turned down an agreement with Japan which the US has long insisted on: General Security of Military Information Agreement (GSOMIA), which allows military intelligence sharing between Japan and South Korea, and with which the US had intended to reinforce the trilateral military cooperation. By cancelling one hour before the signing, South Korea in effect slapped “No” to the face of the US, while proposing a GSOMIA to China³⁰. The negotiation is still on-going between Korea and China as of 2014³¹. Furthermore, Korea is preparing to leave US nuclear umbrella and acquire a defense independence from the US by attempting to take off legal obstacles to possessing nuclear weapons. For example, it was long requesting the US to lift the ban on uranium enrichment and spent nuclear fuel reprocessing ³² and is keen on extending its missile range³³. In terms of “North Korea threats” too, South Korea sees a definite advantage in strengthening alliance with China rather than with the US, as China holds a major leverage with North Korea through the provision of almost entire food and energy that the latter is importing.
 

Korea – China’s Vanguard Bustling About to Divide the United States and Japan

Together with the US-Korea alliance, the other pillar of US security structure in East Asia is the US-Japan alliance. South Korea, with support from China, is running an aggressive propaganda campaign against Japan in countries with which Japan has defense partnership, such as the US, Canada and Australia, through means of building Comfort Women statues and memorials in these countries.

The contentions over Comfort Women and the Japanese Army during the WWII stem from the diverging understandings over the nature of these women’s labor. Korea and China claim that they are women forced into “sexual slavery” by the Japanese Army, while many in Japan question the claim as proofs advanced are often contradictory to documented evidence and no eye witness ever appeared. Their stance is that these women were employed prostitutes like many others around the world who receive soldiers as their clients.

Around the world and especially in the United States, Korean and Chinese organizations lobby and build statues of these Comfort Women commemorating “sex slavery by the Japanese Army,” such as in the city of Glendale, California, where a law-suit is on-going to take down the statue. Their offensive increased in its scale and intensity in the last two years, concurrently with the rise of China and its increasing financial means. This is exactly the time when Abe’s Yasukuni visit was reported in such a way to cause a serious friction between the US and Japan.

For example, on 19 August 2014, City of Fullerton, California, gave its support to the House of Representatives Resolution 121, which asks Japan to acknowledge and apologize for forcing Korean women into sexual slavery during WWII, and decided to examine the possibility of building a Comfort Women memorial in the city museum center³⁴. On May 30 2014, a “Comfort Women Memorial Peace Garden” was inaugurated in Fairfax County, Virginia³⁵ . Since 20 September 2014, Canadian Museum for Human Rights exhibits Comfort Women issues and plans to start school programs on the issue from 2015³⁶. Chinese and Korean communities declared their intention to build Comfort Women statues in Australia and attempted to build one in Strathfield, Sydney³⁷.

The supporters of the statues claim that 200,000 Korean women were forced into sexual slavery. However, their claims are contradictory to the documented truth, and it is likely that they are propaganda for political purposes. The nature of Comfort Women as prostitutes was confirmed by American Army in 1944. According to the United States Office of War Information, Psychological Warfare Team attached to U.S. Army Forces India-Burma Theater, APO689 dated 1 October 1944, the U.S. Army captured twenty Korean Comfort Women and two Japanese civilians around 10th August 1944 in Burma.

“A ‘comfort girl’ is nothing more than a prostitute…They lived in near- luxury in Burma in comparison to other places. This was especially true of their second year in Burma. They lived well because their food and material was not heavily rationed and they had
plenty of money with which to purchase desired articles. There were able to buy cloth,
shoes, cigarettes, and cosmetics to supplement the many gifts given to them by soldiers
who had received ‘comfort bags’ from home. While in Burma they amused themselves
by participating in sports events with both officers and men; and attended picnics,
entertainments, and social dinners. They had a phonograph; and in the towns they were
allowed to go shopping.”

Internationally, no single country accused Japan of “Comfort Women” issue during or right after the war, including Korea itself. In the International Military Tribunal for the Far East, also known as Tokyo Trials, the Allied Powers tried Japanese leaders for “crimes against humanity and/or conventional atrocities,” among other crimes, in 1946. However, the issue of “Comfort Women” was never mentioned. If the sexual slavery of 200,000 Korean women really took place as Korea claims, then this issue would have been brought up and investigated by the Allied Powers. The absence of such act signifies that Comfort Women were known as mere prostitutes, not sexual slavery.

Even South Korea itself never brought up this subject when negotiating with Japan for the
Treaty on Basic Relations between Japan and the Republic of Korea, which settled all claims and compensations arising from Japanese rule in Korea from 1910-1946. The negotiation lasted for 14 years from 1951 to 65, before the treaty was finally signed in 1965. The issue of Comfort Women was never brought-up in the treaty. This is an indication that Korean government of the time, which knew the facts about Comfort Women, did not see any issue with the nature of their services or how they were recruited. If it were a sexual slavery, this issue would have been certainly brought up during the negotiation and some sort of compensations arranged in the treaty.

In addition, this treaty stipulates that Seoul will not demand further compensation either at the government or individual level (Article II³⁸), after receiving USD 800 million in grants and soft loans (when South Korea’s national budget at that time was approximately USD 350 millions). These grants and loans were intended for individuals who suffered damages during Japanese rule. Japan offered to compensate individual victims directly, which Korea rejected; stating that it would handle individual compensations “as a domestic issue”³⁹. South Korean government also insisted receiving the compensation for the entire people in Korea – including for victims in North Korea, arguing that South Korea would handle the compensations once these two countries are reunited. In the end, Korea used less than 10% of the above sum to compensate individual victims, and the rest was diverted to its economic development. This treaty along with the related documents on negotiations was kept away from public eyes until January 2005, when the Seoul Administrative Court ordered the government to disclose them to the public.

It is worthwhile to note that the Korean Parliament approved the ratification of this treaty on 14 August 1965. Furthermore, South Korean government officially recognized in 2009 that Japan’s compensation issues relating to its rule in Korea have been fully settled. On 14 August 2009, South Korean “government admitted that Japan had already paid compensation… The administration said it came in the form of economic assistance of $3 billion, separate from the $5 billion in official development assistance that Japan gave to Korea in line with the reconciliation treaty in 1965⁴⁰.”
 

Conclusion

China watches the US hegemony with the eyes of a tiger waiting to pounce. The two pillars of the US predominance in Asia are its military supremacy and economic might. The foundation of the US military presence in Asia is its alliance with Japan, which provides the US with military bases of paramount strategic importance and significant financial support (in terms of direct financial contribution to the US military presence and the backing of the US dollar), in addition to collaborating closely on cutting-edge military technology. The US economic power is founded on the dollar’s status as international currency, which allows the US to expand its economy and exercise world-wide influence to the extent that would otherwise not be possible. The vulnerability of the United States is its “twin deficits” which undermines the dollar’s status as international currency.

Seeing this state, China launched an offensive on two fronts: breaking-up of the US-Japan
security alliance and the challenge to the dollar’s status. The recent rift in the US-Japan
relations and the unprecedented criticisms on Abe’s visit to Yasukuni are products of China’s massive propaganda campaign within the United States, and the US has been an easy prey to it. In fact, it has been trapped in China’s ingenious ruse – maneuvering history cards to break the US-Japan alliance. As China announced to Putin in 2012, its political stratagem to takeover Asia consists of the disunion between the US and Japan; then bringing Japan under its influence and finally launching an offensive against the US hegemony.

In this situation, Japan is the key to the US leadership in Asia and plays a decisive role in the protection of US national interests in this region. Only by strengthening its relation with Japan, the United States can maintain its predominance in Asia. The bashing of America’s loyal and reliable ally in Asia goes against its national interests.

 

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Acknowledgement

This article has received invaluable comments and advice from Mr. Yoshinori Kitano, one of the most respected International Relations Analysts in Japan and a leading Russia expert. I hereby express my sincerest gratitude to him.

22 October 2014
Kasumi Tanaka

 

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Annex

APO689 by the United States Office of War Information, Psychological Warfare Team attached to U.S. Army Forces India-Burma Theater, 1 October 1944.

 

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Notes

1. Ivanova, Irina. “China proposes a united anti-Japanese front.” The Voice of Russia. The Voice of Russia, 15 Nov. 2012. Web. 24 August 2014.

2. The territorial disputes over the Senkaku Islands was originated when China and Taiwan began making claims on the islands, after the United Nations Economic Commission for Asia and the Far East (ECAFE) announced in 1968 the possibility of petroleum and natural gas reserves in the seabed near the Senkaku.
Maps published by China and Taiwan prior to 1968 all indicate the Senkaku Islands as part of Japanese territory. Ex. World Map, published by Beijing City Map Publisher in April 1960 (世界地図集 1960 年4 月 １版、北京市地図出版会社発行) or World Map published by Taiwanese Defense Research Institute & China Geography Research Institute in 1965 (世界地図集 第一冊 東亜諸国 1965 年国防研究院・中国地学研究所発行). For more information, cf.: “Fact Sheet on the Senkaku Islands.” The Ministry of Foreign Affairs of Japan, n.d. Web.

3. Kitano, Yoshinori. Putin’s Top-notch Lecture for Japan’s Self-Reliance. Tokyo: Shueisha International, 2013. Print. p.57. (In Japanese: 北野幸伯著 『日本自立のためのプーチン最強講義』集英社インターナショナル).

4. Kitano, Yoshinori. The Day the Sino-Russo Alliance destroys the United States – Unilateralism vs.Multilateralism. Tokyo: Soushisha, 2007. Print. pp.36-70. (In Japanese: 北野幸伯著 『中国・ロシア同盟がアメリカを滅ぼす日』草思社).

5. Idem.

6. “Current FAQs How much U.S. currency is in circulation?.” Board of Governors of the Federal Reserve System. The Federal Reserve Board, n.d. Web. 15 Sep. 2014.

7. “ News Release: U.S. International Transactions.” Bureau of Economic Analysis – US Department of Commerce, n.d. Web. 15 Sep. 2014.

8. Lawder, David. “U.S. fiscal 2014 budget deficit falls to $486 billion, CBO says.” Reuters. Reuters, 8 Oct. 2014. Web. 18 Oct. 2014.

9. Kitano. The Day the Sino-Russo Alliance destroys the United States. pp.36-70.

10. Vn, Sreeja. “Yuan Overtakes Euro As Second-Most Used Currency In International Trade Settlement: SWIFT.” International Business Times. IBT Media Inc., 03 Dec. 2013. Web. 20 Oct. 2014.

11. Kitano. The Day the Sino-Russo Alliance destroys the United States. pp.36-70.

12. 1 year interest rate

13. Zeng, Min and Morath, Eric. “China, Japan Boost U.S. Bond Buying to Record Highs.” The Wall Street Journal. Dow Jones & Company, Inc., 16 Jan. 2014. Web. 20 Oct. 2014.

14. “Public Fund League Table.” SWFI. Sovereign Wealth Fund Institute, Jun. 2014. Web. 20 Oct. 2014.

15. “List of Statistical Tables.” Ministry of Finance Japan. Ministry of Finance Japan, n.d. Web. 20 Oct. 2014.

16. 13 August 2001 ; 21 April 2002 ; 14 January 2003 ; 1 January 2004 ; 17 October 2005 ; 15 August 2006

17. “Let Japan decide on shrine itself: US envoy.” Agence France Presse 24 May 2006. Newswire.

18. “U.S. Steers Clear of Dispute over Koizumi’s Shrine Visit.” Jiji Press 16 August 2006. Newswire.

19. Fackler, Martin. “Nationalistic Remarks From Japan Lead to Warnings of Chill With U.S..” The New York Times 20 February 2014. Print.; Fackler, Martin. “Nationalistic talk in Japan threatens U.S. ties.” The New York Times 21 February 2014. Print.

20. Editorial Board.“Mr. Abe’s Dangerous Revisionism.” The New York Times 3 March 2014. Print.

21. “BC-Yasukuni UPDATE6.” Japan Economic Newswire 26 December 2013. Newswire.

22. “FOCUS: Abe’s surprise shrine visit may complicate Japan-U.S. ties in 2014.” Japan Economic Newswire 28 December 2013. Newswire.

23. Idem. Comment by James Schoff, senior associate at Asia Program of the Carnegie Endowment for International Peace

24. 2013 figures. Data extracted from the World Bank Website. Stockholm International Peace Research Institute (SIPRI). World Bank. Web. 30 August 2014.
< http://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS >

25. Suzuoki, Takabumi. Japan standing against China; South Korea following China. Tokyo : Nikkei BP, 2013. Kindle. In Japanese: 鈴置高史著 『中国に立ち向かう日本、つき従う韓国』日経ＢＰ社

26. 2011 figure. Share of International Trade in GDP. OECD Factbook 2013: Economic, Environmental and Social Statistics. OECD 2012.Web.< http://www.oecd-ilibrary.org/economics/oecd-factbook-2013/shareof-international-trade-in-gdp_factbook-2013-30-en >

27. 2012 figure including Hong Kong’s. Republic of Korea. World Trade Organization. Web. 1 September 2014. < http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Country=KR&Language=F >

28. Editorial. “Currency swap for trade.” Korea Times 5 December 2012. Newspaper.

29. Suzuoki. 2013.

30. Chung, Min-uck. “Seoul seeks military deal with Beijing.” Korea Times 21 May 2012. Newspaper.; “Korea working to forge military cooperation pact with China: defense ministry.” Korea Times 21 May 2012. Newspaper.

31. “South Korea calls for military intelligence pact with China.” China Defense Mash Up 12 February 2014. Web. 01 September 2014. <  http://www.china-defense-mashup.com/south-korea-calls-for-militaryintelligence-pact-with-china.html >

32. “South Korea/United States: S. Korea urges U.S. to allow ‘peaceful’ nuclear enrichment.” Thai News Service 18 September 2012. Wire. ; Choe Sang-Hun. “South Korea and U.S. fail to cement nuclear deal.”The International Herald Tribune 25 April 2013. Newspaper.

33. “South Korea extending ballistic missile range to counter North’s threat.” News Point 3 August 2014. Web. 1 September 2014.

34. “Fullerton supports ‘comfort women’ apology.” Orange Country Register 19 August 2014. Web. 03.September 2014. < http://www.ocregister.com/articles/women-632197-comfort-korean.html >. City Council Agenda. City of Fullerton 19 August 2014. Web. 03. September. <  http://docs.cityoffullerton.com/weblink8/2/doc/550927/Page1.aspx >

35. Olivio, Antonio. “Memorial to WWII Comfort Women dedicated in Fairfax County amid protests.” The Washington Post 30 May 2014. Web. 03. September 2014.
< http://www.washingtonpost.com/local/memorial-to-wwii-comfort-women-dedicated-in-fairfaxcounty/ 2014/05/30/730a1248-e684-11e3-a86b-362fd5443d19_story.html >

36. Welitzkin, Paul. “Human rights museum to feature displays on atrocities against Chinese.” China Daily USA 06 June 2014. Web. 03 September. < http://usa.chinadaily.com.cn/world/2014- 06/06/content_17583990.htm >

37. “ Behind the Propaganda Wars; China, S. Korea grow closer over ‘comfort women’ issue.” The Japan News 4 July 2014. Print. Pg3.

38. Article II: 1. The High Contracting Parties confirm that the problems concerning property, rights, and interests of the two High Contracting Parties and their peoples (including juridical persons) and the claims between the High Contracting Parties and between their peoples, including those stipulated in Article IV(a) of the Peace Treaty with Japan signed at the city of San Francisco on September 8, 1951, have been settled completely and finally.

39. Choi, Soung-ah. “Secrets unveiled on Japan colonial victims; Documents on normalization of ties stir up memories, potential lawsuits.” The Korea Herald 18 January 2005. See Annex 11 for the original article which states: “Now that various claims are being settled in a lump, how to deal with individual claims should be treated as a domestic issue,” a South Korean negotiator was quoted as saying in the declassified minutes of the seventh and final round of normalization talks.

40. Kim, Se-jeong. “Victims of Forced Labor by Japan Seek Litigation for Compensation.” Korea Times 14 August 2009.

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