China: The Wisdom of Aggressive Bluffing


February 1, 2023: American military leaders increasingly speak of China taking offensive action against Taiwan. That’s not going to happen. The Ukraine War demonstrated the importance of motivation and morale. The Taiwanese identify with the Ukrainians while the Chinese note that they, like Russia, are basically police state dictatorships while Ukraine and Taiwan are democracies that are highly motivated to innovate and fight to preserve their way of life. China would also suffer much more than Russia from any economic problems an attack on Taiwan would lead to.

China, like Russia, has internal economic and population problems. China’s working age population is shrinking and that is having an impact on the military because not enough Chinese are willing to serve. Its economic problems were amplified by recent large-scale covid19 related shutdowns. This triggered widespread open public resistance. The government backed down, unwilling to literally go to war with its people over this. Chinese leaders were then obsessed with there being no covid19 infections at all in China and so imposed the shutdowns. Most Chinese, however, paid attention to what was happening in the rest of the world, concluded that some infections and deaths were preferable to the shutdowns, and took to the streets to coerce the government into shutting down the shutdowns. The breadth and depth of their protests was unprecedented in the history of Communist China, and so threatened the power of the Chinese Communist Party that it submitted to public demands. This set a dangerous precedent for the future.

One of the economic risks associated with China attacking Taiwan is the economic damage to China. This includes problems associated with the damage done to the Taiwanese electronics industry, which is unique and is the sole or primary manufacturer of several key electronic components. China and rest of the world are very dependent on Taiwanese computer products. Taiwan has threatened to destroy those manufacturing facilities in the event of an invasion. Meaningful production would cease for months even if an invasion is defeated without destruction of these facilities, and at least a year if the invasion succeeds. In one scenario China could blackmail much of the West into tolerating its conquest by Taiwan by offering restored production priority of key electronic components to everyone except the United States.

Destruction of Taiwanese computer products industries during an invasion would result in world-wide economic disruptions for several years before America, Japan and South Korea can replace Taiwan’s former production. China’s economy would suffer most of all because China is as dependent on the West for Taiwanese electronics, and on Western imports of China’s non-electronic products that would plunge due to lack of Western demand during a recession. Western sanctions for China’s invasion would pretty much shut down China’s exports even after the West replaces Taiwan’s former computer electronics. The West would certainly not export its computer electronics to China given that China would have caused such economic chaos, and China lacks the ability to manufacture its own advanced electronics without imports of key Western key and materials. These problems have been recognized for decades, especially after recent fires at factories, often in Taiwan that produced all or nearly all of a single electronic component. These fires cause economic disruptions that can last months until customers can adjust or supplies can be resumed. This led to calls for more diversification of key production to plants in other countries even if this meant increased prices for the components in question. There are still too many key electronic items produced in Taiwan and Taiwan knows much impact that has on Chinese reluctance to actually attack.

The price of a successful Chinese invasion of Taiwan would likely be destruction of CCP (Chinese Communist Party) rule in China. Even if Taiwan does not destroy its advanced computer products industry during the invasion, China will suffer trade by most of its customers and suppliers. China’s economy will collapse without Western imports, or its own exports to the West, and this might happen anyway if the U.S. Navy then imposes a World War Two level blockade. As an invasion gets closer, the risks of trying it will become more and more apparent to China’s very risk-averse Communist Party leaders, and president Xi is just one man.

Taiwan has long had good relations with Ukraine and identifies with Ukrainians resistance to Russian aggression. Taiwan established diplomatic relations with Ukraine early. Since the end of the Cold War Taiwan had been seeking to establish diplomatic and trade relations with Ukraine. Until recently Ukraine tried to work with China. That did not work out and, when Russia invaded, China sided with Russia while Taiwan sent more and more economic and medical aid to Ukraine. Taiwan also obeyed economic sanctions against Russia, and sold Ukraine nearly a thousand specialized UAVs via a trade contact in Poland. Taiwan additionally offers aid to Ukraine for reconstruction once the war is over, including establishment of hospitals and much more.

Chinese leader Xi Jinping and his senior military Chinese officials are watching the Russian and Ukrainian military performance during the current war with great interest and growing alarm. That’s because current Chinese armed forces are closer to what Russia is using than to Ukraine’s, which China would like to emulate. That would be difficult because of China’s politics and endemic corruption.

For most of this new century China's leaders have complained about the state of their armed forces. The critics include many irate generals and admirals. Increasingly the complaints are published, so that everyone knows the problem is still seeking solutions. Initially these complaints were confined to private meetings, but so many people attend these meetings that details eventually get out to the general public. Since these leaks do not represent official policy, they do not get repeated in the Chinese media, and foreign media tends to ignore it as well. It's more profitable for the foreign media to portray the Chinese military as scary. China’s military is scary, but not in the way some Westerners believe. Chinese armed forces are less formidable to Chinese leaders than to foreigners. The Chinese military exists to frighten foreigners, not fight them.

Past mistakes are catching up with China as it continues its post-Cold War policy of aggressive territorial claims and risking, but not going to, war with its neighbors. Internally China is creating the fictional Big Brother surveillance state of the novel “1984”. This has more to do with internal politics and the need to distract an increasingly wealthy and concerned population from local problems with corruption, pollution and ineffective government. Domestic unrest has been growing louder and more visible to Chinese and the world. Recent examples include nationwide protests against rigid covid19 shutdowns. Before that it was the large-scale freedom protests in Hong Kong during most of 2019 and into 2020. This was about Chinese abuse of the special status Hong Kong is supposed to enjoy until 2047, but it is also about the corruption and financial recklessness in the rest of the country. China ignored the Hong Kong protestors and are dismantling the guaranteed (until 2047) freedoms for Hong Kong. The widespread covid19 protests were another matter and the government backed down and at the end of 2022 is still seeking a way to regain their total control of the population. Outside China, the government pursues an ancient, and often quite successful, strategy that emphasizes what appear to be high-risk policies but are actually long-range efforts to wear down the opposition and eventually assume control of the objective with little risk or cost. Or so China believed until the Americans, and many other victims, fought back.

Meanwhile China, the only real threat to Russia, quietly makes progress in the east. There China has claims on much of the Russian Far East and is openly replacing Russia as the primary economic, military and political force in Central Asia. Russia’s self-destructive invasion of Ukraine meant China has lost a major economic and military partner. Russia was unique to China because the two countries have unresolved disputes over ownership of Russian territory near the Pacific coast. China found Russia a good source of petroleum and natural gas as well as many other raw materials. Ukraine-related sanctions included the loss of export sales in Europe. The best alternative customer is China, which makes China the major customer for these natural resources. New pipelines have to be built to get additional supplies to China. There are several reasons for China preferring to not become too dependent on Russian oil and gas. China’s current status as a major oil and gas customer has led many existing Chinese trading partners in Europe and other parts of the world to reconsider their economic ties with China. There are some major exceptions and China is working to repair damaged economic relations with the West. Chinese leaders who wish to remain in power realize that the economy is very important.

Decades of rapid economic growth made China the second largest economy on the planet and dependent on foreign trade to keep the Chinese economy thriving. Those decades of economic growth also created China’s first significant middle class. There are now several hundred million educated and affluent middle-class Chinese who are essential to the continued success of the Chinese economy. Chinese leaders never before had to deal with something like this. Chinese middle-class participation in the covid lockdown protests meant the government had to back down. That strategy worked because while economic performance has been dismal since 2021, foreign economists see China returning to robust economic growth in 2024 with GDP growth of over five percent.

Then there is the neighboring economic disaster known as North Korea. Big Brother China is openly losing patience with its unruly neighbor. China is, literally, North Korea’s economic lifeline. China is the primary or only source for getting essentials like petroleum, food and all sorts of smuggled goods, past a long list of international sanctions. China will tolerate a lot of bad behavior in return for obedience and maintaining order along the Chinese border. North Korea failed in both categories. The 2022 war in Ukraine gave North Korea an opportunity to sell ammunition to Russia in return for desperately needed food and fuel.

Everyone looks to China because Korea has traditionally been a Chinese responsibility and, most of the time, a difficult one. North Korean leader Kim Jong Un has obediently gone to China several times since 2018 to receive advice. Kim also met with the leaders of South Korea and the United States. So far lots of the right words but little action. China and everyone else fears that North Korea is going to try and scam its way out of another tight situation and risk the very real wrath of China while doing it. Inside North Korea the official word is that the nuclear weapons are essential and not negotiable. Unofficially, more North Koreans want a change of government or a way to get out. Meanwhile South Korea continues to visibly prosper, with GDP per capita that is more than 20 times larger than North Korea. Being caught viewing videos of life in South Korea or South Korean video entertainment, is now a capital (death penalty) offense in North Korea.

January 30, 2023: Chinese coast guard ships once more chased Japanese fishing boats away from the Japanese Senkaku Islands. The armed Chinese ships entered Japanese territorial waters (within 22 kilometers of one of the Senkaku Islands). The Chinese usually do this to harass Japanese fishing boats that China insists are there illegally. The Chinese Coast Guard ships will retreat if they encounter Japanese Coast Guard or navy ships. For years China has been regularly sending coast guard ships to the Senkanus in an effort to force Japanese fishing boats out of what China claims are Chinese waters. In early 2021 China enacted a law authorizing their navy and coast guard to “protect” Chinese coastal waters off the Senkakus. Anticipating this, in early 2020 Japan established a military base on Miyako Island (between Senkaku Island and Okinawa). The Miyako and Senkaku islands are between Okinawa and Taiwan. All three of these island systems dominate the seas between Japan and Taiwan and China has been making claims to some of these islands, especially the Senkakus and indicating that all of these Japanese islands are actually Chinese. The new garrison on Miyako Island has 380 troops and is equipped with anti-aircraft and anti-ship missiles. Chinese naval ships have frequently entered Japanese territorial waters (within 22 kilometers of land) around the Senkaku islands and remained in Japanese waters for an hour or more. Miyako Island is 210 kilometers from the Senkakus and Japan plans to put garrisons on more of these small islands. China and Japan are competing to establish the most dominant position within the Senkaku coastal waters. So far it’s a stalemate.

January 28, 2023: Smartphone sales fell 13 percent in 2022, compared to 2021. Chinese manufactured and sold 286 million smartphones; the first-time sales fell below 300 million in a decade. This fall was attributed to continuing problems with covid19. Worldwide, smartphone sales of 1.2 billion smartphones, were down 11 percent. In China the covid19 shutdowns were more severe and prolonged than anywhere else. China is also having other problems, like a declining workforce brought on by decades of the one-child policy instituted in the 1980s to curb excessive population growth. The policy was lifted over the last decade but most parents were not inclined to have more than one or two children.

There is also a growing shortage of Chinese women in China that has created a market for young foreign women. China's one child policy, and the ability to determine the sex of the child before birth, led to more (20 percent more) boys than girls being born in China. The lack of potential brides means desperate Chinese men are willing to buy a kidnapped girl from Pakistan (or anywhere else). This crime has become common in most nations neighboring China. The birth dearth causes problems in other ways. As the military completes its decades old modernization program it is now running into a severe shortage of qualified recruits. This was due to the growing shortage of working age Chinese created by the one child policy. The government saw this labor shortage coming and relaxed the one child policy in 2015 and basically turned it into a two-child policy. Young couples did not respond as expected. In response to that the government offered cash incentives to couples who have a second child. That did not work either. Surveys found that 60 percent of young couples were reluctant to have a second child mainly because of the expense involved. In 2016 there were nine percent more births which was only 1.3 million more babies and not enough to make a dent in the growing shrinkage of the working age population (which declined over four million in 2016). The government had expected three million more births a year. It appears that China has, since implementing the one child policy in the 1980s, managed to acquire the “affluent mother” syndrome. That means better educated and paid women refuse to have a lot of children. South Korea, Japan and Singapore already suffer from this as does most of the industrialized world. This hit the military particularly hard as the Chinese have, for all practical purposes, come to depend on volunteers to staff the growing number of demanding technical and management jobs. Too many of the too few potential recruits want to make a career of the military or, if coerced, spend much time in uniform at all. But the Chinese military, as it modernizes (even with manpower reductions) cannot find enough qualified people. This situation is made worse by the requirement that all officers and key technical people be loyal to the communist party. The requirement is rigorously and repeatedly enforced by the party leadership even if it means the military is not as capable as everyone is led to believe. This illusion is difficult to sustain in some cases. The best example is the expansion of the navy with over a dozen major warships entering service each year and there are not enough competent officers and sailors to run the ships. The navy has urged more women to join the navy and go to sea but it’s not enough.

January 27, 2023: A Chinese space satellite manufacturer and satellite operator has been sanctioned by the United States for selling the Russian Wagner Group satellite imagery of Ukrainian military units and facilities. These imagery services aided Wagner Group in its recent offensive against Ukrainian forces in eastern Ukraine.

January 24, 2023: As China encounters more economic problems, including the worker shortage, expensive but economically unproductive projects outside China are being questioned. One example is the Chinese effort to build fortified artificial islands in the South China Sea. This has cost about $4 billion so far for seven islands. These islands are placed in areas that belong to other countries. The new islands enable China to challenge current and longstanding ownership by other countries. This is illegal. In response to this outlaw behavior the U.S. Navy regularly conducts FONOPs (freedom of navigation operations) by sending warships into areas of the South China Sea that China considers its territorial waters because of the artificial inlands. The Philippines has military detachments on nine of the disputed islands or reefs. These are part of an effort to oppose the illegal Chinese claims. Since 2020 the Americans have taken a stronger stand against Chinese aggression in the South China Sea by declaring Chinese claims to offshore resources across most of the South China Sea unlawful, as is the Chinese campaign of bullying to control these resources. In 2016 an international court ruled against China and stated that occupying uninhabitable rocks and building artificial islands did not confer an EEZ (Exclusive Economic Zone). Ownership of “rocks” gets, at best, 22 kilometers of territorial waters from the edge of each rock rather than 360 kilometers for EEZ rights. Before this change the U.S. merely called for China to comply with the court ruling, something China said it would not do even before the court completed its deliberations. The Americans did continue to carry out aerial and naval FONOP with warships to assert the right of innocent passage. This annoyed the Chinese, who claimed most of the South China Sea was under Chinese control and no foreign ship or aircraft could enter without permission. China has been claiming areas long recognized as belonging to Vietnam, Indonesia, Malaysia, Taiwan and the Philippines. That has caused all these nations, plus the United States, Japan and South Korea to form an alliance to halt Chinese aggression. Chinese government officials seeking to save money are questioning the usefulness, cost and risks of continuing this expensive and increasingly vulnerable islands.

January 11, 2023: South Korea announced that it is considering developing nuclear weapons to deter the growing North Korean threat to use their nukes to attack South Korea. Chins was critical of the South Korean announcement. South Korea responded to China by pointing out that China keeps exporting components for missiles and other weapons to North Korea and has criticized South Korean and Japanese anti-missile defenses against North Korean attacks without admitting it opposes those defenses because they can stop Chinese missiles as well. Japan is also capable to developing and building nuclear weapons but has refrained from doing so because the perceived threats did not justify it. Increased North Korean threats have changed that.

January 3, 2023: Since the Ukraine War sanctions were imposed on Russia in early 2022, China and India have quietly helped Russia to smuggle much of that oil to them and sell it at a large (up to 40 percent) discount. Chinese firms also export components to Russia that can be used to continue producing weapons. This China-Indian lifeline was a major reason Russia backed off on its threats to use nuclear weapons in Ukraine. China and India made it clear these threats were not acceptable and if they continued China and Indian trade with Russia would be reduced. China expects to do a lot more business with Russia after the war is over. China has also made it clear that the war was a big mistake for Russia and doesn’t care how it ends as long as it ends soon. China has refused to supply Russia with weapons because it would be hit with sanctions by NATO countries. The Central Asian states oppose the war in Ukraine and agree with China and India. This provides more economic opportunities in Central Asia, where China was already displacing Russia as the major trading partner. The Central Asian nations have also seen an influx of many (hundreds of thousands) Russians fleeing the mobilization of men to fight in Ukraine and do it with little or no training, inadequate equipment and inept or absent unit leadership. These exiles brough billions of dollars with them, which they deposited in local banks. Much of that money was used to start new businesses in these former parts of the Soviet Union. The local economies prospered from these investments and some of the host nations predict significant GDP growth because. Many of these young and well-educated Russians seem ready to settle in their new countries, at least until Russia ends the war and the growing police state atmosphere. Finally, Russia needs to get out from under all those sanctions.

December 17, 2022: Japan announced that over the next five years it is gradually increasing its defense budget from one percent of GDP to two percent. That means the 2027 defense budget will be about $73 billion, the third largest after the United States and China. Russia currently spends more than that because they are at war in Ukraine. This Russian spending is temporary because much of it is borrowed money and unless the economic sanctions on Russia (because of the war) are lifted, sustaining that high defense spending is not possible. For Japan, most of the additional defense spending is being spent on missiles for retaliating against North Korea, Russia or China. This counter strike capability is a major change in Japanese defense strategy. South Korea sees this as a welcome but worrying change in Japanese defense policy. There is some concern that Japan might be too aggressive in reacting to a possible threat. Both Koreas are still angry at Japan because Korea was a brutally treated Japanese possession from 1910 to 1945. The four decades of Japanese occupation were very cruel. Think how bad the Nazi occupation of conquered countries was during World War II and realize that the Japanese occupation of Korea was much worse and for much longer. The Japanese don’t help with their post-World War II attitude that Japan was a victim because it was forced into World War II by evil Westerners and was only trying to help its neighbors by occupying them and treating them badly. Japanese have a hard time understanding how their victims don’t appreciate all that Japan tried to do for them. What the foreigners do remember is what the Japanese did to them, something the Japanese tend to downplay or deny outright.

December 15, 2022: COMAC (Commercial Aircraft Corporation of China) delivered the first C919 airliner to a customer. In this case the customer was China Eastern, which plans to begin regular passenger service with the C919 in early 2023. Getting the first Chinese designed and built commercial airliner delivered is a big deal for China. For over fifty years China has been working towards designing and building its own commercial airliners. Finally, COMAC, a state-owned firm, did it with the C919 narrow-body twin-engine airliner.

The C919 competes with the latest Boeing 737 model, the 737 Max. The Max ran into serious quality problems after introduction, which was later traced back to a change in management selection as Boeing sought to reduce costs and increase its ability to compete with its major rival AirBus by no longer requiring senior managers to have an engineering, as well as a business background. Fixing that problem will take the rest of the decade to complete. China has noted the problems Boeing had and avoided them. This approach has enabled China to achieve new capabilities much faster and completely than Russia was ever able to do during decades of Cold War-era efforts. After the Soviet Union collapsed in 1991, the new Russia retained a lot of the Soviet bad habits. This explains why China has surpassed Russia in so many areas since 1991. The success of the C919 is another example of this as 1,200 C919s have been ordered and COMAC expects to establish production capabilities of 150 C919s a year within five years. This production rate is similar to those of AirBus and Boeing. Russia is still way behind China and the West when it comes to developing and manufacturing commercial airliners.

December 14, 2022: Noting the effectiveness of artillery systems in Ukraine that were produced in NATO countries, China has been aggressively marketing similar, often identical Chinese models that have additional features and cost less. At the moment, export of the NATO artillery types sent to Ukraine means a long wait because so many of these systems were rushed there. China also has large quantities of 155mm GPS guided artillery shells available as well. One of the most popular NATO systems used in Ukraine is the British M777 lightweight 155mm towed howitzer. The Chinese version is the AH4, which weighs 4.5 tons and can fire shells as far as 40 kilometers. There is another even lighter three-ton version for mountain warfare. Another favorite in Ukraine is the French truck mounted 155mm Caesar system. The Chinese SH-1 is very similar and weighs 22 tons, compared to 18 tons for Caesar. Both systems have the same 52 caliber long gun and a crew of five. Ukraine also found armored self-propelled 155mm guns useful. The Chinese contribution to this category is the PLZ45. This is a 33-ton tracked armored vehicle carrying a 155mm/45 caliber gun with a maximum range of 39 kilometers. There is also a laser-guided round with a range of 20 kilometers. This requires someone near the target to direct a laser at the target. Top speed on a road is 55 kilometers an hour. Range, using internal fuel, is 550 kilometers. A crew of five operates the vehicles, which carry 30 rounds of 155mm ammo. China also has heavier, longer range 155mm towed guns and a recently updated PLZ45A4 version of its tracked artillery vehicle. Chinese marketing is based on lower-cost systems delivered to whoever can pay. Rush orders cost a little more. These systems mentioned here are also used by the Chinese army, but often under a different name.

China has not sold any of these systems to Ukraine, which is currently receiving most of its artillery free from NATO nations. China does not give its artillery away and has not done so for many decades. Over the last five years China has been the fourth largest arms exporter, behind the United States (37 percent), Russia (18 percent) and France (11 percent). China is currently at five percent but is taking a lot of business from Russia because of economic sanctions and the similarity of Chinese systems. Chinese weapons usually cost less than their Russian counterparts and have additional features. The longer the sanctions on Russia continue, the more market share Russia will lose and the losses are often permanent.

December 13, 2022: The recent widespread protests and demonstrations in China against strict covid19 controls were widely reported outside China because they involved an unprecedented breakdown of China's enormous Internet censorship operation often called the Great Firewall of China. For over a decade China has had the largest population of Internet users in the world. Between September and November 2022 China experienced a major breakdown of its Internet censorship operation as an unprecedented number of Chinese protested the censorship online employing numerous techniques that had emerged over the last decade to evade the censorship. These methods were never used on a massive scale before and, when that finally happened, the Great Firewall was unable to cope. As more Chinese users realized that the internet controls were overwhelmed and breaking down, more people joined in. All this was mainly in support of public demonstrations against the months of increasingly restrictive covid19 lockdowns. These cracks in internet censorship meant more Chinese became aware of how damaging the lockdowns were. The Great Firewall was supposed to prevent that from happening. The government and the Chinese people both discovered how much bad news the Great Firewall had been hiding. This did permanent damage to Chinese censorship efforts and now a much larger number of Chinese know about ways to successfully and consistently evade the Great Firewall.

December 12, 2022: Because of the North Korean censorship it took a while for news and videos of the widespread protests in China against the covid 19 lockdowns. Many North Koreans were surprised at this because Chinese are better off economically than North Koreans and China is supposed to be able to suppress large scale protests. Some North Koreans talked among themselves about similar demonstrations in North Korea but none acted on it.




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