China: A Bad TIP


April 6, 2018: The latest changes in the government include final approval of constitutional change that enables current leader president Xi Jinping to rule indefinitely, or at least as long as he can hang onto power. This is now the law and Xi wasted no time in making more changes. He introduced the NPS (National Supervision Commission) which has an expanded mandate that makes it the most powerful anti-corruption organization. Until the NPS the most powerful anti-corruption group was the ruling Communist Party’s CCDI (Central Commission for Discipline Inspection), which only went after party officials. The NPS can do that as well as investigate any corruption in China, whether it involves a party member or not. The NPS is powerful because it answers directly to the supreme leader (Xi Jinping) and cannot be overruled by anyone but him. The creation of the NPS was a popular move because rich and powerful Chinese who engage in corrupt practices often appear untouchable. No more, unless Xi Jinping owes you a favor.

Provincial leaders were ordered, at the 2017 19th National Congress, to halt the practice of inflating economic data to meet goals set by the national government. Not everyone has complied but all apparently tried. These orders had been issued before but the 2017 version came with assurances that those who did not comply would be subject to intense scrutiny by anti-corruption prosecutors. Most provincial leaders are complying, especially since the government also offered a carrot to go with the stick. Provincial goals are now somewhat more nuanced that just GDP. The new goals stress quality not quantity. This is difficult to sustain because it depends on keeping a lid on corruption, which is a goal rarely achieved in China and never for long. Provincial leaders see official goals are opportunities rather than burdensome requirements. The catalyst for this approach is corruption. What the national government is asking for is that provincial leaders must now fix local problems (poor infrastructure, pollution, falling birthrates and the resulting smaller workforce and growing number of elderly) mainly with local resources. The national government says it is going be more responsive to these provincial problems but that is also a rare event in Chinese history. On top of all this there is a damaged national banking system trying to cope with huge amounts of bad debt (the aftereffect of decades of corruption in lending). This is all good news, but it remains to be seen how much of it turns into reality.

The Cash Conspiracy

China is encountering more resistance to its ambitious program of overseas investment and development. The primary government objective is to obtain access to needed raw materials as well as to build a new, Chinese controlled trade network called OBOR (One Belt, One Road). A third goal is to use those investments to gain political, diplomatic and military power outside China. This plan, as most large scale and ambitious efforts, is running into problems. The main one is that the terms of these investments are subject to a lot of corruption and government interference (Chinese and local). The result of this is many projects are over budget and behind schedule. In a growing number of countries the locals are becoming aware of all the implications of these Chinese investments and becoming, as the Chinese see it, “troublesome”. For example the Philippines is a typical recipient of growing Chinese investments but many Filipinos see their local corruption as a weakness that the Chinese are quietly seeking to exploit. Thus a recent a Chinese credit rating agency report gave the Philippines an excellent (AAA) rating. This got different reactions in the Philippines. Some saw it as an accurate assessment of how things were going. The rating agency noted that tax and other reforms were underway and that GDP growth was expected to stay strong (at 6.8 percent) even though the Filipino government was seeking something between seven and eight percent. This upbeat assessment made it possible for China to approve new loans to the Philippines. That made a lot of Filipinos uneasy. That’s because China is increasingly using its large foreign investments as weapons. Case in point is the tactic of loaning poor countries large amounts of money for huge development projects (like ports, roads and railroads). The loans are on terms that look attractive but eventually much be repaid. When the debtor nation runs into trouble making payments China offers to reduce the load in return for control (if not majority ownership) of the ports, railroad, airport or whatever. With control of these facilities China can probably run them more efficiently, and profitably. But control means it is easier for China to use the facility for military or espionage purposes. This is called DTD (Debt Trap Diplomacy) and has been a favorite Chinese tactic for over a thousand years by virtue of China having, until a few centuries ago, long been the wealthiest empire on the planet. Nations currently vulnerable (they have large Chinese debts) to DTD are Sri Lanka, Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan, Venezuela and Tajikistan. Most nations are aware of the DTD trap but where there is a lot of corruption China can create a DTD situation anyway. Some of these DTD efforts go bad and cost China a lot of money, but on average DTD is a net gain for China as it gains military, economic and diplomatic advantages without having to fight.

North Korea

North Korea officials are finding ways to get around new sanctions, aside from having the boss to go China and kiss the ring. For example female university students must now spend two years in China for “practical experience” after their first two years of university study. That now involves working as waitresses in North Korean restaurant that used to recruit non-students. But the sanctions ended that for a while. Actually this working in China program for university began in 2014 but has now been expanded in order to keep North Korean restaurants open and earning lots of foreign currency. The government is also allowing North Koreans to visit China for extended periods if they have some job lined up that will generate foreign currency for the government. This does not violate the sanctions because these North Koreans are in China to see friends or family or simply as tourists. But on the side they are illegally working, something that is difficult to police if the “work” is not visible to the general public.

Since the March 25 visit of Kim Jong Un to China there has been a sharp increase in North Korean workers returning (illegally) to China to work. The busloads of North Koreans are being allowed into China and later showing up at work sites. This may have been allowed to encourage Kim Jong Un to behave during his April meeting with the South Korean leader and the May meet with the U.S. president.

South Asia

Pakistan has become more dependent on China for weapons as U.S. sales declined 76 percent in the last five years. The Americans are punishing Pakistan for supporting Islamic terrorism and not doing anything to change that. China has become the major supplier of weapons to Bangladesh and Burma as well although for those two countries China simply offers lower prices. India has in turn bought less from Russia, long the main supplier, and depended more on Western nations (mainly the U.S. and Israel. China has become a major threat to customers Russia long believed they had a lock on. China can offer a wider range of inexpensive weapons similar to what Russia has long offered but deliver stuff of higher quality, higher quantity and customized to customer requirements. Moreover China turns around these orders more quickly. There are still some Chinese weapons suppliers who have acquired some of the bad Russian habits but these are usually bottom feeders supplying the lowest cost stuff to the most desperate customers. China encourages its arms manufacturers to take the high road, except when it comes to practical measures like paying bribes to get the sale and get it delivered.

April 3, 2018: The government is increasing its control over Christian churches in China. The latest move is to ban Chinese online bookstores from selling bibles. That was already illegal because it has long been the law that bibles could only be distributed by government approved and regulated Christian churches. But as online bookstores became more popular in China the government did not immediately apply all its book distribution and censorship to online sales. That has changed, especially when it comes to religious materials. China sees unregulated religions in China as a threat.

April 2, 2018: The Chinese navy deployed some 40 warships, including their lone aircraft carrier for what was described as a training exercise in the South China Sea. Aerial and satellite photos showed this training exercise included a procession of all the warships in two lines as they moved from the naval base on Hainan Island (their main naval base in southern China). This formation appeared to be more for publicity than improving combat skills.

April 1, 2018: A senior Chinese diplomat visited South Korea, apparently to deliver news of the recent meeting between the North Korean and Chinese leaders. China has to approve any deals between the two Koreas and this visit was to clarify what China will allow in the future. This is not required by any international agreement but simply due to the fact that China could disrupt any deal it does not approve of. This was apparently one reason for the March 25 visit of Kim Jong Un to China. The behavior of North Korea over the last few years has been annoying for China and this new North Korean effort to arrange one-on-one meets with other leaders made China look bad and the Chinese wanted to make the best they could of the situation.

March 31, 2018: In northeastern India (Arunachal Pradesh) China has built another base on their side of the border. In addition to several multistory buildings the base has a telecommunications tower and a surveillance tower with several sensors. To the west China has built a new road into tiny Bhutan to get around Indian efforts to halt a Chinese buildup on the Doklam plateau. Bhutan, unlike India, doesn’t mind of China builds a new road in Bhutan without asking permission. That is how Bhutan survives having two of the most powerful nations on the planet for neighbors. On this section of the Tibet border China is still building up its military forces (especially air defense and warplanes) on their side of the frontier. India is doing the same on their side and both sides appear getting for another confrontation over conflicting claims on the Doklam plateau. A 2017 confrontation was settled in August 2017 but the standoff continues. The two nations blamed each other for this confrontation that took place in a very inhospitable part of the world. The Doklam plateau is where the Tibet border meets India’s Sikkim State. China is also building new roads to this part of the Tibet/India border. India protests, often with troops, when Chinese construction efforts enter Indian or simply contested territory in this high altitude wilderness. China has most of the advantages here, with more roads and bases on their side of the border, 24/7 satellite surveillance of the area, better communications and electronics in general plus a track record of China winning and India losing. China has made it clear that it believes it owns the Doklam plateau and is determined to assert that ownership without starting a major war. There is a similar situation in the northeast, where India has increased patrols, particularly where the borders of India, China and Burma meet. India wants to detect new Chinese incursions as quickly as possible so the Chinese can be confronted before they can become too established (by erecting structures and building roads).

March 30, 2018: After seven years of effort and several signed, but never ratified, agreements India is still without a base in the Seychelles Islands. China, on the other hand proceeded with large investment project which give the Chinese a larger economic presence on the islands than India. This all began in 2011 when the island nation of Seychelles asked China to come in and establish a military base. It was hoped that would help keep Somali pirates away. The presence of these pirates hurt the local economy, and any help was appreciated. Seychelles had already sent about a hundred of its troops to China for training. Chinese warships going to, or from, Somalia stopped for visits. But a base would be another matter, and something India wanted to prevent. Seychelles is 1,500 kilometers off the African coast and 3,000 kilometers southwest of India. The Seychelles islands have a total population of 90,000 and no military power to speak of. They are largely defenseless against pirates. By 2010 Somali pirates began operating as far east as the Seychelles. India has provided assistance to the Seychelles, as has NATO, but it apparently has not been enough. The Chinese considered the base request, declined but agreed to continue having the Chinese Navy use the Seychelles for resupply and shore leave. India provided patrol boats and reconnaissance aircraft for the Seychelles and after 2012 the international anti-piracy patrol off Somalia shut down the pirate threat in general and to the Seychelles in particular. India persisted with the naval base proposal and twice, in 2015 and 2017, deals were agreed to and signed. But because of local politics in Seychelles neither of the agreements was ever ratified and the current Seychelles government is not interested in negotiating another base deal. Meanwhile more Chinese investments in the Seychelles arrive and are welcomed.

March 30, 2018: China announced major upgrades for the joint Chinese-Pakistani JF-17 fighter. These “Block III” upgrades mainly involves replacing the mechanical radar with an AESA (phased array) radar and a general upgrade in electronics. The Chinese manufacturer (CAC) is doing this because it has found AESA an essential feature if you want export sales. CAC also builds the J10, which is similar to the JF-17, and installed AESA in the J10 in 2007 so China definitely has the tech. While there have been some export sales the JF-17 failed get more such sales because the aircraft was not considered competitive. That doesn’t bother Pakistan, where their first JF-17 squadron became operational in 2010. Upgrading Pakistani JF-17s with AESA will be a first for Pakistan because none of the other Pakistani fighters have it (not even the F-16s.) So far Pakistan is the only user of the JF-17 although Burma and Nigeria have some on order. Pakistan has about a hundred JF-17s. The JF-17 was part of a project that began in 1992 and while it was a joint Pakistan-China development project China supplied most of the money and did most of the work. China, however, does not use the JF-17, only Pakistan. That’s largely because the JF-17 is assembled in Pakistan, although over 40 percent of the components come from China or Russia. The project has gone through several name changes (FC-1, Super 7) and was never a high priority for China. The 13 ton JF-17 is meant to be a low cost ($20-30 million) alternative to the American F-16. The JF-17 is considered the equal to earlier versions of the F-16, but only half as effective as more recent F-16 models. The JF-17 uses the same Russian engine, the RD-93 that is used in the MiG-29. The JF-17 design is based on a cancelled Russian project, the MiG-33. Most of the JF-17 electronics are Western. The JF-17 can carry 3.6 tons of weapons and use radar guided and heat seeking missiles. It has max speed of Mach 1.6, an operating range of 1,300 kilometers and a max altitude of 17,000 meters (55,000 feet).

March 29, 2018: China launched two more Beidou third generation GPS navigation satellites. This makes eight third gen birds so far and 31 altogether (including test satellites). In 2012 China opened Beidou to civilian use and expects to grab a major share of the satellite navigation market from the U.S GPS system by the end of the decade (when Beidou will cover the world using 35 satellites). In 2013 Pakistan agreed to adopt Beidou and give it equal status with the American GPS. China built ground facilities in Pakistan to enhance Beidou so that it can be used for precision applications (like landing aircraft in bad weather). Pakistan was the fifth country to adopt Beidou. Currently Beidou only covers Asia and the Pacific but by 2020 there will be sufficient satellites in service to cover the world. Beidou will be fully operational in 2020 with a restricted (to China and Pakistan) accuracy of 10 cm (four inches) and a public accuracy of 10 meters (31 feet).

March 28, 2018: India denied a media report (by a Japanese publication) that Indian and Chinese warships confronted each other on the 22nd off the Maldives Islands. This follows a Chinese news report in February indicating that there had been a similar confrontation, but there wasn’t.

March 26, 2018: The government has completed the shift of the border guard force to the military. Previously the border guards were considered police and answered to non-military officials in the government. That meant that if the military had a problem on the border (like with India or North Korea) they had to go through another (non-military) government department to get a border guard to cooperate with nearby military units.

March 25, 2018: North Korean dictator Kim Jong Un arrived in the Chinese capital. He travelled aboard his personal armored train. This was the first time Kim has travelled outside North Korea since inheriting power in 2011. Pictures of the unique train soon appeared on the Internet but there was no official confirmation until three days later, when the visit ended with an official announcement. Apparently Kim was summoned to China and told by Xi Jinping for a discussion about the relationship between the two countries. North Korea is seeking to obtain a renewal of the Mutual Aid and Cooperation Friendship Treaty between the two countries which obliges China to come to the aid of North Korea if North Korea is attacked. In 2017 China told Kim that China would not automatically help North Korea if North Korea launched an attack on South Korea or the U.S. and then was hit by retaliatory attacks. Kim was also reminded that the Mutual Aid treaty is due to expire in 2021 and renewal is not automatic. The meeting between Xi and Kim ended without any dramatic announcement about what exactly was accomplished but the official rumor was that Kim was told to drop his nuclear weapons program and get what he could get from South Korea and the Americans in return. Kim and his wife returned with about $400,000 worth of gifts from the Chinese, including some items that, according to current sanctions, cannot be sent to North Korea. It was noted that Xi was invited to visit North Korea and the most likely time would be this July, the 65th anniversary of the signing of the armistice that ended the Korean War. That visit is apparently contingent on Kim not screwing up the upcoming meetings with the South Korean president followed, in May, by one with the American president. The meeting in China included North Korea agreeing to again take part in the six-party talks, which were last held in 2009.

March 23, 2018: The national censors have issued more regulations in a growing effort to outlaw parody items directed at the government. This is especially true when video of official events and those attending are recast as parodies of Chinese leaders or institution. This effort to suppress parody and any form of criticism is ongoing because with the Internet and the growing number of educated and affluent Chinese there are more clever and effective critics than ever before. Being Big Brother is not as easy as it is made out to be.

March 22, 2018: An American destroyer (USS Mustin) carried out the second American FONOP (freedom of navigation operation) in the South China Sea. This was the second FONOP for 2018. This one was near Mischief Reef (270 kilometers west of Palawan) off the coast of the Philippines. China protested as they now consider this area part of China. Mischief Reef is much closers to the Philippines (Palawan) than China (Hainan) and according to international law (and a recent international court decision) is Filipino. The Chinese say they have prior claim to most of the South China Sea and basically dares the rest of the world to try and stop them. This makes sense to most Chinese because the Chinese have long called China Zhongguo, which is usually translated into English as “middle kingdom”. But a more literal and accurate translation is “everything under the heavens.” Until the 21st century this mainly meant adjacent land areas. But now China points out that “everything” means the South China Sea as well. Chinese media report these FONOPs as a violation of international law and most now trigger a response by Chinese warships or warplanes. In reality China rarely opposes the American warships. These exercises are meant to affirm that many of the Chinese claims to the entire South China Sea are invalid and that the right to free passage through China’s EEZ is assured.

In the Indian Ocean the Maldives lifted a 45 day state of emergency that had threatened to escalate into a situation where the Chinese military would intervene to protect its massive investments. China and India had been threatening each other over who should do what in Maldive Islands (just south of India). This conflict heated up at the end of 2017 when China and the Maldives signed an agreement that allowed China to build and operate a “Joint Ocean Observation Station”. This monitoring station would be built on an atoll that is the closest part of the Maldives to India. Opposition politicians in the Maldives claim China has already taken possession of sixteen small islands and that China has been investing heavily in the Maldives economy and influential politicians. This agreement was apparently obtained by Chinese bribes and assurances that there would be more Chinese investments. Meanwhile the Maldives government was in chaos because elected officials and the Supreme Court judges disagree about who should actually be in charge. The tiny (248 square kilometers spread over 1,192 coral atolls spread over 90,000 square kilometers of water off the southern coast of India) nation has a mostly Moslem (98 percent) population of 430,000 plus 100,000 foreign workers (a third of them illegals). Most of the population is concentrated on about 15 percent of the islands. The per capita income is about $10,000 and most of it is based on tourism followed by fishing. Many young men have been attracted to Islamic terrorism but there is not much religious violence in the Maldives. While a democracy the religious parties and military have kept the government in turmoil by asserting decidedly non-democratic powers.

March 21, 2018: China has sold Pakistan a high-tech missile tracking system that enables Pakistan to develop more accurate and destructive ballistic missiles. This system is key to developing an effective multi-warhead missile, one that can deliver two or more warheads accurately to different targets.

March 19, 2018: China has refused to make any additional loans to Venezuela. China had been a major lender to Venezuela and provided over $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 or use for domestic needs. Venezuelan oil is difficult to refine, which is why the U.S. is the major buyer as the Americans have built special refineries to handle it. China faces huge losses because Venezuela became officially bankrupt at the end of 2017 and its socialist government has wrecked its oil industry and ability to pump and ship oil. The bankruptcy was not unexpected but China knew there would be great risks and potentially high costs for establishing themselves in South America. China will extend payment terms on current loans but is taking a “wait and see” attitude to the growing political and economic catastrophe in Venezuela.

March 18, 2018: In Bangladesh the army is investigating another case of Chinese weapons (mostly small arms) being smuggled in aboard ships that were not intercepted by the coast guard or in cargoes not inspected at ports. The weapons were for black market arms dealers who sell to Islamic terrorists, gangsters and anyone who can pay.

March 13, 2018: France and the Philippines agreed to cooperate in dealing with Chinese aggression in the South China Sea.

March 12, 2018: In the northwest (Xinjiang province) the local government proudly reminds everyone that there were no terrorism related deaths in 2017. That was the first full year that the current provincial government was in charge. The reason for the sharp reduction in terrorism or separatist activity in Xinjiang has been the introduction of a lot more new technology for monitoring the population. This includes thousands of vidcams and a very effective facial recognition system. This is in addition to a growing list of methods used to collect data on the non-Han Chinese population, especially anything related to ethnic separatism or Islamic terrorism. This helps the government select those who will be sent to re-education camps (for a few weeks or six months or more.) There are currently over 100,000 Moslems (most of them Uighur, ethnic Turks who used to be the majority in Xinjiang) in the re-education camps. That is out of the nine million Uighurs in the province. Uighurs are a shrinking minority as more and more Han Chinese move in. The re-education camps contain very few Han Chinese. A new generation of security analysis software and hardware is replacing a lot of the older manpower intensive data collection methods. Xinjiang is being used as a test site for new “Big Brother” (as in the anti-communist novel “1984”) technology. This is being done in the name of controlling Islamic terrorism (although there is very little of that in China, even in Moslem majority districts) and ethnic separatism (which is a real threat especially in Xinjiang and Tibet). On the other hand the government has made enormous strides when it comes to reducing poverty in Xinjiang and Tibet but that tends to produce more affluent and educated separatists.

March 10, 2018: Some Chinese Uighurs are Islamic terrorists and openly proclaim their membership in groups like TIP (Turkistan Islamic Party). Recently this group released a combat video on the Internet that made it clear the TIP was still working with the Taliban (as they have been doing since the 1990s). Currently TIP is active in the northern Afghanistan (Faryab province) and until 2014 was based in northeast Pakistan (North Waziristan). TIP was founded by and still led by Chinese Turks (Uighurs). TIP has found friends in Turkey and is also active in Syria. All this has made China unhappy. In early 2015 Afghanistan admitted that it had an arrangement with China whereby Afghanistan would seize and turn over to China any Chinese Moslems (especially Turkic Uighurs) found in Afghanistan. About the same time this resulted in a dozen Uighurs arrested in Afghanistan being sent back to China. In return China increased the diplomatic and economic pressure on Pakistan to stop supporting Islamic terrorists attacking Afghanistan. China is the largest foreign investor in Pakistan as well as the main source of modern weapons, so when China talks Pakistan must listen and at least pretend to act. This China link was one reason for Pakistan attacking North Waziristan in mid-2014. Since the late 1980s (when TIP was created) it has largely consisted of Chinese Uighurs from northwestern China (Xinjiang province). Since 2001 TIP has attracted more recruits from other areas in Central Asia that have Turkic populations.




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