Showing posts with label China. Show all posts
Showing posts with label China. Show all posts

27 May 2017

CPEC might create geo-political tension between India and Pakistan: UN report

A report by the United Nations has said the bilateral China-Pakistan Economic Corridor (CPEC) might create geo-political tension between India and Pakistan and ignite further political instability.

The report is produced by the United Nations Economic and Social Commission for Asia Pacific (ESCAP) at the request of the Chinese government and aims to inform the implementation of the Belt and Road Initiative (BRI).

The report expresses concern over the Kashmir dispute since the CPEC crosses over the region and might escalate tension between India and Pakistan.

The political instability in Afghanistan could also limit the potential benefits of transit corridors to population centres near Kabul or Kandahar, as those routes traverse southern and eastern Afghanistan where the Taliban are most active.

PLA Vows to ‘Build an Indestructible Combat Force’ Subservient to Xi

By Arthur Dominic Villasanta 

The generals commanding the five major services of the People's Liberation Army (PLA) have promised their unstinting support for Chinese president Xi Jinping's effort to reshuffle and reorganize the PLA, which is the armed force of the Communist Party of China (CPC).

Xi met with commanders of the 84 corps-level units he earlier reorganized or established and issued instructions to them. He ordered all these units to adhere to the CPC's leadership and obey the CPC Central Committee and the Central Military Commission (CMC), which he heads as its chairman.

Xi said the 84 units as crucial parts of a "new system," and called on these units to safeguard China's sovereignty, security and developmental interests.

Chinese state-controlled media said all PLA officers and soldiers pledged to obey the CPC Central Committee, the CMC and Xi to enhance combat readiness and "build an indestructible army."

26 May 2017

** Countering China’s submarine operations in South Asia

BY Abhijit Singh

As Indian Prime Minister Narendra Modi visited Sri Lanka earlier this month, reports emerged that the Sri Lankan government had turned down China's request for a submarine docking in Colombo harbor. Beijing, apparently, wanted one of its submarines (ostensibly on its way to the Gulf of Aden for 'anti-piracy' patrols) to make a logistical stopover at a Sri Lankan port, but Colombo is believed to have quietly declined, after which the submarine is supposed to have been diverted to Karachi.

The Sri Lankan government's decision to nix the Chinese request is likely to have been shaped by an experience three years ago, when the docking of a People's Liberation Army Navy (PLA Navy) submarine in Colombo resulted in a firestorm of protest from New Delhi. Acutely conscious of India's strategic sensitivities around Chinese naval presence in Sri Lanka, Colombo this time around moved quickly to avoid a repeat of the incident.

If rejecting China's proposal made for startling optics, the message seemed directed at the political class in New Delhi. Indian observers found it curious that Sri Lankan sources cited in initial media reports were eager to portray Colombo's refusal to allow the submarine's docking in Colombo as an act of Sri Lankan solidarity with India. More strikingly, however, Beijing's request for the submarine docking nearly coincided with Modi's visit to Colombo, raising doubts about China's intentions in raising the matter in a manner that would ensure it soon went public.


Pravin Sawhney

Staying away from a potent regional power is not an option for India. Conflicts with Beijing need quick resolution for a productive Act East policy

India needs its Henry Kissinger who could advise US President Donald Trump that US-Sino relations need not — and should not — become a zero-sum game. In a dramatic turnaround which caught analysts by surprise, Trump moved from a confrontationist to cooperative approach with China within 100 days of assuming the presidency.

Not so with Prime Minister Narendra Modi. Brushing aside the glaring national power-difference with China, and the high stakes involved in hostility, he seems to have sought refuge in perception management for political dividends. There is no other way to rationalise India’s outright rejection of Chinese invitation to him and six Cabinet Ministers to participate in the recently concluded Belt and Road Forum (BRF) in Beijing.

India Objects to China's Belt and Road Initiative—and It Has a Point

by Alyssa Ayres

Journalists take pictures outside the venue of a summit at the Belt and Road Forum in Beijing, China, May 15, 2017. (Thomas Peter/Reuters)

The grandiose Belt and Road Forum—a symbol of China’s foreign policy stepping-out as a global connectivity visionary—kicked off on May 14 with a notable absentee: India.

On May 13, India’s Ministry of External Affairs released its formal response to a question about Indian representation at the Belt and Road Forum, attended by “nearly three dozen” heads of state and dozens of senior officials from around the world. It’s worth reading in full.

The statement abandons the typical language Indian officialdom crafts to be as inoffensive as possible to the greatest number of countries. Citing India’s commitment to physical connectivity “in an equitable and balanced manner,” the statement itemizes a series of principles for infrastructure projects that sound like a World Bank investment monitoring report: “must be based on universally recognized international norms, good governance, rule of law, openness, transparency and equality” “must follow principles of financial responsibility to avoid projects that would create unsustainable debt burden for communities”“balanced ecological and environmental protection and preservation standards” “transparent assessment of project costs” “skill and technology transfer to help long term running and maintenance of the assets created by local communities” “must be pursued in a manner that respects sovereignty and territorial integrity” India obviously believes that Belt and Road projects do not meet the above criteria.

China Can’t Sustain Its Debt-Fueled Binge, Moody’s Says


SHANGHAI — China has gone on a spending spree, borrowing money to build cities, create manufacturing giants and nurture financial markets — money that has helped drive the economic powerhouse in recent years. But the debt-fueled binge now threatens to sap the energy of the world’s second-largest economy.

With its economy maturing, China has to pile on ever more debt to keep its growth going, at a pace that could prove unsustainable. And the money is increasingly flowing through opaque channels that operate outside the regulated banking system, leaving China vulnerable to blowups.

A major credit agency sounded the alarm on Wednesday, saying the steady buildup of debt would erode China’s financial strength in the years ahead. The agency, Moody’s Investors Service, cut the country’s debt rating, its first downgrade for the country since 1989.

China’s debt problems stem from the global financial crisis in 2008. As world growth faltered, China unleashed a wave of spending to build highways, airports and real estate developments — all of which kept its economic engine chugging.

China’s silent debt bomb for Pakistan


Excessive liquidity making its way from Chinese banks to Pakistan does not bode well for its modest economy

History shows that when a country’s debt-to-GDP ratio climbs above 200 per cent, a red flag goes up. China’s total debt at $27 trillion is now 277 per cent of its GDP. At first glance, the principal worry for China is its over-leveraged state sector. Local governments have used cheap credit for years to fuel infrastructure growth. Many gleaming new Chinese cities built during the boom period are today ghost towns with unoccupied residential towers and empty streets.

Chinese GDP has slowed significantly from its breakneck speed of 10 per cent a year in the mid-2000s. China’s economic statistics are not entirely reliable and the official GDP growth rate of 6.8 per cent for fiscal 2017 can be discounted to around 5.5 per cent.

State and local government debt is a concern because most state enterprises have borrowed heavily from banks. Defaults could set off a banking crisis that will be difficult to contain. Li Yang, a senior researcher with the leading government think-tank, the China Academy of Social Sciences (CASS), said: “The gravity of China’s non-financial corporate debt is that if problems occur with it, China’s financial system will have problems immediately. It’s a fatal issue in China. Because of such a link, it is probably more urgent for China than other countries to resolve the debt problem.”

Calming the Waters in the South China Sea: A Win–Win for China

By Michael Vatikiotis

A year ago, there were real fears that contested claims over tiny specks of coral in the South China Sea could spark a war in Southeast Asia involving China, the 10 ASEAN member states and the US. The risks greatly multiplied after a special tribunal convened in The Hague under the Law of the Sea ruled in July 2016 that China’s territorial claims in Philippine waters had no legal basis. What has transpired since then demonstrates the pragmatism of regional states, the limited extent of US influence in Asia, and says a lot about how China intends to wield power.

There was some dangerous brinkmanship in the lead-up to the July ruling. The US and China postured aggressively, using a mixture of rhetoric and sabre-rattling. China showed no sign of backing down from its claims, swiftly building runways and installing weaponry on some of the disputed islands. The US sailed warships and flew aircraft close to some of the islands, claiming the right to conduct freedom of navigation operations.

Strategic Assessment: China’s Northern Theater Command

By: Peter Wood

At the end of April, China’s Defense Ministry announced it would be conducting “live fire drills” near the border with North Korea (MOD, April 27). This followed weeks of rumors that the PLA was deploying in large numbers close to the Korean peninsula, which the MOD spokesperson subsequently denied (MOD, April 27). North Korean revelations of new missile types, several missile tests and histrionic response to U.S. deployment of THAAD missiles have all contributed to escalated tensions between China, the U.S. and both North and South Korea. Further emphasizing the gravity of the situation, U.S. President Donald Trump said that “we could end up in a major, major conflict” (Reuters, April 28). An examination of China’s Northern Theater Command, its military organization responsible for Northeast Asia, provides insight into China’s interests in this region, and particularly toward the Korean peninsula.

China Has a Powerful Air Force (and One Big Flaw It Can't Easily Fix)

Dave Majumdar

China is determined to close that gap, but it has not yet succeeded in doing so. Last year, Beijing setup the Aero Engine Corp. of China (AECC) as part of its efforts to solve the problem. The firm has $7.5 billion in capital and 96,000 employees. According to a CNN report, Beijing's most recent five-year development plan states that developing and producing indigenous engines is one of China’s most important goals.

China has the money and the willpower to develop its own aerospace engine industry. It’s just a matter of time before Beijing masters jet engine technology and starts developing and mass-producing its own propulsion systems. When that day comes, China will be independent of Russian engine technology and might indeed become a major aerospace industrial power in its own right.

Will the Sukhoi Su-35 Flanker-E be the last jet fighter that China imports? The Chinese government’s official media certainly seems to believe so. “With the commissioning of the J-20, the Su-35 will soon lose its value in the Chinese market,” the People’s Daily states.

China’s Soft Power, Part 3: Why A Global Rise of Strongmen Won’t Boost Beijing’s Appeal

As I noted in previous blog posts, China has in recent years embarked upon a global soft power offensive. This charm offensive has included an expansion of Xinhua and other state media outlets into many new markets, as well as professionalizing these news services and hiring many capable reporters. The new charm offensive has included vast increases in aid, much of it part of massive new concepts like One Belt, One Road. It has included an increase in assistance for educational exchanges, new programs for training of foreign officials coming to China on short courses, and an overall effort by Xi Jinping and other senior leaders to portray Beijing as a kind of defender of the global order—at least on trade and climate change, two issues where U.S. leadership appears to be retreating.

This attempt to portray Xi as the new defender of the global order was most evident during his visit to Davos, in January. There, he told attendees at the World Economic Forum that Beijing would protect free trade rules and norms, warning that “no one will emerge as a winner in a trade war.”

In my previous post, I wrote that, at least in Southeast Asia and Northeast Asia, China’s massive soft power offensive is not likely to succeed. A decade ago, when I wrote a book on China’s then-rising soft power, it might have; Beijing was perceived more favorably by its neighbors back then, in part because it had been relatively modest in exerting its hard power influence in Southeast Asia. Now, after a decade of squabbling over the South China Sea and East China Sea, and a rising Asian arms race, China’s hard power has become significant, and threatening to neighbors. This hard power, delivered in a manner many Southeast Asian nations view negatively, undermines the entire soft power effort.

Chinese Defense Adviser Says Djibouti Naval Facility Is A Much-Needed ‘Military Base’

By Minnie Chan, 

An influential Chinese defence adviser explicitly called the navy installation China is establishing in the East African country of Djibouti a “military base” and said China will need more facilities like it to protect the nation’s growing overseas interests.

Professor Jin Yinan, a retired major general and former director of the strategic research institute at the PLA’s National Defence University, told an open forum in Hong Kong on Thursday that he expects the project will be finished and soon put into service. But his description of the installation as a military base was a striking departure from Beijing’s past descriptions of the project as a “support facility”.

“We said in the past that we would never build an overseas base but now we build one. Why?“ Jin said. “Will China copy the US to seek hegemony in the world? No. We have to protect the Chinese maritime interest faraway.”

Why the U.S. Navy Fears Russian and Chinese Submarines

Dave Majumdar

Even if the Navy did set the requirement for the number of SSNs at a higher level, it is not clear what the service can do to address the shortfall. Richardson said, for example, the service could look at further extending the lives of some of its Improved Los Angeles-class submarines and building an additional Virginia-class boat in fiscal year 2021 onwards so that production remains at two SSNs per year. “We’re looking at every trick we’ve got,” Richardson said.

Ultimately, the Navy will need to increase submarine production if it wants to make up for the submarine deficit, but that will mean that Congress will have to increase the service’s shipbuilding budget.

Enemy submarines remain the single most dangerous threat to the United States Navy’s aircraft carriers and its surface fleet at large. However the service is working on improving its anti-submarine warfare (ASW) capabilities as the once-dormant Russian undersea force reemerges and China grows its fleet.

While anti-ship cruise and ballistic missiles often capture the lion’s share of the attention, submarines armed with Russian-made 533mm and 650mm waking-homing torpedoes are among the only threats that can actually sink an aircraft carrier. “A torpedo properly placed under the right part of the keel is one of the few things that can actually flatout sink an aircraft carrier,” retired U.S. Navy Capt. Jerry Hendrix, director of the Defense Strategies and Assessments Program at the Center for a New American Security told The National Interest.

Chinese Industrial Spies Cast a Wider Net


One of the emerging trends in today’s expanding cyber espionage landscape has been China’s emergence as the leading practitioner of economic cyber espionage.

What does the trajectory of Chinese economic espionage look like, and where do we still see barriers to the establishment of effective norms barring the practice before it becomes common among developing countries that will soon possess their own cyber capabilities?

Cyber economic espionage is the theft of intellectual property, trade secrets, and business intelligence to gain an advantage in negotiations. It is distinguishable from more traditional, and more accepted, forms of political espionage.

However, practical enforcement against economic espionage based on intent is hard, and such differentiation implies that economic well-being and national security may not be deeply linked.

25 May 2017

One Belt One Road: How India Can More Than Match China’s Grand Design

Jay Srinivasan

A market-driven, conservative capital-spending, and more cautious India has distinct advantages that China does not.

China strode big and tall in its “coming out” ceremony, its biggest and grandest demonstration of emerging big power status, at the Belt and Road Forum in Beijing on Sunday. The event and the importance the country attaches to it were not lost on most countries, especially India, which chose to not participate and did not send a delegation.

The monumental strategic project that China has referred to under various names over the years – “One Belt One Road” (OBOR), “Belt Road Initiative”, etc - is basically envisaged as a modern-day equivalent of the Silk Road that traversed Eurasia in mediaeval times. In its modern avatar, China has re-envisioned it as an economic corridor connecting landmass and sea stretching from the Pacific Ocean to the Mediterranean Sea on the one hand and from South China Sea to the Indian Ocean on the other.

What’s driving China’s New Silk Road, and how should the West respond?

Kadira Pethiyagoda

The Silk Road Summit, covering China’s One Belt, One Road (OBOR) initiative, is as much about celebrating Beijing’s rise as the 2008 Olympics were. For the first time in the history of the Westphalian system, Asian and other non-European heritage countries are not only ascending to central places in the global order, but are refashioning its structure.

Unprecedented in size and scope, China’s infrastructure project promises investments of around $1 trillion (though only $50 billion has been spent so far), covering countries accounting for 60 percent of the world’s population and one-third of global GDP (though this includes critic of the plan, India). All this occurs at a time when Western global leadership is hamstrung by internal rifts. If policymakers are to respond to China’s global thrust, they must understand the factors behind it and reflect on some of the conventional wisdom that has placed the West at a disadvantage in certain respects.

China and Africa: Changing the Narrative in 2017

By Aubrey Hruby

Aubrey Hruby is a nonresident senior fellow at the Atlantic Council and co-author of The Next Africa: An Emerging Continent Becomes a Global Powerhouse. This piece is part of a special RCW series on the U.S.-China geopolitical relationship. The views expressed here are the author’s own.

The much-discussed and controversial China-Africa relationship has evolved greatly over the past few years, but common perceptions have not kept pace with changing realities. China has become Africa’s largest and fastest-growing trading partner, pledging $60 billion-worth of funding to the continent in 2015. It has been cast as an exploitative “neo-colonial” business partner over the past two decades -- one with little interest in forging genuine win-win deals with African nations. This view has some merit given the opaque, government-to-government nature of China’s relationship with the continent. There are, however, indications that China and African countries are developing commercial ties that are more balanced, diversified, and beneficial to both regions. China and the African continent collectively contain a third of the global population and have recorded the fastest growth rates in the world over the past 15 years.

Can China Afford Its Belt and Road?

Christopher Balding 

China's just-completed conference touting its Belt and Road initiative certainly looked like a triumph, with Russian President Vladimir Putin playing the piano and Chinese leaders announcing a string of potential deals and massive financial pledges. Underneath all the heady talk about China positioning itself at the heart of a new global order, though, lies in uncomfortable question: Can it afford to do so?

Such doubts might seem spurious, given the numbers being tossed around. China claims nearly $900 billion worth of deals are already underway, with estimates of future spending ranging from $4 trillion to $8 trillion, depending on which Chinese government agency is doing the talking. At the conference itself, Chinese President Xi Jinping pledged another $78 billion for the effort, which envisions building infrastructure to link China to Europe through Asia, the Middle East and Africa.

From no other country in the world would such pledges be remotely plausible. Yet even for China, they'll be difficult to fulfill without clashing with the country's other objectives.

The first question is what currency to use for all this lending. Denominating loans in renminbi would accelerate China's stated goal of internationalizing its currency. But it would also force officials to tolerate higher levels of offshore renminbi trading and international price-setting. So far, they've shown little appetite for either.

May 17, 2017 | 09:00 GMT For China, All Roads (and Belts) Lead to Europe

China's Belt and Road Initiative encompasses six economic corridors. But in geographic and ideological terms, Europe represents the end of the new Silk Road. Increased connectivity with Europe could offer China a chance to expand its access to new markets, as well as to high-tech and strategic assets, thereby facilitating its domestic industrial reform plans. Despite Beijing's stated goal of fostering greater integration throughout Eurasia with its Belt and Road scheme, however, its approach on the Continent has so far emphasized bilateral or subregional agreements with states in Central and Eastern Europe, as well as the Mediterranean. The strategy has raised concerns among the European Union's central powers that Beijing's influence in the countries could threaten their own, particularly as the bloc's political and economic rifts widen.

For centuries, trade between Europe and China along the ancient Silk Road fluctuated as each side weathered cycles of prosperity, war and instability — a trend that continues to this day. China is currently in the midst of a decadelong economic and social rebalancing to ease its economic and supply chain reliance on its eastern coast. At the same time, it is eager to project power abroad commensurate with its economic and military clout. In Europe, meanwhile, rising nationalist movements and enduring disagreements over economic matters have paralyzed the European Union at a time when the bloc is contending with issues such as Russia's activities in its borderlands and a new political order emerging in the Middle East. Beijing views the parallel challenges facing China and Europe as an argument to increase cooperation between the two through the Belt and Road Initiative.

China Reaches into its Cyber Toolkit to Wage Economic Warfare


When Beijing got the word that the United States was accelerating the deployment of its Terminal High Altitude Area Defense (THAAD) system to South Korea as a response to North Korea’s latest missile tests, senior Communist Party officials went, no pun intended, ballistic. The official Chinese news agency Xinhua wrote that the deployment of THAAD will lead to an increased arms race in the region and threatened that more “missile shields of one side inevitably bring more nuclear missiles of the opposing side that can break through the missile shield.”

Meanwhile, the Chinese government has increased the pressure on South Korean private firms operating in China as a punishment and warning for Seoul’s decision. Lotte, a South Korean conglomerate that sold the government a golf course to be used for THAAD, felt the pain almost immediately upon the announcement of its role in the defense battery’s positioning. Chinese authorities shuttered dozens of Lotte stores on the mainland, using the flimsy excuse that the government had just discovered that the stores did not comply with fire regulations. Beyond the closure of the physical stores, Lotte’s website was brought down and Lotte Duty Free suffered a distributed denial-of-service attack originating from Chinese internet addresses. Initial estimates of lost business and damage from these cyber attacks are in the hundreds of thousands of dollars.