China Caucus Blog

Posted by Congressional China Caucus | March 17, 2015

South Korea Tells China Not to Meddle in Decision Over Missile System. “Tension between Seoul and Beijing over Washington’s desire to deploy a ballistic missile defense system in South Korea intensified on Tuesday as South Korea made an unusual public retort to China, asking it not to meddle in its defense policy. In recent months, the United States has made it increasingly clear that it wants South Korea to install the American missile defense system, known as Terminal High-Altitude Area Defense, or Thaad. The Americans call it a needed deterrent against North Korea, which has been developing its ballistic missile technology. At the same time, Beijing has put pressure on Seoul to refuse the American request, arguing that the real target of the system is China. “A neighboring country can have its own opinion on the possible deployment of the Thaad system here by the U.S. forces in South Korea,” Kim Min-seok, a spokesman for the South Korean Defense Ministry, said during a regular news briefing on Tuesday, without referring to China by name. “But it should not try to influence our security policy.” South Korea considers the United States, which still keeps 28,500 troops in the country decades after the Korean War, to be its most important ally. But its growing economic dependence on China — its leading export market — has required an increasingly tricky balancing act. That was apparent this week, as envoys from both countries visited South Korea with opposing demands about the missile defense system. Mr. Kim’s remarks Tuesday were in response to comments Monday by Liu Jianchao, a Chinese assistant foreign minister, who said he had had “a very candid and free dialogue” with South Korean officials about the issue. “We hope that China’s concerns and worries will be respected,” Mr. Liu told reporters in Seoul, where his comments were widely interpreted as a sign that Beijing was trying to use its economic influence to pull the country away from Washington.”

Defying U.S., European Allies Say They’ll Join China-Led Bank.
“Germany, France and Italy said on Tuesday they had agreed to join a new China-led Asian investment bank after close ally Britain defied U.S. pressure to become a founder member of a venture seen in Washington as a rival to the World Bank. The concerted move to participate in Beijing's flagship economic outreach project was a diplomatic blow for the United States, reflecting European eagerness to partner with China's fast-growing economy, the second largest in the world. It comes amid prickly trade negotiations between Brussels and Washington, and at a time when EU and Asian governments are frustrated that the U.S. Congress has held up a reform of voting rights in the International Monetary Fund due to give China and other emerging economies more say in global economic governance. German Finance Minister Wolfgang Schaeuble said Europe's biggest economy, a major trade partner with Beijing, would be a founding member of the Asian Infrastructure Investment Bank. A French Finance Ministry official told Reuters that Paris "confirms France's participation and highlights agreement between Germany, France and Italy" on the matter, first reported by the Financial Times. The Italian Treasury said the Europeans had agreed to work to ensure the new institution "follows the best standards and practices in terms of governance, safeguards, debt and procurement policies". French Foreign Minister Laurent Fabius told reporters: "We are indeed considering this idea positively. We are looking at the precise modalities internally in France, then we'll have the opportunity to discuss it with other European countries. "You have seen that the British have already joined. We have been working on this prospect for quite some time," he added.” 

What Can Mussolini’s Navy Teach Us About Chinese Naval Power?
“As I pointed out in January (see: “Problems of Estimating Military Power”), it is inherently difficult to assess military strengths and to accurately predict how one’s opponent will behave in battle. More often than not, estimating military power is a guessing game, camouflaged by pseudo-scientific quantity and qualitative analyses, often punctuated with alarming bits of intelligence about the growing technical capabilities of a likely future adversary. The history of the inter-war Italian navy, the Regia Marina, which faced a strategic outlook similar to the PLAN and was also confronted by technologically superior naval opponents, provides a great lesson in why overestimating your enemy’s capabilities is maybe just as dangerous as underestimating military power. In short, miscalculating the fighting strengths of Mussolini’s navy prior to and during World War II diverted precious allied resources from dealing with more important military challenges (and as a consequence it inadvertently contributed to various allied defeats in the first three years of the war, such as during the Battle of France, and especially during the campaigns in North Africa). It also influenced policy making by granting Italy too big of a say in European politics (e.g., look up the history of the signing of the Munich Agreement) in comparison to the country’s real military capabilities. Like the PLAN today, the Italians were engaged in many military innovations throughout the 1930s. For example, one article notes: “The Italian navy was impressive for its pioneering naval research into radar and its prowess in torpedo technology — the latter resulting in powerful aerial and magnetic torpedoes and contributing to the maiali, or small human-guided torpedoes — the ultimate weapons in asymmetric naval warfare.” Also, the post-World War I Italian Navy, similar to today’s People’s Liberation Army Navy, harbored regional aspirations.” 

Concrete Steps For the U.S. in the South China Sea.
“The United States, its allies, and its partners face an intertwined series of challenges in the South China Sea. This nested series of issues is most clearly manifest in China’s recent (and continuing) island-creation and expansion in the South China Sea. China’s island-dredging is itself only a symptom of the real problem: a significant power vacuum in the South China Sea. The United States has largely reduced its presence in those waters over the past 20 years. While the overall capabilities of the U.S. Navy are increasing with each new ship, the newer, more versatile platforms are more expensive. In DoD terminology, the Navy has prioritized capability over capacity, with the result being the reduction by more than 20 percent in total Navy ships since 1995. Combined with demands on the U.S. Navy to be present in the waters around the Middle East, and the United States is left with fewer “presence days” elsewhere in the world. In terms of hard power, Southeast Asia’s littoral states’ maritime—navy and coast guard—capabilities are extremely limited. In addition, they are reluctant to take actions that would put them in direct opposition to China. The reluctance may be due, at least in part, to the fact that China is the top trading partner of the Association of Southeast Asian Nations (ASEAN). Even considering countries’ willingness to pursue their interests according to international law, the Philippines’ much-noted arbitration case (which was initially highly controversial among ASEAN countries) is only to determine what maritime features are contestable in court—not who owns them, but “can they be owned?” 

Posted by The Congressional China Caucus | March 06, 2015

Obama’s China Tool Kit: In Need of Serious Repair. “About a year ago, the Obama administration found itself on the defensive abroad. In late 2013, China had established an Air Defense Identification Zone over the East China Sea, imposing rules that amounted to a Chinese assertion of sovereignty over international airspace and disputed territories. The following month, a Chinese warship halted in the path of the USS Cowpens, nearly causing a collision, in an attempt to keep it from lawfully observing Chinese naval exercises in international waters. In March, Russia formally annexed Crimea only a month after Russia-friendly Ukrainian President Viktor Yanukovych was removed from power. As President Obama was preparing to leave on a four-country swing through Asia in April, allies were whispering misgivings about America’s insufficiently robust reaction to the Crimea crisis only a few months after the president failed to follow through on his Syrian “red line” threat. And so to reassure nervous allies and deter further provocations, the Obama administration flexed its muscles—or, more accurately, indicated a willingness to flex its muscles in the future. While the president was in Asia, officials revealed to the Wall Street Journal that the Pentagon had developed a new toolkit for dealing with Chinese misbehavior…This fit well with the tone of the president’s trip, on which he finalized a new defense agreement with the Philippines and spoke forcefully of America’s commitment to its alliances with Manila and Tokyo. All in all, it was a reassuring week for America’s Asian allies. But China wasted no time in calling what turned out to be an American bluff. Just days after President Obama’s return to the United States, China parked a massive oil rig, the Haiyang Shiyou 981, in disputed South China Sea waters, just 120 nautical miles from Vietnam’s coast. It was a provocative move and possibly designed in part to discern how the United States would respond. Washington denounced the Chinese action, with Secretary of State John Kerry telling Chinese Foreign Minister Wang Yi that the oil rig placement was “provocative,” to which, one can only imagine, Wang replied, “no, duh.” Typically, Kerry “urged both sides…to de-escalate tensions, to engage in high-level dialogue, to ensure safe conduct by their vessels at sea, and to resolve the dispute through peaceful means.”

Superpower Showdown: America Can Stop Chinese Aggression in Asia. “Here’s a fun filled fact Asia hands here in the beltway and throughout the U.S. need to make peace with: Washington at present has zero chance of stopping China’s island building adventure in the South China Sea. None. Zero. Zip. Nada. The Obama Administration’s lackluster approach when it comes to Beijing’s challenge to the international status quo has only enabled Chinese behavior over the last few years. But what America can do— like any smart strategist— is gain a clear understanding of Beijing's strategy when it comes to Asia and plan the next move. And that next move, a carefully-thought-out reaction to Beijing’s various attempts to slowly change the international order in the Asia-Pacific is key. To put it quite simply: China needs to pay a price for its actions now and in the future. Beijing needs to be put on notice from here on out the costs of its actions will be steep— like the promotion of a “balancing” coalition that will only grow stronger with every aggressive action China takes. Beijing’s strategy is quite genius when you think about it. For those who have been watching Chinese actions over the last several years, a clear pattern emerges. Beijing has crafted a strategy using various non-kinetic actions to recast the overall balance of power in Asia with China displacing the United States as the dominant regional force. All the moves have one thing in common: none are provocative enough to spark a war or any type of kinetic response by those nations that are impacted. Such actions by China all create concern and raise tensions throughout the region. However, most never make the front page of major newspapers in America or raise serious alarm bells on the level of the situation in Ukraine or the challenge of ISIS. Nonetheless, the cumulative impact of such actions over the last several years is slowly changing the dynamics in Asia to favor China economically, politically and militarily.”

‘Made in China’ Nuclear Reactors A Tough Sell in Global Market. “As China signs global deals to export its nuclear power technology, it faces a huge obstacle: it still needs to show it can build and safely operate these reactors at home. Aided by foreign technology acquired during three decades of development, China has the highest number of reactors being built and ambitions to export its home-grown models to an overseas market worth hundreds of billions of dollars. Premier Li Keqiang told an annual parliamentary meeting this week that the China aimed to increase its share of global sales in a range of advanced industries, including implementing major projects in nuclear power. And in a sign of progress on exporting its own nuclear technology, China signed a preliminary agreement last month to sell its flagship Hualong 1 reactor to Argentina. But despite state media describing the deal as the model's "maiden voyage", China has not yet built Hualong 1, raising questions about the country's capacity to deliver reactors for the global market. "Our fatal weakness is our management standards are not high enough. There is a big gap with international standards," said Xu Lianyi, a senior expert at China's State Nuclear Power Technology Corp (SNPTC), referring to the challenges China faces expanding its nuclear power sector.  SNPTC, which was set up to receive technology transferred from Westinghouse Electric Co., is trying to develop another reactor ultimately targeted at the world market. Although China has operated Western-designed reactors at home for more than 20 years, it will need to convince buyers of the reliability of its own technology, particularly given a checkered reputation on industrial standards and safety in some other areas such as mining.”

Britain Has Enduring Responsibility for Democracy in Hong Kong, Report Says. “Britain has an “enduring moral responsibility” to ensure that Hong Kong is “democratic, stable and prosperous,” and diplomats should do more to uphold the treaty that governed the former territory’s return to China 18 years ago, a Parliament committee says. But a new report issued Friday by the British Parliament’s Foreign Affairs Committee stops short of saying what will, or can, be done. “The U.K. can and should take a clearer position on the overall pace and degree of democratic reform,” the report says. “The specific details of constitutional reform are for the governments of China and Hong Kong to decide together with the people of Hong Kong.” The report is the conclusion of the panel’s seven-month inquiry on the state of the Sino-British Joint Declaration, the treaty under which Hong Kong reverted to Chinese rule in 1997 under a framework known as “one country, two systems.” That framework supposedly ensures the territory of 7 million a substantial degree of autonomy for 50 years from Communist rulers in Beijing. Hong Kong is home to 250,000 British citizens and 3.4 million British (overseas) nationals, who have British passports but no right to work or reside permanently in Britain. The committee’s inquiry, which began in July, happened to coincide with the most tumultuous period in Hong Kong since the treaty was signed in 1984 and registered with the United Nations. Chinese authorities sought to obstruct the committee’s work, even prohibiting its members from visiting Hong Kong during last year’s massive pro-democracy street protests. In August, the standing committee of China’s legislature, the National People's Congress, set a framework for future elections for Hong Kong’s chief executive, in effect limiting the choice of candidates to two or three approved by a nominating committee expected to be composed largely of people regarded as “pro-Beijing.” That framework touched off the unprecedented demonstrations that lasted 10 weeks and saw thousands of participants clogging major thoroughfares and surrounding government headquarters. The sit-ins ended in mid-December after police, acting on a court order, cleared the streets.”

Posted by The Congressional China Caucus | March 03, 2015

Twin Historic Traumas Shape Xi Jinping’s China Presidency. “It was a homecoming for Chinese President Xi Jinping. To mark China’s Spring Festival, Xi made a visit in mid-February to the small northern village of Liangjiahe, where he was banished in 1969 as a raw 15-year-old during the turmoil of the Cultural Revolution, where he worked for seven years and where he joined the Communist Party. His father had been persecuted and jailed in one of Mao Zedong’s purges, and Xi suffered humiliation, hunger and homelessness, sleeping in a cave, carrying manure and building roads, according to official accounts. “Perplexed” when he was sent to the countryside, Xi emerged as if remolded by the painful years he spent there. He learned enough in the village to be able to cast himself as a man of the people. The lessons also made him profoundly distrust those same people. Xi told villagers that he had left his heart in Liangjiahe, but it was clear that the experience has stayed with him in ways both spoken and unspoken, and has helped shape the sort of president he has become — possibly the strongest Chinese leader since Mao. In September, Xi will pay a state visit to the United States, as a president who has ruthlessly centralized power while embarking on an ambitious project to revitalize Communist rule and to secure the party’s future. He is also a president whose worldview, and vision for China, were shaped by two historic traumas.” 

China Names 14 Generals Suspected of Corruption.
“China’s military authority on Monday released a list of 14 generals who are under investigation or have been convicted of graft, among them the son of one of China’s once highest-ranking generals. The generals were the latest prominent officers to fall under President Xi Jinping’s sweeping anticorruption campaign. Published on the official website of the People’s Liberation Army three days before China’s rubber-stamp legislature convenes for its annual meeting in Beijing, the list identifies a host of leading officers, the majority of whom are in the political and logistics departments of the military, navy, missile corps and other branches. The investigators’ focus on the military bureaucracy highlights two distinct types of corruption that the Communist Party believes undermine military readiness, experts say: bribery in political departments relating to the sale of positions; and embezzlement within logistics departments, which handle large amounts of money as well as contracts. Among those being investigated is Rear Adm. Guo Zhenggang, the son of Guo Boxiong, the retired vice chairman of the powerful Central Military Commission, which oversees the 2.3 million members of China’s armed forces, the world’s largest. Admiral Guo, 45, the deputy political commissar of military command in the coastal province of Zhejiang, was put under investigation last month, suspected of “serious legal violations and criminal offenses,” a common official euphemism for corruption. In what appeared to be a well-timed media campaign coordinated to discredit the admiral, the investigative magazine Caijing published a long exposé of his family’s corrupt land dealings online, 10 minutes after the list of generals was released.” 

Obama Sharply Criticizes China’s Plans for New Technology Rules.
“President Barack Obama on Monday sharply criticized China's plans for new rules on U.S. tech companies, urging Beijing to change the policy if it wants to do business with the United States and saying he had raised it with President Xi Jinping. In an interview with Reuters, Obama said he was concerned about Beijing's plans for a far-reaching counterterrorism law that would require technology firms to hand over encryption keys, the passcodes that help protect data, and install security "backdoors" in their systems to give Chinese authorities surveillance access. "This is something that I’ve raised directly with President Xi," Obama said. "We have made it very clear to them that this is something they are going to have to change if they are to do business with the United States." The Chinese government sees the rules as crucial to protect state and business secrets. Western companies say they reinforce increasingly onerous terms of doing business in the world's second-largest economy and heighten mistrust over cybersecurity between Washington and Beijing. A Chinese parliamentary body read a second draft of the country's first anti-terrorism law last week and is expected to adopt the legislation in the coming weeks or months.” 

Taiwan Says Agreement Reached in China Flight Path Dispute.
“Taiwan and China have reached an agreement over disputed new commercial flight paths following months of negotiations, according to Taiwanese officials. The Mainland Affairs Council, the Taiwanese government body in charge of China policy, said Monday that China agreed to move a new north-south route for commercial airlines further away from the middle line that divides control over the Taiwan Strait. It also said China agreed not to put the route in place on Thursday as originally planned, though it didn’t say when the route would go into effect. In January, Taiwan’s Civil Aeronautics Administration publicly complained that China unilaterally established the route, dubbed M503, that comes as close as 7.8 kilometers from the middle line. The agency said the route presented a potential hazard to air traffic and Taiwan’s airspace. China had also planned three new feeder routes for flights to cities along the Chinese coast that would intersect M503. In its own statement on Monday, the Taiwanese agency’s Chinese counterpart, the Taiwan Affairs Office of the State Council of China, said the two sides were discussing the route but didn’t mention changes. It said the new flight paths are necessary to relieve pressure on air travel around Shanghai and the Pearl River Delta in southern China. It also maintained that the route is set at a safe distance from the Taipei region. Earlier, Chinese officials said the routes had already gained the backing of the International Civil Aviation Organization in 2007.” 

Posted by The Congressional China Caucus | February 25, 2015

Asia’s New Triple Alliance. “Democracy has not featured as a theme of President Barack Obama’s foreign policy. He took office promising to withdraw troops from Afghanistan and Iraq, not to remake those countries in America’s image. The Arab Spring turned into a nightmare, leading Obama to back strongmen in Cairo and Riyadh. Outreach to autocrats in Moscow, Beijing, Tehran, and Havana has sometimes taken precedence over ties with U.S. allies. But in India last month, Obama changed tack, recognizing that a convergence of interests and values makes the world’s largest democracy pivotal to U.S. strategic objectives. In doing so, he followed in the footsteps of Japanese Prime Minister Shinzo Abe, who predicted as early as 2006 that Japan’s relations with India could surpass those with America to become “the most important bilateral relationship in the world” on the basis of shared interests and values. For his part, Indian Prime Minister Narendra Modi is treating Washington and Tokyo as India’s most valuable external partners. Both Japan and India lately have also prioritized ties with democratic neighbors in South and Southeast Asia. Abe and Modi are pursuing the sort of values-based diplomacy that Obama previously scorned. But all three now seem to recognize that unsentimental national interest and shared political ideals require closer strategic collaboration to shape the Pacific century. Coming from very different backgrounds, Obama, Abe, and Modi are converging around the idea of an Indo-Pacific alliance to manage China’s rise and sustain the peace of Asia. This is a strong challenge to Beijing’s belief in its own preeminence — and its attempts to forge a “new type of major power relations” with the United States over the heads of its allies. In response to China’s pressure on the Asian balance of power, Japan, India, and the United States launched an official trilateral strategic grouping in late 2011. They have now agreed to deepen trilateral strategic cooperation, particularly in maritime security. The three leaders also are discussing the reconstitution of a Quadrilateral Strategic Partnership alongside Australia — whose current prime minister, Tony Abbott, has supported the idea ever since his predecessor, Kevin Rudd, killed the proto-alliance in a sop to China.” 

How to Deter China.
“In the U.S. military, at least, the “pivot” to Asia has begun. By 2020, the navy and the air force plan to base 60 percent of their forces in the Asia-Pacific region. The Pentagon, meanwhile, is investing a growing share of its shrinking resources in new long-range bombers and nuclear-powered submarines designed to operate in high-threat environments. These changes are clearly meant to check an increasingly assertive China. And with good reason: Beijing’s expanding territorial claims threaten virtually every country along what is commonly known as “the first island chain,” encompassing parts of Japan, the Philippines, and Taiwan—all of which Washington is obligated to protect. But to reliably deter Chinese aggression, the Pentagon will have to go even further. Emerging Chinese capabilities are intended to blunt Washington’s ability to provide military support to its allies and partners. Although deterrence through the prospect of punishment, in the form of air strikes and naval blockades, has a role to play in discouraging Chinese adventurism, Washington’s goal, and that of its allies and partners, should be to achieve deterrence through denial—to convince Beijing that it simply cannot achieve its objectives with force. Leveraging the latent potential of U.S., allied, and partner ground forces, Washington can best achieve this objective by establishing a series of linked defenses along the first island chain—an “Archipelagic Defense”—and, in so doing, deny Beijing the ability to achieve its revisionist aims through aggression or coercion. China claims that its rise is intended to be peaceful, but its actions tell a different story: that of a revisionist power seeking to dominate the western Pacific. Beijing has claimed sovereignty over not only Taiwan but also Japan’s Senkaku Islands (known in China as the Diaoyu Islands) and most of the 1.7 million square miles that make up the East China and South China Seas, where six other countries maintain various territorial and maritime claims. And it has been unapologetic about pursuing those goals. In 2010, for example, China’s then foreign minister, Yang Jiechi, dismissed concerns over Beijing’s expansionism in a single breath, saying, “China is a big country, and other countries are small countries, and that is just a fact.” 

China Ejects Spy Chief From Group of Advisers. “
China has dropped one of its espionage chiefs from a high-profile panel of advisers, official news agency Xinhua said on Wednesday, after the ruling Communist Party announced he was being investigated for corruption. Ma Jian, a vice minister at the Ministry of State Security, is the most senior security official facing investigation since former domestic security czar Zhou Yongkang was ensnared in a graft scandal last July. The investigation into Ma could lead to a shake-up in the powerful state security ministry, a KGB-like operation that spies on citizens and foreigners at home and abroad. One of China's most opaque bodies, it has no public website or spokesman. The advisory panel, the Chinese People's Political Consultative Conference (CPPCC) has revoked Ma's membership eligibility, Xinhua said on its microblog, without giving details. Last month, the party's anti-graft watchdog said it was investigating Ma, signaling that the strongest corruption crackdown in decades has engulfed the powerful intelligence network. It is unclear what triggered the investigation of Ma, who is said to have headed China's counter-espionage programs. Ma was director of the ministry's "No.8 Bureau", charged with counter-espionage surveillance of foreigners, chiefly diplomats, businessmen and reporters, a source with ties to the leadership had told Reuters.  He has since been replaced by Qiu Jin, a vice minister of state security. The South China Morning Post newspaper, based in Hong Kong, said Ma was closely tied to Ling Jihua, the target of a graft investigation last year and one-time senior aide to former President Hu Jintao. President Xi Jinping has vowed to target high-ranking "tigers" as well as lowly "flies" in his anti-corruption drive, and has pledged to step up the effort.” 

Russia Could Make China King of the South China Sea.
“What Robert Kaplan so smartly dubbed “Asia’s Cauldron”— the South China Sea— might be set to boil once again. But the real kicker is who might be turning the switch to “high” on that virtual stove: none other than Russian President Vladimir Putin. Events thousands of miles away in Ukraine could set off a chain reaction that could see China become the undisputed ruler of this large body of water thanks to a large infusion of Russian weapons and technology— if the West starts arming Ukraine. But before we get to all the juicy details of how China could become “master and commander” of the South China Sea thanks to Russian assistance, lets take a much needed survey of the latest drama show in this troubled body of water. Tensions are rising in the Asia-Pacific as China continues to change facts on the ground (“in the water” might be a better term), continuing work on several massive island reclamation projects that many analysts feel will create much larger islands housing airfields, ports, radar stations and maybe even anti-ship missile batteries. The motivation is quite obvious— Beijing would likely become the sovereign master of the South China Sea if these islands were used for the natural purpose of claiming sovereignty. Nothing says “indisputable sovereignty” by doing the things a sovereign does, like patrolling your supposed territory and enforcing your laws in that territory. Bases in the South China Sea could make that all too infamous nine or ten-dash line more than just big marks on a map somewhere in Beijing. They could make it a reality. When it comes to Chinese military capabilities, much has been made over the last several years of the PRC’s growing ability to deny a technological advanced adversary (think the United States and/or Japan) the capability to intervene in various possible engagements near its borders (Taiwan and/or the East and South China Seas). Over the next several years, such capabilities are likely to evolve and improve thanks to technological innovations. Combining likely Chinese technological advances like longer range and more accurate cruise missiles, plus new bases in reclaimed islands in the South China Sea, is nothing short of a nightmare for U.S. and allied planners who are doing all they can to ensure access to vital parts of the Asia-Pacific.” 

Posted by The Congressional China Caucus | February 24, 2015

Fretting About the Yuan. “American protectionists have long insisted that a fundamentally undervalued yuan is to blame for the large U.S. bilateral trade deficit with China. They call on the U.S. Treasury to declare Beijing a “currency manipulator” and impose punitive tariffs. The Obama Administration has resisted this step, but it also has pressured China to allow the market to determine the yuan’s value in the expectation it would rise more quickly against the dollar. So it’s worth savoring the irony that Beijing is intervening again in the currency market—this time to keep the yuan from falling. The currency has bumped along the bottom of its trading band for months, forcing the central bank to sell dollars and buy yuan to slow its decline. The yuan’s fall of 3.2% against the dollar since January 2014 should lead protectionists to reassess whether it was ever as undervalued as they claimed. But instead many in the U.S. Congress seem to be doubling down. A bipartisan coalition wants tougher measures on “currency manipulators”—read China—before they will approve the Trade Promotion Authority needed for the Trans-Pacific Partnership trade pact. The thinking seems to be that Beijing is deliberately devaluing the yuan. Some media have picked up the line that a “currency war” is in the offing. Yet on a trade-weighted basis, the yuan continues to hit new highs. Its fall against the dollar over the past year is more a function of a strong dollar than a weak yuan. There also is no reason to believe that Beijing has abandoned its emphasis on a stable currency. Rather than try to regulate its economy through short-term exchange-rate movements, the People’s Bank of China has steered a steady course since the early 1990s, and the country’s remarkable growth is due in part to this policy. The large U.S.-China bilateral trade deficit was never a function of the exchange rate, but rather China’s large pool of unskilled labor. The final assembly of products that used to be made in Japan, South Korea and Taiwan was moved to the mainland.” 

U.S. Expert Finds Faults in Chinese Military Command.
“As exchanges between the American and Chinese militaries increase, so, too, do the reports of publicly available research on the People’s Liberation Army by American experts working outside the Pentagon. This month the California-based RAND Corporation published a lengthy report on the weaknesses of the P.L.A. that focused on the human dimension rather than weapons. Much of the research was based on open-source material in the Chinese military press. Now, a former Army attaché at the United States Embassy in Beijing, Dennis J. Blasko, has published a piece on the Chinese military not doing so well, and he draws on the military press for his conclusions. In his article, “Ten Reasons Why China Will Have Trouble Fighting a Modern War,” published on the military affairs blog War on the Rocks, Mr. Blasko cited an antiquated chain of command, too many military personnel assigned to nonmilitary duties such as communications and transport, and too few officers trained in joint command operations. In the past two years, Mr. Blasko wrote, Chinese Navy and Air Force officers have commanded joint exercises, but these appear to have been limited in scope and number. In late 2014, he said, the P.L.A. publicly recognized the lack of experience of its top officers in joint commands and announced a new program for the selection, training and appointment of joint operation commanding officers. Like the RAND report, Mr. Blasko’s article stresses a lack of realistic training for the P.L.A. Efforts are being made to rectify this shortcoming, but some problems can sound rather quaint. One Chinese military journal referred to throwing away “night lanterns” during training. The Chinese often write in parables, Mr. Blasko said in an interview, and in this case the night lanterns were apparently a reference to flashlights that needed to be replaced with night-vision goggles. Several units have been created to serve as enemy forces in confrontational training exercises, and mock combat exercises between the services have been conducted, he said. Still, the drive to improve training has a long way to go. “Increasing realism in training will require additional funds, particularly for fuel and maintenance expenses and for more and better training areas and training simulators,” he wrote.” 

China’s Affair with the ‘Other Korea’.
“China is playing good cop/bad cop with South Korea in ways that may be detrimental to the Republic of Korea’s (ROK) security and the U.S.-ROK alliance. While Xi Jinping’s visit to Seoul (pointedly snubbing North Korea) last July was a seductive move to woo the ROK, Chinese defense minister Chang Wanquan’s warning against the ROK deploying U.S. THAAD missile-defense systems earlier this month sought to intimidate Seoul. Putting the squeeze on Seoul over missile defense is yet another effort by Beijing to have it both ways. On the one hand, China keeps North Korea on life support as Pyongyang builds ever-more-capable ballistic missiles and nuclear weapons. It provides North Korea with oil, food and other goods and also protects it at the UN after Pyongyang’s various provocations. This support both ensures the continued division of Korea and helps China maintain a buffer between itself and U.S.-allied South Korea. On the other hand, China has also become increasingly important to the South Koreans. China is already Seoul’s largest trading partner and has become increasingly important to the South Korean economy. This limits South Korea’s ability to pressure China over its North Korea policy. Now China is seeking a veto over ROK defense policy by trying to portray South Korea’s efforts to defend itself as part of China’s broader “containment” narrative, which claims that just about every U.S. action is threatening China. Like the rest of U.S. “rebalancing” policies in Asia, ROK deployment of THAAD or even Seoul’s acquisition of less capable missile-defense systems that are interoperable with U.S.-Japanese systems is viewed by Beijing as part of a larger U.S. strategy to block China’s rise and neutralize its nuclear deterrent. Without getting into the delusional nature of Beijing’s allegations, U.S. missile-defense policies have no such capability. Similarly, ever since North Korea test fired a Taepodong-2 missile over Japan in 1998—the first time since WW2 that missiles flew over Japan—a shocked Tokyo has responded by building a missile-defense system to protect against the threat from Pyongyang.” 

Mainland Chinese Visits to Hong Kong Drop Amid Tensions. “
The number of mainland Chinese visitors to Hong Kong during the Lunar New Year holidays fell for the first time in about 20 years as they have felt increasingly unwelcome amid political unrest in the city. The drop comes as Hong Kong's leader Leung Chun-ying said he would raise the issue of large numbers of mainland Chinese visitors with Beijing at a parliamentary meeting next month. "If we have to restrict or decrease the numbers of mainland Chinese coming to Hong Kong then we must continue to discuss this with (China)...this is a difficult task," he said. The drop, though a mild 0.3 percent over the first three days of the holiday, is the first decrease in Lunar New Year arrivals from China in about two decades, according to a major travel industry group, and could presage longer term decreases that could impact the city's economy. "It's alarming," said Joseph Tung, the Executive Director of Hong Kong's Travel Industry Council. Over 40 million mainland tourists streamed into Hong Kong last year, spending freely in luxury shops, malls, restaurants and hotels, as well as emptying local stores of daily necessities such as baby milk formula and cosmetics. Tung and other travel industry heavyweights say political tensions in Hong Kong including pro-democracy demonstrations last year and a recent spate of anti-China shopper protests in local malls have discouraged tourists from mainland China. "Put yourself in their shoes. If you feel as though people are not welcoming you, why would you come to Hong Kong?" Tung said. "If these things carry on... the high spenders in China can just go elsewhere, like Europe." 

Posted by Congressional China Caucus | February 23, 2015

China Protests Modi’s Visit to Disputed Border Region. “China said on Friday it had lodged an official protest against Prime Minister Narendra Modi's visit to a border region claimed by both countries. China disputes the entire territory of Arunachal Pradesh, calling it south Tibet. Its historic town Tawang, a key site for Tibetan Buddhism, was briefly occupied by Chinese forces during a 1962 war. "The Chinese government has never recognized the so-called 'Arunachal Pradesh'," a statement on the Chinese Foreign Ministry's website said on Friday. It said Modi's visit was "not conducive to the overall development of bilateral relations". Modi visited Arunachal Pradesh on Friday to inaugurate the opening of a train line and power station. He did not mention China but pledged billions of dollars of investment to develop infrastructure in the region. "I assure you that you will witness more development in the state in the next five years than it has seen in the last 28 years," Modi said, addressing a huge crowd. Faster transport links and exploitation of Arunachal Pradesh's hydro-electric potential are the keys to fighting poverty and bringing about rapid development in the frontier state, he said. In January, China objected to statements by Japan's foreign ministry supporting India's claim to the region. A visit by U.S. President Barack Obama to India in January was widely seen as a sign Modi is moving closer to the United States, to offset rising Chinese influence in Asia and, in particular, intensifying activity by the Chinese navy in the Indian Ocean.” 

Hong Kong ‘Radicals’ Up Ante in Democracy Push Against China. “
Nearly three months after police cleared away the last of Hong Kong's pro-democracy street protests, lingering anger is stoking a new front of radical activism that has turned shopping malls and university campuses into a fresh battleground. While still relatively few in number, a cluster of outspoken groups have staged small but disruptive protests in recent weeks targeting mainland Chinese visitors - tapping a seam of grassroots resentment to call for greater Hong Kong nationalism and even independence from China. More than 100 such activists descended on the New Town Plaza, a mega-mall a short train ride from the border, on a recent Sunday to harass the day-trippers who stream across daily to shop, eat and sight-see. The mainlanders - 40.7 million of which visited the city of 7 million last year - spur the local economy, but also exasperate locals by clogging streets and emptying store shelves of cosmetics, baby formula and other essentials. "Away with the locusts and barbarians," read one banner as protesters roved through the bustling mall tailed by police. "Go back to China," protesters shouted at visitors, including an elderly Chinese woman who fled with her trolleyload of shopping. "We don't want you!" Shops were closed and police pepper-sprayed some activists amid chaotic scenes and made several arrests. A pro-Beijing newspaper, Wen Wei Po, thundered that the "radicals", some of whom waved a British colonial flag, were "inciting the foul culture of Hong Kong independence".” 

Argentina, China Could Joint Develop Fighters.
“London's successful blocking of the Gripen fighter sale to Argentina appears to have done little to stop Buenos Aires' determination to replace its aging attack and fighter fleet. Nor has it halted its threats to use force to "liberate" the Malvinas (Falkland) Islands from British control. In October, Argentina's Defense Minister Agustin Rossi announced plans to procure 14 Saab Gripen fighters to replace its single-engine Dassault Mirage III/5, which saw combat during the 1982 Falklands War. However, London quickly killed the deal. When that was nixed, Argentine's President Cristina Kirchner traveled to Beijing, Feb. 2-5, and announced Argentina and China were creating a working group to facilitate the transfer of a variety of military equipment, including fighters. To further sweeten the pot, China takes Argentina's position on the Falkland Islands and has compared the dispute to China's sovereignty claims over disputed islands in the East and South China Seas. Two types of Chinese fighters are candidates: The FC-1/JF-17 and the J-10, both built by Chengdu Aircraft Corporation (CAC). The JF-17 is the Pakistan-built variant of the FC-1. Both fighters have their advantages and disadvantages, said Doug Barrie, the senior air analyst at the International Institute for Strategic Studies in London. The Chengdu FC-1 represents the cheaper and less-capable combat aircraft, he said. Argentina could purchase significantly more FC-1s, "although in capability terms this would not represent as great an increment in overall performance compared to the J-10," he said. The Argentinean Air Force could face difficulties acclimating to non-Western equipment, but "we should understand that such a sale will have a special political importance for the Chinese. It brings prestige and opens doors to new combat aircraft sales to the region," said Vasily Kashin, a China military specialist at Moscow's Centre for Analysis of Strategies and Technologies. "They will likely provide good financing conditions and will probably pay special attention to subsequent maintenance and training work." 

Currency’s Weakness Troubles China’s Policy Makers.
“Every weekday morning this year, China’s currency has followed the same ominous path. The central bank in Beijing fixes the initial value for the renminbi, the center point for the currency’s daily trading range. It is roughly the same value, 6.12 to 6.13 to the dollar. Then the markets open in Shanghai, and the renminbi quickly sinks close to the bottom of the currency’s trading band, roughly 2 percent lower. Only frequent intervention by the central bank — buying renminbi and selling dollars — prevents the Chinese currency from falling even further. The weakness in the renminbi is a growing worry for government policy makers and corporate executives. The currency’s decline reflects the money flowing out of the country. Wealthy Chinese are moving large sums overseas, troubled by President Xi Jinping’s anti-corruption campaign and the country’s slowing economy. Foreign investors are also growing more skeptical of China. For many years, China kept the renminbi weaker than economic fundamentals dictated, to help its exporters stay competitive in foreign markets. But a weak renminbi is no longer an unalloyed advantage. Chinese banks and companies have borrowed overseas an estimated $1 trillion in mostly short-term, dollar-denominated debt over the last five years. They were betting that the renminbi would continue its decade-long gradual appreciation, which would have made their debts in dollars less expensive to repay. But a depreciating renminbi makes that debt more costly. That puts central bank officials in a quandary. “They cannot afford to let it depreciate too quickly,” said Liu Li-gang, a China economist at ANZ, a big Australian bank. “Firms could be pushed into default.” Almost no one expects a sudden, disorderly fall in the renminbi. At $3.84 trillion, China’s foreign exchange reserves dwarf every other country’s, accounting for a sixth of the entire world’s supply. China can easily fend off any attempt to “break the renminbi” in currency markets.” 

Posted by Congressional China Caucus | February 20, 2015

China’s Muhammad Ali Military Strategy. “So China has no good strategy to counter American intervention—and may not even care that much about doing so—because Chinese officialdom and commentators seldom use the word “counterintervention”? Ah. Glad we straightened that out. Or at least that seems to be the message coming from MIT professor Taylor Fravel and Naval Postgraduate School professor Chris Twomey, writing over at The Washington Quarterly. Read the whole thing. In brief, the twosome maintain that counterintervention is a Western term for describing Chinese strategy, that it’s so commonplace in Western commentary as to rank as a “meme” or “trope,” and that Chinese strategists rarely use it except to relate what Westerners are saying about China. Projecting the term onto China, they say, implies that Beijing’s military strategy aims solely at deterring or defeating American intervention, whether in the Taiwan Strait or elsewhere in maritime East Asia. In turn, imputing a U.S.-centric view of Chinese maritime strategy to Chinese strategists obscures other purposes that impel China’s words and deeds. Beijing, observe Fravel and Twomey, may have other purposes in mind for the warships, aircraft, and armaments the People’s Liberation Army (PLA) is busily assembling. Some disputes don’t involve the United States, rendering the question of intervention moot. Nor has the Chinese Communist leadership confined its ambitions exclusively to East Asia. The leadership entertains ambitions in the Indian Ocean and elsewhere on the map. In short, everything’s not about America. Obsessing over the American factor in Chinese strategy skews strategy-making in Washington and allied capitals, narrowing strategists’ field of view. Now, we can quibble over whether counterintervention really figures that prominently in the U.S. military lexicon. I doubt it expresses any consensus appraisal of the PLA, let alone dominates thinking or obscures much of anything. Apart from a handful of mentions in the Defense Department’s annual reports on Chinese military power, along with scattered mentions in op-eds and think-tank works—all amply documented in Fravel’s and Twomey’s endnotes—it’s far from a household term. Google it if you doubt me. The results will be sparse.” 

Revealed: Why China Would Lose A War Against America.
“Let’s not mince words: a U.S.-China war would be hell on earth. It would likely start World War III. Millions— maybe billions— of people would die if nuclear weapons were ever used in such a conflict. The global economy would likely face ruin— that’s what happens when the world’s biggest economic powers start shooting at each other. Thankfully the chances are remote it will ever happen. Yet, the threat of such a conflict remains thanks to the many different pressure points in the U.S.-China relationship. Forget the challenge of ISIS, Ukraine, Syria or whatever the flavor of the moment is. The U.S.-China relationship— and whether it remains peaceful or not— is the most important challenge of our time. Period. Several days ago I examined in a short piece on these digital pages how China could do great damage to U.S. and allied military forces in a war. Thanks to over twenty years of large scale investments, the PRC has gone from being a third-rate military that could project very little offensive punch to arguably the second most powerful military machine on the planet. And with an emphasis on weapons systems that embrace anti-access/area-denial military doctrine (A2/AD), China seems to be developing the tools it needs if war with America did ever come to pass. Beijing’s motto these days: be prepared. This article examines the challenges China would face against the U.S. in a conflict--but in a very broad, top-down, and practical sort of way. This time I will avoid the fun but sometimes easy to pick apart scenario-style type of analysis. While Beijing certainly has the tools to get the job done when it comes to a war with Washington, the challenges China would face in such a conflict would be immense— and many of them could be quite basic. The PRC would be going to war against the premier military power on the planet— some would argue the most lethal fighting machine of all time. In this essay we will review some of the important foundational reasons why many argue, quite convincingly, that the U.S. would very well defeat China in a war.” 

Hong Kong’s Umbrella Revolution Isn’t Over Yet. “
On the final night of Hong Kong’s largest Occupy camp, a crowd of protesters swelled along an empty highway. It had been 74 days since the first canister of tear gas hit democracy supporters armed with only umbrellas, setting off what the city soon came to call the Umbrella Revolution. It had been more than two months since protesters first sat on that street in their raincoats, sleepless and worried that the military would soon arrive. The fear had now dissipated, and on this cool December evening, the atmosphere was raucous and festive. People filled the empty spaces between tents, spilling out of a metro stop and pouring over concrete barriers with the help of carefully constructed wooden steps. They lined up for free souvenirs — silk-screened T-shirts, leather necklaces, protest stickers — and gathered around microphones for open meetings. They threw glitter and snapped photographs. They sang along to pop songs crooned by a man called Bananaooyoo (now a protest icon whose signature color, like that of the protest itself, is yellow). Archivists removed pieces of artwork for safekeeping, and a few activists hung yellow banners: “We’ll be back.” The camp they were leaving behind had grown to hundreds of yards in length, its irregular boundaries defined by tangled barriers of metal and plastic, hastily secured with zip ties. A lone cluster of tents closest to one of the more distant barriers quietly celebrated its term as the farthest outpost of the camp, in the shadow of the Hong Kong headquarters of the People’s Liberation Army. As I poked my head inside a tent, a protester announced, “We are the First Defensive Line!” The First Defensive Line comprised a rotating crew of about 20 students and young people. “We were a materials station,” explained a petite education student named Jodi Li, who wore thick-rimmed glasses and had an easy high-pitched giggle. “Now we become a . . . sleeping station? I don’t know. There are little materials now.” At the height of the protests, they supplied protesters with hard hats, plastic goggles and bottles of water. “We can’t protect them, but at least we can ask them to protect themselves,” she said. They had watched the movements of the police just outside the barriers and sent messages to other supply tents. Now they were squeezed in under a blue canopy, dumping foam platters of raw meat into a pot on a hot plate, singing dirty songs and shouting invectives against the Hong Kong leadership: “The government is suck!” 

Afghans Arrested Chinese Uighurs to Aid Taliban Talks Bid.
“Afghanistan arrested and handed over several Muslim Uighur militants from China's west in an effort to persuade China to use its influence with Pakistan to help start negotiations with the Taliban, Afghan security officials said on Friday. The deal sheds light on China's increasing importance in Afghanistan and Pakistan, with its involvement in efforts to end the war with Taliban, who have been fighting since 2001 to re-establish Islamist rule in Afghanistan. Hopes for a peace process were raised on Thursday when Pakistani and Afghan officials said members of the Taliban leadership had signaled they were willing to begin talks as soon as next month. The apparent Taliban change of position was said to have been made under pressure from Pakistan, although the official Taliban spokesman denied any move toward negotiations with the Afghan government. Pakistan has been under pressure from China, which is concerned about Islamists among its Muslim minority, to step up pressure against militants. Three senior Afghan police and intelligence officials described the operation last month to capture ethnic Uighur militants, members of a separatist movement opposed to Beijing's rule over the Xinjiang region, which is home to the Turkic-speaking, mostly Muslim Uighurs. "We offered our hand in cooperation with China and in return we asked them to pressure Pakistan to stop supporting the Taliban or at least bring them to the negotiating table," said one of the security officials, who attended a meeting with Chinese officials to arrange transfer of the prisoners. Chinese officials in Beijing and at the embassy in Kabul did not respond to requests for comment. The Uighurs, who the Afghan officials said had trained in militant camps across the border in Pakistan, were handed over to Chinese officials last month.” 

Posted by Congressional China Caucus | February 18, 2015

‘Commie-Loving Mainlanders’ Targeted at Hong Kong’s Top University. “A campus election at a top Hong Kong university degenerated into an acrimonious campaign against mainland Chinese candidates, highlighting simmering tensions two months after pro-democracy protests led by local students paralysed parts of the city. Mainland students say they have always felt a distance from their local peers, but recent events in the Chinese-controlled city have fueled a burgeoning Hong Kong identity among many younger residents, alongside frustration and anger at Beijing. "To brainwashed Commie-loving Mainlanders, we despise you!", read a flyer posted on the University of Hong Kong's (HKU) "Democracy Wall", underscoring the sharpening divide. The flyer has since been removed. The so-called "Umbrella Movement" protests late last year, calling for full democracy in Hong Kong, posed the greatest challenge to China's authority since the crushing of a pro-democracy movement in Beijing in 1989. The Communist Party's People's Daily said this week that life for mainland students in Hong Kong was "getting tougher", and the roughly 150,000 young people it estimates live in the territory were "being treated unfairly as collateral targets". Divisions at HKU bubbled to the surface when a young woman running for the student union was accused of being a Beijing spy and subjected to online abuse after a campus television report highlighted her Communist Party Youth League membership. A pro-Beijing newspaper leapt to her defense, warning against what it described as a dangerous "McCarthyite trend" in the former British colony.” 

Exposed: China’s Super Strategy to Crush American In a War.
“We all know that the chances of a U.S.-Sino war in Asia are remote— thank God. With hundreds of billions of dollars in bilateral trade, the strong possibility that such a conflict would draw in most of Asia’s big geopolitical players, as well as the very real eventuality that such a conflict could go global (and nuclear), is enough to shut down such apocalyptic thoughts. However, as I discussed last week, there is enough pressure points between the two superpowers that sudden tensions could spark a crisis— a crisis that could spiral out of control if cooler heads don’t prevail. The purpose of this article is straightforward and scary enough: what if Beijing found itself in a situation where it felt war was inevitable with Washington (a crisis over Taiwan, a crisis in the East or South China Seas etc.)— how would it proceed? While there are many different ways China could strike America— many of which would be non-kinetic and could even deny like a cyberstrike from a third party country or actor— Beijing has the means to do incredible damage to U.S. interests and alliance networks throughout Asia and even in the wider Indo-Pacific. Much of Washington’s “pivot” or “rebalance” is certainly based on such a fact: a realization that U.S. military primacy is no longer guaranteed thanks to a slick Chinese counter-intervention based military modernization (despite what others may think). Before one can set the course for war, we need to get some housekeeping items out of the way. Let us assume for the purposes of this article China has decided to strike kinetically and decisively. Let us also assume Beijing’s goal is to limit the ability of U.S. forces along with their allies the capability to strike back conventionally. China in this scenario has also decided it will not use nuclear weapons and limit its war aims to the Asia-Pacific theatre. So, knowing all that, how would China go to war against America?” ​

Taiwan Appoints Military Officials As New China Affairs Chief. “A military official and former deputy minister of foreign affairs was named on Monday as the head of Taiwan's China policy-making body. The previous chief announced his resignation last week. Andrew Hsia, currently the Deputy Minister of National Defense, will become Minister of Taiwan's Mainland Affairs Council (MAC), which handles cross-strait policy with its Chinese counterpart, China's Taiwan Affairs Office." Hsia has extensive administrative experience and policy-implementation capabilities," a statement on the website of Taiwan's executive branch said. "[He] will continue to promote the development of cross-strait relations." The former head of MAC, Wang Yu-chi, said last week he would resign in protest at a court ruling clearing a former deputy of leaking sensitive information to mainland China. Ma Xiaoguang, a spokesperson for the mainland's Taiwan Affairs Office, commented on the appointment by expressing hope for continued "positive interactions," according to the mainland Chinese state-run Xinhua News Agency. Hsia, who also used to be a deputy foreign minister, takes office as engagement between the two sides continues to increase, encompassing everything from finance to tourism. Cross-strait business ties have surged to their most extensive in six decades, supported by the policies of Taiwan's China-friendly president Ma Ying-jeou. Despite warming cross-strait relations, Taiwan's ruling Nationalist party took a major drubbing in recent local elections largely seen as a referendum on ties with China. This followed a weeks-long occupation of Taiwan's legislature last spring by students and activists in protest against a trade deal with China.” 

What is China’s Way?
“Michael Auslin, a scholar at the American Enterprise Institute in Washington, recently wrote a commentary titled “The Twilight of China’s Communist Party,” which was published in the Wall Street Journal. The author quoted “one of America’s most experienced China watchers” as saying “the CCP has entered its endgame” and added the claim that “No one contradicts his statement, instead there is general agreement.” This view actually touches upon a long-running discussion: Will China’s way of development lead to a dead end? Or will the ruling Chinese Communist Party (CCP) re-invigorate itself by continuing to blaze the trail of modernization that began in the late 1970s? Certainly China faces some big problems: CCP unity vs. factional divergences, economic miracles vs. widening wealth gap, social harmony vs. disruptive unrest. Former Chinese Premier Wen Jiabao once complained that ruling the Party was like sitting atop a volcano. More recently, dangerous cracks have begun to appear in the uppermost echelon of China’s political apparatus as President Xi Jinping’s anti-corruption drive has become ever tougher. So far, 180,000 cadres have been “disciplined,” yet that is just the tip of an iceberg of rampant corruption that has made the CCP’s legitimacy more vulnerable. Cynicism is at an all-time high and morale in officialdom never been lower. Wealth is being transferred offshore, along with spouses and children – a desperate move by culpable party and government officials to avoid the clutches of anti-graft investigators. Yet I firmly believe these shortcomings will not by themselves ring the death knell of the CCP nor trigger the collapse of the country’s so-called ‘’socialist system with Chinese characteristics.’’ My reasons are as follows.” 

Posted by Congressional China Caucus | February 13, 2015
America’s Dalai Lama Dilemma. “President Barack Obama’s first public appearance with the Dalai Lama , the spiritual leader of Buddhists around the world, made headlines on Feb. 5. While the setting was an ostensibly religious occasion, the National Prayer Breakfast, China was quick to take offense. “This action by the U.S. to ‘drive a nail’ into the hearts of the Chinese people is harmful to the political trust between the two countries,” opined the state-run Xinhua news agency. The paranoia stirred by the 79-year-old religious leader is remarkable. “A jackal in Buddhist monk’s robes and an evil spirit with a human face and the heart of a beast,” is how the former Party Chief of Tibet, Zhang Qingli, once described him. China’s ire stems from the belief the Dalai Lama is leading a campaign for Tibetan independence and actively working to undermine Chinese rule in Tibet. Such anger is misplaced. Far from encouraging violence, the Dalai Lama has served as a potentially irreplaceable check on the passions of frustrated—and potentially more militant—Tibetans now convinced that negotiations with China are a futile endeavor. Nearly four decades of on-again, off-again talks (including the latest round, which stretched from 2002 to 2010) have yielded little progress. The Dalai Lama has not shied away from criticizing Beijing, calling Tibet an “ancient nation that is dying and its people are in danger.” And he is unafraid of taking jabs at the Communist Party itself: “telling lies has unfortunately become part of their lives.” Yet the Dalai Lama also reiterates that he is “not seeking independence from the People’s Republic of China.” He has even signaled his readiness to accept China’s existing political system and constitution.” 

ith Eye on Japan, China Plans Big Military Parades Under Xi. “Chinese troops are rehearsing for a major parade in September where the People's Liberation Army (PLA) is expected to unveil new homegrown weapons in the first of a series of public displays of military might planned during President Xi Jinping's tenure, sources said. China will hold up to four PLA parades in the coming years in the face of what Beijing sees as a more assertive Japan under Prime Minister Shinzo Abe, who wants to ease the fetters imposed on Tokyo's defense policy by a post-war, pacifist constitution. The parades are also intended to show that Xi has full control over the armed forces amid a sweeping crackdown on military graft that has targeted top generals and caused some disquiet in the ranks, a source close to the Chinese leadership and a source with ties to the military told Reuters. As military chief, Xi will review the parades and be saluted by PLA commanders during events expected to be broadcast nationwide. "Military parades will be the 'new normal' during Xi's (two 5-year) terms," the source with leadership ties said, referring to the phrase "xin changtai" coined by Xi to temper economic growth expectations in China. The frequency of the parades would be a break from recent tradition. Xi's predecessors, Jiang Zemin and Hu Jintao, only held a military parade in 1999 and 2009 respectively to mark the founding of the People's Republic in 1949. The military parade to be held on Sept. 3 in Beijing would mark the 70th anniversary of the end of World War Two. It would be Xi's first since he took over as Communist Party and military chief in late 2012 and state president in early 2013.” 

U.S. Has Raised Concerns with China About New Cyber Rules: Official.
“The Obama administration sees planned new cybersecurity rules in China as a "major barrier" to trade and has raised concerns with Beijing at the highest level, a senior U.S. official said on Thursday. Deputy U.S. Trade Representative Robert Holleyman said the new regulations, which would force technology vendors to Chinese banks to hand over secret source code and adopt Chinese encryption algorithms, ran counter to Beijing's moves to open its markets and economy. "Our view is that it's a major barrier to trade," he said at an event on trade in services. "There's been engagement at the highest levels of the U.S. government and cabinet with Chinese counterparts asking for those (regulations) to be put on hold." China's Foreign Ministry spokeswoman Hua Chunying said China was committed to its policy of opening up to the outside world. "As long as foreign companies operating in China respect China's laws and harm neither the country's national interests nor consumers, we will protect their legitimate rights in accordance with the law," she said at a daily briefing. Holleyman said later it was "premature" to say whether the United States could challenge the rules at the World Trade Organization, but China had to consider its international commitments, including plans for an investment treaty with the United States. The rules are set to come into effect in mid-March.  "They have to look at their underlying needs but ensure but that when those are addressed (they) are not contrary to the type of trade commitment and liberalization of their market that they also want to achieve," he told reporters. Holleyman is the former head of BSA The Software Alliance, one of more than a dozen U.S. business groups which have complained directly to Beijing about the rules and appealed to Washington to help overturn them.” 

enry Kissinger and the China-North Korea Reality. “In World Order, Henry Kissinger offers his latest explanation of China’s unhelpful position on North Korea’s nuclear program. It is no more persuasive or intellectually satisfying than other defenses of Beijing’s behavior presented over the past two decades. As such, it continues to beg the question: What is China’s real game? Kissinger writes: “For China, North Korea embodies complex legacies.” The Korean War symbolized “China’s determination to end its ‘century of humiliation’ and ‘stand up’ on the world stage.” That experience also cautions Beijing against getting dragged into unwanted wars with unpredictable consequences. But then comes this statement, which would be a non sequitur even if it were accurate: “That is why China and the United States have taken parallel positions in the UN Security Council demanding that North Korea abandon – not curtail – its nuclear program.” While it is true that Beijing and Washington ended up voting for final versions of the three Security Council resolutions on Pyongyang’s nuclear project, it was only after China greatly watered down – some might say emasculated – the more vigorous condemnations and punitive actions the U.S. had proposed. Regarding the real work in the Council – the deliberations and crafting of the Resolutions – it is a bit of a stretch to call American and Chinese positions “parallel” rather than competing or even conflicting. The bottom line, as reported by the Arms Control Association, is a mere delay in Pyongyang’s march toward complete nuclear breakout: “To this date, UN Security Council resolutions have been largely unsuccessful in preventing North Korea from advancing its nuclear weapons and ballistic missile programs, although the sanctions have slowed development in these areas.” The resolutions have failed in their stated goal not only because they have been weak from the outset thanks to Beijing, but also because China has been reluctant to enforce even the limited sanctions they prescribe. Without real teeth, the resolutions have been little more than an annoying inconvenience to Pyongyang. Worse, they signal Kim Jong-un, as they did his father, Kim Jong-il, that China still has the North’s back in its nuclear weapons confrontation with the West.” 

The Caucus Brief is a daily publication for Members of Congress and Hill Staffers on China news and information compiled by the office of Congressman Randy Forbes, Founder of the Congressional China Caucus.  Email with tips, comments, or to subscribe/unsubscribe.
Posted by The Congressional China Caucus | February 12, 2015
Report: China’s Incomplete Transformation. “Media reports of China's new J-20 and J-31 stealth fighters, "carrier-killer" anti-ship ballistic missiles and anti-satellite weapons have unnerved many in the Pentagon. But a new report to be released on Wednesday by the US-China Economic and Security Review Commission (USCC), outlines the various Achilles' heels of the Chinese military, including opportunities the US military could exploit. Defense News got first rights, before its release, on reviewing the report, entitled, "China's Incomplete Military Transformation: Assessing the Weaknesses of the People's Liberation Army." Sponsored by the USCC and produced by the International Security and Defense Policy Center of the Rand National Security Research Division, the report is based on the premise that understanding where the People's Liberation Army (PLA) falls short of its aspirations, or has not fully recognized the need for improvement, is just as important as recognizing the PLA's strengths. The report looks at two critical shortcomings: institutional and combat capabilities. On institutional issues, the PLA faces shortcomings regarding outdated command structures, quality of personnel, professionalism and corruption. Combat weaknesses include logistical, insufficient strategic airlift capabilities, limited numbers of special-mission aircraft, and deficiencies in fleet air defense and anti-submarine warfare. "Although the PLA's capabilities have improved dramatically, its remaining weaknesses increase the risk of failure to successfully perform some of the missions Chinese Communist Party [CCP] leaders may task it to execute, such as in various Taiwan contingencies, maritime claim missions, sea line of communication protection, and some military operations other than war scenarios." The report sifted through over 300 Chinese-language articles from CCP publications, along with numerous books and studies, including important books on strategic missile forces issues, such as "The Science of Second Artillery Campaigns" by Yu Jixun.”

Chinese Military Weaknesses Revealed.
“China’s military made substantial strides in building modern armed forces but remains fundamentally weak due to problems with combat capabilities, Party controls, and corruption, according to a congressional study made public Wednesday. Chinese military gains over the past several decades are “impressive overall, and the [People’s Liberation Army] is clearly becoming an increasingly professional and capable fighting force,” states the report done for Congress’ bipartisan U.S.-China Economic and Security Review Commission. However, the report concludes, “we have found that the PLA suffers from potentially serious weaknesses. These shortcomings could limit its ability to successfully conduct the information-centric, integrated joint operations Chinese military strategists see as required to fight and win future wars.” The 201-page report, written for the commission by seven China experts at the Rand Corporation, stated that knowing Chinese military weaknesses will be valuable for deterring conflict or defeating China in a future war. Commission Vice Chairman Dennis Shea said the study is important because of its focus on PLA deficiencies and vulnerabilities. “The report’s coverage of the PLA’s organizational, combat, and industrial weaknesses is an excellent tool for our defense planners on Capitol Hill, in the administration, and within the wider defense community, as they seek to anticipate the future direction of China’s military modernization, tailor future U.S.-China military-to-military cooperation, and protect U.S. national interests at home and abroad,” Shea said. Major institutional weaknesses include poor command structures, low quality personnel, and corruption in the ranks. The central problem for PLA combat capability is an inability to conduct joint ground, air, and sea military operations, a key to conducting operations outside China’s land mass, the report said. The Chinese military also currently has problems integrating advanced weapons, and military personnel lack proper training for using and maintaining the arms, the report said. The weaknesses mean that despite new weapons systems, such as missiles, submarines, cyber warfare capabilities, and space weapons, “the PLA’s weaknesses increase the risk of failure to successfully perform some of the missions Chinese Communist Party leaders may task it to execute, such as in various Taiwan contingencies, maritime claim missions, sea line of communication protection, and some military operations other than war scenarios,” the report said.” 

Western Companies Slam China’s Internet Firewall. “
China’s growing restrictions on the Internet are harming the operations of Western businesses, stifling research and development operations and discouraging executives from moving here. The American and European Chambers of Commerce in China released separate surveys in the past two days showing that 83 and 86 percent of their members respectively believed that those restrictions – under a system known as China’s Great Firewall – were having a negative impact on their business operations. Four out of five European companies surveyed also reported that the business environment had deteriorated further since controls were tightened at the start of this year. In recent weeks, Gmail and some virtual private networks — the tools many people use to jump the firewall — have been blocked or restricted, as President Xi Jinping wages a concerted campaign to control the Internet, block criticism and prevent the infiltration of “Western values” he fears could undermine the Communist Party's rule. In a sharply worded statement, European Chamber President Joerg Wuttke said the measures could backfire on China. “These worrying trends illustrate how excessive tightening of Internet controls can choke business growth and stifle investment in technology and R&D – areas which are crucial for China’s development,” he said. “This is compounded by the fact that these measures are also discouraging much-needed foreign talent from relocating here. Restricted access to key Internet tools is not merely an unfortunate inconvenience for individuals – it is an increasingly onerous cost of doing business here that many companies are finding harder to bear.” Mark Duval, President of the American Chamber, AmCham China, said his conversations with members showed most were frustrated with the slow Internet speeds experienced in China, and their ability to transfer data and files quickly, rather than the blocking of specific sites.” 

China Confirms Pakistan Nuclear Projects. “A Chinese official publicly confirmed Monday that Beijing is involved in at least six nuclear power projects in Pakistan and is likely to export more to the country, media reports said. In a press conference in Beijing, Wang Xiaotao, the vice-minister of the National Development and Reform Commission, said China “has assisted in building six nuclear reactors in Pakistan with a total installed capacity of 3.4 million kilowatts.” Wang, who was unveiling plans for new guidelines for Chinese exports in the nuclear sector, also said that Beijing was keen to provide further exports to countries, which would presumably include Pakistan given previous reports and trends. The Sino-Pakistan nuclear link has been well-known even though some specifics are often shrouded in secrecy. This is reportedly the first time that a top official has publicly admitted to such a scale of China’s cooperation with Pakistan. Revelations about the growing Sino-Pakistan nuclear axis comes amid continuing concerns expressed by some that ongoing cooperation is occurring without the sanction of the Nuclear Suppliers Group (NSG) which helps supervise the export of global civilian nuclear technology. China is a member of the NSG and existing regulations prohibit members from exporting such technology nations like Pakistan which do not adopt full-scale safeguards. China declared the first two reactors it already agreed to construct for Pakistan – the Chashma-1 and Chashma 2 – at the time it joined the Nuclear Suppliers Group in 2004, with the expectation that no new deals would follow. But in 2010, the China National Nuclear Cooperation announced it would export technology for two new reactors, Chashma-3 and Chashma-4 because it argued – rather controversially – that these projects were already grandfathered in under previous agreements rather than being fresh proposals. News of other deals has since followed, including a November 2013 announcement that China would help build two reactors in Karachi and a January 2014 report about talks on three other reactors, which The Diplomat reported on here. Pakistani officials say this is part of broader plans to produce around 8,800 megawatts of electricity from nuclear power by 2030 and overcome crippling power shortages that plague the nation.” 
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