Chinese Military,Political and Social Superthread

[CougarKing]

I think the adverse reaction to China's stinginess is, largely, from overseas Chinese and foreigners, in general.

As far as I can tell it is playing well in China amongst "ordinary" Chinese.

I think the average "Zhou Blow" on the street in China is pretty much unaware and/or indifferent to what's happening to the Philippines. Those fortunate enough to have internet access would more likely be searching for something to buy on Taobao (a Chinese version of Ebay) or sorting through tweets of Sinopop celebrities on Weibo (the Chinese version of Twitter) rather than watching their state media. There a few instances where political dissidents may provoke a popular backlash against the government on certain issues on Weibo, but the censors will quickly wipe those clean within hours.

I remember during the 1996 Taiwan Strait crisis, in a foreign news network's coverage that saw ordinary mainland Chinese bystanders interviewed on a Beijing street, every one of them interviewed was unaware that China was even conducting wargames in the Taiwan Strait.

 

[CougarKing]

I find it disappointing that another China/PLA expert, David Shambaugh, isn't among this latest gathering of foreign experts on the PLA.

Defense News

Taipei Conference Examines Evolving Chinese Strategic Doctrine
Nov. 15, 2013 - 05:54PM  |  By WENDELL MINNICK

TAIPEI — Evaluating changes in Chinese strategic thinking in terms of threat perceptions, doctrine and concepts for employing military power was the theme of an academic conference held here Nov. 14-15.

The Chinese Council on Advanced Policy Studies (CAPS), US National Defense University (NDU), and Rand Corp. sponsored the International Conference on People’s Liberation Army (PLA) Affairs.

Of note, Andrew Yang has returned to CAPS as the secretary general after serving several years as the vice minister of defense on policy for the Ministry of National Defense (MND).

The conference is considered one of the top forums on promoting the study of Chinese military affairs. The official theme was, “The PLA ‘Prepares for Military Struggle’ in the Information Age: Threats, Doctrine, and Combat Capabilities.”

Speakers included Alexander Huang of Tamkang University, John Schurtz and Dan Taylor of the US Defense Intelligence Agency, Andrew Erickson of the Naval War College and Phillip Saunders of NDU, Dean Cheng of the Heritage Foundation, Andrew Scobell of Rand, and Joe McReynolds of the Center for Intelligence Research and Analysis under Defense Group Inc.

Attendees included officials from the American Institute in Taiwan (AIT), the de facto US Embassy. These included Michael Burgoyne, US Army programs officer; Donald Chu, senior adviser; Michelle Jean, AIT Liaison Affairs Section; William Klein, political section chief; Christian Ogrosky and Michael Paluba, US Air Force programs officers; and Matthew Schwab, chief, security cooperation office.

Oriana Skylar Mastro, a Georgetown University professor of security studies, presented her paper, “Historical Patterns in Chinese Conflict Termination Behavior.” Mastro provided a hypothetical Taiwan scenario using three tendencies exhibited by Chinese leaders during war.

First, China tends to be much more willing to open communication channels in wars with smaller countries than it would be in a conflict with peers or greater powers.

Second, Chinese leaders historically overestimate the degree to which the threat or implementation of escalation will effectively compel the adversary to capitulate – “a belief that undermines crisis stability.”

Third, Chinese leaders tend to misjudge the influence of external parties; “specifically Beijing overly relies on international pressure to convince adversaries to de-escalate and compromise to end the conflict.

Mastro suggests that in the case of a Taiwan contingency, China’s position on talking while fighting will depend on the US role in the conflict. If the conflict is localized between China and Taiwan, then Chinese leaders are likely to offer talks during the conflict. However, “China’s willingness to talk does not equate to willingness to compromise,” she said.

In cases where Chinese leaders believe they have the upper hand militarily, they offer talks not as a means to compromise, but to create a channel for the opponent to capitulate to Chinese demands. If the US is involved militarily, China will be unwilling to offer talks for fear of projecting weakness.

China’s reluctance to talk while fighting, therefore, could create problems in managing escalation and resolving the situation in a timely manner.

China is also likely to engage influential countries to pressure Taiwan into wartime talks, Mastro said. Chinese leaders, concerned about China’s image during war, will believe that publicly expressing the desire to open diplomatic channels will make them look reasonable and their use of force defensive. China is also less likely to engage with multilateral institutions in which the US may have disproportionate influence unless they believe that institutional pressure will restrain the US response.

During the conference, Andrew Erickson of the US Naval War College and Phillip Saunders of NDU provided a side lecture summarizing their findings on Chinese cruise missiles, which will appear in their forthcoming book, “A Low Visibility Force Multiplier: Assessing China’s Cruise Missile Ambitions,” in late December.

Erickson said China is now capable of deploying anti-ship cruise missiles from air, land and sea platforms. These will challenge US Navy ships, particularly in an effort to overwhelm the Aegis Combat System on US destroyers.

“China views large-scale saturation attacks as the best way to overwhelm missile defense systems, such as Aegis.”

Cruise missiles are also very difficult to detect by US satellites and this has led to a US dependence on regional long-range radars, such as Taiwan’s early warning radar on Leshan Mountain, and other long-range radars in Japan and along the arc of the Ryukyu Islands, said a former AIT official.

 

[dapaterson]

If you want to retain access to mainland Chinese sources, it's best to not speak at such a conference in Taipei.

 

[a_majoor]

WRT examining Chinese strategic doctrine, I suggest you look up the term "Unrestricted Warfare" (URW)

The Chinese government is also undertaking economic reforms, although how well they will follow through and how well this will work  are open questions:

http://business.time.com/2013/11/15/china-unveils-major-economic-reforms/

China’s Economic Reforms Are More Sweeping Than Anybody Realized
But it remains unclear if change will go deep enough to solidify the country’s economic miracle.

By Michael Schuman @MichaelSchumanNov. 15, 20135 Comments

After an important Communist Party plenum wrapped up on Tuesday, many observers (including myself) feared that the results showed President Xi Jinping was unwilling to launch the drastic reforms necessary to fix the economy. On Friday, more details emerged on what exactly Beijing’s top leaders approved during their conference, and the pledged reforms are much meatier and potentially more powerful than anything previously suggested, and tackle some of the worst ills of the economy.

Most notably, there is finally talk about reforming China’s dominant state-owned enterprises, or SOEs. These behemoths suck up the nation’s resources and crowd out the private sector, though they are bloated, inefficient and hamper the development of the economy. Now Xi is planning to do something about that. Beijing pledged to end some monopolies, improve SOE management and allow the private sector to invest in projects with SOEs. Such steps could make SOEs more competitive and allow greater scope for more productive private enterprise. Xi also plans to liberalize prices on commodities like water and natural gas, as well as in transport and telecom; speed deregulation of interest rates and capital flows; reduce curbs on foreign investment; and allow private investors to set up small banks. All of this will expand the role of the private sector in the economy and permit resources to be allocated more intelligently.

The concern earlier in the week was that Xi and his team seemed to dodge the reforms that were most pressing, either because they were unwilling to take on the special interests that would get hurt as a result, or they didn’t see the need or urgency. Now it is clear the Xi does appreciate the weaknesses of the Chinese economy – excess capacity, rising debt, a distorted financial sector, a lack of competition – and appears willing to confront them head on. However, what remains to be seen is how quickly these announced reforms will become reality, and how far they will really go. Some of this stuff has been talked about for a while – such as financial deregulation and market opening – but the pace of actual change has been glacial. In other areas, such as SOE reform, it is uncertain right now how much power the state is really willing to cede to the market and private enterprise.

How you see Xi’s reform efforts depends very much on how you see the health of China. If you believe that the Chinese economy is generally sound and requires no more than an extension of previous reform efforts to propel the economy forward, then you’ll believe Xi is on the right track. If you believe (like I do) that the Chinese state-led development model is fundamentally broken and a drastic break with past practices is necessary to move forward, then you’d believe Xi is not doing enough. Hopefully for China’s economic future, Xi will move beyond his promises and introduce some real change.

 

[Edward Campbell]

In this article, which is reproduced under the Fair Dealing provisions of the Copyright Act from the Financial Times, we have a repeat of my warning that, while neither China nor Japan wants a war some local miscalculation, which could lead to combat, albeit not, in my opinion, a real war, is almost inevitable:

http://www.ft.com/intl/cms/s/0/be1c23b4-4f96-11e3-b06e-00144feabdc0.html?siteedition=intl#axzz2l5hBFxPh

China and Japan are heading for a collision
It is hard to believe either side wants war – but posturing could spark accidental conflict

By Gideon Rachman

November 18, 2013

Amid all the noise about the economic reforms launched last week by China, it was easy to overlook another important change. The Chinese government is setting up a National Security Council, co-ordinating its military, intelligence and domestic security structures. The model is said to be America’s NSC. But China’s move also parallels developments in Japan, where Shinzo Abe’s government is also setting up a National Security Council.

Under ordinary circumstances, this modernisation of military and security structures would not be cause for concern. But these are not ordinary times. For the past year, China and Japan have been engaged in dangerous military jostling, as they push their rival territorial claims to some uninhabited islands, known as the Senkaku to the Japanese and the Diaoyu to the Chinese. In one recent week, Japan scrambled fighter jets three times in response to Chinese overflights. China, meanwhile, complains that Japanese ships came provocatively close to a recent live-fire exercise carried out by its navy. With tensions high, the revamping of the two countries’ security structures takes on a more ominous tone.

It is hard to believe that either China or Japan actually wants a war. The bigger risk is that military posturing around the islands will lead to an accidental clash – and that the governments of both nations would then be trapped by their own nationalist rhetoric, making it very hard to climb down.

Both sides now routinely accuse each other of irresponsible behaviour and out-of-control nationalism. Both insist that, if pushed, they are willing to use military force to defend their claims to the uninhabited rocks that they are disputing.

In Beijing recently, I listened to a top general from the People’s Liberation Army insist that China would never make the mistakes of Japan in the 1930s by taking the path of militarism. Just weeks earlier in Tokyo, I had heard a Japanese official drawing a different conclusion from the same history: “The Chinese are making exactly the mistakes we made in the 1930s,” he asserted. “They are allowing the military to break free from civilian control. And they are challenging American power in the Pacific.”

A conflict between China and Japan – the second and third-largest economies in the world – would obviously be disastrous. It could also easily become a global conflict. The US is pledged to defend Japan through the US-Japan Security Treaty. And, although the Americans say that they take no formal position on who has sovereignty over the islands, they do recognise that they are under the administrative control of Japan – which means they are covered by the security treaty.

The whole dispute is shaped by the continuing growth in the economic might of China. Current projections suggest it is likely to be the largest economy in the world by 2020 – claiming a title that has been held by America since the 1880s. And although the US military has a size and sophistication that China is not yet close to matching, Chinese military spending is growing fast – at a time when the Pentagon is retrenching. Japan has just announced a small increase in its own military budget. But the country is drowning in debt, and knows it cannot keep pace with Chinese military spending.

These shifts in economic and military weight have created uncertainty about the future balance of power. And uncertainty tempts powerful nations to test each other’s limits and capabilities. An extra layer of danger is added by the bitter legacy of history. In China, President Xi Jinping argues that one of the main tasks of the Communist party is to overcome the historic humiliations his country has suffered – foremost among which was invasion by Japan. But in Tokyo, the Abe government has adopted a more nationalistic and less apologetic rhetoric about the past. The dispute is deeply personal for both men. Mr Abe’s grandfather and mentor administered Japanese-occupied Manchuria in the 1930s, at a time when President Xi’s father was part of the Chinese Communist forces, fighting the Japanese.

If China and Japan are to avoid a mutually destructive collision, both sides need to change course. The establishment of a crisis hotline between Tokyo and Beijing, a move resisted by China, would be very helpful. But something bigger is also needed on both sides – an acknowledgment of the legitimacy of each other’s fears and resentments.

Amid all its complaints about Chinese nationalism, the Abe government has failed to address Japan’s own failings. It is not only the Chinese who are offended by Japan’s attitude to history. Many other Asian nations are similarly appalled. At a time when Japan’s relative power is inexorably declining in Asia, the country cannot afford nationalist posturing.

But precisely because Japan is frightened by China’s rise, it is afraid to take any step that could be seen as weakness. By contrast, China can afford to be magnanimous. It is the rising power. So it should make it absolutely explicit that – whatever the disputes between the two nations – China accepts that Japan has a secure and honourable place in the emerging political order in Asia. Such a step would provide vital reassurance to the government in Tokyo – and it would also be massively in Beijing’s interests. For, as long as peace prevails, China’s rise can continue uninterrupted.

I agree with Gideon Rachman:

    1. "The bigger risk is that military posturing around the islands will lead to an accidental clash – and that the governments of both nations would then be trapped by their own nationalist rhetoric, making it very hard to climb down;"

    2.  "Both sides need to change course. The establishment of a crisis hotline between Tokyo and Beijing, a move resisted by China, would be very helpful. But something bigger is also needed on both sides – an acknowledgment of
          the legitimacy of each other’s fears and resentments;"

    3.  "The Abe government has failed to address Japan’s own failings;" and

    4. "China can afford to be magnanimous. It is the rising power. So it should make it absolutely explicit that – whatever the disputes between the two nations – China accepts that Japan has a secure and honourable place in the emerging
          political order in Asia."


Edit: format

 

[Journeyman]

...... the governments of both nations would then be trapped by their own nationalist rhetoric, making it very hard to climb down

Vaguely reminiscent of almost 100 years ago when a war was inevitable "because of the railway timetables"  (to steal from AJP Taylor).

While I dislike the term "inevitable" when talking about anything to do with International Relations, as noted the "fears and resentments," coupled with national honour/face, make some degree of conflict inescapable -- the questions being: what form; how to minimize.

 

[tomahawk6]

If anyone is on the verge of overreach its the PRC.Their aggressive posture in the region with regard to island chains well beyond their borders,will cause a clash.

 

[CougarKing]

Didn't a Spanish court order a similar arrest of former Chilean leader Alberto Pinochet a couple of years ago as well?

Agence-France-Presse

Spain court orders arrest of China ex-president Jiang Zemin

MADRID - A Spanish court on Tuesday issued an international arrest warrant for China's ex-president Jiang Zemin in a case brought by activists alleging that Chinese forces committed genocide in Tibet.

Tibetan rights groups brought the case against Jiang, former prime minister Li Peng and three other Chinese officials, alleging they were responsible for "genocide, crimes against humanity, torture and terrorism" against Tibetans in the 1980s and 1990s.

Spain's National Court issued the arrest warrant under the doctrine of universal jurisdiction, which allows courts to try certain cases of human rights abuses committed in other countries.

It accepted the case because one of the plaintiffs, Tibetan exile Thubten Wangchen, has Spanish nationality, and the Chinese courts have not investigated the allegations.

The National Court wrote in a ruling released on Tuesday that there were "indications of participation" by the accused in the alleged crimes "given the political or military responsibility" they held at the time.

On those grounds the court said it "considered it necessary to approve the issuing of international arrest warrants" against the five.

The three other defendants are China's former state security chief Qiao Shi; the Chinese Communist party's leader in Tibet at the time, Chen Kuiyan; and Peng Pelyun, minister for family planning in the 1980s.

The Spanish court has also agreed to investigate a charge of repression in Tibet brought against China's latest ex-president Hu Jintao, who left office last year.


(...)

 

[Edward Campbell]

Didn't a Spanish court a similar arrest of former Chilean leader Alberto Pinochet a couple of years ago as well?

Agence-France-Presse

Oh, good ... because Spain doesn't have any economic or social problems of its own to worry about, right?  :

 

[CougarKing]

    2.  "Both sides need to change course. The establishment of a crisis hotline between Tokyo and Beijing, a move resisted by China, would be very helpful. But something bigger is also needed on both sides – an acknowledgment of
          the legitimacy of each other’s fears and resentments;"


Edit: format

Did you note the incident back in the late 1990s where a flotilla of protestors holding both PRC and Taiwan flags evaded a Japanese coast guard blockade in order to plant their flags on one of the Diayus/Senkaku Islands? From that, it can be surmised that their shared enmity towards Japan would be one of the things that Taipei and Beijing do agree upon.

However, whenever Taiwan gets into an international dispute, such as when those Philippine Coast Guardsmen shot a Taiwanese fisherman earlier this year, China will always claim to speak for Taiwan (by condemning the Philippines in that incident) even if Taiwan's own foreign affairs ministry releases their own statement.

With those precedents above in mind, would it be reasonable to conclude that such a Tokyo-Beijing hotline would result in Taipei wanting their own hotline with Tokyo as well? (but this would of course irk Beijing)

If such a hotline is established, Japan, being the former colonial power that ruled over Taiwan for 50 years from 1895-1945, might then seek a more direct, but still unofficial link with the Taiwan leadership, other than through the trade office they already have there. This would simultaneously keep Japan's "One-China" policy intact.   

 

[Edward Campbell]

Did you note the incident back in the late 1990s where a flotilla of protestors holding both PRC and Taiwan flags evaded a Japanese coast guard blockade in order to plant their flags on one of the Diayus/Senkaku Islands? From that, it can be surmised that their shared enmity towards Japan would be one of the things that Taipei and Beijing do agree upon.

However, whenever Taiwan gets into an international dispute, such as when those Philippine Coast Guardsmen shot a Taiwanese fisherman earlier this year, China will always claim to speak for Taiwan (by condemning the Philippines in that incident) even if Taiwan's own foreign affairs ministry releases their own statement.

With those precedents above in mind, would it be reasonable to conclude that such a Tokyo-Beijing hotline would result in Taipei wanting their own hotline with Tokyo as well? (but this would of course irk Beijing)

If such a hotline is established, Japan, being the former colonial power that ruled over Taiwan for 50 years from 1895-1945, might then seek a more direct, but still unofficial link with the Taiwan leadership, other than through the trade office they already have there. This would simultaneously keep Japan's "One-China" policy intact. 

Wheels within wheels, within wheels ... it's part of what makes foreign policy, including foreigners' foreign policies, so fascinating.

 

[tomahawk6]

I imagine GW Bush is on their arrest on sight list as well.

 

[CougarKing]

US Senator wants Taiwan to participate in RIMPAC...

Let's see how far this goes...

Defense News blog

Are Things About To Get Awkward At Major Pacific Military Exercise?

Could war ships from China and Taiwan soon simultaneously participate in a major Pacific military exercise? If one US senator has his way, it might happen.

Sen. Dan Coats, R-Ind., has introduced an amendment to the upper chamber’s version of the 2014 National Defense Authorization Act (NDAA) that, if approved, would put the entire Senate on record as supporting Taiwan’s participation in the Rim of the Pacific (RIMPAC) exercise in 2014.

Coats’ measure explicitly states Taiwan’s participation would enhance its navy’s humanitarian assistance and disaster relief expertise. To that end, the amendment points to “earthquakes and typhoons that frequently strike its own homeland.” Given China’s, well, complicated relationship with and policy toward Taiwan, Beijing likely will be, shall we say, skeptical…

The amendment would make this statement the official opinion of the full United States Senate: “The United States welcomes the opportunity to work with Taiwan in creating a more interactive naval relationship between our two countries as it is in best security interests of both countries.”

Again, one can sense China’s skepticism already.

And speaking of China, Deputy Defense Secretary Ashton Carter in March announced the PLA Navy would be sending a ship to participate in RIMPAC 2014.

Are things about to get awkward on the high seas? Perhaps.

 

[a_majoor]

How the Chinese deal with this may be the most important issue of the day. A deflating credit bubble will make life tough for us, but a bubble "pop" will be a global disaster. The deflation of the Japanese credit bubble in the early 1990's, and their lost decade should be instructive for students of history:

http://www.businessweek.com/news/2013-11-18/credit-driven-china-glut-threatens-to-turn-into-bank-debt-crisis

Credit-Driven China Glut Threatens Surge Into Bank Crisis
By Bloomberg News November 19, 2013

In China’s “Shipping Valley,” where the Yangtze River empties into the sea north of Shanghai, the once-bustling home of the nation’s biggest private shipbuilder is deadly quiet on a recent morning.

Rows of dilapidated five-story dormitories in the city of Nantong, previously housing China Rongsheng Heavy Industries Group Holdings Ltd.’s 38,000 employees, were abandoned after the shipbuilder teetering on collapse cut almost 80 percent of its workers over the past two years. Most video arcades, restaurants and shops serving them have closed.

A $6.6 trillion credit binge during the past five years, encouraged by Beijing policy makers as stimulus to combat a global economic slowdown, now threatens to stoke a debt crisis. At stake are trillions of yuan in bank loans that companies producing everything from ships to steel to solar power are struggling to repay as the world’s second-largest economy heads for the weakest annual expansion since 1999.

Rongsheng, which is seeking a government bailout after accumulating 25 billion yuan ($4.1 billion) in unpaid loans as of June, including to Bank of China Ltd., is a casualty of over-investment gone bust. In Nantong, the only remaining market is selling past-its-shelf-life bread, woolly shoe pads and other dusty items at a discount as shopkeeper Qiu Aibing prepares to wind down before winter. There’s no sign of a single customer.

“After I’m done selling all this stuff, I’ll be gone,” said Qiu, briefly lifting his eyes from a TV and casting a careless look at the half-empty shelves. “The workers didn’t have money to spend anyway because there’s no work to be done, and many of them haven’t been paid for months.”

Bad Loans
China’s biggest banks are already affected, tripling the amount of bad loans they wrote off in the first half of this year and cleaning up their books ahead of what may be a fresh wave of defaults. Industrial & Commercial Bank of China Ltd. and its four largest competitors expunged 22.1 billion yuan of debt that couldn’t be collected through June, up from 7.65 billion yuan a year earlier, regulatory filings show.

“In the next three to four years, industries with excess capacity will be the main source of credit loss for banks and their nonperforming loans as China cleans up the legacy,” said Liao Qiang, a Beijing-based director at Standard & Poor’s. “The speed of the process will depend on the government’s determination and whether they are willing to incur short-term pain for long-term gain.”

‘Very Painful’
Premier Li Keqiang, who took office in March, pledged to open the economy to market forces and strip power from the government in a process he described as “very painful and even feels like cutting one’s wrist.” In July, he vowed to curb overcapacity, which the government blames for driving down prices, eroding profits and generating pollution. Policy makers meeting in Beijing last week said they would elevate the role of markets in the nation’s economy.

China’s economy probably will expand 7.6 percent in 2013, the weakest pace since 1999, even as growth rebounded in the third quarter, according to the median estimate of economists surveyed by Bloomberg News.

Shang Fulin, China’s top banking regulator, this month urged lenders to “seek channels to clean up bad loans by industries with overcapacity to prevent new risks from brewing” and refrain from dragging their feet in dealing with the issue.

Credit Deterioration
China’s credit quality started to deteriorate in late 2011 as borrowers took on more debt to serve their obligations amid a slowing economy and weaker income. Interest owed by borrowers rose to an estimated 12.5 percent of China’s economy from 7 percent in 2008, Fitch Ratings estimated in September. By the end of 2017, it may climb to as much as 22 percent and “ultimately overwhelm borrowers.”

Meanwhile, China’s total credit will be pushed to almost 250 percent of gross domestic product by then, almost double the 130 percent of 2008, according to Fitch.

The nation might face credit losses of as much as $3 trillion as defaults ensue from the expansion of the past four years, particularly by non-bank lenders such as trusts, exceeding that seen prior to other credit crises, Goldman Sachs Group Inc. estimated in August.

Rongsheng, whose assets jumped sevenfold between 2007 and 2012 when government-directed lending led to a shipbuilding boom, also has loans outstanding to Export-Import Bank of China and China Development Bank Corp., state-owned policy banks set up to provide financial support at a cheaper cost to companies and industries endorsed by the government. Rongsheng may post a second consecutive loss of 2 billion yuan this year and a 1.1 billion yuan loss in 2014, according to a median estimate of analysts in a Bloomberg survey.

Delayed Salaries
Rongsheng now relies on its remaining 8,000 workers to build the world’s biggest cargo ships for Brazil’s iron-ore producer Vale SA and Oman Shipping Co., as well as smaller vessels and oil tankers. Workers in its shipyards, mostly from other parts of China, and local staff in its Shanghai office have had their salaries delayed, sometimes by two months, a person with knowledge of the matter said.

“I can still manage to survive by cutting expenses here and there, but many migrant workers can’t -- not with only 20 yuan in their pockets and not knowing their next payday,” said Liu Guojun, a blue-uniformed dormitory maintenance and security worker who earns 2,000 yuan a month. “There’s a surge in theft and other petty crimes around here as a result.”

Rongsheng declined in an e-mail to answer questions about its operations. Spokesmen for ICBC and China Construction Bank Corp. declined to comment on the prospect of rising bad loans, while those at Bank of China, Agricultural Bank of China Ltd. and China Development Bank didn’t respond to requests.

Shipyard Shutdowns
The pain is being experienced by Rongsheng’s peers nationwide. A third of the country’s 1,600 shipyards may shut down within five years amid a global vessel glut, Wang Jinlian, secretary general of the China Association of the National Shipbuilding Industry, said in July.

To Ji Fenghua, chairman of Nantong Mingde Heavy Industry Group Co., another struggling “Shipping Valley” builder specializing in high-end vessels, that’s an understatement.

“I won’t be surprised if half of the shipbuilders fail, given the excess capacity,” said Ji, recounting the day in July 2012 that hundreds of his workers who hadn’t been paid in three months besieged his office building.

Repaying Banks
The company was strapped for cash as state-backed banks recalled their loans after the banking regulator ordered that new financing be stopped for shipbuilders and some other businesses. Deprived of new credit to pay off old debts, Ji and his fellow founders emptied their own bank accounts, collateralized their homes to banks and hit up relatives and acquaintances for cash.

“Every cent of the money we earned and borrowed was used to repay banks, leaving us nothing to pay workers or the suppliers,” Li said. “We have banks to thank for our boom, and we have them to blame for our doom.”

Mingde Heavy eventually survived the crisis with government help. Its cash shortage continues even as the company continues to take orders for stainless-steel chemical tankers.

The central government pledged 4 trillion yuan in economic stimulus during the global financial crisis starting in 2008. In 2009, Export-Import Bank of China committed to 160 billion yuan of credit to the nation’s two largest state-run shipbuilders, while Bank of China agreed to help smaller and private companies, according to statements from banks.

Easy access to credit helped Chinese banks churn out record profits and reduce bad-loan ratios to less than 1 percent as of June 30 from 2.8 percent at the end of 2008.

‘Industrial Glut’
“The 2008 stimulus exacerbated an industrial glut that has been in existence since 2003,” S&P’s Liao said. “We expect the government to take measured steps in a crackdown on overcapacity because they need to weigh the impact on financial stability.”

Nonperforming loans at Chinese banks increased for an eighth consecutive quarter in the three months ended Sept. 30 to 563.6 billion yuan, extending the longest streak in at least nine years. Still, they account for just 0.97 percent of the nation’s outstanding loans, according to the China Banking Regulatory Commission.

The bad-loan ratio could climb to as high as 1.5 percent in the next few quarters, according to Lian Ping, chief economist at Shanghai-based Bank of Communications Co. Most of the increase, he said, will come from the provinces of Jiangsu, where Nantong is located, and Zhejiang, south of Shanghai, where small businesses have been hit hard by the slowdown.

Turning Tide
In the first six months of this year, soured loans increased by 18 billion yuan in Jiangsu, more than any other Chinese province, followed by Zhejiang and Shanghai, the official Xinhua News Agency reported.

“There are many capital-and-labor-intensive industries that have relied on bank loans and policy support for their past success,” Lian of the Bank of Communications said. “But now the tide is turning against them.”

Shipbuilding isn’t the only industry affected by overcapacity. Also in Jiangsu, about 130 kilometers (80 miles) southwest of Nantong, Wuxi Suntech Power Co., the main unit of the industry’s once-biggest supplier (STP:US), went bankrupt with 9 billion yuan of debt to China’s largest banks, according to a Nov. 12 report by Communist Party-owned Legal Daily. Suntech Power Holdings Co. (STPFQ:US), the parent firm, defaulted on $541 million of offshore bonds to Wall Street investors.

Solar Panels
About 1 gigawatt of solar-panel production, more than 40 percent of the company’s 2011 module manufacturing capacity, was idled at one of two factories, according to a statement issued by Shunfeng Photovoltaic International Ltd., which agreed to buy Wuxi Suntech on Nov. 1 for 3 billion yuan. A gigawatt is about as much as what a new nuclear reactor can supply.

Government and banks’ support for the solar industry since late 2008 has resulted in at least one factory producing sun-powered products in half of China’s 600 cities, according to the China Renewable Energy Society in Beijing. China Development Bank, the world’s largest policy lender, alone lent more than 50 billion yuan to solar-panel makers as of August 2012, data from the China Banking Association showed.

China accounts for seven of every 10 solar panels produced worldwide. If they ran at full speed, the factories could produce 49 gigawatts of solar panels a year, 10 times more than in 2008, according to data compiled by Bloomberg. Overcapacity has driven down prices to about 84 cents a watt, compared with $2 at the end of 2010. The slump forced dozens of producers like Wuxi Suntech into bankruptcy.

‘Much Worse’
An unidentified local bank reported a 33 percent nonperforming-loan ratio for the solar-panel industry, compared with 2 percent at the beginning of the year, with the increase due to Wuxi Suntech, China Business News reported in September.

“The real situation is much worse than the data showed” after talking to chief financial officers at industrial manufacturers, said Wendy Tang, a Shanghai-based analyst at Northeast Securities Co., who estimates the actual nonperforming-loan ratio to be as high as 3 percent. “It will take at least one year or longer for these NPLs to appear on banks’ books, and I haven’t seen the bottom of deterioration in Jiangsu and Zhejiang yet.”

The Wuxi government in 2007 planned to build a 2.2-square-kilometer solar-panel park with projected sales of 100 billion yuan by 2012. The area is now covered with weeds and construction waste, left undeveloped because of overcapacity.

Steel, Cement
The same is true in industries such as steel and cement, which were named by the State Council as facing a “serious” glut. China’s economic planners have sought to rein in the steel industry since at least 2004, when work on a 10.6 billion yuan project in Jiangsu was halted. Even so, annual capacity has risen to 970 million metric tons, according to the steel association, exceeding the industry’s output by 35 percent in 2012. China produces seven times more than No. 2 Japan.

About 10 million tons of aluminum production capacity is being built at a time when the industry incurred combined losses of 670 million yuan in the first half, with some producers in central and eastern China facing severe losses, the Ministry of Industry of Information Technology said in July.

That month the ministry ordered more than 1,400 companies in 19 industries including steel, ferro alloys and cement to cut excess production capacity this year, an indication that the government is pursuing pledges to fix fundamental issues in the economy even as growth slows. Excess capacity was supposed to be idled by September and eliminated by year-end.

China’s land ministry yesterday told local authorities to ban allocations for any new production projects by overcapacity industries including steel and shipbuilding, the official Xinhua News Agency reported.

Hawkish Tone
“The central government is hawkish in its tone, but when it comes to execution by local governments, the enforcement will be much softer,” Bank of Communications’ Lian said. “Many of these firms are major job providers and taxpayers, so the local government will try all means to save them and help them repay bank loans.”

When hundreds of unpaid Mingde Heavy workers took to the streets for a second time last November, the local government stepped in by lining up other firms to vouch for Mingde so banks would renew its loans. Mingde Heavy avoided failure by entering into an alliance with a shipping unit of government-controlled Jiangsu Sainty Corp., which also imports and exports apparel.

Mother-in-Law
“I have everything I need to become a top-tier shipbuilder but the money,” said Ji, Mingde’s chairman. “I used to be proud that we are an independent, private company without government interference. Not anymore. The pressure is much less when you have a rich mother-in-law.”

Under President Xi Jinping’s reforms laid out last week, the private sector will be boosted by looser state controls, while local government officials will be evaluated not only on increases in GDP but also on indicators such as energy consumption, overcapacity and new debt.

China’s lending spree has created a debt burden similar in magnitude to the one that pushed Asian nations into crisis in the late 1990s, according to Fitch Ratings.

As companies take on more debt, the efficiency of credit use has deteriorated. Since 2009, for every yuan of credit issued, China’s GDP grew by an average 0.4 yuan, while the pre-2009 average was 0.8 yuan, according to Mike Werner, a Hong Kong-based analyst at Sanford C. Bernstein & Co.

Credit Cycle
“If credit allocation in China improves, the ultimate credit cycle and economy downturn will be mitigated,” Werner wrote in an Oct. 21 note to investors. “However, if China continues to rely on debt to fund its economic growth, the country’s ultimate credit cycle will be more severe.”

Based on current valuations, investors are pricing in a scenario where nonperforming loans at the largest Chinese banks will make up more than 15 percent of their loan books, according to Werner, who forecasts a 2.5 percent to 3.5 percent bad-loan ratio by the end of 2015. A further decline in GDP growth would lead to more soured loans and weaker earnings, he said.

Lenders so far haven’t reported significant deterioration in loan quality. Bank of China said it had 251.3 billion yuan of loans to industries suffering from overcapacity as of the end of June, accounting for 3 percent of the total. Its nonperforming-loan ratio for those businesses stood at 0.93 percent, the same level reported for the entire bank.

At China Construction Bank, loans to industries with overcapacity fell about 8 billion yuan in the first half of the year to 180.8 billion yuan, while at Bank of Communications, the amount was 72 billion yuan or 2.3 percent of the total, the banks reported.

Dividends Curbed
Credit growth may slow over the next year and a half from the 20 percent to 25 percent gains in recent years to about 15 percent, Josh Klaczek, head of Asia financial services for JPMorgan Chase & Co., said in July. The expansion of nonperforming loans will depress profits and curb the ability of banks to increase dividends, and if more loans sour, lenders may need to raise capital, he said.

“Banks currently have the ability to absorb a decent amount of bad loans, and local government involvement will slow the speed of NPL increases,” S&P’s Liao said.

While China’s cabinet in July urged mergers and curbs in the shipbuilding industry, it called for continued financial support to help “quality companies” maintain their operations.

In Nantong, handmade-noodle-shop owner Ma Shuntian said he’s still a believer, even after losing 50,000 yuan this year. Ma and his wife pumped almost 1 million yuan into the restaurant five years ago after selling everything they had in Qinghai province and moving to the area where Rongsheng’s workers reside. In a good year, selling noodles brought in more than 100,000 yuan in profit.

“I hope Rongsheng can come through this crisis and the town comes back to life,” said Ma, a father of three. “If they earn big money, I can earn small.”

To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net; Jasmine Wang in Hong Kong at jwang513@bloomberg.net; Aipeng Soo in Beijing at asoo4@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

 

[Edward Campbell]

I understand a few of the policy implications and one or two of the technical aspects of this, but ... any help on assessing the significance of this report, which is reproduced under the Fair Dealing provisions of the Copyright Act from Xinhua would be appreciated:

http://news.xinhuanet.com/english/china/2013-11/23/c_132912145.htm

China Exclusive: Defense Ministry spokesman responds to air defense identification zone questions

English.news.cn

2013-11-23

BEIJING, Nov. 23 (Xinhua) -- China's Defense Ministry spokesman Yang Yujun on Saturday answered questions from the media on the establishment of the East China Sea Air Defense Identification Zone.

1. Why did the Chinese government set up the East China Sea Air Defense Identification Zone? Was it related to the current regional situation?

An air defense identification zone is established by a maritime nation to guard against potential air threats. This airspace, demarcated outside the territorial airspace, allows a country to identify, monitor, control and dispose of entering aircraft. It sets aside time for early warning and helps defend the country's airspace.

The Chinese government has followed common international practices in the establishment of the zone, with aims of protecting its state sovereignty and territorial and airspace security, and maintaining flying orders. It is a necessary measure in China's exercise of self-defense rights. It has no particular target and will not affect the freedom of flight in relevant airspace.

2. On what grounds did China establish the East China Sea Air Defense Identification Zone?

The establishment of the East China Sea Air Defense Identification Zone has a sound legal basis and accords with common international practices.

Since the 1950s, over 20 countries, including some big powers and China's neighboring countries, have set up air defense identification zones.

China's measures conform to the Charter of the United Nations and international laws and practices. China's domestic laws and regulations, including the Law on National Defense, the Law on Civil Aviation and the Basic Rules on Flight, have clear stipulations on protecting territorial and airspace security and maintaining flying orders.

3. How was the domain of the East China Sea Air Defense Identification Zone determined? Why is the zone located as close as 130 kilometers from some countries?

The domain of the zone is based on the needs of China's national air defense and maintaining flying orders.

The east end of the zone is still closest to China (compared with other countries), from which combat aircraft can reach China's airspace within a short time. It is necessary for China to identify an aircraft from that point to ascertain its purpose and attributes, so as to set aside early warning time to adopt measures to protect air defense security.

Moveover, a relevant country established its air defense identification zone as early as 1969, which is also about 130 kilometers from the Chinese mainland at its closest distance.

4. After foreign aircraft enter the East China Sea Air Defense Identification Zone, what measures will China adopt?

The Announcement of the Aircraft Identification Rules for the East China Sea Air Defense Identification Zone of the People's Republic of China has made explicit stipulations on the identification of the aircraft in relevant airspace, and that is in line with international practices.

China will take timely measures to deal with air threats and unidentified flying objects from the sea, including identification, monitoring, control and disposition, and it hopes all relevant sides positively cooperate and jointly maintain flying safety.

It is worth mentioning that China has always respected other countries' rights of free flight in accordance with international laws, and the establishment of the East China Sea Air Defense Identification Zone will not change the legal nature of relevant airspace. The normal flight of international flights in the zone will not be affected.

5. Will China establish other air defense identification zones?

China will establish other air defense identification zones at an appropriate time after completing preparations.

----------

Related:

Statement by the Government of the People's Republic of China on Establishing the East China Sea Air Defense Identification Zone

BEIJING, Nov. 23 (Xinhua) -- The Ministry of National Defense of the People's Republic of China issued a statement on establishing the East China Sea Air Defense Identification Zone.

Following is the full text:

Statement by the Government of the People's Republic of China on Establishing the East China Sea Air Defense Identification Zone

Issued by the Ministry of National Defense on November 23

    The government of the People's Republic of China announces the establishment of the East China Sea Air Defense Identification Zone in accordance with the Law of the People's Republic of China on National Defense (March 14, 1997),
    the Law of the People's Republic of China on Civil Aviation (October 30, 1995) and the Basic Rules on Flight of the People's Republic of China (July 27, 2001). The zone includes the airspace within the area enclosed by China's outer limit
    of the territorial sea and the following six points: 33º11'N (North Latitude) and 121º47'E (East Longitude), 33º11'N and 125º00'E, 31º00'N and 128º20'E, 25º38'N and 125º00'E, 24º45'N and 123º00'E, 26º44'N and 120º58'E.

The six points listed in the MND press release are visible onthe map

 

[a_majoor]

More on China's aggressive posture. While this may make American foreign policy increasingly difficult, China may discover that they are building their own walls as well. Contrast this with the long running American Grand Strategy of creating an international order that benefits both friends and foes (See ERC's post in "A Grand Strategy for a Divided America").

http://ricochet.com/main-feed/Chinese-Aggressiveness-in-Asia

Chinese Aggressiveness in Asia
Paul A. Rahe · 13 hours ago
There is trouble on the horizon, and before long it may turn into very big trouble.

In late August, I wrote at length about China's resolute turn back to despotism; about its vehement public repudiation of constitutionalism, the rule of law, and freedom of the press; and about the manner in which Chinese communist cadres are now expected to read Alexis de Tocqueville's classic The Ancien Regime and the Revolution as a warning against a relaxation of party discipline.

There is another dimension to what is going on in China, and it dovetails neatly with the first. In and for a long time after the time of Deng Xiaoping, the Chinese talked softly while carrying a big stick. Deng and his immediate successors understood that the rise of China would elicit anxiety on the part of the Japanese, the Koreans, the Vietnamese, the Taiwanese, and the Filipinos, and they did what they could to allay that anxiety by refraining from doing anything that would suggest on their part aggressive intent.

In the last couple of years,  however, all of that has changed; and everywhere where one goes in Asia, an old friend who travels in high circles told me earlier this week, one senses hostility -- not towards the United States but towards one's neighbors. The anger underlying all of this has been stirred by the Chinese, who have been throwing their weight around with ever greater force.

This weekend the Chinese upped the ante. In the South China Sea, between Korea and Taiwan, there are some uninhabited islands, which are called the Senkaku isles by the Japanese and the Diayu isles by the Chinese. Although there are other claimants, these have been controlled for many decades by the Japanese. This weekend, however, China extended its air-defence zone to include the islands:

Chinese Defence Ministry spokesman Yang Yujun said Saturday that the establishment of the zone, which China said entered into force as of 10 a.m. Saturday, was aimed at “safeguarding state sovereignty, territorial land and air security, and maintaining flight order.”

“It is a necessary measure in China’s exercise of self-defense rights. It has no particular target and will not affect the freedom of flight in relevant airspace,” Yang said in a statement on the ministry’s website.

“China will take timely measures to deal with air threats and unidentified flying objects from the sea, including identification, monitoring, control and disposition, and it hopes all relevant sides positively cooperate and jointly maintain flying safety,” he said.

Along with the new zone, the Chinese ministry released a set of aircraft identification rules that it says must be followed by all aircraft entering the area, under penalty of intervention by China’s military.

Aircraft are now expected to provide their flight path, clearly mark their nationality and maintain two-way radio communication in order to “respond in a timely and accurate manner to identification inquiries” from Chinese authorities.

Shen Jinke, spokesman for the People’s Liberation Army Air Force, reported late Saturday that it had conducted a sweep of the area using early warning aircraft and fighter jets. “The patrol is in line with international common practices, and the normal flight of international flights will not be affected,” Shen said.

Four Chinese Coast Guard boats briefly entered Japan’s territorial waters around the Senkakus on Friday, after multiple incursions at the end of October and the beginning of this month further aggravated tensions between Beijing and Tokyo.

The Japanese are understandably perturbed:

Defense Minister Itsunori Onodera in late October said the repeated incursions are a threat to peace and fall in a “gray zone (between) peacetime and an emergency situation.”

A few days earlier, his Chinese counterpart had threatened Japan that any bid to shoot down China’s drones would constitute “an act of war.” That move came after a report said Japan had drafted plans to destroy foreign drones that encroach on its airspace if warnings to leave are ignored.

Not surprisingly, Chuck Hagel and John Kerry have expressed concern. They ought to be concerned. This is a deliberate provocation, and it is clearly meant as a challenge to Japan. In that neck of the woods, the Chinese evidently intend to have their way, and those who do not acquiesce will be made to pay dearly. What we are witnessing is an attempt by the Chinese to assert and establish their hegemony over the entire region. What they aim at is something like what, in the years prior to World War II, the Japanese called the Greater Asian Co-Prosperity Sphere.

Intimately connected with this development is another fact. In recent years, since the economic downturn that began in 2007, prominent Chinese have repeatedly expressed contempt for the United States. We are on the decline, they say. Decadence has set in, and China's time has come.

There is good reason to think that the Chinese leadership believes that this is true, and there is this to be said in defense of their posture. Their ability to project power in the Pacific has grown by leaps and bounds in recent years, and we have done nothing to counter their preparations to take out our bases and ships.

If the Chinese leadership really believes what its members sometimes say, the final years of the second term of Barack Obama and those of his successor are going to be more unpleasant than anyone has yet imagined. Statesmen who broadcast weakness and who cut military budgets to the bone, are asking for trouble. Those who sow the wind are bound to reap the whirlwind.

 

[tomahawk6]

Collision course perhaps or the first move in a diplomatic chess match ?

http://www.france24.com/en/20131123-china-creates-air-defence-zone-over-japan-controlled-islands

AFP - Beijing on Saturday announced it was setting up an "air defence identification zone" over an area that includes islands controlled by Japan but claimed by China, in a move that could inflame the bitter territorial row.

Along with the creation of the zone in the East China Sea, the defence ministry released a set of aircraft identification rules that must be followed by all planes entering the area, under penalty of intervention by the military.........


http://www.japantimes.co.jp/news/2013/11/23/national/china-sets-up-air-defense-id-zone-above-senkakus/#.UpKua0CSZOd

Ihara was quoted as telling Han that Japan can “never accept the zone set up by China,” as it includes the Senkakus. He further said the new zone will “escalate” already fraught bilateral ties over the uninhabited but potentially resource-rich islet chain, branding China’s move “very dangerous,” the statement said.

 

[CougarKing]

More about the controversial East China Sea ADIZ:

Asian airlines to give flight plans to China after airspace zone created
BY BEN BLANCHARD AND TIM KELLY
BEIJING/TOKYO
Mon Nov 25, 2013 7:44am EST



(Reuters) - Asian airlines will inform China of their flight plans before entering airspace over waters disputed with Japan, regional aviation officials said on Monday, effectively acknowledging Beijing's authority over a newly declared "Air Defense Identification Zone".

Civil aviation officials from Hong Kong and Taiwan said their carriers entering the zone must send flight plans to Chinese aviation authorities. A transport ministry official in Seoul said South Korean planes would do the same.

An official at the Japan Civil Aviation Bureau said Japanese airlines flying through the region to non-mainland Chinese destinations would likely need to inform China of their plans. "Airlines have been advised to take greater care in the area," said another bureau official.

Singapore Airlines and Qantas Airways Ltd said they would keep Chinese authorities informed of their flights through the area.

Korean Air said its flight plans would be delivered to Chinese authorities but the routes its pilots took would not be affected. Japan Airlines and ANA Holdings also said the zone had not affected their flights.



Asian and Western diplomats said the zone was a problem for Japan, the United States and other countries that may be wary of any acknowledgement of China's claims over the area.


"No one wants to be in a position where by following Chinese instructions you are giving tacit acknowledgement of their sovereignty over a disputed area. And there is a fear that is precisely the game that is being played - it seems no accident that the disputed Senkaku islands are now in the heart of overlapping zones." - one Asian diplomat said.



Japan has its own Air Defence Identification Zone but officials said Tokyo only required aircraft seen to be approaching Japanese territorial airspace to identify themselves.


In its announcement on Saturday, China's Defence Ministry said it would set up other such zones when preparations were finalized. It gave no further details and the ministry's news department declined to elaborate when contacted by Reuters.



REUTERS

 

[CougarKing]

China's carrier heads for the South China Sea.

China sends carrier to South China Sea for training amid maritime disputes

Reuters

(Reuters) - China sent its sole aircraft carrier on a training mission into the South China Sea on Tuesday amid maritime disputes with some neighbors and tension over its plan to set up an airspace defense zone in waters disputed with Japan.

The Liaoning, bought used from Ukraine and refurbished in China, has conducted more than 100 exercises and experiments since it was commissioned last year but this is the first time it has been sent to the South China Sea.

Though considered decades behind U.S. technology, the Liaoning represents the Chinese navy's blue-water ambitions and has been the focus of a campaign to stir patriotism.

The Liaoning left port from the northern city of Qingdao accompanied by two destroyers and two frigates, the Chinese navy said on an official news website (navy.81.cn/).

While there, it will carry out "scientific research, tests and military drills", the report said.

"This is the first time since the Liaoning entered service that it has carried out long-term drills on the high seas," it added.

It did not specify exactly what training would be done, only noting that previous exercises involving aircraft landing and taking off had gone well and laid a firm foundation for future tests.

Previously reported training exercises have mostly been in the Yellow Sea.

China's Defense Ministry said on Monday that it had lodged formal protests with the U.S. and Japanese embassies after both countries criticized a Chinese plan to impose new rules on airspace over disputed waters in the East China Sea.

China also claims almost the entire oil- and gas-rich South China Sea, overlapping claims from Taiwan, Malaysia, Brunei, the Philippines and Vietnam.

That dispute is one of the region's biggest flashpoints amid China's military build-up and the U.S. strategic "pivot" back to Asia signaled by the Obama administration in 2011.

China's navy said the mission was routine, adding that the Liaoning was still in a testing phase.

"This test visit to the South China Sea is part of normal arrangements for testing and training for the Liaoning," it added.

**********************************

 

[CougarKing]

Both Japan and South Korea defy China as well over the ADIZ, following the instance whenUS bombers' challenged it earlier this week...

Reuters

Japan, South Korean military planes defy China's new defense zone

TOKYO/SEOUL (Reuters) - Japanese and South Korean military aircraft flew through disputed air space over the East China Sea without informing China, officials said on Thursday, challenging a new Chinese air defense zone that has increased regional tensions and sparked concerns of an unintended clash.

BEIJING REJECTS SEOUL'S DEMAND

A South Korean official also said a navy reconnaissance plane had flown over a submerged rock in the area claimed by both Beijing and Seoul, and that the flights would continue.

The rock, called Ieodo in Korea and Suyan Rock in China, is controlled by South Korea, which maintains a maritime research station built on it.

In the ongoing war of words, the policy panel of Japanese Prime Minister Shinzo Abe's Liberal Democratic Party approved a resolution on Thursday demanding China rescind the new air defense zone, saying the unilateral move reflected "unreasonable expansionism".
Link: Reuters

Commercial airliners are also starting to defy it; I hope this doesn't lead to an incident like that of Korean Air Flight 007 in 1983, when a Soviet Su15 fighter shot down that airliner for supposedly violating Russian airspace.

Two Japanese airlines to disregard China air zone rules
BBC - Nov 27

Two of Japan's biggest airlines have agreed to abide by a government request not to implement China's new air defence zone rules, officials say.
All Nippon Airlines and Japan Airlines say that they will stop filing flight plans demanded by China on routes through the zone, set up on Saturday.
Japan says that China's new air defence identification zone are "not valid at all" and should be disregarded.

Singapore Airlines and Qantas have said that they will abide by the new rules.


News On Japan