This is an interesting idea

Put Chinese soldiers in North Korea, matching the American soldiers in South Korea.  China would have to be desperate to do it.  The U.S. would have to restrain itself from responding in kind.  But the interesting question is "would the North accept it?" Would they tolerate the troops of a foreign power--the foreign power in their immediate neighborhood--to be stationed on their soil?  Would Kim see it as a threat, or a promise?  If the Korean program is really about deterrence, then they might accept it.  If the motivation is not deterrence but attack, they definitely would not.

It would also allow China and the US to call Kim's bluff.  I'd love to see the Korean reaction.

China Should Send 30,000 Troops Into North Korea – Foreign Policy

China’s biggest ally in the South China Sea? A volcano in the Philippines — Quartz

Interesting connections--between Mt. Pinatubo, Typhoon Yunya, and China replacing the US in the South China Sea.  In one sense these events just accelerated some long-standing trends, but the impact of natural disasters on international relations is seldom given enough attention.



China’s biggest ally in the South China Sea? A volcano in the Philippines — Quartz

"The Great Renewal"

Xi Jinping 习近平 (Photo credit: Wikipedia)

Recent statements out of China point to some changes in how the Chinese view themselves, their role in the world, and their future.  Party Congresses are a time to reveal changes in doctrine, and the most recent Congress falls into the pattern. According to Xinhua on 13 March "The Chinese Dream" is the hot topic, and

"China's new Communist Party leader Xi Jinping said during a museum tour last November the Chinese dream meant for him the 'great renewal of the Chinese nation.' He has pledged to pursue the shared Chinese dream of national rejuvenation."

Nightwatch does its typically fine job of evaluating the changes: 

"The Chinese dream" is being introduced on the margins of the National People's Congress (NPC) as the new strategic concept that replaces "China's peaceful rise."

In practice, this means the recognition of an inflection point in China's progress to the status of a global power, from "rising power" to national renewal.  Xi's speech of March 11th to the PLA delegation to the People's Congress was described as one that

... scientifically answers a series of important questions, that is,why to strengthen the military under the new situation,what to be the goal of military strengthening,how to take the path of military strengthening with Chinese characteristics."

It declares that "effecting civil-military integrated development is an important way of realizing the integration of enriching the nation and strengthening the military," and "to build a military force of the people that obeys the party's orders, is able to win in war, and keeps a good behavioral style; fully and clearly understand that obeying the party's orders is the soul, being able to win in war is the core, keeping a good style is the guarantee."  Nightwatch sums up the changes:

The circular makes the point that there is a new situation. Xi has scientifically evaluated it as requiring integration of economic and military strength in order to fulfill The Chinese Dream. In The Chinese Dream concept, Xi explicitly connects economic growth with military modernization and links them to Chinese renewal. 

His speech is called a programmatic document which means that it is not cheerleading, but guidance. An intense study period for the entire armed forces is prescribed in order to explain the purpose and direction of a more rapid development of national defense and military modernization. 

In the 1990s, indoctrination about "fighting wars under modern conditions" disrupted normal armed forces training and reshaped the training that followed the indoctrination period. 

The new situation requires military obedience to the Party; the ability to win wars; and good behavior. Obedience to party orders and behaving well are longstanding issues in the PLA. The new requirement is "to win in war," which replaces, "fighting wars under modern conditions." 

In the circular the PLA was instructed that the PLA is expected to provide the "strong power guarantee" for national rejuvenation. 

This appears to portend a more muscular and militarily assertive China during the next five years at least. China remains committed to peace, but not at the expense of its national interests and claims. The pace of military modernization will quicken.

Maritime claims in the South China Sea (Photo credit: Wikipedia)

That seems to me to be a fair reading.  I'd only add a couple of points of my own.  The requirement "to win in war" not only strongly suggests that there will be a sizable increase in resources to the armed forces.  It implies that the wars that China may fight are, in fact, ones they can win.  It does not say that China wants war, or even that it expects war.  It does say, however, that war is possible - including, presumably, great-power war - and if it happens China can, and should, be prepared to win.  Furthermore, backed by that kind of power - at least on a regional scale, and perhaps globally - one should expect a more assertive foreign policy.  The sort of claims we've seen in the South China Sea, for example, are a foretaste of things to come.  And if others (read the US) believe a "show of force" will be sufficient to assure retreat they may be surprised.  Rising power, hegemonic retrenchment, plenty of room for miserception of capabilities and will.  This is not a formula for stability.

us1.campaign-archive2.com/?u=817f179ff76c12de2a4e5ba20&id=2d7a6870c0&e=cad5c8ba2d

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One empire down, one to go?

Here's an interesting perspective on where we've been and where we're going, as articulated by Monika Halan:

The fracturing post-World War II equations showed through the plaster in 2011. The 63-year period from 1945 to 2008 will be remembered as the time when two dominant ideas about people and money, and how we choose to organize ourselves around these ideologies, died. One version delinked people from money; the other put money before people. The first collapse was in 1991 when the dominant interpretation of collectivism shattered the Soviet Union into 15 shards. The classless, moneyless, stateless, egalitarian society, which took from each according to his ability and gave to each according to his need, crumbled under the weight of authority and effort that was needed to impose something so state-centric and unnatural in place. Progress does get measured by money, and the severe scarcities and the dysfunctional economies of the Soviet bloc hastened the collapse—the delinking of people and money did not hold true. 

But handing over the keys to the market caused another collapse, and 2008 was when the interpretation of individualism in the form of predatory capitalism began its death dirge when the US’ financial sector demonstrated what unregulated greed can do. This version of capitalism (which was not what Adam Smith envisaged) delinked risk from reward, made a section of labour behave like capital, and made governments subordinate to the transnational corporation. That version of capitalism, emboldened by the breakdown of communism, pushed for and got what were called “free” markets and “less” government. But markets, as was later found out, were not really free—but compromised by the 1% who held the levers of control to move the system. And move it they did, towards appropriating more and more for themselves.

But there's more to it than that: both post-war empires overextended themselves. The Soviets couldn't pull back and manage a real "restructuring" (perestroika) and failed to keep "openness" (glasnost') under sufficient control to keep the empire intact. Today, with greater technologies for information transparency--and heavy-handed attempts to restrict it--the parallels for the US are too close for comfort. Do we really think the TSA is just for the external threat?

And then there's the Chinese. The Chinese government is watching the various "Springs" of recent history and finding it's too vulnerable for comfort. Little noticed in the growth of Chinese military power is the fact that the internal security forces now have a budget that rivals that of the PLA.

Old patterns of social organization and control are breaking down, but there's no consensus on what will replace them. Probably the best we can do is encourage experimentation, and see what works (and for whom) in various circumstances. But that's precisely what those in power are most opposed to trying. This could get interesting.

Liberty, Equality, Fraternity - Home - livemint.com

The party's over

It's more than the great firewall

BBC News - China: 1.3 million websites shut in 2010:

The Chinese Academy of Social Sciences said there were were 41% fewer websites at the end of 2010 than a year earlier.
Chinese officials have tightened regulations on the internet in recent years, and they launched a crackdown on pornography websites in 2009.
The academy's researcher said there was no link, insisting China had a 'high level of freedom of online speech'.
Liu Ruisheng said that despite the declining number of sites, the number of web pages had risen to 60 billion during 2010 - a 79% increase on the previous year.

Comment: It should be interesting to see how well this works. There's lot of talent in China--and much of it looks for ways around official censorship.

Russia and China

STRATFOR has an interesting comparison of the immediate prospects for Russia and for China.  For Russia, the fact that the (nearly bankrupt) Greek government is going to them for help--after being rejected by the EU--is a blow to the eurozone and a boost for Russia's prestige.

This was an avenue that both Iceland and Serbia took during their economic crises, and each time the EU responded with financial aid of its own to counter Moscow’s rising influence. A Russian loan to Greece — no matter what the actual size of the aid package — would be a psychological blow to EU unity. An EU member state — a eurozone state no less — finding financial assistance in Russia rather than among its fellow euro users would lay bare the EU’s inefficiency, particularly in times of crisis management. Moscow would therefore send a powerful message to Central European states that see the EU as a counter to Russian spheres of influence on their borders.

China has the problem that it's stuck between saying no to helping Iran resist American sanctions--which would undermine its claim to counterbalance American power in the region--or try to block the sanctions--which it doesn't have the immediate infrastructure to do, and would encourage more Sino-US tensions.

While sanctions may not specifically target Iranian oil exports, Beijing reasonably fears they could create a chain reaction jeopardizing its oil supplies not only from Iran, but also from the rest of the Gulf, since these shipments pass through the Strait of Hormuz where Iran is most likely to aim any retaliation. While China’s economic growth rate is high, serious vulnerabilities exist in the banking, property and export sectors, all of which the government is attempting to address without triggering a destabilizing slowdown. Now would be an exceedingly bad time for a sudden energy shock.

Moreover, much of the credibility of China’s claims to rising international status rest on its ability to defend smaller states like Iran that are antagonistic to the United States. If China drops Iran at the first sign of American coercion, a host of other states — in Latin America, Africa and Southeast Asia — will rethink whether they can rely on China for support. In such a case, Chinese leaders would struggle to allay domestic outrage at yet another example of acquiescence to the United States, while much of the political capital they have painstakingly built up in recent years through speeches, state visits and investments across the world would be squandered.

From the Chinese perspective, it's one more reason to develop a much greater naval presence, or to work out some kind of arrangement that makes China's access to oil less dependent on the good will of the US Navy.

I wonder how the debt issue fit into this?  By some measures, the British economy is in even worse shape than the economy of Greece, and American problems are growing rapidly.  Can the Chinese find a way to use the debt as a lever?

"This report is republished with permission of STRATFOR"

Blocked in China

You can learn a lot by looking at the fears of the people in power.
Websites and Words That Are Blocked in China

China has its own problems

A story by Ambrose Evans-Pritchard includes this warning from Fitch Ratings. Fitch is an international credit rating agency, as well as one of four Nationally Recognized Statistical Rating Organizations (NRSRO) (the big ones are Moody's and Standard & Poor's) designated by the U.S. Securities and Exchange Commission. Unlike the big two, Fitch warned the market on the constant proportion debt obligations (CPDO) with an early and pre-crisis report, and its reputation has grown accordingly.

China's banks are veering out of control. The half-reformed economy of the People's Republic cannot absorb the $1,000bn (£600bn) blitz of new lending issued since December.

Money is leaking instead into Shanghai's stock casino, or being used to keep bankrupt builders on life support. It is doing very little to help lift the world economy out of slump.

Fitch Ratings has been warning for some time that China's lenders are wading into dangerous waters, but its latest report is even grimmer than bears had suspected.

"With much of the world immersed in crisis, China appears to be one of the few countries where the financial system continues to function largely without a glitch, but Fitch is growing increasingly wary," it said.

"Future losses on stimulus could turn out to be larger than expected, and it is unclear what share the central and/or local governments ultimately will be willing or able to bear."

Note the phrase "able to bear". Fitch's "macro-prudential risk" indicator for China threatens to jump from category 1 (safe) to category 3 (Iceland, et al). This is a surprise to me but Michael Pettis from Beijing University says China's public debt may be as high as 50pc-70pc of GDP when "correctly counted".

The regime is so hellbent on meeting its growth target of 8pc that it has given banks an implicit guarantee for what Fitch calls a "massive lending spree".

Bank exposure to corporate debt has reached $4,200bn. It is rising at a 30pc rate, even as profits contract at a 35pc rate.

Fitch traces the 2009 bubble to the central bank's decision to cut interest on reserves to 0.72pc. Bankers responded to this "margin squeeze" by ramping up the volume of lending instead. Over half the new debt is short-term. Roll-over risk is rocketing. China's monetary stimulus since November is arguably more extreme than the post-Lehman printing of the US Federal Reserve, though less obvious to the untrained eye.

No need to panic, but keep watching.

China's banks are an accident waiting to happen to every one of us - Telegraph