China: Central Planning Stymied By Reality

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December 1, 2016: GDP growth has been slowing since 2010 and that trend will continue. This is mostly about how the decades of development are over. Most of the missing (because China did not go through the Industrial Revolution until the late 20 th century) infrastructure (road, ports, dams, utilities, housing) have now been built and, because of government corruption, often overbuilt. China is putting up impressive economic numbers but not enough of the ones that count. For example, a better (but less used) measure of economic strength is how much of the national wealth is in private hands (where it is more efficiently managed). Thus while China makes much of its GDP (at $11 trillion second only to the American $18 trillion) and the prospects of Chinese GDP eventually surpassing the U.S., they are now losing ground when it comes to privately controlled wealth ($23.4 trillion versus $84.8 trillion).

Moreover the real strength of the Chinese economy is production for domestic consumption. Starting in the 1980s, China set the economy free to finally get through Industrial Revolution (which most Western nations underwent in the 1800s) with little state interference. As happened in the West, this leads to explosive growth and problems with pollution and raw materials shortages. This makes China's neighbors nervous, because that's where lots of the raw materials come from, and some of the pollution (industrial waste) can go to. Currently, China boasts of having the largest economy on the planet by the 2030s. Reality tends to be what happens while you’re making other plans.

China’s problems have worldwide impact. In 2014 Chinese economic growth was 38 percent of the world total and the Chinese economy (now the second largest in the world) accounted for 15 percent of global economic activity. While the United States is rather well insulated from Chinese economic problems, most of the world is not. This is particularly true of Asian nations, which depend a lot more on China as a buyer of their goods. For any country China is more important as a customer than as a supplier and economists in and out of China see Chinese economic growth in decline for the rest of the decade and probably longer. While this will not slow down the Chinese military buildup much at all, it will make Chinese leaders more concerned about peace at home than military backed expansion abroad. Chinese leaders are acutely aware of Chinese history and the lessons it provides. Despite being a police state the Chinese leadership knows that in the past censorship and lots of armed men have not prevented massive unrest that brought down seemingly unassailable governments. Even if the uprisings failed, like the 19th century Taiping Rebellion that left 20 million dead did, the aftermath can leave the government too weak to hold the country together. That’s the kind of damage the Taiping Rebellion did and led to a century of civil war, foreign invasion and the destruction of the ancient imperial system. The communists see themselves as the saviors of China for bringing China back to world primacy, a position it previously held for thousands of years. Before the Western industrial revolution the Chinese economy had usually (over thousands of years) been the wealthiest on the planet. Restoring China to its traditional roles as an economic and military power is still very popular with most Chinese and worth taking extreme measures (like replacing the current government) to hold onto.

While generations of Chinese have made enormous sacrifices to get this far, there is less enthusiasm to suffer more simply to allow corrupt officials (most of them members of the ruling Chinese Communist Party) to get rich or to get away with past crimes. The current situation is also something quite new in Chinese history; a large, powerful and assertive middle class that is not willing to tolerate threats to their recently achieved economic status. Chinese leaders have looked around for guidance on how to deal with this. There are the examples of Hong Kong, Taiwan and Singapore, all Chinese cultures that went through the development of a large middle-class. Those examples are not very comforting because all largely dispensed with the police state model. China is, in fact, still a communist police state and some leaders are beginning to consider actually changing that. Whatever they do they have to admit that the times they are changing. While the threats of economic collapse, currency devaluation, pollution, corruption and inadequate banking reforms and personnel shortages grab more media attention, the politicians realize that the new middle class is in the center of all those other problems while also being the solution or the ultimate nightmare for the current rulers of China.

China no longer expects GDP to grow nearly seven percent this year. There has long been reason to doubt the accuracy of that number. For example Producer Prices (what manufacturers sell their goods for) have been falling every month for nearly four years. This is caused by low demand and in response companies have been employing fewer people for two years so far. Part of the slowdown is deliberate. China had made it more difficult to borrow in an effort to deal with the real estate bubble and corruption (bad loans) in the banking system. But now the government is loosening credit to make it easier for companies to grow. The problem is that the economy is no longer growing like it did since the 1980s, at over 10 percent a year. On top of that there is the old problem of corruption within the government when it comes to accurate economic statistics. The unreliable government statistics were long an open secret that did not seem to matter. That has changed.

To make financial matters worse Chinese banks are being accused of using the same deceptive banking methods (trying to make repackage bad debt as good debt) that brought on the 2008 financial crises in the United States. This is serious problem because it increases the potential for economic collapse. This threat was created by two bad policies. The first was the government allowing economic data reporting to be “adjusted” to suit the needs of local (provincial) officials. That was bad enough (and is now being fixed) but during several decades of rapid economic growth this flawed data allowed the state owned banks (which still dominate the economy) to lend too much money. Thus debt in China has reached nearly 300 percent of GDP, nearly three times what it was a decade ago. Worse, much, if not most of this debt consists of loans that the borrower cannot repay, or not repay in a timely fashion. This threat, more than the South China Sea dispute, is what keeps Chinese leaders up at night. It is believed that nearly $600 billion worth of these loans are uncollectable. Chinese banks are trying to avoid writing off these bad loans (which hurts bank profits and puts some of them out of business) many banks are repackaging them in an attempt to sell them off for far more than they are worth. Chinese banks call these new items WMPs (wealth management products) and assure buyers they are legitimate but offer these bond-like securities with much higher interest rates than other corporate or bank bonds.

South China Sea

President Rodrigo Duterte of the Philippines thought he had persuaded China to allow Filipino fishermen to freely operate around Scarborough Shoal. Chinese warships allowed Filipino to fish near the shoal but continued to prevent Filipino vessels from operating inside the shoal. Since 2014 China has been increasingly aggressive and effective in blocking Filipino access to Scarborough Shoal. For the moment the Filipino fishermen are happy to be back in the area at all. This is still a problem for Filipinos because this shoal is 220 kilometers from one of the main Filipino islands (Palawan) and 650 kilometers from Chinese territory (Hainan Island) and according to international law it is Filipino. China is trying to persuade (with offers of cash, trade and whatever) the Philippines to cooperate and acknowledge Chinese ownership but no permanent agreements have been achieved. All that is obvious is that China is willing to reciprocate when the Filipino leaders says nice things about China and bad things about the United States. Meanwhile the Philippines is technically an American ally and part of an anti-China coalition of nations threatened by Chinese territorial claims. For China this is progress. China takes the long view.

But meanwhile China is openly boasting of having split the American alliance opposing Chinese claims to the South China Sea. China believes it has obtained the cooperation of Cambodia, Philippines and Malaysia. That means ASEAN (Association of Southeast Asian Nations) which in 2014 showed signs of openly defying China, is no longer a threat to Chinese claims. Founded in 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand, ASEAN has since then expanded to include Brunei, Burma, Cambodia, Laos, and Vietnam. Most of these nations oppose China's violation of many members EEZ (Exclusive Economic Zone, waters 380 kilometers from the coast) in the South China Sea. China long had a staunch (and paid for) ally in ASEAN (Cambodia) who blocked all attempts to unify and oppose China. Now China has more allies in ASEAN and one less international critic to worry about.

South Asia

Despite growing problems with taking control of the South China Sea Chinese troops continue cause problems along the border of the Indian state of Arunachal Pradesh. These incidents are not supposed to happen at all because of agreements China and India negotiated in 2013 and 2014. Because of that China claims recent incursions were accidents and point out that their troops leave as soon as India contacts China (per the border agreements) and China is able to contact the border troops involved. There have been fewer of these incursions since 2014. There were 500 incursion in 2015, 350 in the last 12 months and about 200 so far this year. But sometimes the Chinese will refuse to move and that requires a high-level meeting to resolve. Still, it’s a welcome trend because in 2011 there were 213 of these Chinese border violations, followed by 426 in 2012 and 413 in 2013. Meanwhile India continues to move more troops into the area and build facilities to support them. India recently activated the sixth of eight military airfields in the sparsely populated provinces. All eight of these bases are to be operational by the end of the year. Each can handle large transports (like the new American C-17s India bought) and has a control tower and room for rapid expansion.

China still claims to own Arunachal Pradesh. China has always maintained that the 3,500 kilometer long border between India and Chinese Tibet (1,126 of with Arunachal Pradesh) was only temporary and since 2010 China has been more aggressive about changing it. In 2014 China protested India building roads near the Chinese border in northeastern India. The roads were in an area that 2014 Chinese maps depicted as within China’s borders. This is just another escalation in a long-running border dispute over who owns areas like Arunachal Pradesh. In this part of northeast India there are few, if any, ethnic Chinese. The locals know that a Chinese takeover would mean drastic changes because the first thing China does in places like this is move in a lot of ethnic (Han) Chinese and marginalize the natives. This rarely ends well for the locals. While these Chinese claims have been on the books for decades, since 2000 China has become more vocal, and physical, about it. That's one reason India has been rapidly increasing its defense spending. But since both nations have nuclear weapons, a major war over these border disputes is unlikely. Constant Chinese pressure is another matter. China is applying the same tactic in all its recently activated territorial claims. Constant pressure while avoiding anything that might trigger a war is seen by China as a slow but certain way to secure its claims.

China now admits that it will indeed be stationing warships at the new port of Gwadar in Pakistan. China is investing billions to turn Gwadar into a major Arabian Sea port. At the same time Russia has asked for permission to have its warships use Gwadar.

Korea

Despite recently easing up on sanctions China promptly condemned the September North Korean nuclear test and the October ballistic missiles tests. Now China has agreed to enforce a new set of economic sanctions. China continues applying pressure on North Korea, usually quietly, by cracking down on trade, especially the movement of forbidden (by current sanctions) items. China is North Korea’s largest trading partner, buying over half of legal North Korean exports. In turn North Korea imports over $3 billion worth of food, medicine and other unsanctioned items from China. Nevertheless there were some severe economic reprisals by China. This had more to do with recent discoveries that North Korea had bribed a lot of Chinese officials and gone into partnership with a number of Chinese companies to illegally obtain key components for its nuclear weapons and ballistic missiles. The Chinese tried to keep the details of its crackdown secret but, as is often the case in the age of the Internet, this proved impossible. All this was complicated by the fact that the Chinese government has made a major public commitment to fighting domestic corruption and protecting China from foreign military threats. For decades Japan and the United States were identified as the principal foreign threats. But in the last few years the government has allowed growing public anger at North Korea to be openly discussed in Chinese media. These threats; to use nukes and ballistic missiles against China for not supplying North Korea with enough free fuel, food and other aid, had turned Chinese public opinion against North Korea, which had long been seen as an ally against the evil West and their South Korean and Japanese puppets. Until the latest North Korean nuclear and missile tests China was directing more anger at South Korean refusals to halt the expansion of their anti-missile defenses. China is still angry about that but is now more concerned with the North Korean threat. North Korea has remained defiant, continuing to test ballistic missiles that can reach all of China.

The autumn floods in northwest North Korea swept away the newly built border fences on both sides of the river. The fences are not only being rebuilt or repaired but on the Chinese side the fence is being upgraded. For China the growing number of illegal migrants from North Korea are the cause of growing crime because desperate North Koreans will cross the river just to raid local farms or homes and steal what they can and take it back to North Korea. China is also building a new military base on the Korean border, to accommodate the additional troops that have been sent to the border area.

Russia

Economy is destiny, as the Russians have learned from what happened to China, which is now more of a superpower than Russia. Chinese GDP is more than seven times Russia’s and China is spending more than three times as much on defense as Russia. The Russians see the possibility of China regaining its status as a major military power. That was lost several centuries ago but at the moment China has twice as many troops and most of them have better weapons. But the cost of competing with a hostile China appears to be more than the Russia can afford. Meanwhile as an ally China is offering to help by spending billions more on Russian weapons (despite the flagrant Chinese theft of Russian military tech). As distasteful as the situation is, the Russians really do need some help. The Russians are also becoming aware that they were not much of a superpower back in the Soviet days. In Central Asia, where Russia is trying to reestablish dominance over the nations that used to be part of the Soviet Union, China is displacing Russia as the dominant economic power. That means stronger military and diplomatic ties with China as well.

Beneficial Corruption

Sometimes corruption serves a useful function. This is rare, but it happens. A recent example is the discovery (by statistics experts) that about half the “missing girls” resulting from a major population control program were not missing. In many parts of the country local officials would overlook unregistered females in return for a bribe or simply to have a family owe them a favor. But as these female infants grew up they began to show up in population statistics and that was how the corrupt practice was discovered. This all began in the 1980s when many couples forced to have only one child would abort a child if it was a female, because much more importance is attached to having a male heir. Thus until recently it was believed that there are were about 40 million more males than females in China, and that the disparity would grow. But efforts to track this phenomenon revealed the corruption. Nevertheless there are lots of surplus males coming of age, and the competition for wives is causing problems. Women are taking advantage of their scarcity, but men are also going to neighboring countries to buy, or even kidnap, young women to be wives. This is causing ill will with neighbors, where females are enticed or coerced (kidnapped by criminal gangs) to become wives of Chinese men who have no other options. It’s not just brides who are moving to China, eight million workers moved to China in 2014, increasing the foreign born population 263 million and that movement continues. It’s these migrants that will become increasingly important in the next few decades for dealing with the labor shortage. On a related note the government relaxed the “one child” policy a year ago and it has been noted that there has been no increase in births. 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.

November 30, 2016: The CPC (Communist Party of China) issued new rules regulating pay, benefits and discretionary spending of government officials. This is meant to reduce the incidence of “legal corruption” in which government officials spend more (often much more) than necessary to carry out their duties. Specifically the new rules are meant to curb lavish entertaining, travel and accommodations not to mention luxurious offices and government facilities in general. This sort of thing has been tried before and the problem is the enforcements. The CPC leadership promises to enforce the new rules.

In Hong Kong two local politicians lost their elected posts as members of the Hong Kong legislature. The two had refused to take the oath of office as written and had replaced the phrase pledging allegiance to China with a reference to the “Hong Kong nation.” Many Hong Kong residents resent the way China is forcing Hong Kong to adopt Chinese political customs, which are seen as inferior to the Western legal and business customs Hong Kong adopted during more than a century of being a British territory. In 2015 over a thousand university faculty and students gathered in Hong Kong for several weeks to protest government efforts to weaken the academic freedom long enjoyed by Hong King universities. The government is concerned about these academic protests morphing into another embarrassment like what happened in 2014. That involved thousands of pro-democracy demonstrators tying up the streets for 79 days. The government prosecuted some of the 2014 protest leaders and that proved to be yet another unpopular move that many Chinese consider corrupt.

November 26, 2016: In southwest Pakistan (Baluchistan) two Chinese engineers were murdered and it is unknown who did it. This is an embarrassing incident because since early 2016 Pakistan has been sending additional police and soldiers to the area to provide more security for the growing Chinese workforce in Gwadar, a city of 100,000 and site of one of the biggest construction projects in the country. Pakistan has assured China that there would be no terrorist violence against Chinese working on upgrading the port of Gwadar. This is a key part of the $46 billion China-Pakistan Economic Corridor (CPEC). This project began in 2013 when China agreed to spend $18 billion to build a road from Gwadar into northwest China. This will require drilling long tunnels through the Himalayan Mountains on the border (in Pakistani controlled Kashmir.) The road and a natural gas pipeline are part of the larger CPEC project. This will make it much easier and cheaper to move people, data (via fiber optic cables) and goods between China and Pakistan. China also gets a 40 year lease on much of the port facilities at Gwadar, which India fears will serve as a base for Chinese warships. The thousands of Chinese coming into Pakistan for this project will be prime targets for Islamic terrorists and tribal separatists in Baluchistan. The people in Gwadar will benefit greatly from the construction and the expanded port. Because of that Pakistan is recruiting another 700 local policemen, whose intimate knowledge of the area will be key in keeping the peace. These new police will serve in a unit dedicated to keep the foreign (mainly Chinese) workforce safe.

November 25, 2016: China agreed to work with the United States to impose more sanctions on North Korea. China agreed to try and persuade Russia to cooperate. That is important because China and Russia are the only two nations with a land border with Korea. The new sanctions are believed to include halting North Korea coal exports to China, or anyone else. Coal has been a major export item for North Korea.

November 24, 2016: China ordered Hong Kong port officials to seize nine Terrex AV81 wheeled APCs (armored personnel carriers) and other military equipment on a container ship. The ship was just stopping in Hong Kong to pick up and discharge cargo. Apparently this equipment, headed for Singapore, had been used in Taiwan for some recent joint training between Taiwanese and Singaporean troops. Both these countries kept quiet about it, in deference to Chinese displeasure over how these two countries both oppose Chinese claims in the South China Sea. While China has no such disputes with Singapore, China expects Singapore to refrain from cooperating with Taiwan. China created this incident to send a message.

November 23, 2016: South Korea and Japan signed an intelligence sharing agreement that mostly covers North Korean military matters but also includes aspects of military threats from China and Russia. China criticized this agreement, which has been in the works since 2012.

November 22, 2016: In the south, across the border in Burma (Shan State) fighting between rebellious tribes and the army led to a Chinese citizen inside China being wounded by some of the gunfire. China told Burma to restore order to the border which has been unruly for centuries. To emphasize the point China put army units near the Burma border on high alert and publicized the order.

Across the Pacific Chile and China signed several trade and cooperation agreements which makes it easier for the two countries to buy and sell from each other. All this economic activity has increased Chinese dependence on the sea. This is unique in Chinese history, for in the past, China was self-sufficient and ignored naval matters. No more. The admirals are pointing out that, without control of long sea routes to Africa, Australia and South America, the Chinese economy would choke. Forget about exports, it's the raw materials China needs, and only a stronger fleet can guarantee access. To emphasize that point, last year China became the largest exporter on the planet (passing Germany), with nearly ten percent of global exports. The U.S. is the number three exporter.

November 20, 2016: The government has banned all South Korean movies, TV shows and popular music in China. This is a big deal because these aspects of South Korean culture are very popular in China and very lucrative for the South Korean firms that produce them. It’s also a point of pride for South Koreans in general that Chinese admire, and pay for, a very public aspect of Korean culture. This comes after China suspended discussions on joint defense matters in early November. This is another escalation of the Chinese efforts to coerce South Korea over its plans to install American THAAD anti-missile system. Because of continued North Korean nuclear and ballistic missile development South Korea now plans to have THAAD operational in 2017. China, Russia and North Korea have long opposed THAAD. South Korea wants THAAD for protection from North Korean missile attack and always resisted Chinese objections, even when China hinted that failure to drop THAAD might result in less trade with China. That was a signal to South Korean voters to carefully consider the cost of defying China. That did not work and now China is going through a long list of minor punishments it can apply in an effort to get South Korea to comply. China will not come right out and say it but they object mainly because THAAD would also make South Korea less vulnerable to intimidation by Chinese ballistic missiles. South Korean voters understand that so all the threats are having less impact than China expected. South Korean public opinion polls show voters are even more enthusiastic about the high tech and very expensive (over $100 million per launcher and associated equipment) THAAD system now that North Korea continues launching ballistic missiles and preparing for more nuclear tests. China also sees this defiance as a sign that South Korea does not believe Chinese assurances that it has North Korea under control. This move also means that South Korea is not ready to abandon its alliance with the United States and instead accept the patronage and protection of China, the traditional local superpower.

November 16, 2016: China has agreed to invest $2.2 billion to upgrade Venezuelan oil facilities. To pay for this Venezuela will increase shipments of oil to China from the 550,000 barrels a day (most of which is paying for past loans) to 800,000 barrels a day. The government corruption and mismanagement has hurt the Venezuelan oil industry and caused a decline in oil production from 3.5 million barrels a day in 1999 to 2.3 million today. The production decline is continuing, because the government refuses to clean up the mess in the national oil company and the oil production facilities. This collapse in oil income has created a cash shortage that the government has been dealing with by borrowing. That option is fading fast as potential lenders not the refusal to do anything about the fundamental problems. For example China has been a major lender and has provided about $50 billion since 2007. Most of these loans are repaid with Venezuelan oil. The amount of oil owed China increases as the oil price declines, which means Venezuela has less oil to sell for current needs. Because the socialist economic policies have driven most manufacturing, and even agricultural companies out of business nearly everything has to be imported. China fears that they may not see a lot of their loans repaid and are demanding more oil instead. In 2014 China was receiving over a third of Venezuelan oil exports and now that is nearly half.

November 14, 2016: Two Chinese submarines were handed over to the Bangladesh Navy. In 2013 Bangladesh ordered two Type 035G subs for $103 million each. The Type 035Gs are so cheap because they are an old design that actually goes all the way back to World War II. The Chinese, with their typical persistence have kept tweaking and improving that design. For China it all began in the 1960s with their Type 33 boats. These were copies of the Russian Romeo class which was the successor to the Whiskey class boats, which were, in turn, based on the German Type XXI. The German design first showed up in 1943, and was the first modern submarine in that it was designed to spend most of its time underwater (with just the snorkel device and periscope above water, to bring in air for the diesel engine and crew). The Type XXI was a 1,600 ton (on the surface) sub, compared to the 1,500 ton Romeos. Russia built over 500 Romeos, while China built over 80. India is alarmed that neighboring Bangladesh has bought Chinese submarines, especially since Bangladesh has never had subs before. Bangladesh is the largest customer for Chinese arms exports. India also suspects that Chinese subs have been operating in the Bay of Bengal.

November 12, 2016: Off the southwest coast of South Korea a group of 30 Chinese fishing boats fishing illegally were fired on by a South Korean Coast Guard boat. This is the second such incident this month. In October South Korea changed its ROE (rules of engagement) to allow coast guard crews to use weapons against foreign fishing boats that refuse to comply with orders to act in a threatening manner. This was the aftereffect of a September 29th incident where a Chinese fishing trawler had three (of 17) crew killed by a fire started while they were trying to flee South Korean coast guard ships. The other 14 Chinese sailors were jailed until the situation could be resolved (usually by China paying a large fine).

Further south four Chinese coast guard vessels entered Japanese territorial waters (within 22 kilometers of land) around the Senkaku islands. This was the second such incident in a week. Japan issued an official protest which China dismissed because China does not recognize Japanese claims to Senkaku. There have been 30 of these incidents in 2016. Earlier in 2016 Japan announced the creation of a new naval task force to patrol and defend the Senkaku Islands. This force consists of ten new 1,500 patrol ships and two older vessels carrying helicopters. Japan has controlled the Senkakus for over a century and says it will use force to retain possession. China has challenged Japan and its allies to do just that.

November 10, 2016: North Korea quietly but officially asked China to have its Internet censors block Chinese Internet users from referring to North Korean ruler Kim Jong Un as “Kim Fatty III”. This term not only criticizes the fact that Kim is very overweight while many North Koreans are going hungry but also referring to the fact that North Korea is a hereditary dictatorship and Kim Jong Un is the third Kim to rule. China promptly complied and that itself became news (unofficially) on the Chinese Internet. China would not comply with a request like this unless North Korea offered something in return. So far there is no mention of that. So it would appear that the 2013 decision to allow Chinese to say whatever they wanted about Kim Jong Un paid off. China does not like to publicly criticize an ally and has been low-key in its public comments to North Korea over the growing displeasure towards North Korean nuclear and ballistic missile projects. But China has other ways to send a stern public message to the North Korean leadership. In 2013 China quietly ordered its Internet media operatives to say what they think about what is going on in North Korea. As a result popular Chinese Internet personalities are saying what the government prefers not to say (that the North Korean leadership is acting like maniacs). Chinese Internet commentators are often local celebrities who are allowed to spout on their website or microblog (the tightly controlled Chinese version of Twitter) as long as they do not say anything the government censors do not approve of. The Chinese people understand how this works and know which blog posts are crap and which are sincere. The jabs at the North Korean “Boy General” are largely sincere, with the posters saying what a lot of Chinese think about North Korea.

November 9, 2016: The Chinese government announced that India would definitely see Chinese investment and trade deals disappear if India openly sided with Japan and other nations embroiled with China over Chinese territorial claims in the South China Sea and elsewhere. This aggressive stance especially in the South China Sea and the Indian border, is popular inside China, where the government has increasingly been playing the nationalist card. All Chinese know their recent history. In the 19th century the corrupt and inept imperial government lost control of much of China (Hong Kong, Manchuria, and so on) to better armed and aggressive foreigners. Then the communists took control in 1948 and began to win China some respect. Now China (still run by the communists) is asserting its ancient claims on adjacent areas, like the South China Sea. But those ancient claims also include control of Vietnam, Taiwan, the Philippines and much of the Russian Far East. Asserting ancient claims is how the two World Wars began but China insists it is merely protecting itself. This was frequently heard before both World Wars began.

November 2, 2016: Malaysia is buying four Chinese OPVs (offshore patrol vessels) and has agreed to try and settle South China Sea related disputes with China diplomatically. Details of the sale were not revealed and that usually means the deal was a cover for bribing Malaysian officials to be more pro-Chinese. This comes after Japan gave Malaysia two large (90 meters/292 foot) patrol ships. These are former Japanese ships being replaced by new models. The retired ships are in good shape and Japanese will provide training for the Malaysian crew. Japan has also provided 19 used patrol vessels to the Philippines, Vietnam and Indonesia. In addition Japan has donated or sold some new patrol vessels to these nations in order to encourage cooperation in opposing Chinese claims in the South China Sea.

November 1, 2016: For the first time China showed off its most advanced stealth warplane, the J-20, at a Chinese air show. China expects the J-20 to enter service in 2018 and has apparently changed its mind about exporting the J-20. Since 2014 China has offered its 18 ton J-31 stealth fighter to export customers as the FC-31 but insisted that it would not export its more advanced J-20. What apparently changed this policy was Chinese belief that they had solved the engine problems and could build their own engines and not be dependent on Russian engines. The J-20 made its first flight in 2011, and many more since then. There in addition to the two original J-20 prototypes six more were built between 2012 and 2015, each incorporating changes. By the end of 2015 the final design was ready for production. This J-20 is a 36 ton aircraft that looks like the American F-22 when viewed head on. Yet the J-20's overall shape, weight, and engine power is closer to the American F-15C.

 


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