Ever since China National Offshore Oil Corporation moved its hulky $1 billion oil rig into disputed waters just 120 nautical miles off Vietnam’s coast, the two communist neighbours and former allies have been getting stuck into each other.
Chinese flotilla, including armed vessels, have been engaging in water cannon fights as well as old-fashioned ramming against Vietnamese boats. The standoff is taking place not far away from the Paracel Islands, which the Chinese seized from South Vietnam in the dying days of the Vietnam War.
The standoff in the South China Sea has quickly spread to the Vietnamese mainland. Tens of thousands of rioters across many provinces have ransacked what they believed to be Chinese factories; however many of these turned out to be Taiwanese, Singaporean, Korean and Japanese. Several Chinese nationals have been killed and hundreds have been injured, according to various media reports.
Taiwan, a bystander in this dispute, has suffered the most from the mindless violence. The country is the fourth-largest investor in Vietnam, with more than $30bn worth of investment. Over half of the 2200 Taiwanese factories in the country have been shut down and the riots have caused billions of dollars in damages, according to Taiwanese authorities.
Though Hanoi is not orchestrating the massive demonstrations and the systematic looting of foreign investors itself, it is clear that the Vietnamese government is at least giving its implicit blessing to the anti-China brigade. Let’s not forget that Vietnam, like China, is an authoritarian country where the government will otherwise crush demonstrations and rallies swiftly. According to The Economist, some flag-draped patriots are on government payrolls, and reporters from state media are also allowed to attend the anti-China demonstrations.
What is happening on the streets of Vietnam is a déjà vu of what took place in China two years ago, when many anti-Japanese protests erupted across the country. Young, angry Chinese protesters -- also draped in red flags -- ransacked Japanese businesses and caused hundreds of millions of dollars worth of damage. Like Hanoi, Beijing tacitly approved the demonstrations until eventually they got out of control -- things got really ugly when angry youths started attacking drivers of Japanese-made cars.
The riots, together with the Chinese boycott of Japanese goods, cost Japanese companies more than $100 million, according to a Japanese government estimate. Toyota’s sales declined 4.9 per cent in 2012 for the first time since 2001 and Nissan also suffered a 5.3 per cent decline in the same year.
Both the Chinese and Vietnamese communist parties are staking their legitimacy on economic growth as well as their nationalist credentials. In the case of Vietnam, the party does not want to be seen as soft on its large northern neighbour. On the other hand, Beijing has painted itself into a corner over its more assertive foreign policy stances in both the East and South China Seas, having for years cultivated strong nationalist sentiment.
In Japan, Shinzo Abe’s conservative government has been trying hard to get its neighbours angry over the country’s controversial history during the Second World War. Abe and senior government ministers have been paying their respects at the Yasukuni Shrine, a Shinto religious site that honours Japan’s war dead, including 14 Class-A war criminals.
South Korea and China, both victims of Japanese colonialism, are predictably angry about Japan’s persistent refusal to owe up to its history. Tokyo is pushing hard to revise its six-decade-old pacifist constitution, in favour of building a stronger military force.
It seems that Asian leaders from Hanoi to Beijing, Manila and Tokyo are playing with the dangerous fire of nationalism at a time when tensions are escalating in a region that’s vital to Australia’s economic future. Seven out of 10 of Australia’s top export destinations are in the Asia-Pacific, accounting for 63.8 per cent of Australian exports.
The most dangerous flashpoint is over a few rocky outcrops in the East China Sea known as Diaoyu -- or Senkaku -- Islands. The area is currently crowded with Chinese and Japanese armed flotilla and patrol planes. US President Barack Obama has promised to come to the aid of Japan to defend these small islands in the event of open conflict with China.
The conflict over these disputed islands could potentially involve the world’s three largest economies and two nuclear-armed superpowers. During this tense time, we still see Asian leaders indulging in almost suicidal play with nationalist sentiment on their home turf. The Japanese prime minister is paying respect to war criminals; the Chinese -- to the delight to Seoul but anger of Tokyo -- opened a museum to honour a Korean nationalist who assassinated revered Japanese prime minister Ito Hirobumi.
Over the weekend, India also elected the Hindu-chauvinist Bharatiya Janata Party in a landslide victory. Its leader, Narendra Modi, is a hardline Hindu nationalist who was allegedly involved in a mass anti-Muslim riot in the state of Gujarat in 2002 when he was the chief minister there.
One of the underappreciated risks to economic growth and stability in the Asia-Pacific region is the growth of nationalism. Asian political leaders, instead of dampening these sentiments, are actively encouraging it. It is a risk we can ill afford.