Chinese Military,Political and Social Superthread

[Edward Campbell]

Here is an informative article, reproduced under the Fair Dealing provisions of the Copyright Act from BBC News:

http://www.bbc.co.uk/news/world-asia-china-22163599

China 'reveals army structure' in defence white paper
China's increased military spend has worried many of its neighbours

16 April 2013

The army has a total of 850,000 officers, while the navy and air force have a strength of 235,000 and 398,000, China said in its defence white paper.

The paper also criticised the US's expanded military presence in the Asia Pacific, saying it had exacerbated regional tensions.

China's defence budget rose by 11.2% in 2012, exceeding $100bn (£65bn).

The defence white paper, which state media describe as China's 8th since 1998, emphasised China's "unshakable national commitment... to take the road of peaceful development".

However, it highlighted "multiple and complicated security threats" facing China, and China's need to protect its "national unification, territorial integrity and development interests".

'Strategic deterrence'

The white paper reveals details of China's military structure. According to state-run news agency Xinhua, this is the first time such information has been disclosed publicly.

Correspondents say this appears to be part of an effort, on the part of the Chinese military, to become more transparent.

The territorial army has 18 combined corps in seven military area commands: Beijing, Nanjing, Chengdu, Guangzhou, Shenyang, Lanzhou, and Jinan.

Source: http://en.wikipedia.org/wiki/PLA_Military_Region ~ not included in the BBC article

The air force has 398,000 officers and an air command in the same seven military areas, while the navy commands three fleets: the Beihai Fleet, the Donghai Fleet and the Nanhai Fleet, the paper said.

The paper also describes the role of China's second artillery force, which contains China's nuclear and conventional missile forces.

The force is crucial to China's "strategic deterrence", and is "primarily responsible for deterring other countries from using nuclear weapons against China, and carrying out nuclear counterattacks and precision strikes with conventional missiles," the paper said.

Maritime disputes

The paper also criticised the US's increased presence in the region.

"The US is adjusting its Asia-Pacific security strategy," it said, adding later that "some country has strengthened its Asia-Pacific military alliances... and frequently makes the situation there tenser."

The US has increased its military presence in Asia in recent years, as part of President Barack Obama's "pivot to Asia".

The white paper also addresses "issues concerning China's territorial sovereignty and maritime rights", criticising Japan for "making trouble over the issue of the Diaoyu Islands".

The islands, known as Senkaku in Japan and Diaoyu in China, are controlled by Japan but claimed by both China and Taiwan.

Separately, the paper describes "'Taiwan independence' separatist forces" as the biggest threat to cross-Straits relations.

Taiwan is an island which has for all practical purposes been independent since 1950. However, China views the island as a rebel region that must be reunited with the mainland - by force if necessary.

Comparable figures for the USA are (active force only):

Army:  541,291 ) Land Forces
USMC: 195,338  ) 736, 700        (China: 850,000)
USN:    317,237                          (China: 235,000)
USAF:  333,772                          (China: 398,000)

When you look at the two budgets ($680+ Billion vs. $100+ Billion) you get some idea of the changes the China has made over the past 25 years: the army is much, much smaller, the navy and air force have grown; equipment and training are much better but China is nowhere near being a military "peer."

A look at the map will tell you that those 1.35 million Chinese military personnel must be spread out across the regions to concentrating a large force in Shenyang, near North Korea, is difficult.

 

[CougarKing]

Here is an informative article, reproduced under the Fair Dealing provisions of the Copyright Act from BBC News:

http://www.bbc.co.uk/news/world-asia-china-22163599

Comparable figures for the USA are (active force only):

Army:  541,291 ) Land Forces
USMC: 195,338  ) 736, 700        (China: 850,000)
USN:    317,237                          (China: 235,000)
USAF:  333,772                          (China: 398,000)

When you look at the two budgets ($680+ Billion vs. $100+ Billion) you get some idea of the changes the China has made over the past 25 years: the army is much, much smaller, the navy and air force have grown; equipment and training are much better but China is nowhere near being a military "peer."

A look at the map will tell you that those 1.35 million Chinese military personnel must be spread out across the regions to concentrating a large force in Shenyang, near North Korea, is difficult.

The release of this information in the white paper shows a greater effort by the PLA towards transparency and shows continuing movement towards greater professionalism (and away from "People's War" ideology).

Don't the "smaller" numbers of PLA ground forces  (compared to the armour and infantry corps-heavy early 1980s PLA) also mean a greater shift towards rapidly-deployable, lighter forces as stated before by such long-time China watchers as David Shambaugh in his Modernizing China's Military book? Rapidly deployable forces that can quickly respond such contingencies as internal dissent or any separatist challenges to the state.

 

[CougarKing]

I am still looking for other sources aside from this Indian article to confirm this incursion reported below. If this did happen, another question would be "why now?" considering growing trade and other exchanges between these 2 nations, in spite of being economic and regional rivals. Another source from November last year points that New Delhi is reluctant to repair its portion of the famed WW2-era Stilwell Road to boost regional trade, citing security concerns such as rebel groups on its side of the border.

[size=18pt]Chinese troops intrude into Indian territory in Ladakh, erect a tented post[/size]
PTI Apr 19, 2013, 10.08PM IST

Times of India link

LEH/NEW DELHI: In a deep incursion, Chinese troops have entered the Indian territory in Daulat Beg Oldi (DBO) sector in eastern Ladakh and erected a tented post, setting the stage for a face-off with Indian troops.

< Edited >

With regard to China's own saber rattling over its territorial claims on the South China Sea, other Southeast Asian nations such as Vietnam recognize India's potential as a rival that could balance out China's influence on the region, as seen in this other article from last year:

Vietnam urges India to resolve South China Sea dispute
By Devirupa Mitra|ENS - HANOI ( VIETNAM ) 07th July 2012 08:50 AM

link

Even as China has escalated tensions by controversially inviting bids for oil blocks, Vietnam is pushing India to increase its visibility and voice in the region as a supporting role to peacefully resolve the South China Sea dispute. It also wants India to continue exploring the oil and gas-rich region, approving a two-year extension for ONGC Videsh’s stay in South China Sea.

“As a strong country in the region, India will have a stronger voice and should increase its larger role in helping Vietnam and other countries to resolve the problem (of South China Sea),” Vietnam’s Assistant Foreign Affairs Minister Nguyen Van Thao told a group of visiting Indian journalists.

On June 26, the state-run China National Offshore Oil Corporation (CNOOC) invited foreign companies to bid for nine blocks, all of which fall within Vietnam’s extended economic zone of 200 nautical miles from the shoreline. This immediately led to sharp response from Vietnam, terming it as an illegal move.

< Edited >

 

 

[CougarKing]

;D Pics from signs during my time in China, of more inadvertent indicators that show China's market for English as a Second Language teachers (to correct their signs) is quite lucrative...

(passed on to me by a friend with DFAIT stationed at our embassy in Beijing)

Taken by me in Chongqing's panda zoo:

Outside a museum in Beichuan, China:

 

[CougarKing]

From an Aussie source:

link

Chinese soldiers camp in Himalayan region claimed by India
From: AAP  April 21, 2013 4:07AM

DOZENS of Chinese soldiers have set up camp in a Himalayan region claimed by India, Indian government sources say, signalling a potential renewal of border tensions between the nuclear-armed neighbours.

Troops of the Chinese People's Liberation Army (PLA) entered Indian-claimed territory in eastern Ladakh and erected a camp on the night of April 15, the sources said.

Meanwhile, troops from the Indo-Tibetan Border Police have set up a camp 300 metres opposite the tents pitched by the Chinese, the sources said.

New Delhi is confident it can settle the high-altitude territorial dispute "peacefully" through diplomatic channels, the government sources added.

< Edited >

 

[CougarKing]

To think that it's recent incidents like this that saw Beijing send the elite Snow Leopard anti-terrorism unit( 雪豹突击队), which is part of the 500,000 strong People's Armed Police (PAP), to "unrest-plagued" Xinjiang province. That non-Chinese minorities such as the Uighurs would be involved in such unrest- in spite of special state privileges granted to them such as being exceptions to the one-child policy- are indications of deeper problems than the rosy picture painted by the Chinese media. This is the rosy picture which depicts the Han Chinese as "liberating" and peacefully coexisting with China's 55 or so ethnic minorities since 1949. 

"Terrorist" axe, knife and arson attack kills 21 in China's Xinjiang
BEIJING | Wed Apr 24, 2013 7:27am EDT

Reuters link

(Reuters) - A confrontation involving axes, knives, at least one gun and ending with the burning down of a house left 21 people dead in China's troubled far-west region of Xinjiang, a government spokeswoman said on Wednesday, calling it a "terrorist attack".

It was the deadliest violence in the region since July 2009, when Xinjiang's capital, Urumqi, was rocked by clashes between majority Han Chinese and minority Uighurs that killed nearly 200 people.

Nine residents, six police and six ethnic Uighurs were killed in Tuesday's drama, said Hou Hanmin, spokeswoman for the Xinjiang government.

< Edited >

 

[Edward Campbell]

My impression (and I cannot overemphasize that word) is that minorities in China fall into two broad groups:

    1. The willing, who are, largely, Sinified - almost (except for some folk dancing groups) fully integrated into the Han society; and

    2. The reluctant - especially the Tibetans and the Uyghurs (is there a preferred English spelling?).

It may be interesting to note that the reluctant groups a) have large, contiguous territories, b) have distinct languages and cultures, and c) are the last to be "assimilated" by China.

I think that the (Han) Chinese have brought both better governance and economic opportunity to Tibet and Xinjiang. (I know it is popular to describe the former Tibetan Buddhist theocracy as benign and enlightened but I disagree; it appears, to me, to have been autocratic, obtuse and inept.)

I have observed that China is a fairly secular society; it barely tolerates religions other than: a) traditional Chinese folk beliefs, b) Daoism (Taoism, if you prefer), c) Chinese Buddhism (which is different from its Indian and Tibetan variations) and d)Confucianism (which is not even a religion in any sensible use of that term but which does have temples and "worshipers"). China appears to actively discourage Christianity and Islam: I have seen Muslims harassed for wearing e.g. too much "cover," and we are all aware of the Chinese insistence on consecrating Christian bishops despite the "rules" established by e.g. Rome and Canterbury. Many Han Chinese appear to me to be, essentially, irreligious, but "aware" of and sympathetic to the folk religions and Confucianism and, to a lesser degree, of the other major Sinic religions. I have met few Chinese, including Chinese Christians, who oppose China's policy of consecrating bishops.

Some years ago I met a Chinese official who explained to me that the long term strategy is to "breed" the Tibetans and Uyghurs into irrelevance: Han Chinese, especially young men, are encouraged to move to Tibet and Xinjiang and to marry local girls. It's a long term policy that, explicitly, recognizes that the existing large, well established and reluctant minorities are unlikely to become Sinified any time soon.

 

[CougarKing]

(I know it is popular to describe the former Tibetan Buddhist theocracy as benign and enlightened but I disagree; it appears, to me, to have been autocratic, obtuse and inept.)

While there is a popular perception in the West of the Tibetans as the benign, pacifist victims of malignant Chinese occupiers, the Tibetans actually did put up a short fight in skirmishes like the Battle of Chamdo before they were occupied in 1949. Their inept theocracy was part of the reason behind the antiquated, poorly trained Tibetan rabble that they sent to fight a futile battle against PLA General Fan Ming's invasion forces.

 

[Nemo888]

The toppling of the feudal Theocracy in charge of most of Tibet at the time is not the issue. The wholesale murder of over a million Tibetans after the fact, destruction of one of the world's most unique cultures, disallowing Tibetans to own land, political persecution and torture of ethnic Tibetans, nuclear waste dumping, strip mining etc.

There are now 7.5 million Chinese and only 6 million Tibetans in Tibet. They are  a propertyless and linguistically excluded minority in their own country. So much for the PLA's "liberation". Tibet is so over that it is not even worth talking about except perhaps by historians. You could learn infinitely more about old Tibet by visiting Nepal or Bhutan. Bhutan is actually a theocracy that runs nicely IMO. Much better than how the Chinese raped Tibet or even some Asian "democracies".

The Uyghurs have it worse than Tibetans. The stories of the PAP rounding up dissidents and selling their organs for transplantation are well documented. Now that they have run out of Falun Gong organs to sell Uyghurs are preferred.

 

[CougarKing]

This blog posting by MIT professor M. Taylor Fravel suggests that a recent Op-ed by nuke weapon export James Acton was reading too much into a certain omission in China's last defense white paper.

China Has Not (Yet) Changed Its Position on Nuclear Weapons
thediplomat.com
By M. Taylor Fravel

In a recent op-ed in the New York Times, nuclear expert James Acton suggests that China may be changing its nuclear doctrine.  The principal basis for his argument is the absence of a specific repetition of China’s “no first-use” policy in the latest edition of Beijing’s bi-annual white paper on defense.  Acton, however, misreads the recent white paper and draws the wrong conclusion about China’s approach to nuclear weapons.

First, no first use has been a core feature of Chinese defense policy for decades, having been decided by Mao himself in 1964.  If China abandoned or altered this policy position, it would reflect a major change in China’s approach to nuclear weapons – and a major change in China’s international image. This would not be a casual decision by China’s top leaders but rather a radical change precipitated by a major shift in China’s security environment. Although China’s concerns about U.S. missile defense policies that Acton notes are real, these concerns have existed since the mid-1990s and shape China’s current efforts to reduce the vulnerability of its nuclear forces.

To date, China has focused on building a small but potent nuclear force with the ability to launch a secure second strike if attacked with nuclear weapons – what I call “assured retaliation.”  The relatively small size of China’s nuclear arsenal and the doctrinal emphasis on survivability and reliability are consistent with a pledge to not use nuclear weapons first.  Moreover, if China were to abandon or alter the no first-use policy, it would surely want to reap a clear deterrent effect from such an action and likely do so clearly and publicly, not indirectly and quietly through an omission in a report.

Continue reading...

 

[CougarKing]

A couple of updates on the South China Sea territorial disputes:

Perhaps the first update signals that Taipei intends to eventually send a more permanent naval presence there to deter both the mainland and other rival claimants?

Taipei Times link

The Ministry of National Defense will assess whether an offshore terminal for naval frigates should be set up on Itu Aba (Taiping Island, 太平島) in the South China Sea, Deputy Minister of National Defense Andrew Yang (楊念祖) said at a legislative hearing yesterday.

Local media reported earlier this month that the Coast Guard Administration (CGA), which is responsible for the island’s security, is hoping to build an offshore terminal at the island to accommodate frigates of up to 2,000 tonnes.

It also wants to extend the island’s airport runway, the reports said.

Meanwhile, in the neighbouring Philippines, one of the rival claimants to the Spratleys islands and atolls scattered across the South China Sea:

Philippine Navy chief slams Chinese maneuvers in disputed sea
By Jose Katigbak, STAR Washington Bureau (The Philippine Star) | Updated April 27, 2013 - 12:00am

Philippine Star link

WASHINGTON – Philippine Navy chief Vice Admiral Jose Luis Alano said Chinese naval maneuvers in the West Philippine Sea (South China Sea) and use of non-military maritime vessels way beyond its coastlines to advance sovereignty claims to most of the sea were both “aggressive and excessive.”

Alano, who was appointed Flag Officer in Command of the Philippine Navy last December, met with Admiral Jonathan Greenert, chief of US Naval Operations, at the Pentagon on Thursday to discuss the security situation in the South China Sea and navy-to-navy issues.

News reports from China said the PLA Navy dispatched a large contingent of ships to circumnavigate the South China Sea last month, a maneuver likened to marking Chinese territory.

< Edited >

While the Philippines is one of the militarily weaker claimants because of its lack of modern multirole fighters in its air force as well as anti-ship missiles for its aging warships, it has a strong defense relationship with the United States. This relationship is affirmed annually through the annual "Balikatan" military exercises by forces of the two nations. Interestingly even Australia is considering joining these exercises since a recent defense treaty between Manila and Canberra was just ratified.

 

[Edward Campbell]

This article, reproduced under the Fair Dealing provisions of the Copyright Act from the South China Morning Post, indicates that China really is playing hardball:

http://www.scmp.com/news/china/article/1224211/finance-talks-tokyo-seoul-axed?utm_source=buffer&utm_medium=twitter&utm_campaign=Buffer:%2Bfravel%2Bon%2Btwitter&buffer_share=846d8

Beijing cancels finance talks with Tokyo, Seoul
Diaoyus tensions and Japanese MPs' visit to shrine honouring war criminals seen as behind scrapping of talks on sidelines of ADB meeting

Saturday, 27 April, 2013, 5:29am

Teddy Ng
teddy.ng@scmp.com

Beijing has cancelled an annual financial meeting with Japanese and South Korean officials set for next week, amid strained relations over the Diaoyu Islands sovereignty dispute.

The decision came shortly after Japan's Land, Infrastructure, Transport and Tourism Minister, Akihiro Ota, said his planned trip to China next week would not go ahead.

The cancellation highlights China's unwillingness to hold high- or ministerial-level dialogue with Japan, even as both sides attempt to maintain contact at lower levels. The chief of Japan's defence ministry policy bureau, Hideshi Tokuchi, in Beijing for talks on maritime affairs last night.

"The defence talks are only symbolic to show that both nations can still hold some kind of talks," said Professor Yang Bojiang from the China Institutes of Contemporary International Relations.

Japan's Finance Ministry said yesterday that the meeting, which was to happen on the sidelines of the annual meeting of the Asian Development Bank in New Delhi on Friday, had been called off by China, which was serving as chair of the trilateral meeting of finance ministers and central bank governors this year.

The meeting was scrapped because "there were no issues that needed to be discussed by the three countries", Japan's Kyodo news agency quoted a Japanese official as saying.

In another incident revealing tensions, Ota said yesterday that his three-day trip to China, due to start on Thursday, had been cancelled because of a "co-ordination" problem.

Sino-Japanese ties have been deteriorating since September, when the Japanese government announced it was buying three of the five uninhabited Diaoyu Islands in the East China Sea. The islands are known in Japan as the Senkakus. Tensions escalated further this week when almost 170 Japanese lawmakers visited Tokyo's Yasukuni Shrine, which glorifies Japan's wartime past, and both nations sent ships to waters around the disputed islands.

Da Zhigang , a Japanese affairs expert at the Heilongjiang Academy of Social Sciences, said the maritime communication mechanism could prevent military confrontation.

"But there won't be any significant outcome because neither side will concede much regarding territorial rights."

Deploying ships and aircraft and other forms of sabre rattling are all very interesting, but the tri-lateral economic ties between China and Japan and Korea are vital for all three states.
 

 

[Edward Campbell]

Jonathan Kay, who is Managing Editor for Comment at the National Post and a Fellow at the Foundation for Defense of Democracies in Washington, takes a dim, realist view of China's policies in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the National Post:

China’s ruthless foreign policy is changing the world in dangerous ways

Jonathan Kay

13/04/29

Are we witnessing the end of the “American age”? It depends whom you ask. But one thing is certain: Thanks to the near-bankruptcy of the American welfare state, Washington is losing both the means and desire to project power across the world. Inevitably, nations with deeper pockets — China, most notably — will fill the void.

This process already is underway in many parts of the world. That includes large swathes of Central Asia, where Beijing’s billions are beginning to revolutionize regional infrastructure and alliances — in dazzling but potentially dangerous ways.

Analyzing Beijing’s foreign policy is a relatively simple exercise. That’s because, unlike the United States and other Western nations, China doesn’t even pretend to operate on any other principle except naked self-interest.

On one hand, China has courted Israel as a partner in developing Mediterranean gas fields — but it also has been happy to do business with Israel’s arch-enemy, Iran, and has sold weapons that ended up in Hezbollah’s arsenal. In South Asia, meanwhile, China has cynically helped Pakistan check India’s regional role, even as China’s state-controlled press has warned Pakistan that Beijing may “intervene militarily” in South Asia if Pakistani-origin jihadis continue to infiltrate Muslim areas of Western China.

In the east, China’s policy has been to claim every square inch of the South China Sea, and intimidate every smaller country that dares to oppose its claims. China also props up North Korea, the most totalitarian nation on earth, for no other reason than that China’s leaders dislike the prospect of a U.S.-allied unified Korean peninsula on their doorstep. Even when Sudan’s government was butchering its own people in Darfur, Chinese energy companies were happy to do business in Khartoum.

China’s foreign policy ambitions are growing in unexpected directions. As John Hopkins University scholar Christina Lin argues: “Paradoxically, while the U.S. is pivoting eastward to contain China in the Asia Pacific, the resurgent Middle Kingdom is pivoting westward on its new Silk Road across the Greater Middle East.”

Unlike the United States and its NATO allies, China never had any desire to see its soldiers patrolling the streets of Kabul and Kandahar, or to sacrifice lives and money in furtherance of “nation-building.” As with Chinese operations in Africa, Beijing’s initiatives in Central Asia and the Middle East are ruthless cost-benefit enterprises aimed at extracting Afghan mineral riches, and otherwise enhancing China’s national interests.

Those interests, Lin, notes, include (1) securing safe and secure oil and gas routes, such that China can ensure its energy needs are met even in the event that its coastal supply routes are blockaded or otherwise disrupted; (2) creating a bulwark against the infiltration of Islamist terrorists into China’s Muslim regions from Pakistan and neighboring Muslim countries; and (3) stabilizing and integrating the Xianjiang Uighur Autonomous Region, which occupies a sixth of China and is regularly beset by Islamist agitation.

At the center of China’s plan for Central Asia and the Middle East is a pipeline, road, rail and power network that could eventually extend from the Pearl River Delta, west through China into Central Asia, and eventually all the way to the Mediterranean. This scheme would greatly benefit landlocked nations such as Afghanistan, but it would also be a bonanza to Iran, which likely would end up being a full partner in any such megaproject. (Lin, for instance, has sketched out a scenario in which an Iranian railway line into the western Afghan city of Heart would be integrated with a Chinese network that extends south from Xianjiang into the northern Afghan city of Mazar-i-Sharif.)

Of course, this is a region that could desperately use more economic development. But the prospect of such development being done under joint Iranian stewardship is a disturbing one — not least because it would completely undercut any effect that Western sanctions would have on Iran’s nuclear program.

Most Americans (and Canadians) have supported the idea of leaving Afghanistan “to the Afghans.” But we’re not really doing that at all. In the new Great Game, as in all realpolitik arenas, no vacuum lasts for long. And soon, we likely will be dealing with a deep-pocketed China that seeks to turn the entire region into a logistical and energy-supply back-office for its coastal economic powerhouse. In the process — almost as an afterthought — it will be helping to prop up one of the most malign regimes on the face of the planet, Iran, just as it has done with Sudan and North Korea.

That is just the way China does business. In the long run, it is this amoral approach to global affairs — not the apocalyptic utopianism of militant Islam, which already show signs of extinguishing itself — that will be the greatest threat to the Western democratic ideal.

This article was originally published by New Europe.

Now, one may take issue with Jonathan Kay's suggestion that the Western democracies have operated in an altruistic manner (being willing to "sacrifice lives and money in furtherance of “nation-building.”") but one should not dispute his contention that "China doesn’t even pretend to operate on any other principle except naked self-interest."

It may be that China's public diplomacy is not unappealing in much of the world precisely because it doesn't pretend to be altruistic.

 

[CougarKing]

A repost from the Asia-Pacific Foundation of Canada's facebook page, which emphasizes why cash persists as the preferred mode of transaction in mainland China:

New York Times full article: IN CASH WE TRUST

Chinese Way of Doing Business: In Cash We Trust

SHANGHAI — Lin Lu remembers the day last December when a Chinese businessman showed up at the car dealership he works for in north China and paid for a new BMW 5 Series Gran Turismo — entirely in cash.
     
“He drove here with two friends in a beat-up Honda,” Mr. Lin recalled. “One of his friends carried about $60,000 in a big white bag, and the buyer had the rest in a heavy black backpack.”

Lugging nearly $130,000 in cash into a dealership might sound bizarre, but it’s not exactly uncommon in China, where hotel bills, jewelry purchases and even the lecture fees for visiting scholars are routinely settled with thick wads of renminbi, China’s currency.

This is a country, after all, where home buyers make down payments with trunks filled with cash. And big-city law firms have been known to hire armored cars to deliver the cash needed to pay monthly salaries.

For all China’s modern trappings — the new superhighways, high-speed rail networks and soaring skyscrapers — analysts say this country still prefers to pay for things the old-fashioned way, with ledgers, bill-counting machines and cold, hard cash.

Many experts say it is not a refusal to enter the 21st century as much as wariness, of the government toward its citizens and vice versa.

Doing business in China takes a lot of cash because Chinese authorities refuse to print any bill larger than the 100-renminbi note. That’s equivalent to $16. Since 1988, the 100-renminbi note, graced by Mao Zedong’s visage, has been the largest note in circulation, even though the economy has grown fiftyfold. (The country’s national icon, Chairman Mao, appears on nearly every note: the 1-, 5-, 10-, 20, 50- and 100- renminbi note.)

Chinese economists and government officials often suggest that printing larger denomination notes might fuel inflation. But there is another reason.

“I’m convinced the government doesn’t want a larger bill because of corruption,” said Nicholas R. Lardy, a leading authority on the Chinese economy at the Peterson Institute for International Economics in Washington, noting that it would help facilitate corrupt payments to officials. “Instead of trunks filled with cash bribes you’d have people using envelopes. And there’d be more cash leaving the country.”

All the buying, bribing and hoarding forces China to print a lot of paper money. China, which a millennium ago was the first government to print paper money, accounts for about 40 percent of all global paper currency output, according to a report published by the China Banknote Printing and Minting Corporation. Adjusting for the size of its economy, China has about five times as much cash in circulation as the United States.

In the United States, the highest denomination printed is $100; in Japan, it is the 10,000-yen note, worth about $100; the 500 is the highest-denomination euro note, worth about $650. No major economy has limited itself to such a low denominated bill as China.

By making the 100-renminbi note the largest bill, the nation’s citizens need more of it to buy a television or Swiss watch, never mind a car, home or a yacht, which China’s state-run media said was bought a few years ago by men bearing two suitcases filled with cash.

Following those paper bills as they course through this booming economy offers a fascinating glimpse into how China’s financial system works, and how parts of the country remain stuck in yesteryear.

“In large parts of China, it still looks like the U.S. in the 1950s: most everything is in cash,” said Jeffrey R. Williams, executive director of the Harvard Center Shanghai and a former bank executive who has worked in China for more than 30 years. “In the U.S., you might have one bill-counting machine at a bank, but here every teller has one.”

Although China’s coastal cities have flourished during the 30 years of economic prosperity, economists say the country’s interior remains poor and disconnected from the more modern aspects of the financial grid. As a result, the poor prefer to do business in cash.

(...)

 

[Edward Campbell]

My impression (and I cannot overemphasize that word) is that minorities in China fall into two broad groups:

    1. The willing, who are, largely, Sinified - almost (except for some folk dancing groups) fully integrated into the Han society; and

    2. The reluctant - especially the Tibetans and the Uyghurs (is there a preferred English spelling?).

It may be interesting to note that the reluctant groups a) have large, contiguous territories, b) have distinct languages and cultures, and c) are the last to be "assimilated" by China.

I think that the (Han) Chinese have brought both better governance and economic opportunity to Tibet and Xinjiang. (I know it is popular to describe the former Tibetan Buddhist theocracy as benign and enlightened but I disagree; it appears, to me, to have been autocratic, obtuse and inept.)

I have observed that China is a fairly secular society; it barely tolerates religions other than: a) traditional Chinese folk beliefs, b) Daoism (Taoism, if you prefer), c) Chinese Buddhism (which is different from its Indian and Tibetan variations) and d)Confucianism (which is not even a religion in any sensible use of that term but which does have temples and "worshipers"). China appears to actively discourage Christianity and Islam: I have seen Muslims harassed for wearing e.g. too much "cover," and we are all aware of the Chinese insistence on consecrating Christian bishops despite the "rules" established by e.g. Rome and Canterbury. Many Han Chinese appear to me to be, essentially, irreligious, but "aware" of and sympathetic to the folk religions and Confucianism and, to a lesser degree, of the other major Sinic religions. I have met few Chinese, including Chinese Christians, who oppose China's policy of consecrating bishops.

Some years ago I met a Chinese official who explained to me that the long term strategy is to "breed" the Tibetans and Uyghurs into irrelevance: Han Chinese, especially young men, are encouraged to move to Tibet and Xinjiang and to marry local girls. It's a long term policy that, explicitly, recognizes that the existing large, well established and reluctant minorities are unlikely to become Sinified any time soon.

There are many, many Buddhist sects, and Buddhists in Myanmar are not the same as Tibetan Buddhists, but let us put aside the notion that Buddhists are "benign and enlightened." They (Buddhists) are just as capable of sectarian violence as is any other socio-religious/ethnic group. And, as we saw in the Balkans, Muslims can be the victims, too.

 

[CougarKing]

Meanwhile, this report from Taipei shifts the focus back to China's sole operating carrier: perhaps China intends to send this carrier group around the world to "show the flag" in much the same way the US Navy's "Great White Fleet" circumnavigated the world around 1900, after America's victory in the Spanish-American War? Perhaps this new expedition is something the Chinese admiralty sees as heralding the advent of this century's next dominant naval power?

China's carrier group secretly assembling: reports

Taipei, May 4 (CNA) Escort ships for China's first aircraft carrier, the Liaoning, are quietly assembling at Qingdao Harbor and the carrier battle group is suspected to be sailing out soon, a Hong Kong-based Chinese-language newspaper said Saturday.

Wen Wei Po said in its online version that the carrier battle group might comprise the Liaoning, four type 052C or 052D destroyers, two type 052B destroyers, two to four type 054A escort ships, one or two type 093 nuclear submarines and one supply ship.

The reports also said the aircraft carrier could carry 22 J-15 fighter planes, four to six Z-18 early warning planes and around 12 Ka-27 anti-submarine helicopters.

Judging from the formation, the carrier group could form three lines of anti-air defenses, the first being formed by the Z-18s and J-15s and the second by the Hongqi-9 surface-to-air missiles aboard the 052C/D anti-air destroyers.

The third anti-air line will be formed by the SA-N-12 mid- and close-range anti-aircraft missiles aboard the 052B destroyers and Hongqi-16 mid-and close-range anti-aircraft missiles aboard the four 054A escort ships. The formation could handle 24 attacking targets simultaneously.


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Plus a slightly older article:

China's first aircraft carrier 'preparing for first long distance mission

The 990ft Liaoning carrier – which was formally brought into service last September – is now preparing for its first major outing, CCTV reported.

"A big country cannot do without aircraft carriers," said Zhang Zheng, the carrier's captain, whose first encounter with an aircraft carrier came in Portsmouth, in 2002.

The Liaoning is a former Soviet carrier that was reportedly purchased from Ukraine in 1999 before being refitted at a naval base in northeast China.

In March, the vessel's commander, Zhang Yongyi, told state media its first major voyage could take between one and three months and see the Liaoning reach "waters near Japan's Okinawa islands and even Guam".



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[CougarKing]

I cannot help but agree with Homes' assessment below, especially with regard to how these recent actions jeopardized Beijing's "charm offensive" as highlighted in bold below:

China’s Great India Folly
By James R. Holmes
May 7, 2013


- One hopes China has genuinely reconsidered picking a fight with India, a great power with which it shares a long land frontier. Beijing has created headaches aplenty for itself through its conduct in the South China Sea and East China Sea. The last thing it should do is open another axis along which to disperse energy and resources.

- It's doubtful the intrusion was a mistake. The patrol set up camp 10-20 kilometers on the Indian side of the line, depending on the news source. That's a heckuva navigation error.

- By reopening its territorial quarrel with India, Beijing risks having to redirect resources from sea power back to land defense. Needlessly draining your national treasury is self-defeating behavior.

- If it keeps unsettling its surroundings, Beijing shouldn't be surprised in the future when nervous giggles — instead of admiration and amity — greet its efforts to court foreign audiences. Why Beijing deliberately junked a promising charm offensive ranks as one of the wonders of the age.



Diplomat.com link


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Bored with Japan and the Philippines, China Intensifies a Third Border Dispute with India

by Julian Ku

Not content to push border disputes with only Japan and the Philippines, China apparently has decided that now is also a good time to create a border crisis with India.  Last week, Chinese troops apparently crossed over a disputed border to camp 20 km inside Indian-claimed territory in the remote region of the Himalayas (the Chinese deny the incursion has occurred and both sides appear to be climbing down a bit).

This rather hostile-to-China essay in the Japan Times provides a nice summary of how China has stepped up its activities on three different territorial fronts at the same time.  First, there is the ongoing dispute with the Philippines over the Scarborough Shoal/Huangyan Island in the South China Sea. Then, there is that dangerous dispute with Japan over the Diaoyu/Senkakus in the East China Sea.  Finally, China is provoking India.

Overall, China’s strategy appears to be to put its interlocutors on the defensive and to exhaust them with low-intensity incursions. This is working.  Japan is now repeatedly having to scramble its jets over the Senkakus at repeated Chinese incursions, and India is apparently rushing troops to the remote border region to confront the Chinese troops.  But, as the author of the essay notes, these are all reactive measures that allow China to keep the initiative.  China is not seeking a war, but it is seeking to push the envelope against its neighbors, with some success. India is trying to keep the dispute from escalating and Japan has been defensive about the Senkakus for the first time in decades.

Only the Philippines seems to be able to push back and force China to react, albeit through the soft pressure of an Annex VII UNCLOS arbitral proceeding.

It is impressive how China can keep three of its neighbors scrambling to respond while it slowly builds up its territorial claims.  In the long run, China v. India/Japan/Philippines/Vietnam/etc.  seems like bad odds, but so far it is working. Will international arbitration play any role in resolving these disputes?  I doubt it, but we will soon get some empirical evidence if the Philippines is able to win a judgment that affects or shifts China’s behavior.

link

 

[Kirkhill]

From the Telegraph

China may not overtake America this century after all
Doubts are growing about whether China can pass the US to become the world's biggest economy this century amid warnings that the country’s 30-year miracle is nearing exhaustion.

China's catch-up spurt has a few more years to run in the Western hinterlands perhaps, but when the full story comes out we may find that nationwide growth has already fallen below 7pc.

Photo: Getty

By Ambrose Evans-Pritchard3:21PM BST 08 May 2013968

The world's tallest tower should have been built by now. Officials said last year that the great edifice with 220 floors would be erected in three months flat in China's inland city of Changsha by March, snatching the crown from Dubai's Burj Khalifa.
The deadline has come and gone, yet the wasteland sits untouched. It now looks as if the fin d'époque project – using prefab blocs – may never be approved. Even China knows its limits.

Prime minister Li Keqiang has asked the State Council to clamp down on the excesses of the regions. Not before time. A top regulator says local government finances are "out of control".

Mr Li aims to cut China's economic growth to a safe speed limit of 7pc next year and rein in rampant investment – still a world record 49pc of GDP – before it traps the country in a boom-bust dynamic of frightening scale.
Vested interests are conspiring to stop him, launching a counter-attack from their power-base in the $6 trillion state industries. Even so, uber-growth is surely over.

China's catch-up spurt has a few more years to run in the Western hinterlands perhaps, but when the full story comes out we may find that nationwide growth has already fallen below 7pc.

Mr Li complained in a US diplomatic cable released on WikiLeaks that Chinese GDP statistics are "man-made", confiding to a US diplomat that he tracked electricity use, rail cargo, and bank loans to gauge growth. For a while, analysts use electricity data as a proxy for GDP but the commissars kept a step ahead by ordering power utilities to fiddle the figures.

The National Bureau of Statistics has since revealed that data collected by the regions overstates GDP by 10pc, though they have not acted on the insight. It is well-known why this goes on. The reward system of the Communist hierarchy has been geared to talking up growth, and officials gain kudos by lowering the stated "energy intensity" of their zone.

China's Development Research Council (DRC) expects growth to drop to 6pc by 2020. It could be much lower. The US Conference Board says it will average 3.7pc from 2019-2025 as the ageing crisis hits. Michael Pettis from Beijing University thinks it is likely to slow to 3pc to 4pc over the next decade, deeming this entirely desirable if it comes from taming the runaway state enterprises.
If so, China's growth may not be much higher than the new consensus estimate of 3pc for a reborn America, powered by its energy boom and the revival of the chemical, steel, glass, and paper industries.

All those charts showing China's economy surging past the US by 2030, or 2025, or even 2017, will look very credulous. China may not surpass the US this century.

A Nation Losing Ground

As of last year US GDP was roughly $15.7 trillion, compared to $8 trillion for China on a nominal exchange rate basis, the measure that matters for gauging economic power.

China's output is 75pc of US levels on a purchasing power parity (PPP) basis but even on this measure the Chinese `sorpasso' is looking less certain. Clyde Prestowitz, an arch US `declinist' who has just thrown in the towel, says China may "never" catch the US on any relevant measure. That is a stretch, but not impossible on a forecastable horizon.

"Keep in mind the next time you are in China and find yourself choking on the foul air that the things making the air foul are counted as positives for GDP. If you adjust Chinese GDP for environmental degradation and for over-investment in things that will never be used, it falls in size by 30-50 per cent. Much of this would show up as non-performing loans in most economies but since such loans are never recognised in China, it will show up as slower growth in future years," he said.

A new view is taking hold in elite circles that the banking crash in 2008 was a nasty shock for the US, but not a crippling blow to America's creative enterprise. US governing institutions rose to the challenge. It was however a crippling blow to Europe, and a more subtle blow to China in all kinds of ways.

Richard Haass, president of the US Council of Foreign Relations, says the world may already be in the "second decade of another American century" without realising it.

On almost every key measure, including the fertility rate and high science, there is no credible challenger. Core US defence spending is still greater than that of the next 10 countries combined. "The American qualitative military edge will be around for a long, long time," he said.

Mr Haass says America has managed its dominance in such a way that it has not brought about a containment alliance against it by threatened powers, and that is no small achievement. Like Wagner's music, US diplomacy is better than it seems.

Yes, the US faces a debt hangover, but so does China after the state banks let rip with private loans keep the boom going through the downturn. Fitch Ratings has just downgraded China's debt, warning that credit has jumped from 125pc to 200pc of GDP over the last four years, with mounting reliance on shadow banking that lets banks circumvent loan-to-deposit curbs. This is why George Soros has been warning that there could be a "run" on China's state banking system akin to the Lehman bust.

Total credit has jumped from $9 trillion to $23 trillion in four years, an increase equal to the entire US banking system.

America has moved in the opposite direction. Its banks now have loan-to-deposit ratio of around 0.7, and the biggest safety buffers in three decades. The Congressional Budget Office says US Treasury debt held by the public has jumped from 40pc to 73pc. This is the sort of damage normally seen in wars, but the US has recovered from bigger wars before, and from much higher debt levels. The CBO thinks the budget deficit will fall to 2.4pc by 2015. Growth will then whittle away the debt ratio for a few years.

China's premier Li is fighting a battle against those in the Politburo who delude themselves that the Lehman crisis validates China's top down control. He gave his "unwavering report" last year to a joint DRC and World Bank report on the dangers of the "middle income trap".

Dozens of states in Latin America, Asia, and the Middle East have hit an invisible ceiling over the last fifty years, languishing in the trap with per capita incomes far behind the rare "breakout" stars, Japan, Korea, and Taiwan. The trap is the norm.

The report warned that China’s 30-year miracle is nearing exhaustion. The low-hanging fruit of state-driven industrialisation and reliance on cheap exports has already been picked. Stagnation looms unless Beijing embraces the free market and relaxes its suffocating grip over the economy. "Innovation at the technology frontier is quite different in nature from catching up technologically. It is not something that can be achieved through government planning," it said.

Even if Mr Li succeeds in pulling off this second economic revolution – and we should salute him for trying – China's growth rate is going to slow drastically. Demography will see to that.

The work force began to contract in absolute numbers last year, falling by 3.5 million. The International Monetary Fund says it will now go into "precipitous" decline, and much earlier than thought.

If you are wondering why police are still seizing pregnant women in Chinese cities and delivering them to clinics for forced abortions when they cannot pay the fine for breaching the one-child policy, you are not alone.

The IMF says the reserve army of peasants looking for work peaked at around 150m in 2010. The surplus will evaporate soon after 2020, the so-called Lewis Point. A decade later China will face a shortage of almost 140m workers. “This will have far-reaching implications for both China and the rest of the world."

China's working age population: Source: IMF

China's ageing crisis is tracking Japan's tale with a 20-year delay. China can expect to see the same decline in "marginal productivity" that has afflicted every other facing a rise in the old-age dependency ratio.

The authorities can of course keep the game going if they wish with another burst of credit, but risks are rising and the potency of debt is wearing off. The extra output created by each yuan of lending has halved in four years. Mr Li knows the game is turning dangerous.

A 2010 book by People's Army Colonel Liu Mingfu - "China Dream: Great Power Thinking and Strategic Posture in the Post-American Era" - is still selling like hot cakes in China. Yet it already has a dated feel, a throwback to peak hubris.

China has everything to play for. With skill and a blast of freedom, it can take its rightful place at the forefront of world affairs. But nothing is foreordained.

Events.  If a week is a long time....what is a decade?

 

[CougarKing]

The latest installment (.pdf) of the Pentagon's annual report on Chinese military developments, released yesterday, highlights China's new and still obscure weapons:

http://www.defense.gov/pubs/2013_China_Report_FINAL.pdf

 

[Edward Campbell]

Don't worry, at all, about the military; don't sweat, too much, when (if at all) China will overtake America in GDP.

Water


Think about water: how much China needs, where it comes from, how it is used, how clean it is, etc, etc, etc.

Water is China's weak link.