China: Trying To Avoid Interesting Times

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May 12, 2017: The key crises of the moment is North Korean defiance and nukes. This is a situation that is unpopular with Chinese in general (based on the tone of the chatter on the Chinese Internet) and even more so with Chinese leaders who find themselves under pressure from popular opinion as well as the rest of the world (especially South Korea and the United States) to act decisively. Historically Chinese leaders have learned to avoid acting decisively because the results tend to be unpredictable and usually bad. Thus the Chinese curse “may you live in interesting times.”

The sanctions imposed so far have hurt North Korea and crippled their armed forces. Yet the Kim dynasty is still in power. But North Korea is increasingly vulnerable to sanctions that reduce access to imports essential for nukes, missiles and other military efforts. The United States, South Korea and even the UN have managed to obtain details of how North Korea partially overcomes sanctions and that indicated what additional sanctions would do the most damage, especially to North Korea military and government officials directly involved with forbidden programs (nukes, missiles and evading sanctions.) Any new sanctions will only work if China (and to a lesser extent Russia) cooperates. Russia appears ready to follow the Chinese lead in this area. China is undecided on how far to go in this direction.

North Korea is now extremely vulnerable to China halting all oil exports. China is the only source of petroleum for North Korea and China has already cut the tonnage over the last year but is reluctant to halt all shipments. In response to that North Korea has, for years, been converting thousands of trucks to run on coal gas. This sort of thing was popular in Japan and Germany during World War II because of oil shortages but largely disappeared after 1945. In North Korea these coal powered trucks are an increasingly common sight. But coal gas is half as efficient as petroleum fuels, and vehicles using it are slower, have less range and require more maintenance. Thus coal gas is not suitable for most military vehicles or combat operations. The sluggish and smoky coal powered trucks remind North Korean that their war is not over yet.

Even though China now prosecutes and punishes some businesses that take bribes to help North Korea evade sanctions there are a few sanctions, like no oil at all, that would be much more difficult to evade. If North Korea persisted the next step would a ban on North Korea commercial and military aircraft using foreign airports. Same with North Korean ships. Rail and road traffic into North Korea can be monitored because it can only enter via a few Chinese and Russian border crossings.

Finally there is the possibility of doing fatal damage to North Koreas illegal banking network. The U.S. has been successful at hunting down and punishing major banks and financial institutions that help North Korea move cash to fuel the illegal trade and this would be more effective if China cooperated. But North Korea has access to many financial institutions in China that are protected by powerful local officials. With the backing of the Chinese government the banking sanctions could then be more thorough and be extended to hundreds of individuals (most of them North Koreans) who make the illegal banking network work.

Another North Korean export that could be banned is slave labor. Most of what North Korean workers overseas are paid is taken by an unofficial agent of the North Korean government and then the cash is transported back to North Korea. These legal North Korean migrant workers are part of what amounts to a slave labor program that has become a major (up to $2 billion a year) source of foreign exchange for North Korea. The export of North Korean workers has gone from 60,000 men and women in 2014 to over 100,000 in 2016. The number of workers outside the country is nearly triple what it was before Kim Jong Un took over in 2011. The government takes up to 90 percent of the wages these men and women earn outside the country (mainly in Russia and China) and holds the workers’ families hostage in case the worker does not return home when ordered. If someone does not come back, their families are sent to prison camps. If North Korea cannot afford to import luxuries and consumer goods for the few percent of families that run the police state there will be greater opportunities for China to quietly offer Kim subordinates a lucrative way out. This is right out of the ancient Chinese playbook for dealing with troublesome neighbors.

South China Sea Blowback

The Philippines have defied China by moving troops and construction equipment to Pagasa, a disputed island in the Spratly’s. This particular incident got started in early 2016 when China was seen making preparations to build an artificial island at Jackson Atoll, install a small military garrison and declare the area part of China. Nearby Pagasa is the second-largest (37.2 hectares/93 acres) of the Spratly Islands and is inhabited by 200 Filipinos civilians and a few military personnel. China has been increasingly belligerent in its claims to Pagasa and threatens to “take it back” by force. Chinese military and civilian ships are showing up near Pagasa with increasing frequency and sometimes the Chinese vessels try (by getting in the way) to prevent non-Chinese vessels from getting too close to the island. The Philippines often has a coast guard patrol boat off the island (which is 480 kilometers from the nearest Filipino territory China does not claim) and that provides the possibility of a violent military encounter. China is also concerned with the increasingly frequent visits of American warships to the Philippines (for leave and maintenance) and the South China Seas (to challenge Chinese claims.) So far China has not been violent but with more and more Chinese warships, warplanes and troops showing up in the South China Sea there appears to be increased risk of someone opening fire. There are a growing number of “offenders” for the Chinese to shoot at. In addition to ships from the nearest countries (mainly Philippines, Vietnam and Taiwan) there are the more powerful allies of these countries (mainly Japan and the United States). Now the Philippines is daring China to make an aggressive move at a time when China is busy with several similar situations from Africa to Korea and the Japanese islands.

May 10, 2017: Government controlled mass media featured stories about new combat UAVs and ballistic missiles with an emphasis on being able to destroy large enemy warships and evade defenses. That means the main target is the U.S. Navy. This media effort included mention of a jet powered UAV similar to the American Sea Avenger and a DF-26 ballistic missile that can find and hit large warships over a thousand kilometers away. Neither of these systems is known to work, even though the carrier-killer ballistic missile has been under development for over a decade. This sort of media offensive is usually aimed at American efforts to dispute Chinese claims in the South China Sea. But this time it’s mainly about American naval forces headed for Korea and the implied threat to North Korea and its nuclear program. It’s also about the South Korea anti-missile systems, which the new Chinese systems were described being able to defeat. China is sending a message to the new South Korean president that took power today. Since 2010 (when North Korea actually attacked South Korea but tried to deny it) South Korean leaders have been less willing to follow the Chinese lead on North Korea and demanded that North Korea back off on its nuclear and other military threats to South Korea. China prefers both Koreas do what China wants and for South Korea this means no anti-ballistic missile systems. The new South Korean leader is believed to be less hardline and has agreed to meet with Chinese leaders to discuss the North Korean threat, and whatever else China is concerned about.

May 9, 2017: Satellite photos reveal that China has installed more missile systems at its newly expanded Yulin naval base in the south (Hainan Island). The Yulin base has been there since 1955 but after 2000 China decided to expand it and by 2006 satellite photos showed new tunnels into coastal mountains that submarines could be sheltered in. Yulin was recently revealed to be the main base for China’s aircraft carriers as well as SSBNs (ballistic missile carrying subs). These days Yulin is the main base for operations in the South China Sea, which it is adjacent to.

May 8, 2017: Four Chinese coast guard vessels entered Japanese territorial waters (within 22 kilometers of land) around the Senkaku islands. One of the four ships clearly had a gun turret, which most Chinese coast guard vessels sent near the Senkakus lack. A growing number of Chinese coast guard ships are actually older warships with some of their weapons removed. In this case Japan issued an official protest which China dismissed because China does not recognize Japanese claims to Senkaku. There have been a growing number of such incidents since 2015. So far in 2017 there have been 43 similar incidents compared to 30 for all of 2016 (plus 91 incursions in other areas). In early 2016 Japan announced the creation of a new naval task force to patrol and defend the Senkakus. 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. Aircraft incursions (nearly all from China and Russia) into Japanese airspace also hit record highs in 2016.

May 7, 2017: Japan is changing its laws to make it easier to donate retired military equipment to other countries. One of the first neighbors to benefit from this is Malaysia which is interested in receiving some of the used, but well maintained and modernized P-3C maritime patrol aircraft Japan is retiring (and replacing with a more modern aircraft). Japan and South Korea have been joining the United States in making these donations to local allies. The U.S. has been doing this for decades. China is doing the same but recipient nations prefer the higher quality Western tech that Japan and South Korea are passing out. Both nations have a reputation for creating world-class tech, both commercial and military.

May 6, 2017: Off Taiwan the coast guard seized a Chinese fishing boat caught poaching. It was night and the Chinese boat tried to run for it but was stopped by warning shots and some rubber bullets that hit two crewmen. This poaching is a problem China refuses to deal with because China considers Taiwan part of China. Thus in 2016 Taiwan caught 1,376 Chinese fishing boats poaching and seized 94 of them. China shows its displeasure in other ways, like discouraging Chinese tourists from visiting Taiwan. So far this year Chinese tourism has been down 50 percent (to about 150,000 a month. After 2008 China began making it easier for Chinese tourists to visit Taiwan and soon millions were doing so each year. Many Taiwanese saw this as another ploy to take over their island nation one way (economically) or another (militarily). In response to that Taiwan has been expanding and upgrading its armed forces. This annoys the Chinese leaders who are seen (by Chinese able to get around the Internet censors) as all talk and little more.

May 5, 2017: The Chinese designed and built C919 commercial airliner made its first flight. It was a success and made it clear the C919 could be a competitor to the Boeing 737 and AirBus 320. But in terms of tech the C919 is at least a decade behind the most recent 737s and 320s. No problem, as China knows it has to develop new skills and industries one at a time if they want to become a manufacturer of world class commercial aircraft. The Chinese airlines (many of them state owned) can be ordered to buy the C919, which will make that aircraft profitable as it catches up with the rest of the world. Meanwhile there are many military uses for the C919. This is partly because the twin-jet 737 is the most widely used commercial aircraft in the world, closely followed by the 320 (built to take advantage of the 737 success and to get AirBus going). Since the 1990s China has been a major customer for the 737 but after 2000 it appeared China wanted to build its own 737 for civilian and military uses. In 2010 photos began to appear of Chinese Air Force radar aircraft based on Boeing 737s. This is illegal, as China has to obtain permission. However, the 737 in question appears to be equipped to track missile tests, which can be explained away as a scientific, not military, purpose. The same explanation was given, and accepted, in 2005 when Chinese 737’s were seen being fitted with military grade radar.

May 4, 2017: American and South Korean intel analysts believe North Korean air defenses are largely obsolete and vulnerable. Most of the North Korean air defenses are Cold War era systems but there is some newer stuff like the KN-06. This was believed to be a clone of the Chinese FT-2000 (which is a clone of the Russian S300). China may have quietly provided some data on KN-06 recently along with other intel on the capabilities of North Korean air defenses. Meanwhile South Korea has begun production of its new KM-SAM (Iron Hawk) surface-to-air missile systems. The first batteries would deploy in 2018. KM-SAM is what North Korea implied they had with KN-06 but KM-SAM is real and developed in South Korea.

May 3, 2017: The government announced additional restrictions on what Chinese news media can post to the Internet as well as what appears in social media and so on. This new order arises from the fact that there are few Chinese publications now that lack an Internet presence. While China has long tolerated some “unregulated” discussions in print publications (often to get a debate started over controversial proposals) it is nearly impossible to hide anything on the Internet because of automated search tools and the fact that there are over 700 million Chinese Internet users and non-Chinese can use free translation tools to turn Chinese language Internet content into something readable (and potentially embarrassing to powerful people). So China has ordered more censors hired so that everything coming from Chinese media gets reviewed before appearing. Editors will be held personally responsible. This follows a mid-2016 Chinese ban on what it described as “fake news and the spreading of rumors” especially if the details are obtained from social media on the Internet. This also meant more work for the many people who work (full or part time) for the Chinese Internet censorship organization. This “Great Firewall of China” has had some success but unlike pre-Internet media, the Internet cannot be completely purged of news the government does not want freely available. The 2016 announcement was not a surprise. It came after a rare event in which Chinese leaders criticized, in public, their own Propaganda Department for not doing its job. The Propaganda Department is the several hundred people who direct the vast censorship operation that is supposed to block “inappropriate messages” (that make the Communist Party look bad) and encourage approved ideas. In addition to controlling most mass media in China the Propaganda Department supervises how more than $10 billion a year is spent on pro-China publicity outside the country. Inside China this media manipulation effort employs millions of full time and part time personnel who, since the 1990s, have concentrated more on the Internet. Over a decade ago the rulers of China (which remains a communist police state) noted that they were losing control of their media, which had long been a key component of maintaining a dictatorship. The effort to regain the pre-Internet media monopoly has not been going well and until recently received little official notice. The recent criticism concentrated on failures to keep the traditional mass media (radio, TV, newspapers) in line. This is not unexpected because the massive efforts to censor the Internet have only been partially successful and the disturbing (to the Communist Chinese Party that rules China) new ideas that began spreading in the Internet have spread to the traditional mass media, despite the fact that most media personnel in China are government employees.

May 2, 2017: The United States confirmed that the first THAAD battery in South Korea was operational already. In the waters off Korea an American carrier group was joined by South Korea, Japanese and other warships for joint training. The Japanese contingent included one of its two Izumo class “destroyers” These 27,000 ton ships first entered service in 2015 and are officially for anti-submarine operations. The Izumos can carry up to 28 aircraft and are armed only with two 20mm Phalanx anti-missile cannon and launcher with sixteen ESSM missiles for anti-missile defense. The Izumos can also carry vertical takeoff jet fighters like the F-35B.

April 30, 2017: In the Philippines five Chinese warships visited (at Davao city in the south). This is the first such visit to the Philippines since 2010. But the newly improved relationship between China and the Philippines is not likely to last since most Filipinos are opposed to it. While the new Filipino leader has tried to develop better relations with China he is disappointed at the lack of tangible results.

April 25, 2017: China announced that coal imports from Russia were up nearly 20 percent (to 2.3 million tons). This is a level not seen since 2014 and is largely because China is now blocking North Korea coal imports. Russia is sending coal used to produce steel and China actually bets most of this anthracite coal from Australia, Mongolia and Indonesia. These three countries sent some 12 million tons of anthracite to China in March. Overall China cut imports from North Korea by 35 percent in March. But exports were not reduced.

April 24, 2017: Thailand announced that it had approved a deal to buy three Chinese submarines for $393 million each. The military government got a lot of criticism for this deal, especially from retired generals and admirals who were unafraid to point out that the military had more pressing and practical needs (like new patrol boats and helicopters for the navy) than submarines. Officially the navy defends the purchase as necessary because Thailand has to defend its Andaman Islands and all its neighbors have submarines. But Thai naval officials admit that most Thai coastal waters are too shallow for most submarine operations. Historians point out that every time there is a military government the military takes advantage of it to get major purchases made. This often involves corruption opportunities because buying stuff that is not needed is nothing new. In the 1990s a military government approved the purchase of an aircraft carrier that became infamous for never having anything to do and absorbing so much of the navy budget to maintain that the admirals gradually diverted money away from the carrier and the expensive ship spent most of its career (which has not ended get) tied up in port without any aircraft or even a full crew. In the spirit of that carrier the navy has long sought money for submarines. In mid-2016 the navy revived its plan to buy three submarines from China. The navy had first proposed this in June 2015 but withdrew the proposal a month later because of so much opposition. Most Thais oppose the navy submarine proposal and believe that the billion dollars needed to buy the three Chinese subs would be better spent on updating the rest of the navy and buying for patrol boats to improve security along the coasts. The sad shape of many Thai warships, especially the sole aircraft carrier, is a national embarrassment. Each of the three Chinese submarines costs more than the carrier did. Another factor (that can get you arrested if discussed openly in Thailand) is the Chinese frequently using bribes to expedite major weapons sales.

April 22, 2017: In North Korea an American citizen of Korean ancestry was arrested as he was about to board a flight out of the country. The arrested man is an accounting expert who was teaching at a North Korean university. The U.S. warns its citizens to stay away from North Korea because in times of crises North Korea will arrest foreigners, especially Americans, and use them as hostages for blackmail. China has been quietly giving its citizens the same advice because this time the North Koreans are calling China the enemy as well. North Korea later seized another U.S. citizen who did not get out in time.

April 20, 2017: : China and Pakistan finally signed the agreement that grants China a 40 year lease on new facilities China is building in the southwestern port of Gwadar. The lease grants China most (over 80 percent) of the revenue brought in by port and free trade zone operations. Gwadar is a key part of the $55 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. India fears Gwadar will serve as a base for Chinese warships. Pakistan has no problem with Chinese warships using Gwadar as it helps keep local troublemakers out. The thousands of Chinese coming into Pakistan for this project are prime targets for Islamic terrorists and tribal separatists in Baluchistan. The people in Gwadar will benefit greatly from the construction and the expanded port but the lease agreement provides no payments to the government of Baluchistan. Because of the threats from locals and Islamic terrorists in general Pakistan has formed a special security force, currently 20,000 strong, dedicated to keeping the foreign (mainly Chinese) workforce safe. China has helped with security effort. For example in January the Pakistani navy put into service two 600 ton, Chinese built, patrol ships to help protect the newly expanded port. A third one of these arrived today. At the end of 2016 the Pakistani navy officially established Task Force 88 in Gwadar, a city of 100,000 and site of one of the biggest construction projects in the country. The new naval task force will use warships, maritime patrol aircraft and UAVs to guard the coastal areas from any Islamic terrorist attack against ships, especially Chinese ones. Pakistan has assured China that there would be no terrorist violence against Chinese working on upgrading the port of Gwadar and land links north to China. Pakistan is willing to pay a high price to get CPEC done because it means Pakistan has an ally against Iran and even Western powers that might have some violent disagreement with Pakistan.

April 19, 2017: Russia blocked a UN vote to censure North Korea for its latest ballistic missile test. China backed the measure, continuing its abandonment of voting with Russia to block UN measures hostile to North Korea.

April 16, 2017: China joined Russia is sending intelligence collecting ships to shadow the American carrier task force approaching Korea.

Nepal, which has long maintained close economic and political ties with India, held its first joint military exercises with China. Nepal has also had problems with communist (Maoist) rebels over the last two decades and China made itself useful in dealing with that situation. China is trying to increase its presence in Nepal.

April 15, 2017: North Korea celebrated the 105th anniversary of founder Kim Il Sung’s birth. Since the founder died in 1994, just as the post-Cold War economic collapse was beginning to kill many North Koreans (from starvation) and the economy was collapsing, commemorating his passing has become a big deal. This year the parade in the capital was exceptionally large. But one thing was missing; an official delegation from China. That had never happened before and it convinced many people that the rumors of Chinese displeasure with the Kim government were indeed true. Most North Koreans also know that China was the only major ally they had left and source of key imports like food and oil.

April 13, 2017: China is openly offering North Korea a renewal of their mutual defense treaty if North Korea will drop its nuclear weapons program. China has quietly cancelled the decade’s long defense agreement over the last few months. North Korea did not respond to this new offer.

Japan has quietly issued instructions to citizens on how to respond to a warning of an imminent North Korean missile attack. The instructions pointed out that there would be as little as ten minutes warning and that citizens should immediately take cover, get their vehicles off the road and be prepared to follow any orders by security forces. Although Japan has a formidable anti-missile defense system they like to prepare for every contingency.

April 12, 2017: A Chinese daily newspaper (Global Times) known for being a state-controlled media outlet used to test new ideas published an item today pointing out that if North Korea does not abandon its nuclear weapons program (which is seen as a threat to China) then China will bomb the nuclear facilities and North Korea will have to live with that or suffer further military and economic consequences they cannot respond to (by attacking China). This article also warned the United States not to contemplate doing this, as North Korea was for neighboring China to deal with, not some distant superpower. Within hours the article was removed from the Global Times website, but many people had seen it and it still existed in Google cache. In other words, China was telling North Korea that stronger measures from China were now a possibility. At the same time the U.S. was making it clear that the kind of attack on Syria the U.S. recently carried out could be tried on North Korea. China agrees that it might come to that but they insist that the bombs or missiles be Chinese.

For the first time China refused to join Russia in blocking a UN resolution criticizing the Syrian government. This time it was about the recent use of nerve gas, which Russian insists did not happen. China was never an active participant in the Syria war and went along with Russia because the two nations see themselves as united to oppose American domination. But now the U.S. and China are negotiating a new relationship and Russia fears that means less support from China. While China is backing away from supporting Russia in Syria the same cannot be said for other common problems, like North Korea. China and Russia are still coordinating moves when it comes to North Korea.

 


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