U.S. Accuses China Of Raising Tensions With Apparent Missile Deployment. David Brunnstrom and Ben Blanchard, Reuters. “The United States accused China on Thursday of raising tensions in the South China Sea by its apparent deployment of surface-to-air missiles on a disputed island. U.S. State Department spokesman John Kirby said commercial satellite imagery suggested "very recent" placement of missiles on Woody Island in the Paracel island chain that went against China's pledge not to militarize the South China Sea. "The Chinese have said one thing, and yet appear to be doing another," Kirby told a regular news briefing. "We see no indication that ... this militarization effort, has stopped. And it's doing nothing ... to make the situation there more stable and more secure. In fact, it's having quite the opposite effect." On Wednesday, U.S. Secretary of State John Kerry said the United States would have "very serious" talks with China about militarization of the South China Sea. China has offered little specific response to the missile deployment reports, which first appeared on Fox News on Tuesday, but has accused Western media of "hyping up" the story and said China had a legitimate right to military facilities on territory it views as its own. China claims most of the South China Sea, through which more than $5 trillion in global trade passes every year. Vietnam, Malaysia, Brunei, the Philippines and Taiwan have rival claims. Australian Foreign Minister Julie Bishop, the first senior Western official to visit China since the reports appeared, said she raised the issue of the South China Sea's militarization in talks in Beijing on Thursday. She told reporters after meeting China's top diplomat, State Councillor Yang Jiechi, that China had "challenged" the deployment report but had neither denied nor admitted the missiles were there. "So until such time as we have a clear picture of it, of course it's a matter of concern," she said. Bishop referred to comments by Chinese President Xi Jinping in Washington last year that China did not intend to militarize islands in the South China Sea, and added: "We certainly hold China to that and that's been reiterated to me." Yang explained that the islands in the South China Sea had been China's since ancient times and that "the limited defensive facilities that China has deployed on its own territory have nothing do with militarization," a Chinese statement said. Yang added that Australia should stick to its promise not to take sides and "not participate in or take any actions to harm regional peace and stability or Sino-Australia ties." On Friday, Chinese Foreign Ministry spokesman Hong Lei said China was not militarizing the Spratly Islands and criticized U.S. air and naval patrols in the region. "These actions have increased tensions in the South China Sea and constitute the militarization of the South China Sea," Hong told a regular briefing, when asked about Kirby's remarks. The United States claims no territory in the South China Sea but has expressed serious concerns about how China's increasingly assertive pursuit of territorial claims there could affect the vital global trade routes that pass through it. Beijing has been angered by air and sea patrols the United States has conducted near islands China claims in the South China Sea. Those have included one by two B-52 strategic bombers in November and by a U.S. Navy destroyer that sailed within 12 nautical miles of Triton Island in the Paracels last month. An influential Chinese state-run tabloid, the Global Times, said in an editorial on Thursday that China needed to strengthen its "self-defense" in the South China Sea in the face of "more frequent provocations from the U.S. military." "Jet fighters from the United States, an outside country, may feel uneasy when making provocative flights in the region. To us, that's a proper result," it said of the reported missile deployment.” http://www.reuters.com/article/us-southchinasea-china-idUSKCN0VR0OG

U.S. Wants Expanded Naval Protocol Amid China’s South China Sea Assertiveness. Prashanth Parameswaran, The Diplomat. “The United States is pursuing the expansion of a key naval protocol amid China’s growing assertiveness in the South China Sea, a senior naval commander said this week. While key navies had negotiated a series of protocols in 2014 at the Western Pacific Naval Symposium called the Code for Unplanned Encounters at Sea (CUES) for the safety of naval vessels meeting at sea, some have questioned CUES’ utility since confrontations in the South China Sea have involved non-military vessels. In particular, China has been employing new, large coast guard ships – painted white rather than the Navy grey – while many smaller ships are being manned by militia organized by Beijing. On Monday, in recognition of this problem, Vice Admiral Joseph Aucoin, the commander of the Japan-based U.S. Seventh Fleet, said in Singapore that expanding CUES to cover non-military ships would be a wise move. Speaking to reporters on the sidelines of the Singapore Airshow, the region’s largest event of its kind, Aucoin added that he was asking the U.S. Coast Guard to be more involved in helping with these operations. “We’ve done a lot with CUES to address combatant-to-combatant [encounters] so there’s no miscalculation,” Aucoin said according to DefenseNews. “But I have a greater fear that some of these others, Coast Guard — what we refer to as ‘white shipping’ — cabbage ships [local cargo ships], I’m not sure about their professionalism. I think that having a code of conduct to cover that would be a good thing. That definitely is a concern of mine.” “I’m asking our Coast Guard to become more involved to help us with these types of operations,” Aucoin added, “because it’s not simply grey hulls anymore.” The idea of expanding CUES is not a new one. As I have written previously, U.S. and Asian defense officials as well as analysts have been calling for this both privately and increasingly publicly as well. But Aucoin’s remarks come amid growing fears about Chinese militarization of disputed South China Sea islands. Soon after he had made his comments, reports surfaced that Beijing had deployed two batteries of surface-to-air missiles (SAMs) and a radar system on Woody Island, the largest of the Paracel Islands. In response, Admiral Harry Harris, the current commander of the U.S. Pacific Fleet (PACOM), said that the deployment was of great concern since it would constitute “a clear indication” of the militarization of the South China Sea, despite Beijing’s denials. During his visit to the United States last year, Chinese president Xi Jinping had pledged not to militarize the islands.” http://thediplomat.com/2016/02/us-wants-expanded-naval-protocol-amid-chinas-south-china-sea-assertiveness/

Australia Under Pressure To Respond As Tensions Rise In South China Sea. Lisa Murray, Australian Financial Review. “Australia is under increasing pressure to conduct a sail-through mission in the South China Sea following reports China has positioned surface-to-air missile launchers on one of the contested islands. The United States has been conducting so-called "freedom-of-navigation" operations through the important shipping lane to push back against China's rapid construction of ports, storage facilities and even some air strips on top of contested reefs. So far, Australia has said it supports these operations but has not taken any high-profile action of its own. Satellite images released this week appear to show China has deployed two batteries of eight missile launchers and a radar system to Woody Island in the Paracels, an island chain that is also claimed by Taiwan and Vietnam. Taiwan's government confirmed the reports while the New York Times, citing an unnamed US official, reported that the Pentagon had evidence of the deployment. "It's the most provocative step taken by China so far," said Peter Jennings, the executive director of the Australia Strategic Policy Institute. "This raises the stakes for strategic competition in the region." "Washington will have a very serious set of conversations about what this means for its expectations of friends and allies," the Canberra-based defence expert said. Mr. Jennings noted the weapon system reportedly deployed by China was only a generation behind that used to shoot down a Malaysian Airlines flight over eastern Ukraine in July, 2014. However, China has refused to confirm or deny the reports insisting only that it has the right to defend its sovereignty and Foreign Minister Julie Bishop, who has been in Beijing for a two-day visit, said she would wait until the claims had been verified. "It is a contested claim," she told reporters in Beijing, adding that China hadn't acknowledged the missiles were there. "Australia is keen to understand precisely what China's intentions are in relation to the South China Sea," Ms Bishop said. "Any militarisation of the islands would be of serious concern but the report is in dispute." Chinese commentators and experts have accused Washington of inflaming the situation.  "We wouldn't make this defensive move if the US hadn't sent its bombers flying above our islands," said Liu Qing, from the China Institute of International Studies, a think-tank linked to the Foreign Ministry. Mr Liu, who has recently returned to Beijing from Canberra, where he worked as a diplomat, said the Australian government should play a mediating role. "Facing these aggressive moves from the US, Australia should advise Washington to ease tensions instead of pouring fuel on the fire as it is not helpful to maintaining peace and security in the region." The hawkish state-owned newspaper The Global Times said in an editorial the US, "an outsider", was directly responsible for militarisation of the region. It said the US was advocating for allies, Japan and Australia, "to join its military navigation." "Once the US repeatedly sends warships to make provocations at Chinese islands and threatens the security of Chinese people and facilities on the islands, more military equipment should be deployed to counter US provocations," the editorial said. The South China Sea is subject to a complicated web of territorial disputes involving China, the Philippines, Vietnam, Malaysia, Brunei and Taiwan. Australia has said repeatedly it doesn't take sides but advocates for the disputes to be resolved peacefully. Rebecca Fabrizi, a researcher at the Australian National University who specialises in Chinese foreign policy is not convinced high-profile "freedom of navigation" operations are the right policy option for Canberra. "We need to get China back to the negotiating table with the other rival claimants," she said.” http://www.afr.com/news/world/australia-under-pressure-to-respond-as-tensions-rise-in-south-china-sea-20160218-gmxbw0#ixzz40bJXCeQG

PLA On Cyberwarfare Buildup. Bill Gertz, The Washington Times. “A Chinese military official revealed last month that Beijing plans to rapidly build a new People’s Liberation Army cyberwarfare force in response to U.S. military cyberforces. Col. Li Minghai of the PLA’s National Defense University wrote in the Communist Party-affiliated Global Times newspaper that a new cyberwarfare force is needed to counter the United States as the Pentagon is building up its cyberattack capabilities. “It is more necessary for us to build a brand new ‘operation force,’” said Col. Li, identified as deputy director of the NDU’s Center for Cyberspace Security. As a sign of the sensitivity of the report, Chinese censors quickly removed the posting in Chinese from the Global Times website shortly after it appeared Jan. 21. Col. Li is one of China’s most senior cyberwarfare specialists, and his remarks provide some of the first clues to Beijing’s military priorities in future cyberwarfare operations. Military cyberoperations are among China’s most closely guarded secrets. The 3rd Department of the PLA general staff, known as 3PLA, is China’s main military cyberwarfare force and is said to have up to 100,000 cyberwarriors. A copy of the colonel’s translated article was obtained by Inside the Ring. Col. Li stated that the U.S. military’s cybersecurity strategy for the past four years has emphasized offensive electronic attacks on information systems and regards China as “one of the greatest threats to the United States’ cybersecurity.” Noting that current cyberthreats to China are “not sensational or alarmist talk,” Col. Li said reforms to PLA cyberforces should not be limited to “tinkering,” but require “the rebuilding of a new-breed cyberforce in our country.” “We should apply the brand-new development model in the information age to remold our cyberwarfare preparedness against the threat of the United States’ new cyberstrategy and guarantee our nation’s cybersecurity,” he said. A key feature will be what is described as a “winning mechanism” for warfare in the cyberspace domain. “In the 21st century, seizing control of cyberspace is of decisive significance, like seizing control of the sea in the 19th century and seizing control of the air in the 20th century,” Col. Li wrote. “Cyberoperations in the future will follow the new battlefield rules determined by the winning mechanisms of ‘real-time sensing, sensitive response, source destruction and chain cutoff, joint winning.’” Also, cyberpower must be combined with conventional military power “with winning being based on information power.” Cyberwarfare troops will target information technology infrastructure networks like the Internet, telecommunications systems and computer systems, including imbedded processors and controllers in major sectors. A third priority for the cyberwarfare force will be adding more trained military hackers. “At present, our country still lacks high-end specialists with both knowledge about network technology and knowledge about military command, so it is imperative that we step up the efforts for building the cyberoperation force,” Col. Li concluded. Publication of the report coincided with China’s creation of a Strategic Support Force, announced Dec. 31, that will include dedicated cyberwarfare forces, along with space warfare units. Cybersecurity expert Joe McReynolds disclosed last year that China’s cyberwarfare forces were outlined for the first time in a Chinese military paper. The PLA cyberwar force has three elements, including a cadre of dedicated military specialists devoted to network warfare that conduct cyberattacks and defense, Mr. McReynolds told The Daily Beast. Other forces include teams of specialists working in civilian intelligence, police and security organs who conduct military cyberoperations. Last are units outside government that will be mobilized for network warfare.” http://www.washingtontimes.com/news/2016/feb/17/inside-the-ring-china-plans-cyberwarfare-force-to-/?page=all#pagebreak

Seeing The Forest Through The SAMs On Woody Island. Michael Green, Bonnie Glaser, Zack Cooper, CSIS Asia Maritime Transparency Initiative. “The recent deployment of Chinese surface-to-air missiles (SAMs) to Woody Island is a notable tactical development, but a far more significant strategic signal. Tactically, the HQ-9 batteries deployed to Woody Island could target aircraft at ranges up to 125 miles (200 kilometers), covering much of the Paracel Islands, which are also claimed by Vietnam and Taiwan. Such air defenses are a core element of the People’s Liberation Army’s (PLA) anti-access umbrella. China is rumored to have previously placed less-advanced defensive systems in the Paracels, and Vietnam on some of the Spratly Islands. However, imagery showing Chinese SAMs on disputed islands depicts a noteworthy step in the militarization of the Paracels because it shows the extension of China’s anti-access umbrella south from the mainland into the South China Sea. On the other hand, Woody Island has long been prepared for air defenses using its 8,900 foot (2,700 meter) airstrip, radars, and aircraft shelters. PLA fighter aircraft flying from Woody Island would have a far greater range than the HQ-9 system. Moreover, fighter aircraft could challenge the freedom of overflight by foreign aircraft operating near the Paracels without resorting to actual combat. Mobile SAM systems are certainly less vulnerable than airstrips, but their deployment to Woody Island does not fundamentally alter the regional military balance. Nevertheless, the placement of SAMs at Woody Island is a noteworthy strategic development for two reasons. First, it shows that Chinese leaders are militarizing South China Sea features despite efforts to convince Beijing to do otherwise. Second, recent history suggests that Chinese developments on disputed features in the Spratly Islands often mimic those on Woody Island, indicating that similar steps may be ahead in the more strategically important Spratlys. In recent years, U.S. leaders have repeatedly called for a halt to “reclamation, construction, and militarization” in the South China Sea. Yet Chinese officials have responded that “China has the legitimate and legal rights to deploy defense facilities within its territory.” In September 2015, President Xi Jinping went so far as to state that China did “not intend to pursue militarization” in the Spratly Islands. However, as previous AMTI imagery has shown, China has continued reclamation, construction, and militarization at a variety of South China Sea features. What additional steps might one expect to see in the months ahead? Woody Island has served as a model for Chinese development in the Spratly Islands, particularly at Fiery Cross, Mischief, and Subi reefs. The placement of SAMs at Woody Island suggests that surface-to-air systems may follow on these three reefs as well. Other steps might include hardened aircraft shelters and more advanced radar systems with longer ranges and over-the-horizon capabilities. Additionally, observers might expect to see routine rotations of aircraft, anti-ship cruise missile batteries, surface ships, and submarines through Chinese-held features in the South China Sea. To further assert China’s sovereignty claim, Beijing may also establish territorial baselines around the Spratlys similar to those it created in the Paracels in 1996. Chinese actions suggest that its leaders are intent on providing the islands with both an anti-access umbrella and a power projection capability. Chinese features would certainly be vulnerable in a conflict, but they would provide a substantial edge over other regional claimants during a crisis and would present an additional military challenge to U.S. forces, which would already be stretched thin in a contingency. Such efforts would also help China enforce a South China Sea Air Defense Identification Zone in the months or years ahead. Thus, the tactical importance of the deployment of SAMs to Woody Island pales in comparison to the signal the deployment sends about China’s long-term strategy in the South China Sea.” http://amti.csis.org/seeing-the-forest-through-the-sams-on-woody-island/

Sunnylands And America’s Pivot To ASEAN. Richard Javad Heydarian, CSIS Asia Maritime Transparency Initiative. “China may be gaining the strategic upper-hand in the ongoing scramble in the South China Sea thanks to its newly-built artificial islands, but it is facing increasing backlash in the region. Neighboring states as well as external powers have stepped up their diplomatic pressure on Beijing, while coordinating their efforts at safeguarding freedom of navigation in the area. Crucially, the Philippine Supreme Court last month cleared the main obstacle to the implementation of the Enhanced Defense Cooperation Agreement (EDCA), allowing the United States to augment its military footprint in the Philippines. Beijing’s relentless pursuit of its claims is undermining relations with a host of countries, which have come to welcome a greater U.S. military footprint in the Asia Pacific. The region is gradually witnessing the start of what the late Gerald Segal characterized as a “constrainment” strategy – a calibrated push against perceived manifestations of Chinese revanchism. In particular, President Barack Obama’s February 15-16 summit with leaders of the Association of Southeast Asian Nations (ASEAN) at the Sunnylands resort in California represents a crucial opportunity to strengthen U.S. regional leadership and mobilize greater multilateral pressure on China. For years, a combination of fear, economic dependence, and (primarily U.S.) strategic ambivalence provided China carte blanche to dictate the trajectory of the South China Sea disputes. But Beijing’s massive reclamation activities across the Spratly Islands have shaken the region out of strategic stupor, prompting increasingly robust countermeasures by other regional players. The final months of 2015 saw a diplomatically isolated China that had to grapple with a seemingly coordinated diplomatic pushback. During the November 2015 Asia-Pacific Economic Cooperation summit in Manila, Xi stubbornly rejected any discussion of the South China Sea disputes. But China’s reclamation activities were very much at the center of bilateral discussions between the Philippines and other countries, including the United States, Japan, Australia, and Vietnam. Shortly after arriving in the Philippines, Obama made a highly symbolic visit to the Philippine Navy’s flagship, the BRP Gregorio del Pilar, which was at the heart of the Sino-Philippine standoff over Scarborough Shoal in 2012. Obama reiterated America’s “ironclad commitment” to its Southeast Asian ally. Vietnam signed a new strategic partnership agreement with the Philippines, with a focus on maritime security cooperation, while Japan signed a strategic agreement that allows for the transfer of military hardware to the Philippines. Other countries such as South Korea and Russia also discussed expanding defense ties with the Philippines. During the ASEAN and East Asia Summit meetings later that month, the Philippines along with a number of major powers reiterated their growing worries over China’s reclamation activities and their implications for freedom of navigation and overflight in the region. Despite China’s vehement opposition to any discussion of the disputes, the ASEAN foreign ministers renewed their advocacy for a legally-binding code of conduct in the South China Sea. With the Philippines expecting a favorable verdict in its arbitration case against China in the coming months, there are discussions of a potential “legal multiplier” as neighboring countries such as Vietnam and Indonesia also threaten similar suits against China. Crucially, the United States has joined the fray by conducting freedom of navigation operations (FONOPs) within the territorial sea of Chinese-occupied features. Key ally Australia has stepped up maritime patrols in the area, reiterating Canberra’s concerns over threats to freedom of navigation. Thanks to last year’s passage of a controversial collective security bill, the Japan Maritime Self-Defense Forces could also soon play a crucial role in asserting freedom of navigation in the area. The U.S.-Philippines EDCA will facilitate the expansion of bilateral military exercises and enhance interoperability between the two countries’ armed forces, which are also contemplating joint patrols in the Spratlys.” http://amti.csis.org/sunnylands-and-americas-pivot-to-asean/

THAAD More Useful As Stick Against China Than North Korean Missiles. Raoul Heinrichs, The Lowy Interpreter (Australia). “Tensions are once more running high on the Korean Peninsula. Yet again, North Korean provocations have triggered an action-reaction cycle that is bringing into sharp relief the competing interests of each of the major players on the Peninsula. In the latest case, a fourth North Korean nuclear test in January, followed by the launch last week of a satellite aboard what is effectively an intercontinental range ballistic missile, has provided the impetus for Seoul to enter immediately into discussions with Washington about expediting the deployment of a sophisticated ballistic missile defence (BMD) system known as Terminal High-Altitude Area Defence (THAAD). China, for its part, strongly opposes the deployment. Politically, such a development is an affront to China's prestige and its increasing sense of its role as the principal arbiter of security on the Korean Peninsula. More practically, Beijing is concerned that the placement of THAAD on the Peninsula, in particular the system's sophisticated X-Band radar, would provide radar coverage over much of China itself. This could be used by the U.S. to complicate China's own strategic planning, especially when integrated with other BMD systems across the region. Such misgivings are not altogether unfounded. On the surface, upgrading South Korea's BMD system seems like a natural policy response in the face of a missile threat that appears to be increasing in size and improving in quality. And yet a closer look at the technical specifications of THAAD and the geographic features of the Korean Peninsula, which impose tight constraints on the kinds of missiles able to be employed by both attacker and defender, reveals a system quite unsuited to most realistic defensive contingencies in South Korea. South Korea is a relatively small area. Seoul, home to more than a quarter of the population, lies only about 40km from the North Korean border. THAAD, meanwhile, is designed for high-altitude intercepts on either side of the earth's atmosphere, meaning that it is optimised mostly to defend against medium- and intermediate-range ballistic missiles. Here's the dilemma: the North Korean missiles which THAAD is best suited to defend against are unlikely to be used against South Korea; at the same time, THAAD would be of little or no use against the short and tactical-range ballistic missiles most likely to be employed against the South, particularly against the strategically valuable areas of Seoul and its environs. This dynamic is illustrated most starkly in relation to the threat posed by North Korea's long-range missiles (including the kind launched last week). It was this threat, after all, which has ironically catalysed the decision in Seoul to accede to the deployment. North Korea's long-range missiles are completely unsuited for use against South Korea; just as THAAD is manifestly incapable of dealing with intercontinental-range missiles. The Korean Peninsula is only 1100km long, whereas ICBMs have a range in excess of 5500kms. For Pyongyang, this would make less sense than Qantas buying A380s to service the route between Canberra and Sydney. Moreover, such missiles are expensive, incredibly difficult to produce, and available to North Korea only in very small numbers. They are, consequently, not for use 'in-theatre', but rather need to be understood as the backbone of North Korea's emergent nuclear deterrent against the U.S. Indeed, even if such a missile targeted at the U.S. was to be intercepted from South Korea, it would need to occur within about one minute, while the missile was in its boost phase. To date, no BMD system has that capacity, least of all THAAD, which is designed for high altitude intercept in a missile's terminal phase. A more compelling case may be made for the deployment of THAAD to defend the more sparsely inhabited southern reaches of South Korea against North Korean medium-range ballistic missiles. But even here the costs to U.S. taxpayers, at almost U.S. $1 billion per battery, are set unfavourably against other cheaper, more available options – especially given the relatively low value of this area as a North Korean target. Given the limited practical utility of THAAD for inter-Korean contingencies, then, why is it now being discussed with such vigour? In one sense, as Rod Lyon points out, this discussion reflects the paucity of meaningful options available to Washington and Seoul in dealing with the North Korean threat. Absent any good option, Washington feels obligated to make a largely symbolic act in order to be seen to 'do something' to reassure its allies. Seoul, cognisant of THAAD's limited usefulness but eager to reassure the South Korean people, has little choice but to settle for this. The other explanations relate to China. As Beijing suspects, Washington is most likely taking advantage of North Korean bellicosity to create a useful pretext to begin deploying sensors along China's periphery. While THAAD isn't likely to be much use in North Korean contingencies, it would be better suited to blunting limited Chinese missile attacks, which would necessarily be launched from further afield. Perhaps more importantly, its radar system could also be used to complicate Chinese plans elsewhere in East Asia. For both Seoul and Washington, there is a certain coercive logic that underpins this strategy. Each of them, at various times, have sought to outsource the North Korean problem to China. Each has made significant concessions to Beijing in the tacit expectation that China would use its presumed leverage to inhibit Pyongyang . And each time, those hopes have been dashed by a new round of North Korean provocations, followed by Chinese diplomatic soft-peddling. Having tried the carrot with Beijing and failed, they are now trying the stick in the form of an X-band radar.” http://www.lowyinterpreter.org/post/2016/02/17/THAAD-more-useful-as-stick-against-China-than-North-Korean-missiles.aspx

China’s Africa Dream Isn’t Dead. Huang Hongxiang, Zander Rounds, Xianshuang Zhang, Foreign Policy. “Jeff Kiarie was guarding a Chinese mine back in early 2014 near Arusha, Tanzania when Chinese managers and investors picked up and left, leaving their excavators, tractors, and wheel loaders behind, offering no explanation. “They couldn’t just leave so many machines here,” Kiarie, the lone Tanzanian now guarding thousands of tons of Chinese mining equipment, says he reasoned. But that’s exactly what seems to have happened; Kiarie’s mine remains abandoned, and other Chinese operations on the African continent seem to be in peril. For years, Western media has covered Chinese trade and investment with the continent somewhat breathlessly; a November 2006 New York Times report declared that Chinese development “looks more like Africa’s future than its past,” and a February 2011 article for the BBC proclaimed that “the Chinese are coming” to Africa. Now, with the recent drop in Chinese investment and trade with the continent, it might seem appropriate to declare that the Chinese are going. But as some are leaving, others are innovating, exploring, and digging in.Since the turn of the 21st century, Chinese state-owned and private enterprises have poured into African countries, seeking natural resources, new markets, and other business opportunities. China’s trade with the continent has skyrocketed; in 2009, China surpassed the United States to become Africa’s largest trading partner, and by 2014 flows exceeded U.S. trade with the continent by more than $120 billion. These trends coincided with an explosion in optimism about Africa’s economic growth prospects.But now with the slowdown in China’s economic growth — its GDP expanded 6.9 percent in 2015, down from 7.3 percent in 2014 and the lowest growth rate China has seen in 25 years — things are changing. China’s customs office recently reported that African exports to China in 2015 fell 38 percent from 2014. In November 2015, China’s Ministry of Commerce announced a 40 percent year-on-year plunge in investment to the continent, what the state-run English-language China Daily called a “collapse.” As the jumbo jet that is China’s economy slows — or worse, perhaps heads for a hard landing — some analysts believe the outlook for the African continent is bleak. South Africa’s plunging currency, the rand, is one recent manifestation of more pain to come.In September and October 2015, as part of our work at China House, a Chinese-led social business which focuses on China-Africa issues, we spoke with investors, managers, employees, and wanderers of Chinese origin across several eastern and southern African nations including Kenya, Mozambique, Tanzania, and Zambia. What those people observed provides a mix of optimism and pessimism for Africa’s future. On one hand, as China’s previously insatiable appetite for oil, metals, and minerals wanes, African economies dependent on the export of commodities are hurting. The pain is evident in Tanzania’s once-booming copper mines. Tom Opila, the owner of a variety of mining concessions near the massive inland Lake Tanganyika bordering Tanzania, described how the international price of copper soared in 2010, spurring Chinese arrivals and a frenzy of investor activity. Opila jumped on the opportunity, jointly launching his first copper mining development project with a Chinese firm. Other Tanzanian businesspeople soon also set up investment projects to attract Chinese finance. But now, after shifts in the international market for copper and a series of fraud and quality issues at Chinese firms, the action has ground to a halt. “Later on they did not come any more, ” Opila muttered. The phenomenon extends beyond the copper belts. We caught up with Zhang, a manager at a timber company, at his office just outside Lusaka, Zambia. (Zhang did not wish to give his full name because of perceived risks to his business.) Gazing out over haphazard stacks of rosewood logs, a commodity used primarily for furniture manufacturing in China that sells for between $1,500 to $15,000 per cubic meter — high-end specimens once sold for as much as $1.5 million per cubic meter — Zhang reminisced. “A few years ago, because of the economic boom, the demand for rosewood was very high,” he said. “And the price was very high.” High enough that it was still worth investing despite an onerous export regulation regime. “In a single month we used to export several containers…” Zhang trailed off, his silence preempting follow-up questions. A thousand miles east, in Pemba, Mozambique, Liu — another Chinese national exporting timber who like Zhang did not want to give his full name — faced other problems on top of slowing demand. Suitable timber resources have become scarcer. “Now we have to go very far to find suitable trees to cut,” he said. As a result, “many companies have started to retreat or change [their] business,” pivoting away from traditional operations towards new business models and even new industries. As resource-driven business has become less lucrative, some Chinese investors and traders are indeed leaving Africa.But not all are going. Opila and many other Tanzanians we met remain optimistic about the future, insisting the disappearance of Chinese investors and firms is temporary. A May 2015 press release from China’s Ministry of Commerce noted, “Despite the slowdown, positive progress has been made recently in a number of major investment projects in Africa. It is expected that investment growth will pick up again in the future.” Indeed, while new investment is down, many existing projects in Africa continue to operate and have long-term effects. And some of those we interviewed view low commodity prices as an opportunity.” http://foreignpolicy.com/2016/02/18/africa-kenya-tanzania-china-business-economy-gdp-slowing-investment-chinese/

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 alex.gray@mail.house.gov with tips, comments, or to subscribe/unsubscribe.