`The Chinese have stationed surface ships and submarines at the chokepoints to the South China Sea. These are the straits of Malacca, Sunda, and Lombok, through which, most crucially, Japan's oil supplies go. As of a few minutes ago, President Wang cited China's 1992 Territorial Waters Act, banning military and nuclear-powered ships. Commercial shipping is allowed.'
`What's it doing?' interrupted the President.
`Some tramp steamers are going through. The big shipping lines are telling their captains to hold back.'
`I think, then,' said the President, `for the sake of tonight's assessment we should think of this blockade as not being on just Japanese or East Asian trade, but on American trade. We get a lot of stuff through those sea routes. With American national interest threatened, our thinking will be much clearer. My next question is a natural follow-on. What happens if we go in with the carrier battle groups?'
`Ultimately, they would be unable to defend themselves. But it will not be like the 1996 Taiwan stand-off. I understand that after that a policy was put in place by the PLA to fight and shed blood rather than be humiliated by a foreign hegemonistic power. So we would win, but we could take horrible casualties. Our Navy SEALS would be in hand-to-hand combat to take back the reefs. There is no reason to believe that the Chinese commandos would not fight to the death. In the sea battles, they have fifteen to twenty submarines out there. We might get nineteen of them. But two torpedoes could kill a lot of our servicepeople.
`As yet we are uncertain of support from our allies in the region. South-East Asia has become rich through pragmatism and neutrality. If they believe that China's going to win this, they're not going to let us use their ports and airports.
`Effectively, Mr President, they are daring us to go to war or give up our security role in Asia. What they lack in training and technology, they make up with balls and numbers. They also have location on their side.'
Ms Bernadette Lin, the Commerce Secretary, spoke with what had been the predominant voice in the Sino-American relationship, but she began on a personal note.
`We all heard the CIA assessment of Chinese intelligence-gathering operations here. I would like to stress one point. Please, no witch-hunts. No leaks to the press that every Chinese could be a spy. I am a Chinese-American. As a child, I fled from Shanghai in 1952. Our immigration policy doesn't come without risks. Let us accept the risks and not create a knee-jerk reaction which might effect the lives of hundreds of thousands of American citizens just because they look Chinese. It's not going to be an easy ride for any of us until this crisis winds down.'
`Your point is taken, Madam Secretary,' replied the President.
`Now, I'll be blunt,' Ms Lin continued. `Corporate America does not want confrontation with China. The country has too much to lose. In the mid-nineties, China sold $30 billion worth of goods to us. We sold $9 billion to them which meant that if there had been a trade war we would have won. Since then, that gap has closed. It's not equal yet, but China has diversified so that its exports now go in large quantities to South-East Asia, Europe, and Latin America.
`What would happen if we stopped buying Chinese goods? Sure, China would be hurt bad and people would be thrown out of work. But it would not be crippled. If China stopped buying American goods, Mr President, it would cost us maybe $15 billion this year. There are fifteen states whose economies are heavily reliant on trade with China. I'll list examples. In California, exports to China keep 216,000 people employed. In Seattle, Washington 112,000, many of them with Boeing. In Arizona, 16,000. New York, 100,000. Clearly, there would a domestic political impact with many families affected. That would be reflected by the electorate in the next elections. And to give you an idea, California has fifty-two Congressional seats going in the next election. Washington has nine; Arizona, six; New York, thirty-one. Florida, with 32,000 jobs at stake, has twenty-three seats. Throughout America there are 469 seats whose representatives will take China trade to their election platform.
`It's true that in China millions more will be thrown out of work. What are all those farmers going to do who gave up the rice paddies to set up a Barbie Doll factory? I can tell you what they're not going to do, Mr President. They are not going to protest. They are not going to vote out the government because they can't. Throughout America, there are one and a quarter million jobs which need China trade. Taking families and dependants into account, that means upwards of five million Americans would suffer severely if we let this crisis spiral.
`There are a number of blue-chip companies which consider China to be an integral part of their growth and survival. Boeing estimates that the total market for the sale of commercial jet aircraft to China through 2013 will be worth $66 billion. Other companies like Motorola and AT&T make similar sales projections. But the investments today are huge: Motorola has invested $1.2 billion in China and now makes the latest computer chips there. Hewlett-Packard and IBM both have $100 million investments as well. Auto makers have a big exposure to China d by Ford with $250 million invested in three factories making components, light trucks, and vans, and followed by General Motors with a $130 million investment in three auto parts facilities. In all our top ten investors in China have more than $4 billion invested in the country and it will grow.
`Mr President, I watched when President Jimmy Carter tried to stop selling wheat to the Russians and the business went to the Australians and the Canadians. I watched when Ronald Reagan tried to stop construction of a natural-gas pipeline in the Soviet Union, as it then was, and Caterpillar almost went out of business. And I watched as Clinton flailed about on the issue of Most Favoured Nation status for China. He learned the lesson. The simple truth is that more and more, money not war is the major point in foreign affairs. This incident in the South China Sea is regrettable but it's not going to change that.'
Foreign Minister Kimura's official car pulled out of the drive of the Prime Minister's residence and made for the Gaimusho (Foreign Ministry) in Kasumigaseki. The steel gates of the Ministry building parted as Kimura's Nissan President approached. A polite salute from the gate attendant and his limousine was pulling to a dignified halt in front of the main entrance.
Kimura waited patiently for the arrival of Mr Richard Monroe, the US Ambassador. Kimura did not like Monroe. He was too casual. He did not understand the virtues of silence. Yet he was a man to be taken seriously. Monroe was a close friend of the US President. Monroe had helped get out the Irish vote in Boston, where he was the owner of Boston Analytics Inc., a computer software design company. He was also a major party fund-raiser.
Monroe walked in to Kimura's office as if he had just walked off a tennis court. Apologizing profusely, he explained that the Gaimusho's request for his attendance at this meeting had reached him at a friend's house where he had been playing rackets. Kimura, with a half-smile on his face, inclined his head towards his guest and motioned him to sit down.
`Mr Ambassador, we seem to have a… little local difficulty in the South China Sea,' the Foreign Minister observed. `My government views the moves by the Chinese government with the utmost concern. We believe that the decision by China to seize the oil assets currently under development in the South China Sea, as well as its unwarranted attack on Vietnam, constitutes a threat to our own vital interests in the region and directly impinges upon the security of this nation. I have been instructed by my government, therefore, to invoke Article 6 of our mutual security treaty. We want a return to the status quo ante; we want China out of the South China Sea; we want you to send a carrier battle group to this region to back up those demands.'