26 July 2016

Corruption, the South China Seas Land Grab, and More News About the Chinese Military

China: The Secret Wars
July 22, 2016

The economy remains the major problem for the people that run China. Islamic terrorism, foreign affairs and military reforms all matter much less than the health of the economy. The government says all is well but a growing number of foreign economists and Chinese business leaders have doubts. The foreigners can speak openly while Chinese critics must be discreet. The government predicts GDP growth for 2016 to be about 6.5 percent which and that estimate has not wavered. That makes a lot of experts wary, because as time goes by more evidence of past falsification of data become obvious. There are a lot of old problems that can no longer be hidden. These include massive pollution, corruption, and unprofitable state owned industries. These problems have gotten worse and are crippling economic growth and must be tended to. Territorial claims in the South China Sea and India are distractions from what concerns people most in China; the economy. Thus while Japan continues to be a useful villain for distracting propaganda the government also realizes that Japanese economic power, expertise and experience with economic crises (in an East Asian cultural context) are more useful to Chinese survival. This cannot be admitted publically, but then neither can a lot of essential truths. It’s the East Asian way.


Some things the leaders have to discuss openly and one that involves most Chinese is the government effort to deal with corruption. A recent decision seems promising and it involves changing the rules for monitoring the performance of the most senior officials and investigating corruption among people who were long believed immune to such indignities. This puts the government back on track because assurances were made in early 2016 that the anti-corruption campaign would not only continue but intensify. In the past mainly lower ranking Chinese Communist Party members were prosecuted but by 2015 it became clear that if the corrupt senior party members were not shut down the widespread corruption would survive and thrive. So prosecutors were told that no one was immune and throughout 2015 some of the most senior government and Chinese Communist Party officials were being prosecuted. This was unprecedented and if the investigators are allowed to prosecute everyone who was dirty there would be a lot of new faces in the partly leadership by the end of 2016. Then came the Panama Papers. Chinese leaders hate surprises like this but it became and by May investigations of senior officials seemed to be fading. Apparently not.

Nervous Neighbors

Despite Chinese willingness to quietly ask for advice and cooperation on economic matters Japan also recognizes a need for more obvious diplomatic gestures. Thus Japan is greatly increasing its defense spending, and doing so more efficiently. Japan is saving money by purchasing foreign (mainly American) weapons. In the past Japan would license American tech and build the weapons in Japan. That cost a lot more but created more jobs and a sense of self-sufficiency. That is no longer enough and Japan is buying more weapons and strengthening military ties with the Americans and neighbors also concerned with the very visible Chinese territorial aggression. Most Japanese leaders realize that this Chinese aggression is mostly for show, to distract the Chinese people from more significant economic problems back home, but that sort of distraction has, in the past, led to war. It’s how Japan got involved in a series of foreign conquests that began in the late 19th century and ended in 1945 with a devastating defeat that will take a long time to forget.

China and Indonesia are unofficially, but very visibly, at war with each other over illegal fishing. China has been stealing fish (poaching) from offshore areas where the fishing rights belong to other countries. This poaching has been going on with increasing frequency since the 1990s. But now many of the victims have done the math and noted that the most frequent offenders are Chinese ships. These are either Chinese owned fishing ships or ships from other countries that register themselves as Chinese to gain a measure of immunity from being stopped or punished by the nations being plundered. But some nations are not just complaining, they are fighting back. In the case of Indonesia the fighting back consists of shooting at poachers and, since 2014, destroying (via explosives or burning) over 170 ships used by guilty poachers. Indonesia calculates that this poaching costs Indonesia over $2 billion a year and that China’s worldwide poaching operation brings in over $20 billion a year. Since China does not officially admit it is organizing and controlling this, and the Indonesians are using large warships with orders to fire on any poacher caught and refusing to surrender, the Chinese are taking most of the losses off Indonesia. For a while China sent warships to accompany flotillas (often ten or more ocean going fishing ships) and protect the poachers if caught and keep the police or coast guard boats busy while the poachers escaped. But Indonesia responded by sending out warships (corvettes and frigates) with orders to fire on any foreign warships caught with the poachers. China stopped sending warships but the poachers kept on coming and Indonesia keeps capturing and prosecuting the crews. The poacher ships are often destroyed as media events, with local news being allowed to capture and broadcast videos of the fires and explosions.

The Invisible Wars

Chinese territorial claims off its coasts (especially the South China Sea) and along the Indian border get the most media attention but there is another kind of Chinese invasion that, while less noticed, is becoming a serious economic and political problem for the countries the Chinese have been allowed to invade. Put simply if a country allows Chinese investment on a large (multi-billion dollar) scale the deal usually involves allowing China to bring its own workforce and permitting those workers to establish their own Chinese settlements and then stay when the project is over. This sort of thing results in the Chinese establishing a permanent economic presence and control over a growing percentage of the local economy. This often begins when China floods weak local economies with inexpensive goods. Both of these tactics are hurting local businesses and causing unrest among African business owners and workers. As a result, it’s become common for opposition parties in Africa to accuse China of “neo-colonial exploitation.” The accusation fits, and the Chinese will pay for it down the road, as will peacekeepers brought in to help clean up the mess.

Russia and Central Asian nations are seeing the same tactics being used on them and are demanding restrictions on these practices. Thailand recently turned down billions in Chinese investments because the Chinese would not limit the use of Chinese labor doing the work in Thailand. China is now more willing to negotiate because a growing number of nations are willing to do without Chinese investment if the terms include an influx of Chinese workers, many of whom want to stay for good.

The “overseas Chinese” have been a presence in Asia for centuries. But until now the Chinese government was never much concerned with them. China was never, until the late 20th century, a major international trading power. Now China is and it is spending heavily to finance the migration of more Chinese to settle in foreign lands, and never forget where they came from. For those who do, when the motherland calls, the Chinese government will remind the unwilling that they still have kin or other links back in China and how shameful would it be if this lack of cooperation became known.

China is also involved in wars most people, including most Chinese, are unaware of. For example there is Chinese media support for Iran backed Shia rebels in Yemen. There Saudi Arabia has organized a coalition of local nations to provide air and ground support for the Yemen government against the rebels. China has long backed Iran and in Yemen the rebels know that the popular support in the Gulf oil states for participation in the Yemen war would rapidly erode if there were a lot of casualties among their troops. So far the rebels have been right about this. Yet the Saudis cannot afford to leave a hostile Iranian-supported enclave on their southwestern border and it appears the Saudis feel they have to do whatever it takes to prevent the Iran backed Shia rebels from remaining active. Meanwhile Iran continues to back the rebels, especially when it comes to propaganda. Iran and its allies Russia and China are all using their state controlled media to make the Yemen rebels look more successful than they actually are. Iran continues trying to smuggle in weapons and military supplies. Some of those efforts appear to be succeeding. Most Chinese never notice that the local state controlled media is distorting what is going on in Yemen to favor the rebels there. But those outside China who have free access to all news sources can’t miss it.

North Korea

The impact of China enforcing all the UN trade sanctions against North Korea has, after four months, caused serious shortages of foreign currency. This is how you measure the true impact of any sanctions on North Korea and you know the sanctions are bad when Chinese exporters of consumer goods for the North Korean ruling class (two or three percent of the population, including immediate family, who run the government, universities, research centers and security forces) are now demanding cash in advance. China is the main access point for the thousands of luxury items North Korea imports each month to keep their ruling class content and willing to do what it takes to keep the Kim dynasty in power. There are numerous reports from China about exporters losing sales of these goods to North Korea because bills are not being paid. So suppliers are demanding cash now and the North Koreans don’t have it. The Chinese suppliers are complaining to anyone who will listen because this trade with North Korea is big business in some Chinese cities on the border. North Korea is desperate and North Korean leaders are willing to do almost anything to mend relations with China. “Almost” may not be enough unless North Korea agrees to adopt a market economy to the extent that China has. China, however, is willing to be more flexible on that if North Korea will cooperate in other ways. North Korean officials were recently told, privately, that all would be well if North Korea got rid of its nuclear weapons and its nuclear weapons development program. So far the north is not interested.

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