China: Shanghai And Other Surprises

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April 13, 2022: China officially supports Russian efforts to deal with “Ukrainian aggression” and reunite Ukraine with Russia by invading a country that is a UN member and widely recognized as independent. Unofficially, China is critical of the Russian war on Ukraine, if only because of the negative impact on Chinese trade and diplomacy. China is also opposed to invasions of sovereign nations although Chinese claims on Taiwan are little different from the Russian claim on Ukraine, which better armed and trained Ukrainian forces have defeated so far. China was a major customer for Ukrainian military tech and wheat. For the first three months of 2022 Chinese trade with Russia was up 28 percent from 2021 while trade with Ukraine up ten percent. In 2021 first quarter trade for Russia was seven times larger than with Ukraine while in 2022 the Russian trade was eight times larger. Trade with Ukraine will be more disrupted and will take a while to recover, no matter who wins the war.

There were other problems. China was not happy with the poor performance of Russian troops in Ukraine. China was kept informed about the preparations for the invasion and asked Russia to wait until the Winter Olympics in China were over on February 23rd before invading. The invasion began before dawn on the 24th and was, according to Russia, supposed to be over in fifteen days. After about a week, China concluded that the Russian plan and the Russian military had failed. Russian troops quickly ran into trouble because of the unexpected stiff resistance by Ukrainian troops and armed civilians. China initially remained silent about the invasion and as the Ukrainian resistance increased, along with unprecedented sanctions imposed by Russia’s Western trading partners, China refused to openly provide material support for the Russian economy or military operations. China was also dismayed at the degree of European military support for the Ukrainians, despite Russian threats of nuclear retaliation. That did not dissuade the Europeans or Americans, just as it had not worked on China during their 1969 border war between Russia and China. In 1969 China had recently tested its first nuclear weapon but did not have a nuclear retaliation capability. Russia approached the Americans about joining in a nuclear attack on China. The Americans refused and criticized the Russian threats to use nukes. When China found out about that, there was a warming in the long-frosty relations with the Americans which soon (1972) led to the U.S. recognizing the Chinese communist government.

The Chinese consider themselves more astute students of history than Russians and now believe that the invasion was poorly planned and carried out. China is more willing to acknowledge problems with readiness and training in their own military, lessons that Russia appears to have forgotten. Any perceived Chinese support of this Russian disaster causes problems for China, as well as inspiring the Chinese military to pay more attention to avoiding the Russian approach.

China is not assisting Russia economically, unless it benefits China. To do otherwise would be expensive, reward Russian bad judgment and imply Chinese approval of the Ukrainian operation. With no Chinese economic lifeline available, Russia is under more pressure to end the Ukraine operation as soon as possible. The Russian plan was to rush in and occupy key areas, like the capital Kyiv and all Ukrainian ports, and then declare the war ended and call for negotiations. That didn’t work but opposition inside Russia did appear. Many prominent Russians have risked arrest by openly criticizing the invasion. China has less openly agreed with these critics by refusing to rescue Putin and the Russian economy. China has also been investing more money in its “lost territories” in Pacific Coast Russia. More Chinese are coming into these territories to live and do business while, since the 1990s, more Russians left. China expected to eventually take control of the lost territories economically and with a lot of Chinese residents. The Ukraine-related sanctions have sped up this process.

The Russian invasion is something China warned against because it was reckless, something China avoids at all costs. Now that the Russian invasion has failed and produced unprecedented economic sanctions, China is making the most of that and forcing Russia to be even more dependent on China. For example, Russia was able to use the Chinese credit card network and a new China controlled international banking system. This system is still small and new members tend to be outlaw states, but it’s a start. Ukraine, which has done a lot of business with China over the last decade, is aware that China could order Russia to halt their invasion and deal with the aftermath via negotiations. It suits China to allow Russia to weaken itself further and become more dependent on China. This is their long-range strategy to defeat Russia and retrieve the Pacific coast territory lost to the Russian monarchy centuries ago. For the moment China goes along with the Russian version of the war, in which Russia is simply defending itself from NATO aggression. China intends to be the only winner in this war and so far, that is happening.

China continues to buy and sell in Russia, as does India. China is going along with the Russian effort to get around the banking sanctions by putting the ruble on the gold standard while doing business with major trading partners in their local currency. In the case of China that’s the yuan, which is seen as a possible candidate for eventually replacing the dollar as the primary international trade currency. The Americans are helping by taking on over $7 trillion of additional debt in the last four years, raising its debt load from 3.5 percent of GDP to 12.1 percent. This has caused major inflation in the United States and loss of confidence in the stability of the dollar worldwide. Despite that, China is still very dependent on trade with the West, especially the United States. Russia has a much smaller economy that was number ten worldwide before the latest Ukraine-related sanctions and appears headed for 20th place or worse.

April 12, 2022: China is lifting covid19 sanctions in Shanghai, despite record numbers of new infections announced each day. Videos from the city show crowds protesting in front of police headquarters in a gathering that was illegal but that the police did not attack with riot police. Force was used against smaller grounds of citizens who were out and about seeking ford and other supplies to grab. There is a lot of hunger and anger among the population because of perceptions that the government doesn’t seem to care if people die from the shutdown.

The shutdowns also caused major problems for manufacturing firms in China and worldwide. While many employees of financial firms can work from home, factory workers cannot. The city was shut down after a major outbreak of covid19 was discovered in Shanghai, a coastal city of 26 million that is the center of Chinese finance and several other manufacturing industries. The infection was traced to several people from Hong Kong who had fled to Shanghai to avoid a covid19 outbreak there. Some of these apparently healthy visitors apparently had covid19 but were, like about 80 percent of those who get the virus were asymptomatic (showed no symptoms) and spread it to many in Shanghai. The current strain of covid19 spreads faster but it is less lethal.

So far has admitted several hundred thousand covid19 cases in Shanghai but, as per Chinese policy, no deaths. Over 90 percent of those who die from covid19 have preexisting conditions that could eventually prove fatal but covid19 speeds that up. In the West the custom is to blame covid19 for many deaths where the virus was not the chief factor. In China it is just the opposite, which results in very few admitted covid19 deaths. China is aware of how covid19 works and that the elderly are the most likely to die from it. That is why the elderly did not receive the Chinese covid19 vaccines and in Shanghai the elderly hospitalized for covid19 and kept separate from younger Chinese who are vaccinated. There was a larger problem with young children and babies quarantined separately, often in quarantine centers far from each other. As videos of distressed babies and young children got out the separation policy was changed.

The Chinese vaccines are less effective than Western vaccines but still provide some protection. The outbreak in Shanghai is different because the virus spread so quickly that the government felt compelled to shut down the entire city and found that it could not keep all these people, basically under house arrest, supplied with food and other necessities. At first people shouted from their windows or apartment balconies and did so in large numbers. Cell phone cameras captured this and those videos escaped China and alerted the word to what was happening there. Now there have been some “riots” in the form of people taking to the streets to protest. Among the cell phone videos getting out of China are some aerial views, apparently taken by a quad-copter, showing the largely deserted streets of the deserted metropolis. Meanwhile the virus spreads and the Chinese wall of deception and denial is crumbling.

Chinese problems with covid19 were already proliferating before Shanghai. There are still outbreaks in China and the use of misinformation and disinformation to deny that the virus came from China are unraveling. Chinese efforts to conceal the origins of covid19 eventually backfired. Initial evidence was that covid19 first appeared in Wuhan during late 2019. Chinese doctors complained that the government would not take action, as China had earlier said it would. Instead, those outspoken doctors were ordered to remain silent or else. Several of those doctors died of covid19 while a few others got out of China and were largely ignored, at least initially, by Western governments. China insisted that they had limited covid19 deaths to a few thousand and their lockdown approach kept reinfections from spreading. China tried to blame infected American soldiers, who arrived in China for a mid-2019 planned event. This claim was denied by the United States which tended to go along with the rest of the Chinese version. That eventually changed as the covid19 infection and death models proliferated and were accepted. The actual deaths in China were nearly two million. China continues to stand by its original claims but even WHO (the World Health Organization) and epidemic specialists in other countries are no longer supporting Chinese claims. The Chinese government took a big risk by not providing accurate and early reports about covid19, which they were legally required to do because of international criticism of earlier Chinese refusal to share data on new covid-type diseases. China also developed its own covid19 vaccines, which are actually not vaccines in the classic sense of providing immunity. All covid19 “vaccines” are actually antiviral medications that will lessen the impact and spread of covid19. Such antivirals have long been used to lessen the impact of the annual influenza outbreaks, which are always different because influenza, like covid19 and the common cold, constantly mutate and change. China tried to steal the superior antiviral tech the West had created and went ahead with less effective Chinese vaccines/antivirals. While most Chinese have received the Chinese antivirals, that means they are more vulnerable to continuing outbreaks of covid19.

China is a communist police state, but like all similar governments they monitor public opinion and some senior officials saw covid19 as a potential disaster for the government and worth the effort and risks to suppress details of its origins. China took a chance with covid19 and lost. This covid19 side-effect may be the most lasting and damaging of all.

In Taiwan the government issued a 28-page booklet to all citizens on how to behave if China attacks. The advice was similar to what similar pamphlets in Sweden, Finland and the Baltic States issued before the invasion of Ukraine. The Taiwanese plan to resist, even if some or all of Taiwan Island is occupied.

April 11, 2022: In southern China, covid19 has been confirmed in the city of Guangzhou. Shutdowns have been ordered and city authorities want to avoid as total a shut down as Shanghai employed.

April 9, 2022: In the Balkans, six Chinese Y-20 military transports arrived unexpectedly in Serbia to deliver Chinese FK-3/HQ-22 air defense systems Serbia ordered in mid-2020. This sale was a first in Western Europe and delivery details were kept secret. FK-3 is the export version of the relatively recent HQ-22. Described as similar to the American Patriot System, HQ-22 was introduced in 2016 by a Chinese competitor of the firm that developed and produced the HQ-9. China encourages this kind of competition and it pays off. Neither the HQ-9 nor the HQ-22 have any combat experience.

Serbia ordered an FK-3 battery, which consists of several 8x8 trucks one of them carrying the radar and fire control system while three more launcher trucks each carry and launch four missiles from canisters. There are also vehicles carrying missile reloads or maintenance equipment.

The HQ-9 was always described as roughly equivalent to the U.S. Patriot. Most of the current Chinese long-range antiaircraft systems are the Chinese designed and manufactured HQ-9. China began introducing the HQ-9 in 2001. It was a much less capable system back then. Over a decade of development was believed to have benefitted from data stolen from similar American and Russian systems. A version of the HQ-9 is deployed in ships as well.

China has been cultivating Serbia for over a decade. In 2011 China was expanding military cooperation with Serbia. This was part of China's unofficial "Partners With Pariahs" sales policy. China will hook up with anyone who might be useful, no matter the judgment of world opinion. China does business with Zimbabwe, Libya, Burma, North Korea, Iran and numerous other international bad boys. It's just business and it paid off with Serbia in a substantial sale of air defense equipment.

April 4, 2022: The Chinese military and economic threat has made possible a major expansion of the Australian military. The military and economic threat China has become in the last few years. China sought to coerce Australia to support policies, like ownership of the South China Sea and control over islands closer to Australia (like the Solomons), that Australians opposed. That led to a trade war with some Australian exports reduced. Australia is the nearest source of many raw materials, including food, that China required starting in the 1990s. As the Chinese economy rapidly expanded, Australia experienced a record period of economic growth and low unemployment. This caused problems for the volunteer military, which could not compete in terms of pay levels and living conditions, with civilian jobs. The current trade war with, and military threat from, China has made it easier to recruit and then came two years of covid19 economic shutdowns. That was a major boost for recruiting, especially when it came to obtaining people who could handle certain military jobs that required skills that have been difficult to fill. The current situation is similar to what happened after the last worldwide recession when higher unemployment made it easier to recruit. There were still problems, particularly in the navy.

China is less concerned about North Korean missiles and nukes, but that threat has turned South Korea, Japan and the United States into a more effective coalition opposing North Korean plans. For once South Korea and Japan have put aside decades of disputes over Japanese crimes during their four decades occupation of Korea that ended in 1945. Those grievances will never be forgotten but for the moment the North Korean threat has taken priority.

March 31, 2022: In Africa, Congo has threatened to review Chinese contracts that it calls unfair and possibly corrupt, particularly in the mining sector. In the last year Congo has acted. A month ago, a Congolese court took control of Congo’s Tenke Fungurume mine away from China Molybdenum corporation. According to court allegations, China Molybdenum has failed to pay millions of dollars in royalty payments on copper and cobalt ore. The court appointed a temporary administrator from Gecamines, Congo’s state-run mining authority. Chinese contracts usually contain very demanding confidentiality clauses. However, Gecamines already owns 20 percent of the mine, and the corrupt former president Joseph Kabila is no longer in charge. Even Congolese opposition leader Adolphe Muzito backs current president Tshisekedi’s efforts to investigate these contracts, including some that are far bigger deals than the Tenke Fungurume royalty case. Muzito was in Kabila’s government in 2008 when the deal was arranged. After the court ruling Muzito said that the “Sino Congolaise des Mines (Sicomines) agreement” was lopsided and Congo has failed to benefit from it.

March 28, 2022: China is alarmed at how quickly and decisively the Western nations came together to oppose the bold act of Russian aggression in Ukraine and assist Ukrainians in defeating Russian forces. North Korea shares this apprehension. This casts even more doubt on the capabilities of the North Korean military. The official North Korean reaction to the Russian problems in Ukraine is to ignore the sad state of their military and emphasize the continuing progress in the nuclear weapons and ballistic missiles programs. Most North Koreans are worrying about avoiding starvation or arrest for criminal activity, which includes not being able to pay the legal or illegal bribes demanded to keep you out of labor camps. North Korea is also upset that the war in Ukraine is pushing North Korea out of the headlines. North Korea has long considered coverage in foreign media, good or bad, as essential for keeping North Korea seen as a major military power or at least a threat that cannot be ignored.

March 25, 2022: In Africa, Malawi has agreed to a Chinese BRI (Belt and Road Initiative) memorandum of understanding (MOU). China is currently working on a $68 million water project (Lilongwe Water Program). BRI is a global Chinese effort to build, and often operate new ports, railroads and pipelines that will benefit the local, and Chinese economies.

March 18, 2022: The Philippines announced that it would allow the United States to use Filipino bases if the Ukraine crisis spread to Asia. The Philippines has an MDT (mutual defense treaty) with the United States but it is not always adequate to deal with Chinese tactics. American government priorities can change radically every four years because of presidential elections. The current U.S. president is seen as less steadfast in dealing with China and Russia. The Americans did join NATO efforts against the Russians and the Philippines hopes that extended to increased aggression from China in the South China Sea.

March 12, 2022: During the last two weeks China has been trying to convince the Philippines and the world that a three day stay visit (ending February 1st) by one of their Type 815 (Dongdiao class) AGI (intelligence collection) ships was not a violation of maritime law. China claimed the right to innocent passage through the Sulu Sea near the Filipino coast. That would be true if the AGI simply moved through the area, something that normally takes a few hours at the slowest speed. AGI ships are designed to linger and collect electronic and other information. “Dongdiao” translates as “East Investigation” and the 6,000-ton ship carries 250 people, most of them sensor maintenance and monitoring technicians who also analyze some of the data and transmit it back to China or other aircraft or warships. The Chinese AGI was approached by a Filipino frigate and told to move on. The Chinese captain ignored those commands until the frigate appeared to be preparing to open fire. This is what Filipino neighbor and ally Indonesia has done several times when they find Chinese ships operating where they are not allowed to. China is believed to be interested in the Sulu Sea because it is part of an alternate sea route if the Malacca Strait is closed to China.

At the same time China recently gave the Philippines military engineering and transport vehicles (trucks and buses) worth over $11 million. For a few years China tried to buy cooperation from the Philippines. This did not work but the military vehicles are dual-use and good quality. Filipino officials thank the Chinese for these gifts, which have no visible strings attached.

March 11, 2022: In Pakistan the first six of 25 new Chinese J-10CE fighter-bombers arrived. All of them are supposed to arrive before the 20th. Technically the first Chinese made jet fighter to be exported was the JF-17, but that aircraft is not used by the Chinese air force. Currently two jet fighters designed in China are offered for export; the J10 and the JF17, which is technically a Pakistani aircraft. While prototypes and most of the components for the JF17 were Chinese built, the main export customer was Pakistan and China never bought any, mainly because by the time the JF17 was in service (2007) the J10 was already in production and was considered a superior aircraft. Pakistan was not interested in the original J10 because it also had similar F-16s, and was very satisfied with the locally assembled JF-17. China had to offer a J10 of equal capability and lower price to get sales from Pakistan. The main selling point that worked was that the much-upgraded CE version of the J10 was an affordable answer to the French Rafale fighters India had purchased and comparable to the latest version of the F16, the F-16V.

Pakistan could not really afford these two aircraft but the Pakistani military is powerful enough to force the government to go into debt and damage the economy to pay for aircraft and other military equipment from China. The current high inflation and unemployment in Pakistan led to the unprecedented ouster of a pro-China prime minister who lost a non-confidence vote in parliament. The military might stage another coup but that would not solve the problem of excessive defense spending and if Pakistani procurement spending is reduced, China suffers because Pakistan is their largest single export customer.

 

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