August 10, 2012:
Disgraced (for being corrupt, popular, and overly ambitious) politician Bo left quite a mess behind. In addition to illegal deals worth billions, Bo had used his connections, charisma, and cash to befriend dozens of senior generals and admirals. Some of these officers have been heard muttering (or shouting, while drunk, at political or military gatherings) that the military should have more say in how the country is run. The military is also behind the effort to claim all of the South China Sea and the huge oil and gas deposits believed to exist there. Some officers see that offshore oil bonanza as the path to huge personal wealth.
Bo Xilai was an aggressive self-promoter who left monuments to his achievements all over the center of his power, the southwestern city of Chongqing (population 28 million). Bo's fall from power was embarrassing for the senior leadership of China because the incident put the spotlight on corruption and misbehavior at the highest levels of government. Nearly all the senior Chinese officials are, well, "dirty", as are many of their kin, and the Bo situation led to more Chinese discussing, on the Internet, other dirty leaders. At the highest levels of power the discussion is more about hanging onto power and preventing the military from getting politically ambitious.
August 9, 2012: China and Taiwan signed a new trade pact which provided stronger legal protections (or at least promises of protection and fair treatment). Taiwanese business have over $110 billion invested in China and the growing corruption there has made many Taiwanese nervous about investing more, or even keeping businesses they have in China. The fair treatment also extends to Taiwanese in China, who are often arrested by corrupt local officials when there is a commercial or any other kind of dispute.
Many Chinese businessmen wish they had similar guarantees for deals they made in North Korea. The Chinese government has urged North Korea to allow more foreign investment and establish the kind of market economy reforms that has made China rich in the last three decades. But Chinese and South Korean businesses have found that North Korea is an unreliable and dishonest partner. Most South Korean businesses in the north are shut down and Chinese businesses are trying to get their government to force the North Koreans to shape up. One Chinese businessman has gone public with the details of how North Korean officials simply stole a $38 million investment and had the Chinese managers expelled.
August 6, 2012: In Sichuan province (adjacent to Tibet) a young Tibetan man set himself on fire (to protest Chinese occupation of Tibet). This was the 45th such protest in the last three years. China responded by accusing India of supporting separatists in Tibet. India has hosted Tibetan refugees since the first ones came across in the early 1950s, after China invaded.
August 5, 2012: Two Chinese fishing ships and 37 crewmen were seized by Sri Lankan Navy warships off the coast of Sri Lanka. The Chinese were charged with poaching (illegal fishing in Sri Lankan waters). This sort of thing is common with Chinese fishing companies, who expect their government to exert pressure on countries that seize Chinese fishing ships. Sri Lanka was seen as a place where Chinese could get away with poaching. China and Sri Lanka (which has long had tense relations with India) has become the beneficiary of Chinese economic and military aid and, in short, become very friendly with the Chinese. Sri Lanka has received crucial military aid from China in the last decade, especially during the war with Tamil rebels (who received a lot of aid from Tamils in southern India). India can't become too friendly with Sri Lanka without causing political problems with its own Tamils (many of whom still support the recently defeated Tamil rebels of Sri Lanka, where Tamils have long been a troublesome minority). China has asked Sri Lanka to release the Chinese poachers.
August 3, 2012: The Japanese government has made public its unease at the growing military power of China and Chinese denials that it is building a more powerful military. Japan criticized China's growing attempts to hide military spending (an old custom in communist states), while allowing its generals and admirals to be more aggressive (as in the South China Sea). Taiwan also repeated its claims on disputed islands in the South China Sea and continued to cultivate closer military ties with Japan. Taiwan is trying to interest China in some kind of compromise over the South China Sea disputes but that isn't going anywhere. The Chinese don't just want it all, they insist the area is already there and that China is being very patient with all the trespassers.
The U.S. issued a statement calling for China to obey the rule of law in the South China Sea. A few days later Chine responded by calling the United States a troublemaker.
July 31, 2012: The air force conducted three weeks of long range deployment ("Iron Flow") exercises, with aircraft and ground support units moving long distances and setting up operations. These exercises have been going on for about a decade, growing more extensive and realistic each year.