Are Japan’s Imperialist Instincts Re-Emerging? W/Carl Zha

Hello everybody and welcome to Geopolitical Trends, where truth matters. Excited to be with you as always. I hope, uh, for my, uh, American viewers, hope you had a, a good Thanksgiving. So, uh, we— I'm very, very excited because my dear friend Carl Zai is here. He's right here. Hi, Carl.

Hi, Dr. Oualaaloualou. How are you?

Oh, please call me David. Drop the doctor part. You and I, we, we friends. So how are you, Carl? How's the family?

I'm good, I'm good. Uh, family is good as well.

Good to see you. Good to see you as well. To those— by the way, by the way, guys, to those who do not know who Carl Zah is, which you should by now, Carl is the host of the Silk and Steel podcast. Very interesting channel. I'm gonna put the link for you in the chat box. Please make sure to check it out if you truly want to learn about history, Carl is your source right there. And I'm not saying it to be Mr. Nice, you guys know how I operate. So he's also, I mean, Carl talks about the China, about history, about culture, about politics. You know, that's someone I turn to when I need to know something about that part of the world and the rest around the world for that matter. So he's based in Bali, that's where we are. Connecting with him from Seoul. For you guys, for the community, once again, what I'm going to be covering today with Carl, it will be about 3 or 4 key topics. We'll be talking about G20 Summit who just concluded. We'll be talking about Japan and China tensions, but from this perspective, I'm going to ask Carl to share with us the history of the islands where the tensions are, Senkaku Island, as is known in English version, because Carl knows this part of the history here. Then I'm going to conclude with really an insight that I want to get from Carl. This has to do with China's naval capabilities, and we'll put all this in perspective. So you are in for a treat. Get some popcorn and get some tea or coffee and let's enjoy it. So, all right, Carl, I'm going to start by asking, please, your overall assessment. How do you assess the G20 summit which just concluded in South Africa? Of course, the US was absent, but the rest of the G20, they shrug their shoulders saying, so what if the Americans are not there? Life goes on. How do you see it?

Well, I mean, US is the one that's slapping tariff on everybody, right? So, um, and, and it turns out, uh, you know, the US had to back off when China said no. I think the whole tariff war show that rather than United States, China is the actual responsible leader, global leader, that can confront the bully. And for US, I think it's a special time because now US is beset by internal problems. Trump himself is facing with a revolt among the MAGA ranks. So it can't be bothered, you know, because Trump really never really cared for those multilateral organizations anyway. You know, he doesn't believe in paying for other countries, you know, in his words. And he feels like everybody just has to pay for the privilege of being in the American imperial system. So for him, it makes no sense to give further credibility to these international organizations. If anything, since Trump's first term, US has been actively destroying all these international organizations that itself helped fund after World War II because it feels like it no longer works for US anymore. It felt constrained. And, uh, so, so it's now, now Trump administration is pursue like unilateralism, um, uh, you know, at its own pace. So, so G20, it's, it's, it doesn't really mean anything for, for Trump. And on the other hand, um, for the rest of the world, they, as you mentioned, they're moving on. They're fine. You know, US can, can, you know, they can also see US is stuck dealing with its own problems. But, but the, but the, but the, but the life must go on for the rest of us.

Well, absolutely correct, Carl. When you mentioned about the problems, I live here, we do have serious problems. It's just the government and the media is not willing to let the American people know about it. And I'm talking about the unemployment, for example. That is now jacking up to 4.9% here in the US, media staying silent about it. So that's to me a hint for what lies ahead. You mentioned about the, I won't use the term, the irrelevancy of the G20, but the way I can look at it, and please correct me if I'm wrong, could it be because also we are seeing the emergence of some other key economic blocks, the likes of BRICS and the likes of ASEAN, That is, that is in the case of BRICS, their GDP output is about 35 to 36% of the world output. So could it be that the world is saying, you know what, we're seeing the emergence of these blocs, but the United States is concerned even more about those, those economic blocs? What do you think?

Well, I mean, I mean, G20 could have been a forum where BRICS countries and the G7 countries come together to have a meaningful dialogue and exchange. But what ha— what's— what instead what's happening is the, the G7 member nations, they're just blind followers of Washington. Um, you know, it, it's like they're— it doesn't seem like Europe on its own is ready to pursue strategic autonomy, to, to, uh, to have an equal exchange for the Global South country on their own term yet. Right now they're still acting acting as appendages of Washington, whether on the issue of Ukraine war or on the, the ongoing tension with China. I mean, it actually doesn't make sense for Europe to be in a security competition with China because China is so far from Europe, you know, like they're on the either ends of the Eurasian continent. China posed no security threat to Europe, yet they're acting as if China is in order to justify expanding NATO to Pacific, which is really, really outrageous. You know, like, this is— they're just doing this in order to do US bidding. Um, and so, you know, this is why I don't see, um, G20, um, hold too much meaning under, under such context.

Yeah, well, you're absolutely correct about NATO, and we're gonna address this when we get to the segment when we're gonna be talking specifically about the NATO role. I had a chance to read a white paper about it 2 years ago in which it mentioned that, you know, we're gonna— they say, and I'm paraphrasing here, we're gonna have to categorize China as the enemy because it represents a threat for NATO. And I was like, wait a minute, you are here in Europe and China is all the way on the other side of the world. That just doesn't add up unless there are some other plans. And exactly that, what's going on. I want to get your insight, Carl, on the recent phone call that took place between President Xi Jinping and President Trump, in which Trump is planning on coming to China in April. One thing that comes to mind right away for me, and please elaborate more, whatever you like, and if I'm wrong, please correct me. One thing that comes to mind is most possibility that Donald Trump is going to ask President Xi Jinping's, for China to buy more US Treasuries. Would I be wrong in this assessment, Carl?

Well, this has been US policy for ages. You know, this is, you know, if people remember back in Biden administration, Janet Yellen keep on going to China. It's not just for the mushrooms, you know, she, she's there, she wants China to buy US debt. Uh, because if you look at the Chinese purchase of U.S. Treasury, uh, you went from the peak of $1.4 trillion to now somewhere under $700 billion. I mean, China already reduced its holdings by half, and, and instead of selling, China just holding the existing U.S. Treasury to maturity. They stopped buying new ones because China realized Like, why, why are we financing US government, uh, when we could deploy those surplus dollars elsewhere, like in the Belt Road Project? And that's exactly what China has done. And but, but that's not the US goal. US goal for China has always been that China should be a vast pool of cheap labor to manufacturing low-end labor-intensive goods for the US, you know, whether it's toys or shoes, but continue to recycle this dollar surplus they, they gain from the, the, the, the trade surplus back into the US, uh, financial system by purchasing US debt. Um, but China, China realized, you know, but there's not much in it for us, so, you know, why are we getting, you know, working our ass off for these paper IOUs? So they have diverged, uh, you know, uh, they have been divested from the US, and, and this is what US does not like. Um, but the, the, about the phone call, because there was a lot of reporting around this, you know, first Wall Street Journal came out claiming that this was the first time since 1990s a Chinese leader has called, request a call with, with White House. And then, you know, so many pundits now came out and say, oh yeah, because China need us, you know, why Xi Jinping is really panicking, he needs Trump's help. And then few days later, we get confirmation both from Washington and Beijing, it was in fact a call requested by the White House, by the US side. So I mean, that, that calls into question about credibility of Wall Street Journal, what, not for the first time, of course. And And, uh, and, and then the, the, and more important part is, uh, right after the call, um, you know, the Chinese readout and the U.S. readout is totally different. You know, Donald Trump just tweeted, oh yeah, uh, China pledged to buy more soybeans, and whereas I mentioned nothing about Taiwan or Japan, whereas in the Chinese readout they said they spend quite a bit time to talk about Taiwan issue. And that China and U.S. should be the guarantor of the post-war order. You know, as the victors of World War II, they should be guarantor of the post-war order. And this is a pointed, uh, um, uh, this is pointing at Japan basically, because Japan was a defeated party in World War II, and part of the post-war arrangement was that Japan gave up Taiwan back to China after 1945, and that China— and Taiwan is part of China. And this is, uh, this is the, uh, whole, uh, big tension that was caused by the Japanese prime minister's statement on if there's warship, uh, around waters of Taiwan, that's an existential issue for Japan, so we have to get involved militarily, um, which really crossed the reddest of the red line of China because China has always maintained Taiwan is part of China. The Taiwan issue is an issue between the Chinese people on both sides of the Taiwan Strait to resolve. Other parties should stay the fuck out, you know. It's not really a business, it's the internal Chinese matter. And by, you know, Japanese Prime Minister completely ditch this, um, strategic ambiguity and claim that Japan will militarily intervene. This, you know, this, this crossed a very serious red line for Beijing, and it also invoked the, the old colonial memories when, you know, the whole reason Taiwan was separated from China in the first place was the result of the First Sino-Japanese War of 1894-1895. When China was forced to give up Taiwan to Japan as a Japanese colony, which it remained for 50 years until 1945, the Japanese surrender after World War II, that gave up, uh, Taiwan to China. And the, the— now, now that, that the prospect of, you know, the Chinese Navy flying the Rising Sun flag back to Taiwan, that's, that's gonna royal, a lot of, uh, you know, it's getting a lot of Chinese people upset. So yeah, uh, this is, this, this is a major part of the Xi-Trump call. And afterwards, apparently Trump had a call with the Japanese Prime Minister Takemichi and told her to calm the fuck down. And, and this, uh, again, that was reported by Wall Street Journal. So, so, uh, so, you know, people are also calling question of credibility of Wall Street. How much can we trust the Wall Street Journal reporting? Yeah, it's actually by the same person who reported that was Xi Jinping requested the meeting with, with, uh, uh, Trump. In fact, it was totally otherwise. But what we do know is that Japanese Prime Minister, after the call with, uh, Donald Trump, she just said the call was cordial but released no further detail of the call. So It does look like, you know, Trump did to, to tell her to, to chill out a bit. You know, this is, don't ruin the, the temporary truce in the US-China Cold War, you know, the, the trade war. And especially don't jeopardize, um, Trump's coming visit to Beijing next year.

Yeah, now speaking of that, speaking of that visit, Carl, Besides what I mentioned earlier, well, in your opinion, is that just he wants a photo op with President Xi Jinping, or what would be like common sense? What would be the objective of the trip?

Well, let's remember, Trump actually visited China in his first term, unlike Biden. So Trump is like, he's always up for any opportunity for photo op. Being his nature as a TV reality, reality TV show host, uh, he would not, uh, give up such an opportunity. But, and also Trump, you know, he's a, he's a type of person, the personality that he respects strength, right? And, and he despises weakness, uh, you know, like when Europe and Japan, they fawn all over him and like acting like good old puppy dogs, that only invites more, uh, contempt from Trump. Because Trump has said himself, he despises weakness. When China actually pushed back in the, in the trade war and actually showed to U.S. that China holds more cards at the table, uh, Trump paradoxically— Trump respects that because Trump respects strength. He despised weakness. And so, so he is, uh, and Trump always said, you know, he has, uh, uh, he, he, he respected President Xi Jinping or, and President Putin. He's always wanted to meet with them. So personally, I think he has not, uh, you know, he does— he's not hostile to, toward the idea of meeting, uh, either with Xi Jinping or Putin or, or, or Kim Jong-un. Right? Let's remember, uh, which is a sharp contrast from, from the zombie presidency of Biden, who, uh, you know, who, um, did not make that effort to— so I think, I think this is, uh, this is also true, you know. Let's also remember, Trump is still angling for that Nobel Peace Prize, right? He wants to position himself as a great peacemaker. So he's, he's also thinking about building his legacy now, uh, because this is going to be his last term as president anyway. And so there's, there's that to, to think about. Um, I think, you know, that, you know, yeah, for Trump, it's, it's great photo-op opportunity. It's to shore up his legacy as a great peacemaker and to show himself with, uh, with another strong world— with a strong world leader, you know, that, that kind of bolster his own image domestically, especially when he's facing a lot of, a pushback right now within United States over Epstein files. Um, you know, there's, there's even a revolt among the MAGA ranks about U.S.-Israel first policies and, and, and why U.S. has continued to pursue the, on the path of, uh, interventionism abroad, you know. Um, you know, even though Trump came to power, promised he's going to end that. So, so, and on top of that, there's a lot of problem with, uh, Trump's trade war that introduced, you know, U.S. soybean farmers, they're looking for handout now because, you know, they're, they're not selling soybeans to China. China, China, China, even though they promise they're gonna, you know, looking to address the, uh, trade imbalance, but they actually never promise a specific amount they would buy, uh, US soybean. So, so Scott Bessant basically lies. Scott Bessant claimed that China, you know, committed to buy so many, so many metric tons of US soybean. But in the Chinese readout, they said nothing of that kind. And, uh, and, and it actually makes sense. China already switched their supplier from US to Brazil, um, which is a friendly BRICS country. Right? So why would it make sense for China to kind of now ditch Brazil for U.S.? And, and there's only like the, the soybeans that China sourced from United States, you know, those GMO soybeans, they're not useful, they're not fit for human consumption. They're, they're, those are livestock feed, right? But there's only so many pigs in, in China to feed, right? I mean, like Once they brought the Brazilian soybeans, you know, there's not going to be, uh, much left to, to source from United States. And, and those soybean farmers, they're the core Trump constituency, you know. They're, they're one of the, uh, you know, the, the Republican base. And yet, you know, the whole, the whole Trump trade policy has been disastrous for them. So, so Trump have all these like internal issue to deal with. So, so like a trip abroad where he's gonna be met with pompous circumstances in Beijing, that would look good for his point of view. That would look good for him.

Well, the MAGA issues right here in the US is very, very serious. You got even members of Congress that were supporting of him, supporters of him, like Taylor Greene resigning from Congress. So So you can— you're absolutely correct where things are, except the media here is not talking openly about it. And this is why I like to bring those kind of issues to the fore. So at least our— my community here have a better understanding of this. So thank you very much for that, Carl. Truly appreciate you for that. Let's turn into the Japan-China tensions because there is a lot to cover into this. And given your background in history, I figured we'll start with the island, the history of the islands, if you will be kind, Carl, just to give my community a brief understanding of how this came to be. Then we'll move into the geopolitical aspect of the tensions and the economic aspects of it.

If you will be kind. Well, there is territorial dispute between China and Japan in the East China Sea over the Diaoyu Islands. Um, but the, you know, the, the main issue really is over Taiwan. Uh, you know, all started with Taiwan, and everything started with the Sino— First Sino-Japanese War of 1894 and 1895. Because, uh, the, the, you know, the, the, the Diaoyu Islands, what Japanese call Senkaku, they— there were a group of, uh, uninhabited islets in the East China Sea. Now, up to— China was the first one to map it, give it a name, Diaoyu Islands. And then in 1885, this after Meiji reform in Japan, Japan is starting to become, uh, industrial power. They were thinking about annexing the island. The Japanese, uh, internal minister petitioned, uh, the Japanese government to annex the island of Diaoyu Islands. But at the time, the Japanese Prime Minister Inoue said, well, okay, let's, let's hold off for a second because, you know, the Chinese map— Chinese already given a Chinese name, Diaoyu Island. They obviously claim it. Let's not cause our problem with China yet. This was 1885, 10 years before the First Sino-Japanese War. So, um, and this is internal Japanese official government documents. So they have— they put off, uh, because they are afraid to, you know, challenge China's claim. Then what happened in 1894, 1895 is that Japan defeated China in the First Sino-Japanese War. And then as a result of that, China had to cede the island of Taiwan to Japan as a Japanese colony. So at that juncture, Taiwan suddenly— Japan suddenly claimed, oh, this group of islands, the Diaoyu Islands, is actually no man's land, uh, so it didn't belong to anybody. We, we're going to formally incorporate it into our territory. Um, and but during the Japanese colonial rule of Taiwan, the set of island, Diaoyu Island, it was administered from the Japanese colonial, uh, govern— uh, governorship of Taiwan, you know, as part of Taiwan. Taiwan, uh, so, oh, by the way, the name, the Japanese name Senkaku, is actually a literal translation from the English name Pinnacle Islands. You know, senkaku is Japanese for pinnacle, you know. So that gives you idea where, how that name origin— because the Chinese has named the, the island Diaoyu Islands for you know, since, uh, before the Ming Dynasty, uh, you know, they have to put it on maps and everything. And, and so, so, so Japan, they took, uh, they took the, the English name from the, from the maps of Pinnacle Island, they translate into Japanese and call it Sengaku. And now as the settlement of World War II, Japan was supposed to give up Taiwan or all the surrounding islands back to China. Now, from China's perspective, that would have included the Diaoyu Islands. And but what, what really happened was, um, United States was actually in actual control of the islands. The U.S. Navy was using it as a— for target practice. Um, and, and so this is something that was not challenged by, the Chiang Kai-shek regime on Taiwan because, you know, whatever, Chiang Kai-shek regime on Taiwan was a US client state, so he didn't object to US, um, occupation of the islands to use it for target practice. But what triggered this dispute was in 1971, um, so, so US actually occupied, um, the Okinawa island chain after World War II, and it was governed kind of under— separately from Japan. And in 1971, the— there was a decision whether, um, is Okinawa should remain kind of under the— as a, as a, as a US colony, or should it be returned to Japan. Now, Okinawa itself The Ryukyu Island chain itself also is actually tied to this dispute because, um, the, the Ryukyu is the Japanese pronunciation of Luchu, which is what the island called themselves. Um, the Luchu Island chain, they used to be an independent kingdom, and that has very close diplomatic ties with China. It was part of the Chinese tributary system. And, and, and through the Ming and Qing Dynasty, the Chinese emperors will routinely send envoys to the island to grant investiture, which is to, to officially confirm a new king of, of Lu Chu. And Lu Chu also, they concluded their own separate treaties with the United States when Commodore Perry sailed his black ship to East Asia. Uh, you know, this is in the documents of U.S., uh, Congress, and, you know, U.S. had treaties with the Kingdom of Luchu. So what happened is, in— after Meiji Restoration, Japan, you know, became expansionist power. So around 1870s, Empire of Japan officially annexed the Kingdom of Luchu. So that's when all these territory disputes start happening with China, because before, Japan homeland did not border China directly, right? China's immediate neighbor was the Kingdom of Luchu, which is already in a tributary, uh, uh, status within, within the Chinese imperial system. So there was no dispute, there was no dispute about ownership of Diaoyu Islands, uh, because historically, according to the, the travel documents travelers between China and Lushu Islands, they— the, the, the people say once they leave the water of Diaoyu Island, then they're heading home to, to Lushu Kingdom. And, and so, so because of Japan annexation of Lushu Island, that's how they start to claim Diaoyu Island as part of the— okay, no, they're renamed. So, so the Japanese, also rename, uh, you know, first they refer to by the Japanese pronunciation Ryukyu Islands, but they, but then they decide to rename the main island, uh, they decide to call Okinawa, Okinawa Prefecture. And so the, the, then the, um, but islands for the whole entire period of the Japanese, uh, colonization of Taiwan was administered Taiwan, right? So this is why from the Chinese side, they assume that Diaoyu Island should have been returned with the other islands around Taiwan to China. But it was not challenged again by the Chiang Kai-shek regime in Taiwan because, you know, US was a daddy, right? So, you know, US can, can make use of the island however they want. But in 1971, when United States decide to return the Ryukyu Island chain to Taiwan— to Japan. Again, uh, at that time, U.S. put a vote, uh, to the islanders, um, and the, the island— the people of Okinawa, they thought, you know, by voting for return to Japanese rule that they will get rid of the American base, you know, because the choice is whether to return— remain under the American protectorship or return to Japan. And so, so many of them opted to, uh, for returning to Japan, but to their disappointment, um, nothing changed. The American military stayed in Okinawa, uh, and, and, and so they're, they're kind of get, um, get punished, uh, uh, uh, they're getting like a sort of double jeopardy, um, and but, but the But the, the dispute arose when United States, when they returned Ryukyu Island, uh, administration to Japan, they included the Diaoyu Islands. So, so that's when in 1971 both China, uh, mainland China and the, the regime on Taiwan protested this handover of US. Now for, for US government's official stance on this dispute it officially takes no stance on the sovereignty issue of Diaoyu Islands, but yet they still give it to Japan, uh, handed the control over to Japan. And now, um, more recently, the, the United States State Department actually said, well, even though we take no stance on the sovereignty of the Diaoyu Islands, but since it's under control of Japan, it will still trigger the Japan-US security pact. And, you know, China were to militarily, uh, take over that place. So, so, so US is still militarily pledged to defend the Diaoyu Islands, uh, you know, from China, even though it, it is officially— it takes no stance on the sovereignty issue. So this again, this is like kind of strategic ambiguity. United States, they intentionally kind of left a time bomb, you know, like in the China-US, China-Japan relationship, uh, because to let it continue to fester. And, and, uh, so, so right now, um, what we what we saw was a kind of increasing strident Japanese position on Taiwan, which is, you know, the Japanese Prime Minister basically ditched the whole decade-long policy of strategic ambiguity, which is to say, we, you know, for U.S., the strategic ambiguity on Taiwan is to neither confirm or deny that we're gonna come to, we're gonna get involved in a war, over Taiwan, over status of Taiwan. Um, despite what Joe Biden said during his presidency, when he was asked, will we defend Taiwan, he said yes. But then the White House, you know, came out and, and, and, and walked back to the statements like, yeah, Joe Biden didn't know what he was talking about, he was senile, don't worry about him. But, but, but this, this current prime minister of Japan, you know, she's definitely not a senile old man, right? I mean, there's no plot plausible deniability when she said what she had— when she said, yeah. And she, for her part, um, this is a long-term agenda for her, her, her, uh, the, the, the particular faction of her party, the, the, uh, LDP, because she, she belonged to a particular right wing of the LDP, the Japanese ruling party, which has ruled Japan since most of the war, post-World War II. Now, LDP itself is a pretty right-wing political organization, but she belonged to the right wing of the right-wing political party, right? So she's like really on the, on the, on the, on the, on the extreme part of the spectrum. And for the Japanese nationalist politicians like her, their goal has always been quote-unquote return Japanese to the normal country status. And what they consider normal country is that Japanese must have a military that they can deploy abroad. And this, this has to do with the Japan's peacetime constitution, uh, which was imposed on them by American after World War II, which says, uh, especially Article 9 of the peace constitution, which says Japan should not have a military but you can maintain a self-defense force for the self-defense of the Japanese homeland, home islands. And the Japanese right-wing politician did not like that at all. So they have done their best try to skirt around the issue or overturn Article 9 of the peace constitution. I mean, they, um, you know, back in the day of Shinzo Abe, they tried to like replace it completely, um, with, with, with by saying, oh, Japan should, should be able to act like a normal country, have its own military and deploy wherever he wants. But the peacetime peace constitution is so popular among the Japanese general population because many rightfully saw it as a cornerstone of Japan's post-war prosperity. Because they thought it was because the pivot away from militarism, World War II, that allowed Japan to achieve its, uh, economic miracle post-war. So, so the peacetime— peace constitution is still very popular on Japanese populace. So the Shinzo Abe government decided, you know what, if we can't get rid of it, we'll just, uh, reinterpret it. We just reinterpret what it means. So So they, they, uh, say, okay, well, yes, you know, the idea is we have to maintain a self-defense force to defend Japan, but there will be some contingencies around the neighborhood of Japan that will threaten Japan's security. In that case, we should be allowed to deploy our territory, you know. But even, even in that, like, they were talking about Taiwan, but even back then they were very careful not to explicitly spell out Taiwan, even though that's what they meant. What they really meant was like, okay, if US were to get involved in, in wars around Japan, as, as US ally, we're obligated to help. That means we will have to send out our quote-unquote self-defense force to waters around Japan. But this, this current prime minister Takiichi, she kind of ditched away with all kind of pretense and said, okay, yeah, if something happens in, in Taiwan, around Taiwan, that is an existential threat to Japan, which would necessitate us to get militarily involved. Now what this makes— made this sound especially great into Chinese year is because, you know, even before World War II, from like 1930— from 1931 onwards, the Empire of Japan has used the exact same excuse saying, oh, this war fighting was exist— this is an existential issue for Japan, this is why we need to send our troops to China, right? I mean, like, that was their justification for their war of aggression against China. And, and, and now, you know, hear the same language and, and the Japanese prime minister threatened to send their military to, uh, to, to, to, to waters, uh, what China consider its own territory. That's, that's clearly unacceptable. Um, and this is why there was such a big issue, uh, right now that's blowing up between China and Japan. And China depend demands the Japanese prime minister to retract her statement, uh, and, and now the, the Japanese government is trying to wiggle their way out of this, say like, well, by not continue to make such statement, we're basically retracting. Like, no, no, no, that's not what retraction means. That's not what retract—

they learning from the Americans.

So, so, so, so this is This is why this dispute is ongoing, uh, between China and Japan. But I think there's, um, some domestic reasons for the Japanese Prime Minister to do what she did, and that's because Japan is facing some serious economic headwind right now. The Japanese economy is quietly imploding. Um, this is driving the Japanese interest rate up, uh, you know, which is going to have a huge repercussion around the rest of the world as well, because, uh, for decades, for many years, Japanese Central Bank has been printing a lot of money and they're keeping the interest rate artificially low, you know, almost zero. So then a lot of Wall Street types, they thought, oh, this is a perfect arbitrage opportunity. We can borrow tons of Japanese yen at almost no interest rate and invest it in American stocks or, or bonds which yield higher returns, and we just eat the difference. It's free money, right? So this is called the yen carry trade, which, which involved tons of tons of money borrowing tons of tons of Japanese yen and investing American assets. But now with sudden spikes in the Japanese interest rate, all these people who borrow Japanese yen Many of them borrow with margins, and now suddenly they realize, oh crap, we owe more money than we borrow. So now they have to repay back with higher interest. A lot of them will have to unwind this trade. That means they have to start selling, yeah, the American stocks, that to sell them the US Treasuries in order to pay back the, the amount of the loans, the Japanese yen they have loan. So this is going to have a huge repercussion on the, on the American asset market as well. But, but for Japan, you know, things are not looking good. They, they're already been hurting under the Trump era. Uh, they're getting— because for unlike China, China has a continental-sized economy. Um, you know, the export is really like a small percentage of the Chinese GDP now. But for Japan, export is still a huge part of their GDP because their internal market is not big enough to absorb all of their, all of their production. So when U.S. slapped the tariff on Japanese automakers, this, that is an existential issue. And, and this is, so Japanese economy is under all kind of pressure, and this is why I think the Japanese prime minister um, you know, want to distract his public from the very, very real, uh, economic implosion that's facing by the, the Japanese economy right now. And at the same time, um, she also is fulfilling the promise to her more, uh, extreme right supporters, like, hey, I can be tough on China 'Look at me, I'm dishing away all the strategic ambiguity. I'm telling them I'm— we're going to deploy the Japanese military to the water of Taiwan.' Um, and so, so this— and, and in addition to that, there's another dimension is the Japan-US security pact, because the Japanese right wing has made that the cornerstone of their policy for the past few decades. And they, they thought that, you know, because they have profited from it— Japan basically profited from being the junior partner of the US Empire in East Asia. And what they saw as a result of the Xi-Trump meeting in, in Korea was there's a temporary truce in the tariff war, and And they're, they're, they're reading the, the, the, the leaves to see which way the wind blows. And it looks like US is doing a temporary pivot from a direct confrontation with China to, uh, to consolidate its grips on power elsewhere, like Latin America or Africa, right? This is why Trump is talking about— is now concentrating on Venezuela. Now they're talking about Christian genocide in Nigeria, that they're going to possibly do a military intervention. And for Japan, that's particularly the Japanese right-wing politician, that's bad news. If the US leaves, they will be the one holding the bag to face the resurgent China. They don't want that. So this is a way to create a crisis in order to drag United States back, you know, so, so force the— these Western politicians come out and to say, oh, we're in solidarity with Japan. You know, we, we stand in support of Japan against China, right? This is under this kind of, uh, backdrop Trump now gives a call to Takeuchi. And, and which, according to Wall Street Journal, depending on how much you believe the Wall Street Journal nowadays, is that Trump told, told Takeuchi to calm the F down, right, to chill out. Um, and I think that's— I think that is kind of my reading of the whole ruckus. But I think this is it. In a way what Japan is doing is not dissimilar from what Europe is doing. You know when the European leaders claiming oh you know what if US is going to wrap up the Ukraine war no problem we're We're going to do it alone. We're going to carry on the burden of supplying Ukraine, which is preposterous. Nobody believes that. What they're really trying to do is try to prolong the crisis, try to drag United States back in. They don't want US to leave, so they're the ones holding the bag, end up holding the bag. So I think that's what's going on with Japan.

Well, I'm glad you addressed the historical aspect Karl of the Diaoyu Islands, because a lot of people do not know the background story of this. I had it on a good authority, and I read some. I saw, as a matter of fact, I wish I could have kept a— I saw a picture, not a picture, yeah, a picture of sort from an old archives from way back of where the island was part of China at that time, the, the empires and so forth. And And that in itself, later on, the Japanese start to push against that one. But it was on the record there. And I'm glad you explained this one, at least from a historical perspective. One other thing I wanted to mention, since you brought up the idea of her being on the far right, I knew about her before she became— I read something that, you know, she was a hawkish, Chinese hawkish. I had no idea where she will be till I found out that her protégé was none other than Shinzo Abe. And if we know the history of what happened between Shinzo Abe and Chinese few years ago when he went to the memorial place, you remember that incident, right? You know, and that right there, I put the two together and figured she's not up to anything good.

And there's a lot of, I mean, and she is part of the Japanese right wing that Yeah, it's an active support of historical revisionism, uh, because recently Takahashi visited Malaysia, right? And, and first she went to pay respect to a cemetery of the Japanese soldiers fallen in the Malaya campaign in Malaysia, and then she went to— okay, okay, so she's Japanese, she should do that. Yeah, yeah, okay, whatever. So then, but then she went to visit to another memorial which was, uh, erected to, uh, the British, uh, uh, to, under, during the Malayan, um, Emergency. Now the Malayan Emergency was anti-colonial war, uh, when the Jap— when the British were trying to, trying to maintain their control over the, their, their colony of British Malaya, which at that time, it was between the British colonial, uh, authority and the Malayan, uh, uh, Communist Party, right? And, and the Malayan Communist Party now, it's, it's has a very heavy ethnic Chinese component. And this is because the Malayan Communist Party came into being during the resistance against the Japanese colonial rule during World War II. You know, when Japan first came to take over Southeast Asia during— after Pearl Harbor, uh, the, the Imperial Japanese Army specifically singled out ethnic Chinese in Southeast Asia because a lot of these ethnic Chinese, they have been in support of their homeland struggle against the Japanese aggression. You know, they've been sending a lot of money. Some of them even volunteer to go back to China to fight the Japanese. Japanese. So when, when Japan took over Southeast Asia, this specifically targeted the Chinese community in Southeast Asia, whether in British Malaya, Singapore, or, or, or, or, uh, or Dutch East Indies. And, and so this caused a lot of these, uh, ethnic Chinese population to join the resistance against the Japanese. And, and, and, you know, at that time was led by the, the, the, the, the Malayan, uh, Communist Party. And, and so, but after the war, after Japanese surrender, you know, initially the British supported the insurgency against Japan. But when the British came back, it's like, British like, okay, you, you communists have to give up your weapons, you know. So this, this started the, the, the, the, the anti-colonial struggle called the Malayan Insurgency. And, and so Takeichi knew this history, yet he went to the, the memorial to the British soldiers in the Malayan Insurgency. And, and then what she's trying to do is trying to link up the, the two. It's like, hey, look, look, we, we the Japanese and we the, you know, the Western democratic allies, see, we fought on the same side. We fought those commie Chinese, you see. We're part of the same struggle, which is complete, uh, historical revisionism of what happened in World War II, right? I mean, like, true, but, but, but that's, that's the type of the, you know, kind of the party ideology she represent. She's appealing to kind of the, the commie anti-communism part of the West to see, hey, like, we, we're actually, we're actually allies together in this. Um, so yeah, yeah, so, so this is— yeah, it's very unfortunate that, um, you know, she— this is gonna throw a wrench into the, into the China-Japan relationship for a long time. Uh, for sure. I just don't see how this is gonna resolve anytime soon.

For sure. I mean, to me, uh, Carl, it shows literally lack of diplomatic maturity. That's basically what I, I would put it for a prime minister and knowing, and I am sure she does, knowing the history of what took place in Nanjing, for example, 19— from what, 1931 all the way to 1945. I mean, I was there. I went on the ground. I went and I saw those images in the museum. I mean, heartbreaking. I can't even talk much about all that. It's just the idea of a prime minister will provoke another country that never forgets the scars. You know, you're talking about ancestors of Chinese people that have been sacrificing and been sacrificed and been sort of died in horrible manners. But, and just for her to come and say that that way, that's just to me, let alone when you look at the history of Japanese prime ministers, none of them to my knowledge None of them ever crossed that red line publicly, never to my knowledge. Shinzo Abe did what he did with the memorial visits and so forth. I want to tackle one aspect of this beside the geopolitical aspects because we're going to talk about the Chinese response from the bigger picture and we'll get into that. For now, I wanted to ask from an economic perspective, did Japan think, did this Prime Minister Sane Takashi Did Xi think about the economic consequences, given knowing, for example, and I'll give the example of rare earth elements? Japan doesn't produce rare earth elements. Japan doesn't process rare earth elements. And it has an electronic capacity production which needs access to rare earth elements. Chinese gonna cut off that? That's it. Why, why they didn't think in terms of an economic implications of such a provocation, in your opinion?

Well, I don't think these politicians really care about economics. I mean, why, why, why did Trump start to launch the trade war, right? I mean, like, that's right, right. I think they're more, uh, concerned about in immediate terms, you know, whether to win popular support among their voter base, whether to, uh, curry favor with their, uh, you know um, with their, their mastery in Washington, or whether to maintain their, their hold on power. I think that's more, uh, uh, has more priority than, you know, how the economy is good is going, because Japanese economy already took an immediate hit when, uh, you know, the Japanese GDP— 7% of Japanese GDP is tourism, and Chinese tourists represent one of the largest segments of tourists coming to Japan. And so, you know, they did only second after South Korea. So, so a lot of the Japanese, uh, Chinese tourists already canceled their flights to Tokyo, their, their planned vacation. So that's going to hit a lot of the, the Japanese economy immediately. And then the reporting of Japan trying to seek U.S. help in furthering semiconductor sanctions against China. Yeah, there's a lot of Japanese companies that's supplying components, semiconductor production components, to China. So they thought, okay, but we cannot do it alone, we're going to need the help of United States. But again, China already showed they have the ultimate trump card, which is rare earth. You know, cut off the rare earth, that's it. There's no, there's no, there's no more industrial, modern industrial production. And, and I think, uh You know, Trump understood that. Trump understood that after the trade war when China started to play the rare earth card. Um, and I think Japan is gonna have to learn the hard way.

Yeah, for sure. I, uh, there, there is one, one aspect of one behavior from the governor of Taiwan, uh, what's his name, Lee Chang-teh. I think he was eating some sushi or something just to agitate the Chinese because what he was saying is that, hey, I'm gonna be— I know, I know, Carl, I saw that and I was like, what the heck? What's wrong with this guy?

They just, they just lifted the ban on Japanese food, seafood, just after this incident, right? Taiwan had maintained a ban on Japanese seafood since the Fukushima incident up till now, and now the, the quote-unquote president of Taiwan trying to cash on some points by lifting the, the, the, the, the Taiwan ban on Japanese seafood, and he publicly went on eating the, the, the seafood from Japan. That, that reminds me of that Obama, you know, drinking the water from Flint, Michigan.

That's a good one. Obama did.

Yeah, I remember that. And, uh, and, but this is This is not going to make a dent. You know, the, the level of seafood import from Japan to Taiwan, that doesn't even compare to the amount the Chinese market consumes. You know, the, the largest market is still China. There's no way they're gonna make up for the loss of the Chinese market, uh, you know, like no matter how much Fukushima sushi you're gonna consume. It's not gonna compete with, uh, with the amount that, that, that, that you lost, uh, you know, by losing the Chinese market. Just like the American soybean farmer found out.

Oh yeah, now the farmers are pissed here. I mean, once again, as I mentioned, the media is not disclosing, but the farmers are pissed at Trump. So forget about— no, no, they don't care for— because their livelihood, as a matter of fact, Carl, I did read through a private investigator. He's not affiliated with any— I wish I could have kept the link. I read that some farmers here are now taking their own lives. I was heartbroken when I, when I read that. I was, you know, I can only imagine a farmer taking his own life, leaving a family behind, but because they couldn't take it anymore with the losing their because the Chinese not buying their stuff anymore, and because Trump caused that one.

So straightforward. That, that kind of news you, you only read before from like India, you know, like a lot of news report of Indian farmers commit suicide because they're crushed by debt. Yeah, by, by debt. But now, now, man, like United States is becoming—

yeah, we have it here. It's so sad. It's so sad. So I wanna turn for last segment of our conversation here, Carl. I wanna turn our attention to within the context of these tensions in not just Japan, but Asia writ large. And there are two things now that comes to mind as a geopolitical analyst, and I'm thinking about them simultaneously. One has to do with the Chinese naval capabilities and the other one has to do with the US trying to revive the establishment of a mini NATO in Asia within this two context. I know it's kind of mind-boggling when I, uh, read about it coming out of Washington. So I'll start— we'll start with the Chinese naval assets, and I would like to get your take into, first of all, where do you see the Chinese naval assets within next 5 years? And also within this context, Was it— what was the timing for the release of the Fujian, the aircraft carrier, the Chinese aircraft carrier, which is the third one now? How do you see this playing out within the, the security landscape in the region?

Yeah, well, China in many ways very quickly catching up and in some aspects surpassing the U.S. Navy capability. Uh, you know, just look at the Fujian, uh, aircraft carrier. It's, um, you know, it's, uh, the immediate comparison is the US USS Ford, right? The most advanced aircraft carrier in the US Navy. Now Fujian, because it was newer, it was able to leapfrog in many aspects by employing different and newer technology. So for example, the, the USS Ford electromagnetic catapult, um, which is a first, you know, the first time electromagnetic catapult has been deployed on an aircraft carrier. But the, the Ford electromagnetic catapult cannot launch an F-35, which would be a serious problem because, you know, that's, uh, that's the main workhorse for the US fifth-generation stealth fighter, and then you cannot launch it. And this is because USS Ford was at the time when it was designed, Navy, Air Force, and Marine, they're still fighting over what kind of, uh, specs they want in F-35. So by the time they finalized F-35, USS Ford was already in production, and they just didn't expect F-35 to turn out to be so heavy. And so, so that their catapult cannot launch it. And they can only launch the fourth generation fighter like F-18s. Uh, now they do have electric, uh, steam catapults in, in, in the older US aircraft carrier that can launch F-35. But, you know, there, there are a lot of advantages of, uh, you know, electromagnetic catapults over steam catapults. You know, like one thing is when it became electric you can fine dial, uh, you know, like, like how it's, it's, it's much easier to, uh, for example, to, to, to adjust for the different plane weight, um, that needs to be launched when you have an electromagnetic catapult. But, you know, but, or you can be Trump. He said, like, you know what, electromagnetic catapult, that's bogus. Let's, let's go steam all the way. You know, he's, he's gonna be the first steampunk president, you know, because pursuing the steam technology to the fullest. Because I think Trump is, uh, he grew up like, his peak year is 1980s, right? So he, he's still stuck in the era of Top Gun, right? When like the image of the steam on the deck of aircraft carrier, oh, it looks so cool, you know. That's what we're gonna stick with. Um, and so So this is another— the, the reason that Fujian was able to do this, um, uh, launch the Chinese fifth generation stealth fighters, the J-35, is because one, it's built— it's newer, um, and they also use DC current instead of AC current. Um, they, they, um, so they, they— so by, by the time they, uh, they lay out Fujian, you know, they already know what J-35 is going to be look like. And, and there's also report that Xi Jinping himself intervened personally in the construction of Fujian to, um, to, to, to instruct them to actually put in an electromagnetic catapult. Wow. And, uh, yeah, and then, well, it's not confirmed, but many sources claim that that's the case. Uh, but so, so, um, you know, it uses the latest technology and, you know, it could launch fifth generation aircraft. Now for, for U.S., people can say, well, what, we still have other conventional, uh, aircraft carriers that, that could, could launch a J-35, uh, F-35. Look, a lot of the, a lot of the Nimitz-class carrier. They're older than me. They're older than me. They're, they're due to retire in like a few years. I mean, they— like, how, how long can you keep floating like a more than 50-plus-year-old Hulk? Um, so, so that, that is one problem. And the problem is— the, the real problem is still the manufacturing capability. Uh, you know, US Pentagon admitted China has 230 times the, the naval shipbuilding capability.

That is true.

Than United States. So to even to replace all these Nimitz-class aircraft carrier that's due to, uh, retire, US will not be able to produce aircraft carrier at scale large enough the same way that China will be able to. Because China is already on their way to construct their fourth aircraft carrier, and which is going to be nuclear powered. Um, and, and, and, and, you know, like on paper, US has what, like 11, 12 aircraft carriers?

But in practice, yeah, but, but you know, some of them very old, Carl, some of them very old. They're not gonna keep up with the technology.

Yeah, in practice they only have— they could only keep like 4, you know, 4 aircraft carrier battle group deployed, you know, active deployment at any time. And so, so China is very quickly catching up in that aspect. And, and they— and going forward, that gap is going to increasingly shrink. And, and in many aspects, as I mentioned, they already start surpassing, the US Navy. This is the problem that the Pentagon recognizes, and they— their solution is, you know what, we, we know what the problem is. We know because this is our— we hollow out our, our manufacturing base so much that, you know, we lack the capability. Not a problem, we can go to our allies South Korea and Japan to help us. That's our solution. Their solution— because there's a US, uh, law actually prohibits warships from being built in foreign countries. So they're like, well, okay, what if we just retrofit our ships? We have a lot of ships that we need to retrofit. We just retrofit them in the Korean and, and, and, and, uh, Japanese shipyards. So that's, that's what they're doing. This is why they're trying very hard to loop in Korea and Japan into forming like a mini Asian NATO, right? And then there's also like NATO itself talking about expanding their presence in Asia Pacific, which I, I think that's ridiculous. They're gonna sell like this, you know, like the British keep on talking about selling their aircraft carrier from into South China Sea, but Like Britain, really? I mean, like, you can barely keep your aircraft carrier afloat right now. Like, they have to— they have two aircraft carriers, Britain. They have like the, the Prince of Wales and the, uh, HMS Elizabeth. But they, they had so much problems, they had to cannibalize one for parts for the maintenance of the other. So yeah, so like, for to, to, to, to think that they will be able to, you know, do something in South China Sea, I mean, it's It's, it's ridiculous. Um, but, but for, for US, the, the problem is the same, is that because there's so few US shipyards now, um, they're going to have to depend on, on Korea and Japan to do a lot of heavy lifting. But look, if you're gonna put all your eggs in that basket, if a war break out, you know, guess what, all your shipyards that you will be depend on It's all within Chinese missile range. That is a fact. That's, that's, that's so, so that's, that's still not going to solve the problem of the tyranny of distances, you know, because U.S. Navy basically have to cross the entire Pacific to fight China in China's backyard. And, and U.S. Navy is also facing other problems like recruitment. Uh, they, their paper, they have to lower so many, uh, standards now for recruitment because they can't get enough sailors to sign up because, hey, no, nobody wants to die for Israel, you know, or, or, or, or, or go for sure Taiwan. Um, and so, so that— those— U.S. Navy is probably, um, have most apparent problems of all the three, uh, all the major branches of U.S. military. But U.S. Navy just happened to be the one that we'll have to depend on to fight China, and they have all these problems with all these old ships that can't be replaced. They can't get enough sailors. And they're having helicopters and F-18s crashing out of sky in South China Sea, and China hasn't even fired a shot. So these are the problems that they are— these are, again, self-inflicted problems, and I don't expect them to go away anytime soon.

Or like what happened also, Carl, with the US submarines. Submarine that hit a rock and they're in South China Sea, which had nothing to do with the rock. That's a conversation for another day. But on a serious note, Carl, is this why the— based on what you mentioned for the Chinese naval capabilities, I read the statement by the Ministry of Defense, the Chinese Ministry of Defense, when they use the term, and I put in quotes, crushing the defeat for the Japanese. Is this in a sort of a message from the Chinese to the Japanese regarding the naval capabilities, or to the US for that matter?

Well, I, I have to look, read the original Chinese statement, because a lot of times they— there's some willful mistranslations into English. Yeah, yeah. So, so, uh, but, but, but, but basically right now China is trying to remind Japan not to stir up trouble, uh, in Asia Pacific. And it's, uh, um, because, because they're really pissed about this latest crossing of the red line, uh, you know, because it's a Taiwan issue for China. That's a sovereignty issue, um, that like people are, people are trying to make a case. I see so many people saying, oh, but Taiwan is already independent. When did Taiwan declare independence? They're going to declare independence from what? From which country? So those are the questions you need to answer. But, um, anyway, so, so, so right now, um, uh, yeah, I, I don't foresee a immediate problem breaking out over war over Taiwan Strait. I have maintained this for a long time, um, especially between mainland China and Taiwan. But if a third power is gonna try to get involved, then it's touch and go. It's like that, that the, the possibility for war increased dramatically. Um, so China is just sending out that warning right now, say, hey, You don't want to mess with us.

Yeah, absolutely. Well, Carl, I can't thank you enough, my friend, for really, really sharing your knowledge, your insights, your perspective, and the historical snapshot about the islands. A lot of people do not know that history. That's why they couldn't get it as to understanding the complexities of what's going on in the Orokio Islands. So I'm glad you were able to join me here, share that knowledge with the community. And on behalf of the community, we say thank you so much for carving out time for us. And I look forward to seeing you again. Thank you very much, Karl. Truly appreciate you. Hi guys, hope you enjoyed listening to Karl. He is a wealth of knowledge, literally. And it's always, always nice to hear the historical facts regarding that part of the world. So hope you all enjoy your weekend here. I'm not gonna do any live stream tomorrow, is the weekend, and I'll be working on some stories for you for next week. And hope you just enjoy the rest of the week here, chill out, just do nothing, just chill out. So look forward to seeing you next time. As always, remember, geopolitics impacts your daily life in more ways than one. Till next time, bye-bye.