November 9, 2018:
The West, but not Moslem countries, have been increasingly critical of Chinese efforts to deal with Islamic extremism by sending over a million Chinese Moslems to prison camps where can undergo “re-education”. China considers Islamic conservatism or radicalism a mental disease that can be cured by re-education. The Moslem world is silent on this, in large part because it is a known fact that China will ignore any such criticism and seek to punish (economically or diplomatically) any Moslem country that would criticize China. Many Moslem majority nations depend on China for economic, diplomatic and military support. That is important but not as much as the fact that China simply ignores any criticism about how it treats its own Moslems. China responded to the criticism from the West by insisting the camps were for imparting useful language (how to speak Chinese) and job-related skills to improve the lives of the Moslem Turks who were once the majority in Xinjiang. This “occupational training” excuse was flimsy since the government budgets for Xinjiang show no such increase in job-related training and reports from those released from the camps make it clear the “training” is all about acquiring a more cooperative relationship with the Chinese government.
Meanwhile, local officials in Xinjiang have been praised by the national government for policies that resulted in no terrorism related deaths during 2017 and (so far) in 2018. The national officials have demanded that all local opposition to Chinese (Han) culture and control be eliminated. Local officials were given authority to try anything and that has resulted in severe hardship for the original occupants and rulers of this region; the Turkic Uighurs. Xinjiang has become a test area for whatever government monitoring and control measures local officials want to try and eventually widely implement throughout China. That is the reason for the sharp reduction in terrorism or separatist activity in Xinjiang. The most obvious examples have been the introduction of a lot more new technology for monitoring the population. This includes thousands of vidcams and a very effective facial recognition system.
This is in addition to a growing list of methods used to collect data on the non-Han Chinese population, especially anything related to ethnic separatism or Islamic terrorism. This helps the government select those who will be sent to re-education camps (for a few weeks or six months or more.) The camps were first used in early 2017 and their use was rapidly expanded. There are currently several hundred thousand Moslems (most of them Uighur, ethnic Turks who used to be the majority in Xinjiang) in the 28 known re-education camps. That is out of the nine million Uighurs in the province. Uighurs are a shrinking minority as more and more Han Chinese move in. Commercial satellite photos make it possible to locate and track the expansion of these camps. There has been a tremendous expansion in the capacity of these camps since 2017.
The re-education camps contain very few Han Chinese and apparently include even more “experiments” including the use of new drugs to induce uncooperative Uighurs to undergo an attitude adjustment. A new generation of security analysis software and hardware is replacing a lot of the older manpower intensive data collection methods. This is used to identify seemingly cooperative Uighurs, especially those working for the government, and send them to the camps for treatment.
The Big Brother methods that worked in Xinjiang are showing up in Tibet, even though Tibet was never as violent as Xinjiang. But many ethnic Tibetans are still separatists and China considers that dangerous and subversive thought that must be adjusted. In areas where the new Big Brother style security is imposed, it is very difficult for foreign journalists to find out exactly what is going on. If the government detects contact with a foreigner the police investigate and action is taken.
When Too Much Is More Than Enough
Islamic terrorism is actually a minor threat compared to the economic instability the government has to contend with. For example, too many Chinese banks are, in practice, bankrupt even though on paper they are solvent. A major problem is the huge quantity of unsold housing and business properties. The government looked into this and found the situation was worse than anyone had imagined. It turned out that about 50 million housing units (mostly newly built apartments) are unoccupied. That’s about a fifth of all housing in the country. To make matters worse, a lot of the new construction (like so much else in China) is shoddy because of the corruption by builders and government officials who are supposed to prevent such fraud. A growing number of Chinese don’t believe their government can handle this mess and that results in hundreds of billion dollars’ worth of Chinese currency trying to get converted to more trusted foreign currencies (like the dollar, euro and yen).
South Asia
The Pakistani military has stopped trying to pretend and interfered decisively in the recent Pakistani elections to get a government elected that does what the generals want. The Americans have cut all military and economic aid. Pakistan was hoping the Chinese would replace the American economic and military aid but that is not working out. The Chinese don’t give aid, they provide loans which they insist be repaid. In 2023 Pakistan has to start making payments on multi-billion dollar Chinese construction loans. This turned out to be a major problem when Pakistan went to the IMF (International Monetary Fund) for the 13th time to obtain billions in loans to avoid economic collapse. The IMF was not eager to help and China had to provide the loans.
The main cause of these frequent appeals to the IMF are by now widely accepted; the Pakistani military gets too much of the government budget. The American decision to cut military aid to Pakistan is a big deal because over the last decade that aid has accounted for nearly 20 percent of the Pakistani defense budget. The U.S. aid has declined since 2010 (when it was $2 billion) but was still significant because the current annual Pakistani defense budget is nearly $9 billion. So an extra billion or so from the Americans makes a difference. While Pakistan can turn to China or Russia for all its weapons needs it won’t have access to the best nor will it get any gifts. China and Russia expect to be paid for military goods. Meanwhile, the Pakistani Army gets 47 percent of the defense budget, the Air Force 20 percent and the Navy 11 percent.
Pakistan talks about the “Indian Threat” and in terms of numbers, there is one because India spends nearly $60 billion a year on defense, the fifth largest defense budget on the planet (behind the United States, China, Russia and Saudi Arabia). Pakistan barely makes the top 20. Indian spending is 3.3 percent of GDP while Pakistan is 2.7 percent. In 2016 Pakistan boosted defense spending 15 percent but was unable to sustain that growth rate. For the last five years, Pakistan has, on average, increased its defense spending about 10 percent a year. Neighboring India spends more than five times as much. China’s defense spending ($215 billion) is the largest in the region and second largest in the world. Defense spending in South Asia has risen nearly 50 percent since 2001. The large portion of Pakistani government spending going to the military is under growing criticism inside Pakistan, mainly because Pakistan lags way behind India and China when it comes to spending on education, infrastructure and public health.
Next door India reports that so far this year border violations by Chinese troops are down 20 percent compared to 2017. But that still means there were 137 illegal border incursions by Chinese troops so far in 2018. In September China agreed to establish multiple hotlines along their mutual border and also between the defense ministries of both nations. This revives previous efforts to establish a hotline. In 2016 China and India have worked out and agreed to details of a hotline for commanders on both sides of the LAC (Line of Actual Control). Also known as the MacCartney-MacDonald Line the LAC is the unofficial border between India and China. The LAC is 4,057 kilometers long and is found in the Indian States of Ladakh, Kashmir, Uttarakhand, Himachal, and Arunachal. On the Chinese side, it is mostly Tibet. China claims much territory that is now considered part of India. There have been hundreds of armed confrontations over the last few years as one side or the other accuses “foreign troops” of crossing the LAC. The agreement fell apart when India went ahead, despite Chinese protests, and expanded its military ties with the United States.
As India achieves a higher GDP growth rate than China and will soon have more people than China it has become popular for Indians to seek other comparisons. That does not work out well. India is playing catch-up with China when it comes to explosive economic growth and India has several serious shortcomings that China is much less burdened with. For one thing, the Indian workforce is less educated than the Chinese. This is due to the rampant corruption throughout Indian public education. China, in comparison, has far higher standards in public education. While China has problems with corruption the problem is much more severe for India, especially in the government. This means key decisions (like military procurement and educational or other reforms) are delayed for years, or decades, because of corruption and political deal-making. It’s a cultural thing and India will have to work hard to become competitive with China. On a practical level, Indian military capabilities are inferior to the Chinese because of the corruption and government sloth. For example, the Indian military cannot get needed new weapons or essential support to keep existing one operational. Efforts to improve roads and other infrastructure in border areas claimed by China are way behind schedule because of the government delays and procrastination. These are not new problems but have been around for centuries. China overcame them and if India does not China will always have the upper hand in tech, economy and military power.
Korea
China continues to try and get the UN economic sanctions against North Korea reduced. This effort is part of a strategy to keep North Korea willing to support Chinese needs. China has triggered a regional arms race and the formation of a large anti-China coalition because of aggressive Chinese territorial claims. Anything North Korea can do to distract the Americans would be useful for China and Russia. But North Korean negotiations with the Americans over denuclearization are not a major distraction for the United States. China is and China is not accustomed to that much attention and scrutiny. Even though China has also complied with imposing many (but not all) of the sanctions on North Korea the North Koreans still believe China is an ally. That’s because China still tolerates a lot of smuggling. North Koreans know the Chinese can shut down smuggling if they want to and have done so in the past so the fact that China is willing to cooperate with North Korea in evading the sanctions is seen as a positive thing. Then again, China is the only powerful and prosperous friend North Korea has. Russia tries but really is too broke and weak to be much help. North Korea also believes that China is willing to live with a nuclear-armed North Korea as long as North Korea is stable and not in danger of falling apart and leaving the expensive cleanup to China. South Korea is a democracy and most of the voters are not willing to provide billions of aid in return for vague assurances that denuclearization will happen eventually, maybe.
North Korea does not wait for China to save them and has ramped up their own smuggling and other cash generating activities. As of late-2018 North Korea is still exporting weapons (rockets, small arms and ammo are showing up in Yemen, Libya and Syria). With the help of Russian and Chines partners North Korea is exporting its coal and importing oil. North Korea is also exporting more drugs like opium, heroin and methamphetamine (“meth”). These drugs have long been manufactured by the North Korean government for export to obtain foreign currency. The United States is organizing an international anti-smuggling patrol to counter North Korean smuggling at sea, particularly oil. The new joint patrol effort will include ships, satellites and aircraft from the U.S., Britain, Australia, New Zealand, Canada, Japan, South Korea and France.
November 8, 2018: Taiwan commissioned two refurbished Perry-class frigates into service. Taiwan had asked the United States to make four available but Chinese opposition resulted in that being reduced. Only two frigates were made available. It cost $177 million to refurbish and upgrade the Perry’s, which will replace two older Knox class ships Taiwan received two decades ago.
An American Internet security official revealed that the U.S. government believes China has regularly violated the 2015 agreement with China in which China agreed to halt its use of the Internet to steal data and intellectual property from the United States. Apparently, the Americans are planning retaliation.
November 3, 2018: The U.S. Department of Defense revealed that in the last two years there have been 18 “unprofessional and often unsafe” encounters between Chinese and American warships and aircraft. In the same period, there was only one such incident with the Russians. These encounters are nothing new but they have increased considerably in the last two years. Since the 1990s China has continued to aggressively confront American ships and aircraft that come close to Chinese ships in international waters or disputed areas like the South China Sea. For example in late 2013 a Chinese destroyer cut in front of an American cruiser (the USS Cowpens) which was observing the new Chinese aircraft carrier. The Chinese ship risked a collision as it moved to within a hundred meters of the 10,000 ton U.S. cruiser. This sort of aggressiveness has not been experienced by American warships since the Cold War when Russian warships would risk collision in what American sailors came to call "Chicken Of The Sea." The Chinese are also harassing American intelligence operations off the Chinese coast. For over a decade now the Chinese have been aggressively interfering with American intelligence gathering aircraft and ships. U.S. Navy survey ship operating in international waters often find themselves approached, especially at night, by Chinese fishing boats that deliberately get in the way. In some cases, the harassment includes Chinese warships and naval patrol aircraft as well. All this is reminiscent of Cold War incidents, usually involving Russian ships harassing American ships by moving very close, or even on a collision course. This was all for the purpose of interfering with U.S. intelligence operations, especially those off the Russian coast. Earlier in the Cold War Russian warplanes would fire on American intelligence gathering aircraft, shooting some of them down. This sort of thing declined when the U.S. quietly informed the Russians that American warships and combat aircraft would aggressively return fire. By the end of the 1960s, this aggressive activity diminished to the point where it was considered a minor nuisance and even that was eliminated by a 1972 treaty. The same pattern is playing out with the Chinese but for the last few years, the Chinese have continued to protest this intelligence gathering activity so close (up to 22 kilometers from Chinese territory, an area that is considered “territorial waters”). The Chinese claims in the South China Sea made these encounters even more frequent.
November 2, 2018: China has agreed to provide the $6 billion loan to Pakistan to help avert an economic crisis there. Poor Pakistani fiscal policy made it difficult for Pakistan to obtain a bailout from the IMF (International Monetary Fund) and China was the only alternative.
November 1, 2018: Australia and its northern neighbor Papua New Guinea (PNG) have agreed to build a naval base to discourage Chinese encroachment. PNG will provide the little-used World War II naval base on Manus Island (northeast of Papua New Guinea) and Australia will pay for the base to be refurbished and upgraded so that PNG, Australian and allied warships can use it. The Manus base was used less and less after the 1960s and most of the original facilities fell into disrepair. The base is still used by PNG for some of its patrol boats.
October 31, 2018: In southwest Pakistan, local rebels killed five Chinese who were building a housing complex for more Chinese workers. A week later a local Baluchi separatist group took credit for the killing. Pakistan said it would catch the killers. Last August Pakistan also agreed to build a walled and restricted residential area near the port of Gwadar to house half a million Chinese working in Pakistan. The Chinese construction work on the new Pakistani Gwadar port facilities are visible to anyone on the ground or flying by and in 2017 it was noticed that some features of the new port and airport facilities are clearly intended for military use. India has long accused China (despite denials) was planning to use Gwadar as a base for Chinese warships and naval aircraft. Pakistan never had a problem with Chinese military using Gwadar as it helps keep local troublemakers out. Pakistan has assured China that there would be no terrorist violence against Chinese working on upgrading the port of Gwadar and land links north to China. Pakistan is willing to pay a high price to get CPEC (China-Pakistan Economic Corridor) done because it means Pakistan has an ally against Iran and even Western powers that might have some violent disagreement with Pakistan. Best of all China is picking up most of the $55 billion cost. In early 2017 China and Pakistan finally signed the agreement that granted China a 40 year lease on new facilities China is building in the southwestern port of Gwadar. The lease grants China most (over 80 percent) of the revenue brought in by port and free trade zone operations. China usually imports its own workers from China to do most of the work on projects like this. By 2022 China expects to have about half a million Chinese in Pakistan, some of them with their families. The easiest way to provide protection is to have most of them live in a heavily guarded and restricted access area.
Gwadar is a key part of CPEC and it has the misfortune of being in a province (Baluchistan) that does not want to be part of Pakistan. China and the Pakistanis try to ignore this by not reporting on non-Islamic terror attacks on CPEC construction projects. The government has long been accused of suppressing news of tribal separatists in Baluchistan attacking government targets and especially those related to CPEC. The separatists claim they regularly carry out attacks on CPEC construction projects, but most of their attacks are still directed at Pakistani security forces and government facilities.
October 30, 2018: In the South China Sea China has established weather stations on three artificial islands and is continuing to increase the military capabilities of these artificial islands. The “weather station” sensors also make it easier to monitor aircraft and ship activity in the area. This has caused problems in the Philippines where public opinion favors vigorously opposing these moves while the government does not want to offend the Chinese and endanger the growing number of Chinese economic programs in the Philippines. The government is accused of being bought by the Chinese while the government points out that opposing the Chinese claims in the South China Sea and off the Filipino cost is futile because the Chinese are much more powerful militarily and economically.
October 29, 2018: South Korea complained to China that another Chinese military aircraft had violated South Koreas’ ADIZ (Air Defense Identification Zone). So far in 2018, there have been six Chinese intrusions. The latest incident involved a Y-8 reconnaissance aircraft that flew in and out of the South Korean ADIZ three times in one day. This is all about a 2013 China decision to establish new ADIZ that overlapped South Korean, Philippine and Japanese air space (and ADIZs). China demanded that any foreign military or commercial aircraft request permission before flying into this zone. South Korea and Japan protested while the United States quickly flew some B-52s into the disputed zone without asking for Chinese permission. China protested and the United States ignored them.
The United States has banned exports to Chinese tech firms that have been caught stealing American technology. This tech theft has been going on for several decades without a strong response from the American government. That has now changed. Russian tech was plundered even more heavily and earlier by the Chinese and Russia has been unsuccessful in getting the Chinese to stop. Now that the Americans are acting China has adopted a “who us?” attitude. China is in the weaker position here because their economy is far more fragile than the American one. Pretending to ignore American actions is a reasonable strategy for China since there is always the possible that a new government will gain power in the United States, one that is more susceptible to settling this economic dispute in a manner acceptable to China.
October 23, 2018: China revealed that trade with North Korea declined 57 percent this year (through September) compared to the same period in 2017. Imports from North Korea fell 90 percent while exports to North Korea fell 38 percent. In 2017 North Korea imported $640 million in luxury goods from China. It’s unclear how much that declined in 2018. The luxury goods (mainly cars, computers, flat screen TVs and appliances) are largely for senior officials who have done good work.
October 22, 2018: Two U.S. Navy ships (a destroyer and a cruiser) passed through the Taiwan Strait (the waters between Taiwan and the Chinese mainland) as a form of FONOP (freedom of navigation operation). What made this trip through the Taiwan Strait (which American warships do regularly) is that for the first time since 2007 the U.S. Navy officially announced the event. That annoys China but there was no military response to the passage of the American warships. This comes after another FONOP, at the end of September in the South China Sea where Chinese warships engaged in some “chicken of the sea” maneuvers against the American destroyer involved. At one point a Chinese frigate came within 40 meters of the American warship. That FONOP involved moving closer than 22 kilometers from Gaven and Johnson reefs in the Spratly Islands. China has turned these two reefs into artificial islands and built military bases on them. Contrary to international law China now claims these reefs (and most of the South China Sea) as part of China.
October 19, 2018: The United States announced it was withdrawing from the 1987 INF (Intermediate-Range Nuclear Forces) in which the U.S. and Russia (Soviet Union) agreed to ban the production and use of land-based missiles, especially ones with nuclear warheads, with a range of 500-5,500 kilometers. By 1991 2,700 missiles had been withdrawn from service and the agreed upon ten years verification continued into the 1990s even though the Soviet Union dissolved in 1991. The American withdrawal announcement was in reaction of Russian violations of the treaty (like some versions of the new Iskander and RS-26 ballistic missiles) and violations of other important nuclear disarmament deals (like the 1994 one that got Ukraine to surrender its nukes in return for a Russian guarantee that it would never seek to annex all or part of Ukraine. Another factor is that while China is not bound by the INF it is producing weapons that violate it. Russia immediately denounced the Americans, who are sending senior negotiators to Russia to discuss the matter.
Russia sees the Americans leaving INF as a major setback because until now Russia has been able to violate several Cold War era arms reductions treaties with impunity as Russia sought to rebuild its empire using the excuse that NATO was conspiring to conquer or contain, Russia. On a more practical level, the poor condition of the Russian economy plus the sanctions imposed for the annexation of Ukrainian territory has reduced Russian military capabilities. This is particularly true when it comes to producing new weapons systems. Russia has become like Iran, announcing new weapons that are little more than a press release and some unworkable prototypes.
The Russians also know this American decision is really aimed at China which, and the Americans know and the Russians refuse to admit, has a more powerful military than Russia (for the first time in centuries). The Chinese lead is growing and unlike the United States or NATO, has very real and recently (1970s) fought over claims on Russian territory (the Far East and parts of eastern Siberia). China has very deliberately never renounced these claims, not after the Chinese communists took over China in 1949 and not since. Now Russia is increasingly economically dependent on China, a condition that is getting worse for Russia and appears headed for China getting its disputed territories back via economic not military conquest. For the moment Russia plays down the Chinese threat and makes much of the imaginary one posed by NATO.
October 17, 2018: A Russian container ship is stranded in a Chinese shipyard (where it has been undergoing repairs) because the shipyard owner fears getting hit with American sanctions against Gudzon Shipping, the company that owns the Russian ship. Gudzon was hit with sanctions in August because its ships were caught violating North Korean sanctions by transferring oil to North Korea tankers at sea. Normally that activity is not detected but increasingly it is because American, Japanese and South Korean intelligence agencies have been tracking North Korea’s small merchant ship fleet. Another Gudzon ship is being held in a South Korean port.
Venezuela has switched to the yuan and euro for international transactions. American sanctions have made it “too dangerous” (according to Venezuela) to use the dollar for this.
October 16, 2018: In two separate incidents Burmese Air Force F-7/MiG-21 fighters crashed today. One was weather related while the other was equipment related. One pilot died as did a civilian on the ground. The Burmese still operates their aging F-7s because the more modern alternative is too expensive. In late 2009 the air force ordered more MiG-29s from Russia, as part of a plan to retire its fifty or so F-7s. Nine years later there are only 16 (of 31) MiG-29s flyable and the effort to obtain the more MiG-29s, train the pilots for them and to replace all the F-7s have stalled. There are still about twenty F-7s in service. They are cheaper to operate than the MiG-29s but more dangerous. The F-7 is a Chinese copy of the 1950s era Russian MiG-21. The more capable and expensive MiG-29 (a 1980s design) never did replace all the Mig-21s and F-7s still in service. This is particularly the case in nations like Burma who do not face a real aerial threat.
October 12, 2018: After 18 months of negotiations Burma and China have reached an agreement on how to finance and manage the new port China wants to build in northwestern Burma (Rakhine State). The original proposal was for China to take an ownership share of 85 percent of the new port being built at Kyaukpyu. The Chinese have agreed to reduce their share to 70 percent and expand the capacity of Kyaukpyu in line with demand, not all at once. Burma would be able to control the growth of the Kyaukpyu economic zone and this prevents Burma from getting stuck with more debt than it can handle. The Chinese are financing and building the port facilities there and offered to convert what was originally a $9 billion loan into an ownership stake. This would give China control of yet another newly built port near India. This proposal was not unexpected and became more likely after the completion (in 2015) of a 770 kilometer oil pipeline from China. The pipeline can move about 4.5 million barrels of oil a day. Back in 2013 a 2,500 kilometer natural gas pipeline from Burmese gas fields into China was completed and began operation. About a third of the pipeline is in Burma, the rest is in China. This pipeline delivers 10 billion cubic meters of natural gas a year. This is equivalent (in terms of energy) to 15 million barrels of oil. The Burmese gas replaces the more expensive liquefied natural gas in three provinces of southwest China as well as eliminates the need for 30 million tons of coal a year (a major source of air pollution). The success of the pipeline deal led to a January 2016 agreement that had Chinese firms investing over $9 billion to develop a SEZ (Special Economic Zone) around the pipeline terminal that will include the Kyaukpyu deepwater port and a huge (1,000 hectare/2,500 acre) industrial park. China offered an additional inducement to allow the port ownership. If this was permitted China would abandon construction of an unpopular dam in Kachin State. This dam destroyed much land long used by local tribes and sends over 80 percent of the electricity generated to China. Burma was willing to negotiate and now there is a deal.