Neutering & Defanging Chinese Threat (09-08-2014)

[SSridhar]

Australian military plane flies over disputed South China Sea - AFP

An Australian military surveillance plane has flown near disputed areas of the South China Sea, it emerged on Wednesday, with the crew heard warning China's navy it was on a freedom of navigation mission.

Tensions in the region have mounted since China transformed reefs in the South China Sea into small islands capable of supporting military facilities, a move the United States says threatens free passage in an area through which one-third of the world's oil passes.

In October, Washington infuriated Beijing when the USS Lassen guided missile destroyer sailed within 12 nautical miles of at least one land formation claimed by China in the disputed Spratly Islands chain.

Now a Royal Australian Air Force patrol plane has carried out patrols in air space around the area.

"A Royal Australian Air Force AP-3C Orion was conducting a routine maritime patrol in the region as part of Operation Gateway from November 25 to December 4," a defence department spokesperson told AFP.

"Under Operation Gateway, the Australian Defence Force conducts routine maritime surveillance patrols in the North Indian Ocean and South China Sea as a part of Australia's enduring contribution to the preservation of regional security and stability in Southeast Asia."

The comments follow audio released by the BBC late Tuesday after a reporting assignment in the Spratly archipelago.

In the scratchy radio recording, an RAAF pilot is heard speaking to the Chinese navy.

"China navy, China navy," the voice said.

"We are an Australian aircraft exercising international freedom of navigation rights in international airspace in accordance with the international civil aviation convention and the United Nations Convention on the Law of the Sea — over."

The BBC said it recorded the audio from a RAAF AP-3C Orion aircraft on November 25. It said the message was repeated several times but no response was heard from the Chinese.

The Australian newspaper said it understood that the aircraft did not fly within the 12-nautical-mile limit China claims around the artificial islands it has built up.

The BBC had hired a small plane and taken off from the Philippines, which also claims some of the scattered atolls and reefs in the region, to film Chinese claimed land and construction and see whether they were challenged.

It said they were warned several times, with radio communication from the Chinese navy telling them "you are threatening the security of our station".

[Philip]

The best way to deal with China.Strengthen the forces of its enemies!

http://www.telegraph.co.uk/news/worldne ... sales.html

China summons US envoy over $1.8bn Taiwan arms deal
Beijing threatens sanctions as Washington agrees to sell two frigates, amphibious assault vehicles and missiles to island nation

As China launches aircraft carrier, Taiwan presents 'aircraft carrier killer'
Taiwan's Hsiung Feng III missile is unveiled against the backdrop of a billboard depicting a missile-riddled aircraft carrier Photo: AP

By Agencies
3:31AM GMT 17 Dec 2015

China is threatening sanctions against companies involved in the American government's $1.83 billion sale of navy frigates and other military equipment to Taiwan.

The threat was included in a formal protest delivered late on Wednesday by Zheng Zeguang, vice foreign minister, to Kaye Lee, the charge d'affaires and Washington's second-highest ranking diplomat in Beijing.

A statement from the foreign ministry said Mr Zheng issued a formal diplomatic protest and said the arms sales severely harmed China's sovereignty and security interests.

Mr Zheng said China would take all necessary measures to defend its national interests, including sanctioning the arms firms involved in the sale.

Taiwan President Ma Ying-jeou and Chinese President Xi Jinping Taiwan President Ma Ying-jeou and Chinese President Xi Jinping Photo: Reuters

China considers Taiwan a part of Chinese territory to be eventually unified with, by force if necessary. It has stridently protests all arms sales to the self-governing island, as well as threatened firms involved.

The US State Department said Wednesday it intended to sell Taipei two Perry-class Frigates, Javelin anti-tank missiles, TOW 2B anti-tank missiles, AAV-7 Amphibious Assault Vehicles and a range of other military equipment.

The US recognises China rather than Taiwan, but remains a main ally and leading arms supplier to the island, providing a source of continued tension with Beijing.

The USS Lassen is anchored in Yokosuka near Tokyo (file Picture)The USS Lassen is anchored in Yokosuka near Tokyo (file Picture) Photo: AP

Washington angered Beijing in October when a US warship sailed close to artificial islets that China is building out into military bases in the South China Sea.

Washington has said China's transformation of the geographical features in the Spratly Islands poses a threat to freedom of navigation in the critical area.

[TSJones]

Yikes! Say it ain't so!

http://spacenews.com/chinas-next-gen-ca ... and-orion/

China’s Future Space Capsule Looks a lot Like CST-100 and Orion -

[member_19686]

Business | Fri Dec 18, 2015 3:10am EST
Vietnam builds military muscle to face China
XUAN MAI, VIETNAM | BY GREG TORODE

Vietnam's military is steeling itself for conflict with China as it accelerates a decade-long modernization drive, Hanoi's biggest arms buildup since the height of the Vietnam War.

The ruling Communist Party's goal is to deter its giant northern neighbor as tensions rise over the disputed South China Sea, and if that fails, to be able to defend itself on all fronts, senior officers and people close to them told Reuters.

Vietnam's strategy has moved beyond contingency planning. Key units have been placed on "high combat readiness" - an alert posture to fend off a sudden attack - including its elite Division 308, which guards the mountainous north.

The two countries fought a bloody border war in 1979. The likely flashpoint this time is in the South China Sea, where they have rival claims in the Spratly and Paracel archipelagos.

"We don't want to have a conflict with China and we must put faith in our policy of diplomacy," one senior Vietnamese government official, who spoke on condition of anonymity, told Reuters. "But we know we must be ready for the worst."

Most significantly, Hanoi is creating a naval deterrent largely from scratch with the purchase of six advanced Kilo-class submarines from Russia.

In recent months, the first of those submarines have started patrolling the South China Sea, Vietnamese and foreign military officials said, the first confirmation the vessels have been in the strategic waterway.

DIVISION 308

Militarily, the tensions are palpable northwest of Hanoi at the headquarters of Division 308, Vietnam's most elite military unit, where senior army officers talk repeatedly about "high combat readiness".

The phrase is on billboards beneath images of missiles and portraits of Vietnam's late revolutionary founder, Ho Chi Minh, and its legendary military hero, General Vo Nguyen Giap.

Perched between Vietnam's craggy northern mountains and the ancient rice paddies of the Red River Delta, 308 is Vietnam's oldest division and still effectively guards the northern approaches to Hanoi.

Reflecting deep-set official sensibilities toward offending Beijing, one senior officer, Colonel Le Van Hai, said he could not talk about China. But Vietnam was ready to repel any foreign force, he told Reuters during a rare visit by a foreign reporter.

"Combat readiness is the top priority of the division, of the Ministry of Defense and the country. We can deal with any sudden or unexpected situation ... We are ready," he said.

"High combat readiness", along with references to the "new situation", increasingly feature in lectures by senior officers during visits to military bases and in publications of the People's Army of Vietnam. The phrases also surface in talks with foreign military delegations, diplomats said.

"When Vietnam refers to the 'new situation', they are using coded language to refer to the rising likelihood of an armed confrontation or clash with China, particularly in the South China Sea," said Carl Thayer, a professor at Australia's Defense Force Academy in Canberra who has studied Vietnam's military since the late 1960s.

While ramping up combat readiness, Hanoi's once-reclusive generals are reaching out to a broad range of strategic partners. Russia and India are the main source of advanced weapons, training and intelligence cooperation. Hanoi is also building ties with the United States and its Japanese, Australian and Filipino allies, as well as Europe and Israel.

The outreach covers weapons purchases, ship visits and intelligence sharing but will have its limits. Hanoi shuns formal military alliances under a staunchly independent foreign policy.

Vietnam is seeking more Russian jet fighter-bombers and is in talks with European and U.S. arms manufacturers to buy fighter and maritime patrol planes and unarmed surveillance drones, sources have told Reuters. It has also recently upgraded and expanded air defenses, including obtaining early warning surveillance radars from Israel and advanced S-300 surface-to-air missile batteries from Russia.

Indeed, increases in Vietnam's military spending have outstripped its South East Asian neighbors over the last decade, according to estimates by the Stockholm International Peace Research Institute (SIPRI).

"They are not doing this for national day parades ... they are building real military capabilities," said Tim Huxley, a regional security expert at the International Institute of Strategic Studies in Singapore.

Vietnam's foreign ministry said in a statement to Reuters that modernizing the military was standard procedure for all nations.

"The relationship between Vietnam and China is maintaining a positive development trend in all fields, including the defense sector," the statement said.

OIL RIG FLASHPOINT

While communist parties rule both Vietnam and China and share political bonds, the two countries have a history marked by armed conflict and long periods of lingering mistrust.

Fresh academic research has revealed how the Sino-Vietnamese war in 1979 was more intense than is widely known, rumbling on into the mid-1980s. The two sides then clashed at sea in 1988 when China occupied its first holdings in the Spratly archipelago of the South China Sea - a defeat still acutely felt in Hanoi.

China also took full control of another South China Sea island chain, the Paracels, after a naval showdown with then South Vietnam in 1974. Hanoi still protests China's occupation.

More recently, China's placement of an oil rig in disputed waters for 10 weeks in the middle of last year sparked anti-Chinese riots across Vietnam.

The rig's placement on Vietnam's continental shelf 80 nautical miles from its coast was a game-changer, officials in Hanoi privately said, hardening suspicions about Chinese President Xi Jinping among political and military leaders.

Hanoi dispatched dozens of Vietnamese civilian vessels to confront the 70 coastguard and naval warships China sent to protect the oil rig in mid-2014.

"It was a reminder to all of us just how dangerous the South China Sea has become," said one retired U.S. naval officer.

For its part, China's military strategists have long been frustrated at the two dozen military outposts that Hanoi has fortified across the Spratlys since losing the Paracels in 1974, Chinese analysts say. China is building three air strips on man-made islands it is building on reefs in the Spratlys that it took from Vietnamese forces in 1988.

A statement to Reuters from China's Defense Ministry said the two militaries had close, friendly relations and China was willing to work hard with Vietnam for regional peace.

"Both sides have frank exchanges of view on the South China Sea ... both sides should look for a basic, lasting solution both sides can accept," the statement said.

China's historic claim to most of the South China Sea, expressed on maps as a nine-dash line, overlaps the exclusive economic zones of Vietnam, the Philippines, Malaysia and Brunei. Taiwan also has claims in the area.

Some $5 trillion in ship-borne trade passes through the waterway every year, including most of the oil imported by China, Japan and South Korea.

'PSYCHOLOGICAL UNCERTAINTY'

The importance to China of protecting its submarine base on Hainan Island - the projected home of its future nuclear armed submarine fleet - could be another flashpoint. Beijing also has jet fighters and many of its best warships stationed around Hainan Island. This South Sea Fleet is close to Vietnam's northern coast and its vital deep water access channels to the South China Sea and beyond.

Vietnamese generals make clear to foreign visitors they know their limitations. Two decades of double-digit increases in defense budgets have given China a vastly larger and better equipped navy, air force and army.

Foreign military envoys say they struggle to gauge Vietnam's actual capabilities and how well they are integrating complex new weapons. They are given little access beyond Hanoi's gilded staterooms.

Vietnamese military strategists talk of creating a "minimal credible deterrent" – raising the costs of any Chinese move against Vietnam, whether it is a naval confrontation or an attack across the 1,400-km (875-mile) northern land border.

If conflict did break out, Hanoi could target Chinese-flagged merchant container and oil ships in the South China Sea, said Thayer, who said he was told this by Vietnamese strategists.

The aim would be not to defeat China's superior forces but "to inflict sufficient damage and psychological uncertainty to cause Lloyd's insurance rates to skyrocket and for foreign investors to panic", Thayer said in a paper presented to a Singapore conference last month.

(Additional reporting by Ben Blanchard in Beijing and Ho Binh Minh and My Pham in Hanoi.; Editing by Dean Yates and Bill Tarrant.)

http://www.reuters.com/article/us-vietn ... 0320151218

[chaanakya]

What happens if there is another Indo-Pak war while China and Vietnam are engaged in military duel and Pakistan is being buldozed? Whether China would come to its aid and create two front situation for India?

[SSridhar]

Do you mean to say the reverse of 1962?

[chaanakya]

I would like to think "sort of" reverse of 1962 but India not making first move on China Border while engaged with pakistan. The question is essentially "what if" both India and China faces two front war?

[SSridhar]

‘Malabar’ exercise should not upset peace: China - The Hindu

India’s trilateral naval exercise with Japan and the United States, named “Malabar”, should not destabilise China’s maritime neighbourhood, said China’s Ambassador to India Le Yucheng to The Hindu on Saturday.

“India should ensure that initiatives like the trilateral maritime arrangement or defence ties with other countries are conducive for peaceful and stable Asia-Pacific region,” Mr Le said on the sidelines of a media event in New Delhi on Saturday. Earlier, Mr. Le pointed out in his speech delivered at the event that the maritime boundary of China in the South China Sea was legitimate and flexing military muscles by other countries was not going to help maintain peace and stability in the Asia-Pacific region.

Dismissing concerns that China might obstruct free navigation in the South China Sea, taking advantage of its territorial and maritime claims, Mr. Le said China’s claims were historically accurate and, therefore, could not be disputed. In a spirited defence of Beijing’s rights over the South China Sea, the Ambassador said, “For a long time after World War II, no one challenged China’s sovereignty over these islands. But certain powers have begun questioning China’s territorial and maritime rights in the region after the discovery of energy fields in the South China Sea.”

“This is our common sea. China has always supported freedom of navigation and we are for creating a code of conduct to ensure smooth navigation in that region,” he said, asking external powers not to meddle in the issue.

Presenting the Indian argument, in response to Mr. Le, Ram Madhav, general secretary of the BJP, said China had to take “utmost care” in ensuring freedom of navigation and peace and stability in the South China Sea region. “We have a few unresolved issues in the Asia-Pacific region. Freedom of navigation is necessary for Japan and South Korea that import most of their energy over the oceans of the Indo-Pacific region,” Mr. Madhav said, while indicating that he supported some fresh policy changes in dealing with China’s claims in the Southeast Asian region. “India will use culture, historic ties with the Indian diaspora to convert Asia-Pacific region into an Indo-Pacific region,” he said.

The South China Sea has been at the centre of several regional and bilateral discussions in recent months. At the ASEAN summit recently in Kuala Lumpur, Japan began lobbying for a new code of conduct to neutralise China’s maritime claims.

This was followed by Japan joining the Malabar naval trilateral during the visit of Prime Minister Shinzo Abe to New Delhi between December 11-13. However as narrated by Mr Le, Beijing’s position on maritime rights does not reflect concerns by other countries.

Analyst Brig. (Retd) Gurmeet Kanwal said China had not mellowed following the declaration of the Malabar trilateral. “China needs to give up the unilateral approach to South China Sea as it is part of the global commons which can be safeguarded only by a multilateral approach,” he said.

[Paul]

http://indiatoday.intoday.in/story/chin ... 51993.html

China may put one-third of all troops in new west border military zone

The new sprawling West zone will stretch across more than half of China's territory: covering frontiers from Myanmar in the south to India and Central Asian countries in the west, and all the way north to Russia, and including the two vast and troubled regions of Xinjiang and Tibet.


Ananth Krishnan
Beijing, December 20, 2015 | Posted by Geetanjali Rai | UPDATED 19:37 IST
A +A -
People's Liberation Army (PLA) soldiers
An on-going reorganisation in China's military that will unify two separate military commands currently in charge of guarding the border with India could see as many as one-third of all China's land troops stationed in this expanded new western zone, a report said on Sunday.
While China's 8.5 lakh land forces are currently spread across seven military area commands - of them two western commands, the Lanzhou and Chengdu regions, are tasked with the western and eastern sectors of the border with India respectively, besides Myanmar, Russia and a number of Central Asian countries - a major on-going overhaul of the People's Liberation Army (PLA) is expected to create five new military zones directly under the command of the Central Military Commission headed by President Xi Jinping.
The move comes amid reforms to centralise and modernise the PLA to make it a smaller, nimbler and more high-tech military.
While the details of the reorganization are expected to be announced in coming weeks, the South China Morning Post reported on Sunday citing military sources that as many of one-third of all land forces may be included in the new West zone.
The new sprawling West zone will stretch across more than half of China's territory: covering frontiers from Myanmar in the south to India and Central Asian countries in the west, and all the way north to Russia, and including the two vast and troubled regions of Xinjiang and Tibet.
This zone will be created by unifying the Lanzhou and Chengdu commands, and will for the first time bring both the western and eastern sectors of the border with India under one command.
While the reorganization holds significance for border defences, military sources told the South China Morning Post that internal security considerations were a prime factor in the reorganization.
"The West combat zone will concentrate on threats in Xinjiang and Tibet and other minority areas, close to Afghanistan and other states that are home to training bases for separatists, terrorists and extremists," a military source was quoted as saying.
This could mean fortifying defences in the western Xinjiang region, which borders India, Pakistan-occupied Kashmir as well as Afghanistan, Kazakhstan, Russia and other countries. Xinjiang has seen intermittent violence, which China has blamed on separatist Uighurs and suggested some have received training in camps in Pakistan or Afghanistan.
Underlying the importance of Xinjiang in this reorganization, the PLA may consider shifting the nodal centre of its entire western operations from Chengdu and Lanzhou, where two commands are currently based, to Urumqi, the regional capital of Xinjiang, which, according to the report on Sunday, could become the new headquarters of the PLA's West zone.

[Paul]

What is the reasoning behind this reorg?

[Bade]

This is getting interesting...More mountain strike (MSC) anyone ?

[SSridhar]

China may put one-third of all troops in new west border military zone

An on-going reorganisation in China's military that will unify two separate military commands currently in charge of guarding the border with India . . . The new sprawling West zone will stretch across more than half of China's territory: covering frontiers from Myanmar in the south to India and Central Asian countries in the west, and all the way north to Russia, and including the two vast and troubled regions of Xinjiang and Tibet.
This zone will be created by unifying the Lanzhou and Chengdu commands, and will for the first time bring both the western and eastern sectors of the border with India under one command.
While the reorganization holds significance for border defences, military sources told the South China Morning Post that internal security considerations were a prime factor in the reorganization. . . . Underlying the importance of Xinjiang in this reorganization, the PLA may consider shifting the nodal centre of its entire western operations from Chengdu and Lanzhou, where two commands are currently based, to Urumqi, the regional capital of Xinjiang, which, according to the report on Sunday, could become the new headquarters of the PLA's West zone.

What is the reasoning behind this reorg?

Paul, the PLA land forces are 1.6 million strong. Two months back, the CMC announced a reduction of 300,000 in the manpower which would make it 1.3 million.

The Lanzhou Military Region, which faces Ladakh, has 220,000 PLA troops, including an armoured division and two motorised infantry divisions. The Chengdu Military Region, opposite India’s north-eastern states, has some 180,000 PLA troops, including two armoured brigades and four motorised infantry divisions. So, the two total to 400,000 or one-fourth of the PLA already among the seven military regions. With the elimination of 300,000 troops that the Central Military Commission also announced, it may not be unduly worrying to see the new combined Lanzhou-Chengdu military area hosting one-third of the PLA.The three most important military regions, Guangzhou, Nanjing & Jinan remain as before projecting their force into Indo-China Sea (or West Philippines Sea which the Chinese call as South China Sea) and the East China Sea.

The reduction of manpower of the PLA is to perhaps transfer some to police to manage the internal security better.

[Paul]

Contrast this Chinese step with India moving from 1 command -> 3 commands to manage it's turbulent western borders over the past 50 years.

It matches my assessment that China's threat perception is higher on its seas than with India. Same as what Kaplan said about China's land borders never more secure in last millenium than now. Hence China cutting/redeploying 300K Army and move budget to Navy.

I would argue that Security environment for India is improving vis-à-vis the Chinese. We have 10 - 15 years more to before China changes it's assessment. The Naval threat for India is discountable as US will never let PLAN get past the first Island chain unmolested.

We need to focus on building a Powerful Cruise missile force and Land forces + Artillery.

[Christopher Sidor]

According to my assessment 10-15 years is a bit optimistic. I will give it only 4-5 years. CPC is trying to make PLA more nimble and lethal. Yes about 4-5 Lakh troops will be stationed for the entire Western Region but with the HSR and airlift capabilities of PLA/PLAAF we can expect PLA to field more than 5 Lakh troops against IA in case of a flare up. Add to this the threat that PLAAF poses against Eastern India, North-Eastern India and North-Western India.
Now consider IA, it is a 11-13 Lakh strong army which probably will not be increased to say 15 or 16 Lakhs. We have to keep at least 20-30% of our land based troops against Pakistan, we will not be able to leave this border unguarded. Let us be optimistic and say only 20%. Then that leaves about 80% of our troops available. Out of this ideally we would keep some 50% of our active troops on front line and about 30% in reserves. So we will be able to field in only some 5.5 Lakh troops taking 11 Lakhs as the baseline. I have considered that IA will be withdrawn from all of Counter Insurgency Operations. The case of IAF is even more pathetic.
Moreover let us say that the entire savings incurred by reduction in manpower by 3 Lac over a period of 3-5 years go directly and entirely to PLAN and its air wing. This may allow PLAN to build the capability to operate in IOR.

[SSridhar]

It matches my assessment that China's threat perception is higher on its seas than with India.

I agree.

However, China is watching how India is developing its alliance with the US, Japan, Australia, Korea, Vietnam, Singapore and the Philippines. Though at the moment, China is not very insecure about India, that could change quickly as the defence cooperation deepens between India & the US (jet engines, nuclear propulsion & EMALS for carriers, UACVs, signing up of CISMO & Logistical support agreements etc). Things could therefore change in a jiffy. The Chinese insecurity would be further accentuated if something were to happen to Pakistan and its potential for harassing India diminishes or it becomes a security threat to China itself or China's economy continues on a downward spiral without offering the CPC an opportunity to recover or the internal security situation grows too much (it is not only Uyghur or Tibet situation but also the hundreds of riots that take place all over China everyday without getting reported) etc.

Things could then turn in a jiffy.

[RKumar]

I really and truly hope that India don't sign any such CISMO & LSA agreements with USA.

[SSridhar]

Do you mean to say the reverse of 1962?

Just started reading a book yesterday, "South China Sea' by Bill Hayton which starts off with a scenario where some Philippino commandos try to plant their flag on a rock in the West Philippines Sea. One thing leads to another with Vietnam also joining the fray, helped by India and finally India deciding to do a 1962 on China.

[AjayKK]

Do you mean to say the reverse of 1962?

Just started reading a book yesterday, "South China Sea' by Bill Hayton which starts off with a scenario where some Philippino commandos try to plant their flag on a rock in the West Philippines Sea. One thing leads to another with Vietnam also joining the fray, helped by India and finally India deciding to do a 1962 on China.

One somewhat similar (?) scenario discussed here:

https://www.quora.com/How-can-India-def ... t-Subhedar

[SSridhar]

AjayKK, thanks for bringing my attention to that.

But, Bill Hayton's book starts with the disputes in the Indo-China Sea (West Philippines Sea) and how Vietnam & other claimants get dragged into that precipitated by the Philippino attempt to stake claim to a rock jutting out, and how India comes to the help of Vietnam and then decides to do a reverse 1962 on China.

[SSridhar]

‘Seychelles committed to Indian naval base’ - Kallol Bhattacharjee, The Hindu

A plot of land for India to build its first naval base in the Indian Ocean region has been allocated by the Seychelles government in the Assumption Island.

Lifting the veil of secrecy around the planned project, President James Michel of the Seychelles told The Hindu: “This is a joint project between India and Seychelles involving our two Defence Forces in enhancing our mutual security along our western seaboard. Seychelles is absolutely committed to the project.”

Seychelles is expecting India’s evaluation team to visit the spot soon, President Michel said. The project has acquired significance following China acquiring its first African naval base in Djibouti in November. Once ready, the naval base to be built by the defence forces of India, and Seychelles will help India exercise greater control over the Indian Ocean’s western region all the way to the piracy-prone eastern African coastline.

The base will be one of the major staging posts for a large maritime security network that India is setting up with the help of the various Indian Ocean region partner countries.

Apart from the naval base, India is set to acquire a fully operational coastal radar system (CRS) based in Seychelles from March 2016, Mr. Michel said. The CRS will provide India with the ability to gather intelligence and assist in surveillance operations of the vital energy lanes near Seychelles.

“The Maritime Radar Project is a major development for Seychelles’ and India’s mutual desire for security in the field of maritime security,” said President Michel, who was sworn in for a third term on December 20.

Fighting piracy

Security operation in the Indian Ocean region will also be helped by the leadership role that Seychelles has secured for itself in the Contact Group for Piracy off the Coast of Somalia (CGPCS), which will hold its first meeting in Mumbai on January 31, 2016. “Both India and Seychelles have a vested interest in securitising the Western Indian Ocean. We have forged a partnership that has gone a fair distance in eradicating the scourge of Somalia-based piracy as well as other maritime security issues.”

Mr. Michel acknowledged that India has been steadily increasing its maritime and security cooperation with Seychelles and that a new patrol vessel from India will be handed over to Seychelles in mid-January 2016.

“These initiatives have greatly helped our security environment,” said the President who visited New Delhi in August. He had been persistent in building a security network to prevent piracy, arms trafficking and financial fraud in the banks of the Indian Ocean region islands.

India, with its strong intelligence network, will also be helpful in maritime law enforcement by Seychelles, he added. While declaring support for India’s maritime security plans, President Michel pointed out that small nations are equally important in the contemporary world order and need to be taken seriously for the sake of preserving the security and order.

[member_19686]

Assessing the “Historic” China-Taiwan Summit and Its Implications for Japan
Kawashima Shin

[2015.12.25]

The “Historic” Cross-Strait Summit: What Will Change as a Result?
On November 7, 2015, President Xi Jinping of the People’s Republic of China and President Ma Jing-yeou of the Republic of China (Taiwan), held what was widely reported as a “historic” summit meeting in Singapore. It was the first such meeting between the leaders of the PRC and ROC.
By way of background, in 1946, following the end of World War II, a full-scale civil war broke out between the forces of the Communist Party of China and those of the Kuomintang (KMT, Nationalist Party), which controlled the government of the ROC. The Communists won control of mainland China and established the PRC in October 1949 with Beijing as its capital. In December of the same year the Nationalists retreated from their remaining mainland outpost in Sichuan to the island of Taiwan, making Taipei the capital of the ROC. Though the all-out fighting ended, the fundamentally adversarial relationship between the two sides continued for decades thereafter.
In 1991 the ROC softened its adversarial policy toward the mainland, and in the years that followed contacts across the Taiwan Strait progressed in various areas. After Ma Ying-jeou became president of the ROC in 2008, direct flights between Taiwan and mainland China were started, and large numbers of tourists from the mainland came to visit the island. In these and other respects, relations between the ROC and PRC have improved considerably, and the first meeting between their leaders, which symbolized this improvement, can indeed be termed “historic.” And it may seem that the two sides are now moving toward reunification. But this sort of rosy view has been voiced only in Japanese and some other foreign media commentary; it is unlikely that it is shared by the authorities in Beijing.
If we consider the long term, it does seem reasonable to use the “historic” label for the November 2015 summit and for the two leaders’ moves to reaffirm the “1992 Consensus,” about which I will explain below. But it appears highly doubtful that the meeting will lead to significant changes in the near future.
No Major Impact on Taiwan’s Presidential Election
What if any impact is the summit likely to have on the upcoming January 2016 elections for the ROC presidency and Legislative Yuan, Taiwan’s unicameral legislature? Ma Ying-jeou is currently serving his second term as president and is not eligible for reelection. Furthermore, his support ratings have been languishing at around 10%. The KMT is campaigning for the presidency with Eric Chu (Chu Li-lian), former mayor of New Taipei, as its candidate, but it now seems certain that the victor will be Tsai Ing-wen, chair of the opposition Democratic Progressive Party.
Starting in March 2014, Taiwan was rocked by student protests in what came to be known as the Sunflower Movement. The students and their supporters were expressing their opposition to President Ma’s handing of relations with the mainland and the KMT’s maneuvering within the legislature. Ma has already lost the support of the Taiwanese public; his meeting with President Xi will not change this, nor will it improve the electoral prospects for the KMT. On the contrary, it has led to increased criticism of Ma for the way the summit was suddenly arranged and for the lack of significant results from the meeting, where the two leaders did little more than affirm the 1992 Consensus, and where Ma went along with Xi’s commitment to “rejuvenating the Chinese nation.”
The majority of people in Taiwan actually take a positive view of the summit meeting itself. This does not mean, however, that the Taiwanese public supports reunification with the mainland or that cross-strait issues are now headed toward peaceful resolution. Comments to that effect were seen in the Japanese media, but such views are based on an outdated understanding. The Taiwanese for the most part are hoping to maintain the status quo, under which the ROC is not recognized as a state by the international community but effectively governs Taiwan. So their approval of the meeting between Ma and Xi is based on their view of it as a summit between a representative of the effective government of Taiwan and the leader of China—a foreign country, albeit the one with which Taiwan has the deepest ties.
From Beijing’s perspective, meanwhile, the reaffirmation of the 1992 Consensus by the two leaders at the summit was a highly significant development. Taiwan’s opposition DPP has not recognized the validity of this bilateral agreement. But thanks to its confirmation at the November 2015 summit, even if the KMT loses power and the DPP takes the reins, the new government will be under pressure to accept it. But what is this 1992 Consensus?
The Significance of Reaffirming the 1992 Consensus
In 1991, the ROC revoked its Temporary Provisions Effective During the Period of Communist Rebellion, under which the government had been authorized to suspend the constitution and mobilize the nation against the Communists. And in 1992 representatives of the ROC and PRC met in Hong Kong, where they reached an agreement that came to be called the 1992 Consensus. It was not announced at the time, however. A senior KMT legislator revealed it during the interim between the KMT’s defeat in the presidential election of March 2000 and the launch of a DPP administration in May of that year.
Under this consensus the two sides agreed on the “One China” principle, but according to the Taiwanese, the interpretation of this term is up to each side. The mainland, meanwhile, has not officially recognized this latter point. Also, the two sides use different terms to refer to the 1992 accord; the PRC calls it heyi (agreement), while the ROC calls it gongshi (consensus). And the posture of the government in Beijing changed after President Jiang Zemin (1989–2002) was succeeded by Hu Jintao (2002–12). Under the Jiang administration, Beijing denied Taipei’s assertion that “One China” was to be interpreted separately by each side. Under President Hu, by contrast, the mainland government shifted to a deliberately noncommittal stance of neither affirming nor denying this point.
At the November 2015 summit, it seems that President Xi carried on with the Hu administration’s stance—or perhaps moved closer to Taipei’s position on the matter. But the mainland authorities probably see it as a major accomplishment that they were able to display the 1992 Consensus once again as a cross-strait accord, and this development will place considerable pressure on the DPP in Taiwan.
President Ma’s Designs and the Future of the KMT
Why did President Ma seek to hold a summit with Xi at this juncture? For Beijing, as noted above, agreeing to the bilateral meeting seemed like a good way of promoting better cross-strait ties over the long term and, over the short term, of putting pressure on the DPP administration likely to be inaugurated in 2016. But for Ma the only plus was the prospect of leaving his name in the history of cross-strait relations. The summit seems to have had no benefit for his party, the KMT.
Ma did not go to China for the summit; it was held on the neutral ground of Singapore. And the two leaders split the bill for the meal and other expenses. In these respects Ma and Xi met as equals. And people in Taiwan appreciated these points. But the PRC handled the logistics and venue management, and Taiwanese dishes were absent from the menu, which featured specialties from the native regions of the PRC’s successive leaders.
So what does Ma see lying ahead now that the summit is behind him? As noted above, the January presidential election in Taiwan seems almost certain to produce a victory for the DPP’s Tsai Ing-wen over the KMT’s Eric Chu. The question is how the simultaneous election for the Legislative Yuan will go. The DPP is said to be leading on this front as well. Other, smaller parties are also expected to increase their numbers of seats, but in the context of what is basically a two-party system, the KMT will surely emerge as the second-largest force in the legislature. Ma is probably considering the prospects for the KMT in this position as the top opposition party.
The DPP administration expected to take office in May 2016 is likely to face rough going in relations with the mainland. And the KMT may well take advantage of its own cross-strait ties as a way of placing pressure on the DPP. In this context, the question of who manages these ties within the KMT will become important. Lien Chan, a former vice-president of the ROC, is currently responsible for the pipe between Taipei and Beijing, but he is getting on in years, and it is plausible to think that Ma, following his summit with Xi, aims to take over this responsibility.
Furthermore, if Eric Chu is defeated as expected in the upcoming presidential election, he is likely to step down from his post as chairman of the KMT. Ma may well seek to win back leadership of the party by overcoming the forces backing Wang Jin-pyng, the Taiwan-born-and-bred speaker of the Legislative Yuan. One can surmise that this sort of thinking was behind Ma’s decision to seek a summit with Xi when he did. But if the KMT does in fact try to use its ties to Beijing as a weapon against the DPP after the latter takes power next year, it runs the risk of being viewed as too “pro-China,” and a split might emerge within the KMT itself, with Wang Jin-pyng and his camp possibly breaking away from the party and regrouping with other political forces.
Implications for Japan
Trends in the relationship between the PRC and the ROC are extremely important for Japan, both in terms of national security and economically. So we must continue to place close heed to developments in cross-strait ties in the wake of the Xi-Ma summit.
Meanwhile, the fact that the two sides held this summit may well mean that Japan can and should reexamine some aspects of its policies toward China and toward Taiwan. For example, when Tokyo normalized diplomatic relations with Beijing in 1972, it recognized the PRC as the sole legal government of China and declared that it “fully understands and respects” the PRC’s claim that Taiwan is an inalienable part of its territory. For this reason, the handling of relations between Japan and Taiwan has been entrusted to a pair of “private” organs, the Interchange Association, Japan, and the Association of East Asian Relations.
Also, senior officials of government bodies like the Ministry of Foreign Affairs and Ministry of Defense refrain from contacts with Taiwan, as do politicians in important posts. These and many other unwritten rules have been established over the four decades since the normalization of Japan’s relations with mainland China. But now the relationship between Taiwan and the mainland has changed greatly, to the point where they were even able to hold a bilateral summit. It seems to me that Japan should respond to this major change.
Other countries have taken sensitive moves. The organ that functions in lieu of a Japanese embassy in Taiwan is the Taipei office of the Interchange Association, Japan, and the director of this office serves in lieu of an ambassador. But South Korea’s de facto embassy is called the “Korean Mission in Taipei,” and its head is titled “representative.” Given the progress in cross-strait relations, Japan could well ease the level of the restraint that it has shown in consideration for Beijing in areas like this.
Though the November 2015 summit may not produce any immediate changes on the international political or security fronts, it does seem to present an important occasion for making administrative adjustments of this sort. In the current era of Xi Jinping and Ma Ying-jeou, leaders who have held a cross-strait summit, surely we need not be bound by all the rules from the era of Mao Zedong and Chiang Kai-shek. Japan can view the summit as offering an opportunity to upgrade or at least reexamine its own relationship with Taiwan.
(Originally written in Japanese on December 9, 2015.)

http://www.nippon.com/en/editor/f00035/

[SSridhar]

2015: India, China sign off most engaging year in ties - PTI

India-China relations saw high- level engagements in 2015 and the two sides look to 2016 to step up cooperation in counter-terrorism and efforts to resolve their boundary dispute as they moved towards more interactive and less confrontationist relationship.

This year saw a series of high-level visits from both sides, including Prime Minister Narendra Modi's trip to Beijing, External Affairs Minister Sushma Swaraj and Home Minister Rajnath Singh's visits to China and Chinese Vice President Li Yuanchao's trip to India.

Signing off the most engaging year in recent history, Northern Area Commander Lt Gen D S Hooda travelled to Beijing this month on an invitation from China. Hooda's visit was significant as his predecessor Gen BS Jaswal was denied a visa on the ground that Northern Command covered the "disputed" Jammu and Kashmir, which sparked angry reactions from India.

Officials say Gen Hooda's visit restores military ties between the two countries, removing a major irritant.

Modi's visit like that of Chinese President Xi Jinping's trip to India last year focussed more on do-ables while stepping engagement to resolve boundary dispute and measures to deal with issue of incursions.

The Prime Minister's visit resulted in $22 billion in business-to-business pacts, hotline connection between the two military headquarters and opening of more border points for interaction of local commanders, formation of task force for address widening trade deficit which touched $46 billion and granting of E-visas for Chinese tourists.

Consequently Chinese officials say that there is a steady rise of Chinese investments in India which so far reached about $3 billion with a prospects of more on the way into India's infrastructure projects. China promises to open more for Indian IT and Pharmaceuticals to improve India's exports. {This is a promise for third consecutive year, but, there is nothing on the ground}

During Singh's visit, the two countries for the fist time agreed to step up anti-terrorism cooperation in the region.

China expressed willingness to crackdown on some of the rebel groups in the North East as part of anti-terror drive.

But the two countries had serious differences over China's increasing engagement with Pakistan and its $46 billion China-Pakistan Economic Corridor. India objected to it as it goes through the Pakistan-occupied Kashmir (PoK).

The corridor connects China's Muslim-majority Xinjiang with Pakistan's strategic Gwadar port and provides it access to the Arabian Sea and facilitates speedier imports of oil from the Middle East.

Differences also remain on China's ambitious Maritime Silk Road as India has concerns over its impact in the Indian Ocean.

China this year opened a new, "safer" and "more convenient" route for Indians undertaking the arduous Kailash- Manasarovar Yatra in addition to the existing Lipulekh Pass.

The opening of the second route through the Himalayan pass of Nathu La in Sikkim, 4,000 metres above sea level, was officially announced during Modi's visit to China and will allow more Indians to undertake the pilgrimage.

The new route reduced the pilgrimage time from more than 20 days to about eight and enabled pilgrims to travel the 1,500 km-long route from Nathu La to Kailash by buses.

India and China this year held 18th round of talks in New Delhi to resolve the contentious boundary issue. India asserts that the dispute covered about 4,000 km, while China claims that it was confined to about 2,000 km to the area of Arunachal Pradesh, which it refers as Southern Tibet.

The two sides agreed to maintain peace and tranquillity in the border areas which was a "pre-requisite" for continued growth of bilateral relations as also to enhance cooperation in key areas, including counter-terrorism, maritime security and civil nuclear energy sector.

Offering highly concessional loans, Japan this year bagged India's first bullet train project worth $12 billion connecting Mumbai-Ahmedabad, much to chagrin of China which looks to get other routes like Chennai-Delhi and Mumbai-Delhi.

Indian officials say the routes are open for China if it offered matching concessional loans.

Also, India expressed concern over the current round of tensions between the US and China over an American guided- missile destroyer sailing through artificial islands in the South China Sea (SCS) built by Beijing.

China had raised vociferous protests and warned the US against sending naval vessels and military jet to the area.

China has been wary about India's 'Act East' Policy under which New Delhi sought to expand its relations with the South East Asian countries in Beijing's backyard, specially India's fast-developing ties with Vietnam and the Philippines.

Beijing opposes India undertaking oil exploration off Vietnam's coast, asserting that the area falls within the disputed area of the SCS.

India, however, took up Vietnam's invitation, stating that it is undertaking only a commercial activity which has no bearing on the dispute.

About the freedom of navigation, China has maintained that there is no threat to commercial shipping and civilian overflights but considers naval vessels and military aircraft travelling through the area as violation of its sovereignty.

China claims almost the whole of the resource-rich SCS. Its claim, however, is strongly contested by the Philippines, Vietnam, Malaysia, Brunei and Taiwan.

China is also apprehensive about increasing India-Japan and India-US engagement. It has expressed apprehensions over India's move to include Japan in India-US Malabar Naval exercises on regular basis during Japanese Prime Minister Shinzo Abe's recent visit to India.


Despite such apprehensions shown by China, officials say 2015 will be remembered as year of in-depth Sino-Indian engagements as the dialogue between them to restore relations on all fronts including the military-to-military ties has set the stage for a more interactive and less confrontationist relationship.

[Rony]

‘Seychelles committed to Indian naval base’

It is stupid for the Indian english media to publicly proclaim it. Things like these should always be low key. Have any Chinese media leaked about the chinese base in djbouti ? Even if this news is true, the dork media are only embarrassing our allies with news like this and pushing them to publicly denounce it and embarrassing themselves and the country in the process.

Seychelles: Statement to the Hindu Newspaper Following Interview With President Michel

As you will see at no point in the interview did the President say that Seychelles is committed to an Indian naval base. A Seychelles base will be developed on Assumption Island, and India is partnering in and aiding Seychelles in this joint project.We have explained this issue in the past to press as it keeps being misrepresented by media in India.

[A_Gupta]

http://www.theaustralian.com.au/news/wo ... 21760bca5b
Defection delivers Beijing’s nuclear secrets to Washington

China’s most senior communist cadres have been told the party faces its most damaging case of treason since the founding of the regimen in 1949.

In a confidential speech to party cadres reported by two independent political magazines in Hong Kong, Meng Jianzhu, the country’s security tsar, revealed that the most closely guarded secret­s, including nuclear codes, had been lost to America.

Mr Meng was reporting on the failure of his attempts to lure back a leading defector and the fallout of the incident.

The state secrets passed to Washington included personnel data, communications codes, ­nuclear weapons launch protocols and blueprints of the Zhongnanhai leadership compound, the magazines reported.

Ling Wancheng fled to the US after his brother Ling Jihua, the right-hand man of former president Hu Jintao, was brought down by a scandal caused when his Ferrari-driving son was killed in a spectacular car crash in centra­l Beijing.

While Ling Jihua was ­detained by Chinese security, his brother escaped with a cache of 2700 classified documents as an insurance policy. The Chinese leadership sent a security ­delegation, headed by Mr Meng, to demand his extradition from the US last year but it returned empty-handed.

“While at the head of the party’s central institutions, director of the office of the party and the nation, Ling dared to steal top secrets from the archives in his trust and these were ultimately handed to the US,” said Mr Meng, who described the breach as the most serious in 60 years.

The magazines, Qianshao and Chengming, said three categories of classified information were handed to the Americans.

Plans for the Zhongnanhai leadership retreat, a heavily ­protected enclave of villas and lakes near the palaces of the ­emperors in Beijing, were transferred, with details of its security passwords and communications codes.

The second category included information on command and control systems linking the ­Communist Party central committee in times of crisis with the state council, China’s cabinet, and the Central Military Commission, the supreme command of the armed forces.

Third on the list were launch protocols and procedures devised to guarantee control over China’s non-conventional weapons, including its nuclear deterrent, by the party central committee and the CMC.

[SSridhar]

‘Seychelles committed to Indian naval base’

Seychelles: Statement to the Hindu Newspaper Following Interview With President Michel

We already know that Seychelles has allowed China to build a naval base, one of its 18 foreign naval bases. In fact, Seychelles would be a logistical plus a R&R site for China's naval personnel.

The Chinese President Hu Jintao visited Seychelles in c. 2005. China transferred two Y-2 turboprop aircraft for maritime patrolling and also received permission for PLAN to make frequent port calls. In Dec. 2011, the Seychelles also announced naval resupply facilities for PLAN including a fuelling fcility. The Deputy Chief of the People’s Liberation Army, Gen Ma Xiaotian met with President of Seychelles James Michel in mid-July, 2012 and reaffirmed China’s commitment to deepen bilateral military cooperation.

During PM Narendra Modi’s “Ocean Outreach’ visit in March 2015 to neighbouring island states in the IOR, India bagged “infrastructure developmental rights’ to the Assumption island of Seychelles. The Indian Prime Minister also said, “We also hope that Seychelles will soon be a full partner in the maritime security cooperation between India, Maldives and Sri Lanka”. India also agreed to give the Seychelles a second Dornier aircraft for coastal surveillance.

We will leave it at that. This should make clear what is happening in Assumption Island. Djibouti currently hosts the French (traditional and long-term base), the US and now China as well. Similarly, Seychelles is looking to host India & China. Increasingly, India & China would compete for the same strategic space - India with its mandala and cultural influence and China with its Renminbi. At least with India, Seychelles would not have to go the Zimbabwean or the Mauritius way, i.e. go bankrupt dealing with the greedy Chinese.

[NRao]

About time.

In Central Asia, Chinese inroads in Russia’s back yard

https://img.washingtonpost.com/rf/image ... gUPAtW9h-g

Slowly but surely, a four-lane highway is beginning to take shape on the sparsely populated Central Asian steppe. Soviet-era cars, trucks and aging long-distance buses weave past modern yellow bulldozers, cranes and towering construction drills, laboring under Chinese supervision to build a road that could one day stretch from eastern Asia to Western Europe.

This small stretch of blacktop, running past potato fields, bare dun-colored rolling hills and fields of grazing cattle, is a symbol of China’s march westward, an advance into Central Asia that is steadily wresting the region from Russia’s embrace.

Here the oil and gas pipelines, as well as the main roads and the railway lines, always pointed north to the heart of the old Soviet Union. Today, those links are beginning to point toward China.

“This used to be Russia’s back yard,” said Raffaello Pantucci, director of International Security Studies at the Royal United Services Institute in London, “but it is increasingly coming into China’s thrall.”

It is a shift that has shaken up the Russian leadership, which is watching China’s advance across the steppe with apprehension. Moscow and Beijing may speak the language of partnership these days, but Central Asia has emerged as a source of wariness and mistrust.

For China, the region offers rich natural resources, but Beijing’s grander commercial plans — to export its industrial overcapacity and find new markets for its goods — will struggle to find wings in these poor and sparsely populated lands.

.................................................................

[SSridhar]

About time.
In Central Asia, Chinese inroads in Russia’s back yard

I have always had this feeling that China's grand strategy of Silk Road and Maritime Silk Road (the OBOR strategy) is going to end up in a horrible failure. The Chinese are beginning to be understood everywhere as greedy, uncaring either for the country they operate in or the ecology, swamping the locals with their Han imported labour etc. The first shot across the bow was fired in our neighbourhood by Myanmar when riots broke out and the Myanmarese military junta had to cancel/delay the huge Myitsone hydroelectric project and the Letpadaung copper project. At other places in our neighbourhood, such as Sri Lanka or Mauritius or Djibouti, the governments conceded space to China after being overburdened by huge debts and interest payments. They would soon realize that China does not offer them a model of either sustained relationship or growth. Other huge Railway projects in far away Latin America (Honduras, Brazil, Peru, Colombia) have floundered or are facing stiff resistance too due to resistance from environmental groups and suspicion of China and its opaqueness. Mexico had shut down a Chinese bullet train project and the nation's environmental agency shut down a huge Chinese mall. The swiftness with which the Chinese infrastructure projects are implemented in poor countries "without setting high benchmarks, environmental impact assessment" etc. cannot sustain the model for too long.

Come a certain point in time, the projects would have to be abandoned or the Chinese would have to beat a hasty retreat making either the investments free for the recipient countries or a total loss for both the parties.

By the way, there was never a "Chinese Maritime Silk Road" because the Chinese wre never a sea-faring nation unlike India or many other European nations, for example. There was indeed a very short period when the eunuch Zheng He and a few others ventured out . Otherwise, they preferred the Arabs, Indians, Malays et al to visit their port and trade in pottery, silk etc. The seafarers were the Indians, SriVijaya and Champa Kingdoms, Arabs et al.

[SSridhar]

I am posting the below here in the hope that strengthening of relations among democratic countries of Asia would potentially lead to a strong alliance against China. The below is removal of a long-standing irritant between two of Asia's strongest economies and democracies.

Japan, South Korea agree to settle dispute over wartime sex slaves - AFP

South Korea and Japan reached an agreement on Monday on their dispute over wartime sex slaves that has soured relations for decades, as Tokyo’s leader hailed a “new era” in ties with Seoul.

Japan offered a “heartfelt apology” and a one-billion yen ($8.3 million) payment to Korean women forced into Japanese military brothels during World War-II. Now the two countries, both close U.S. allies, “will welcome a new era”, Japanese Prime Minister Shinzo Abe told reporters in Tokyo after speaking by phone with South Korean President Park Geun-Hye.

The fate of the 46 surviving South Korean “comfort women” is a hugely emotional issue in South Korea, and a source of much of the distrust that has marred relations with its former colonial ruler Japan for decades. The deal would be “final and irreversible” if Japan fulfils its responsibilities, South Korean Foreign Minister Yun Byung-Se said after talks in Seoul with his Japanese counterpart Fumio Kishida. Mr. Abe, Mr. Kishida said, extends “his feeling of heartfelt apology and regret to all of those who as comfort women have suffered great pain, both mentally and physically, that is difficult to heal".

As part of the agreement Seoul will try to relocate a statue symbolising comfort women which currently stands in front of the Japanese embassy through consultations with relevant NGOs, Mr. Yun said. He said Seoul would also refrain from bringing up the comfort women issue again in international forums such as the UN.

[member_19686]

Defection delivers Beijing’s nuclear secrets to Washington
MICHAEL SHERIDAN THE TIMESDECEMBER 28, 2015 12:00AM

China’s most senior communist cadres have been told the party faces its most damaging case of treason since the founding of the regimen in 1949.

In a confidential speech to party cadres reported by two independent political magazines in Hong Kong, Meng Jianzhu, the country’s security tsar, revealed that the most closely guarded secret­s, including nuclear codes, had been lost to America.

Mr Meng was reporting on the failure of his attempts to lure back a leading defector and the fallout of the incident.

The state secrets passed to Washington included personnel data, communications codes, ­nuclear weapons launch protocols and blueprints of the Zhongnanhai leadership compound, the magazines reported.

Ling Wancheng fled to the US after his brother Ling Jihua, the right-hand man of former president Hu Jintao, was brought down by a scandal caused when his Ferrari-driving son was killed in a spectacular car crash in centra­l Beijing.

While Ling Jihua was ­detained by Chinese security, his brother escaped with a cache of 2700 classified documents as an insurance policy. The Chinese leadership sent a security ­delegation, headed by Mr Meng, to demand his extradition from the US last year but it returned empty-handed.

“While at the head of the party’s central institutions, director of the office of the party and the nation, Ling dared to steal top secrets from the archives in his trust and these were ultimately handed to the US,” said Mr Meng, who described the breach as the most serious in 60 years.

The magazines, Qianshao and Chengming, said three categories of classified information were handed to the Americans.

Plans for the Zhongnanhai leadership retreat, a heavily ­protected enclave of villas and lakes near the palaces of the ­emperors in Beijing, were transferred, with details of its security passwords and communications codes.

The second category included information on command and control systems linking the ­Communist Party central committee in times of crisis with the state council, China’s cabinet, and the Central Military Commission, the supreme command of the armed forces.

Third on the list were launch protocols and procedures devised to guarantee control over China’s non-conventional weapons, including its nuclear deterrent, by the party central committee and the CMC.

Mr Meng is reported to have spoken angrily as he detailed the case against Mr Ling at an internal party meeting in southern China.

Ling Jihua was at the heart of power until the present leader, Xi Jinping, took over in 2012. He was “responsible for the safety, health and confidentiality” of the members of China’s ­supreme ruling body, the Politburo standing committee, according to a profile prepared by Cheng Li of the Brookings Institution.

“He (was) also responsible for drafting key documents, collecting important information for ­decision-making and monitoring the implementation of central ­directives and the instructions of top leaders,” it added.

Chinese analysts believe the security chief’s speech may have been deliberately leaked to ­prepare opinion in the party for the eventual trial and conviction of Ling Jihua. The reports exculpated the man who now holds Mr Ling’s old job, Li Zhanshu.

Mr Li is even more powerful than his predecessor and accompanied the President on his tour of Britain, attending a state ­banquet with the Queen at Buckingham Palace.

THE SUNDAY TIMES

http://www.theaustralian.com.au/news/wo ... 21760bca5b

[SSridhar]

China restructures military as Xi eyes ‘strong army’ - AFP

China has unveiled changes to the structure of its military described by President Xi Jinping as “a major policy decision to realise the Chinese dream of a strong army”, state media reported. Beijing in November said it planned sweeping changes in a move intended to enhance the ruling Communist Party’s control over the People’s Liberation Army (PLA). The changes announced late on Friday will see a new army unit set up to oversee China’s arsenal of strategic missiles.

General command

Besides the “Rocket Force”, the PLA also unveiled an army general command to serve as the headquarters for land forces and a support unit to assist combat troops, the official Xinhua news agency said.

The changes come as China acts more aggressively in territorial disputes in the South China Sea and East China Sea and comes just after Beijing announced on Thursday it is building its second aircraft carrier. The nation’s first aircraft carrier, the Liaoning, is a second-hand Soviet ship built more than 25 years ago that was commissioned by China in 2012 after extensive refits.

At the same time, Mr. Xi, who also serves as head of the military, is planning to slash China’s number of troops by 300,000 to roughly two million to craft a more efficient fighting force. China’s Central Military Commission, which Mr. Xi chairs, on Friday also released guidelines to help build the country’s vision of a modern military before 2020 by cutting troops and improving the quality of combat personnel, Xinhua said. — AFP

[SSridhar]

India-China ties progressed but relations remain complex: Envoy

Ties between India and China are set for a "very active" year with likely visits of Prime Minister Narendra Modi and Chinese President Xi Jinping to each other's country even as the relationship remains complex due to the unresolved boundary dispute, the Indian envoy here [Beijing] has said.

India's outgoing envoy Ashok K Kantha, who will be retiring on January 6, said 2016 will be marked by high level visits as Modi is expected to visit China to take part in G-20 summit to be held in east China's Hangzhou city while Xi may visit India to participate in the BRICS summit.

"2016 will be a very active year with two big visits at the highest level. China is hosting G20 summit at Hangzhou and India will host the BRICS leaders' meeting. Top leaders are expected to attend the summits," Kantha, who will be succeeded by Indian Ambassador to Germany Vijay Keshav Gokhale, told the Indian media here.

The expected high-level trips come in the backdrop of highly successful visits of Xi to India in 2014 and Modi to Beijing last year, reflecting the buoyant state of ties which have seen all round development of cooperation in the last few years including in security and defence areas besides trade and investment, Kantha said.

Last year was also marked by high levels visits. Besides Modi, Home Minister Rajnath Singh and External Affairs Minister Sushma Swaraj visited China while Finance Minister Arun Jaitley visited Hong Kong.

Also, Politburo-level officials of the ruling Communist Party of China visited India, Kantha said.

This year's interactions will begin with the visit National Security Advisor Ajit Doval who is expected to be in Beijing on a two-day visit starting on January 5.

He is due to meet his counterpart and China's top diplomat Yang Jiechi and Premier Li Keqiang.

Doval's visit is part of the "architecture for strategic communication" set up by both countries, Kantha said.

He also clarified that Doval's visit is not to take part in Special Representative talks on the border issue.

"He is coming for strategic consultations," Kantha said declining to provide details.

Yang and Doval are designated Special Representatives for border talks. So far the two sides have held 18 rounds of border talks.

But despite the all round progress, it still remains an uneasy relationship due to the unresolved boundary issue, Kantha said.

"It is a complex relationship. There are issues like the boundary question," he said without elaborating.

[Paul]

As I said in Pakistan threat, 1965 is the nadir of India's loss of territory...since then 1967, 1971, 1975, 1986(siachen). we have managed to hold on to our own. A sign of the country's consolidation

http://thediplomat.com/2015/12/the-sikk ... ign=buffer

The Sikkim Anniversary
Forty years after joining India, Sikkim continues to trouble Sino-Indian relations.

By Ivan Lidarev

As 2015 draws to a close, it is worth remembering that it marks a forgotten but important anniversary in the history of India and Sino-Indian relations. Forty years ago, in 1975, the princely state of Sikkim became part of India, following a long political game that saw Beijing try to lure the Chogyal, Sikkim’s king, away from New Delhi’s tight embrace. While India won out in 1975, the Sikkim issue has continued to trouble China-India relations to this day. China has not unequivocally accepted Sikkim as part of India, the Sikkim border between the two Himalayan giants remains a source of tensions, and both sides have interests in Sikkim which are often at odds.

Historically Sikkim – “new palace” in the Limbu language – was a small and pristine Buddhist kingdom in the Himalayas with close religious and cultural ties to Tibet. At different points in the eighteenth and nineteenth centuries the kingdom had lived under Chinese suzerainty and, later, as a British protectorate, but had mostly managed to preserve its domestic autonomy. India’s independence in 1947 and Tibet’s incorporation into the newly founded People’s Republic of China fundamentally changed the geopolitical situation of Gangtok, Sikkim’s capital, as it emerged as a buffer between its two giant neighbors. Concerned that China might expand its influence in Sikkim, Nepal and Bhutan, and even threaten India’s disputed northern borders, New Delhi pressured the three Himalayan states to establish special relations with India. Hence, in 1950, Sikkim signed a treaty with India which established the kingdom as an Indian protectorate, handed over all of Sikkim’s external relations to India, allowed the stationing of Indian troops and prohibited the kingdom from “dealings with any foreign power.”

In the 1960s, however, Sikkim reemerged as a major concern for New Delhi in the aftermath of India’s disastrous 1962 border war with China and the enthronement of a new Chogyal, Palden Thondup Namgyal, who sought full sovereignty for his Himalayan kingdom. The 1962 war, which saw action close to Sikkim, and the 1967 clashes between Chinese and Indian forces on the kingdom’s northern border, at Nathu La and Chola, underscored Sikkim’s strategic importance as a key military point on the disputed border. The Chogyal’s push to sovereignty, probably influenced by his American wife, inevitably led him to seek relations with China to balance India, an interest reciprocated by Beijing which hoped to lure Sikkim into its sphere of influence. Soon after the king’s accession in 1964, Beijing officially sent condolences for his father’s passing and the two sides cautiously came into contact on several occasions in the next decade, including, famously, on one of the Chogyal’s trips to Britain during which he met Chinese officials at a Chinese restaurant in an outright break with the 1950 treaty. As New Delhi was growing alarmed by the prospect of Chinese influence in Sikkim, the kingdom was increasingly being shaken by the struggle between the autocratic Chogyal and Sikkim’s democratic opposition which, cautiously backed by India, sought to curtain his power. This struggle came to a head in 1973, when law and order in Sikkim broke down and India moved its forces in to stabilize the kingdom and eventually mediate a compromise between the king and the opposition. Soon afterward, over Beijing’s ferocious protests, Sikkim’s new democratic assembly agreed with New Delhi’s proposal to make the kingdom an “associate state” of India. In 1975, probably provoked by the Chogyal’s desperate attempt to get Chinese and Pakistani help against India during a trip to Nepal, Indira Gandhi’s government pushed for a referendum which democratically approved the abolition of the monarchy and a full merger with India, after an amendment to India’s constitution. In spite of China’s indignation, Sikkim became a state of the Republic of India.

However, New Delhi’s success in 1975 did not close the Sikkim issue. Forty years after the former kingdom joined India, Sikkim remains a source of political and military tensions between China and India, with little prospect of this ending. There are three reasons for this.

First, China’s stance on Sikkim as part of India has been ambiguous. For decades after 1975, Beijing published maps showing Sikkim as an independent state and spoke about China-Sikkim relations. In 2003, as part of a deal to reset the China-India relationship and make progress on the border dispute, Indian Prime Minister Atal Bihari Vajpayee and Chinese President Jiang Zemin reached an understanding that China would recognize Sikkim as part of India in exchange for full Indian recognition of Tibet as part of China. However, the recognition was implicit, in a trade-related paragraph of the 2005 joint statement between the two sides which stated that the “Sikkim state of the Republic of India” will be opened for trade with China. While Beijing claimed that Sikkim is no longer an issue in bilateral relations and presented to New Delhi maps showing Sikkim in India, it never clearly issued an unambiguous statement or signed a document to this effect. While the Indian side had claimed that during Premier Wen Jiabao’s visit to India in 2005, China affirmed that Sikkim is an “inalienable part of India,” no such statement was publicly uttered by the Chinese side during the visit. The resulting ambiguity gives Beijing the opportunity to reopen the issue in the future and use it as a bargaining chip.

Second, the Sikkim issue is closely related to the unresolved border dispute between China and India. Sikkim’s 204 km border with China’s Tibet Autonomous Region(TAR), while mostly uncontested, forms part of the heavily disputed and unrecognized China-India border and hence remains unsettled. Incidents, usually border incursions, often occur on the Sino-Indian border and the Sikkim section of it is no exception. One particularly significant incident took place in 2014 when China tried to build a road, later destroyed by Indian forces, on the Indian side of the border. Moreover, China is still claiming the “Finger area” of Sikkim, a tract of Sikkim protruding into Chinese territory, through which a significant Chinese highway is scheduled to pass. Beijing has also been building infrastructure to the border with Sikkim, including highways, roads and a rail line, which not only cement Chinese presence along the disputed Sino-Indian border but can be used to ship troops in the case of conflict.

Third, in spite of its size Sikkim has substantial strategic significance for both China and India, significance which often puts the two sides’ interests at odds. The small Himalayan state lies very close to India’s narrow Siliguri corridor, which, if cut in the case of a military conflict with the PRC, would sever the connection between India and its Northeast, part of which is claimed by China. Sikkim also borders Nepal and Bhutan, countries in which Beijing and New Delhi have competed for influence for years. Moreover, as the border between China and Sikkim is determined by the McMahon line, which Beijing ferociously rejects and on which India has based its position in its border dispute with China, the China-India border at Sikkim has wider implications. Finally, the close religious contact between Sikkim’s Buddhists and their Tibetan counterparts, the former kingdom’s geographical proximity to TAR, and the presence of people of Tibetan descent in Sikkim connect Sikkim to the Tibet issue. The role of Sikkim’s Rumtek manastary as the seat of the Karmapa, one of the most important leaders in Tibetan Buddhism, whose position is presently disputed by two claimants, further reinforces this connection.

In brief, Sikkim continues to generate tensions in Sino-Indian relations. At the same time, though, Sikkim offers hope for improved relations between the two trans-Himalayan neighbors. Since 2006 the two sides have opened the Nathu La Pass for trade, which has grown in the last decade in spite of limitations imposed by Indian security concerns and fears of Chinese economic domination of India’s Northeast. In a further positive sign, 2015 saw the opening of a route through Sikkim’s Nathu La Pass for Indian pilgrims who want to visit Tibet’s Mount Kailash and Lake Manosawar, both sacred to Hindus and Buddhists. Sikkim also hosts one of five border meeting points at which officers from the two sides can discuss and resolve border incidents. There has even been talk of developing Sikkim as a major transportation and economic corridor between China and India as part of China’s “One Belt, One Road” initiative and of the Bangladesh-China-India-Myanmar (BCIM) economic corridor. While none of these steps removes the mutual suspicion between China and India in Sikkim, they soften it.

In 1975, Sikkim’s accession to India was prompted by the competition between Beijing and New Delhi. Forty years later, the competition is still ongoing and Sikkim remains a source of tensions between China and India. What is different, however, is the potential that together with tensions, present-day Sikkim might also produce cooperation in Sino-Indian relations.

Ivan Lidarev is a Ph.D. student at King’s College London (KCL) and an advisor to Bulgaria’s National Assembly. Ivan’s research, published in The Diplomat, Eurasia Review and the China Brief, focuses on Chinese foreign policy, Sino-Indian relations and Asian security

My trip to Sikkim was a real eye opener for me.

Chalk one up for Indira Gandhi for this success.

[SSridhar]

Has started reading an interesting book on the history of Indo-China Sea dispute and China's claims over the islands and the sea is a complete, unadulterated fraud. They have even presented this fraud to the UN Body, UN Commission on Laws of the Seas !

[SSridhar]

Sino-Indian ties to benefit world: Indian envoy Ashok Kantha - IANS

China and India are re-emerging in a mutually supportive manner and their cooperation will benefit the world, India's ambassador Ashok Kantha has said.

Kantha has a "sense of deep satisfaction" as relations between the Asian neighbours gained momentum since he took office in 2014, Xinhua quoted the ambassador as saying.

Kantha will complete his tenure and leave China this week.

The last two years were "the most productive phase" in the development of Sino-Indian ties, as shown by frequent high-level exchanges, especially the two landmark visits by leaders of the two countries, he said.

In September 2014, Chinese President Xi Jinping visited India. In May 2015, Xi welcomed Modi to his hometown.

In addition to reaching a series of agreements and understandings, the leaders also sent out "very powerful signals of the desire by India and China to work together", said Kantha.

The re-emergence of India and China was a defining development of the 21st century, and the two countries have to take into consideration each other's interests, concerns and aspirations, he added.

China is one of India's largest trading partners, with two-way trade in 2015 expected to reach $100 billion.

"We need to move to a more balanced trade relationship," said Kantha, adding India was trying to expand its economic engagement and attract investment from Chinese companies.

While China has promoted strategies including 'Made in China 2025' and 'Internet Plus', India has launched initiatives such as 'Make in India', 'Digital India' and 'Smart Cities'.

Kantha said these will create new opportunities for the two countries to contribute to each other's development.

"Indian companies have strengths when it comes to the knowledge-based economy, which can contribute to China's China's economic development, which emphasises innovation and R&D," said Kantha.

Kantha said he appreciated Chinese people's interest in Indian culture. After visiting 27 Chinese cities, Kantha said: "Yoga is finding a second home in China."

China and India, as neighbours and two of the world's fastest growing economies, approach several key global issues with similar perspectives.

"We have converging interests when it comes to international issues. Therefore, it is not surprising that collaboration is increasing significantly."

Kantha admitted there were problems, such us border disputes. "But we will not let them get in the way of the development of relations."

In 2015, China and India, together with other BRICS partners, worked to launch the New Development Bank, which is headquartered in Shanghai and headed by an Indian president.

India also supported China in establishing the Asian Infrastructure Investment Bank last last year, with India being the second largest shareholder.

[Prem]

China’s PLA sings Jai Ho as India goes for Border Defence
http://www.niticentral.com/2016/01/06/c ... 39398.html

“This year there was something new and exciting about the meeting. After paying respects to the national flags and playing of the national anthems, the Chinese soldiers sprang a surprise and enthralled the audience by their performance on Hindi Bollywood songs ‘Jai Ho’ and ‘Ankhe Khuli Ho Ya Ho Bandh’.”Then, Chinese women performed some ‘scintillating dances’, while male soldiers of the People’s Liberation Army (PLA) gave a feel of their voices.The report speaks of growing bonhomie and brotherhood between the armies of the two nations. But in view of past history, one should remain guarded, especially when Indian newspapers get carried away with too much ‘brotherhood’. Remember the Bhai-Bhai days?It is certainly better to dance and sing together, than to sponsor terrorism across the border, like another of India’s neighbours does.Far away from the Lohit valley, Indian and Chinese border officials also met in Ladakh ‘to improve ties at the functional level’.
Another encounter was held at what is called the world’s highest BPM’s post; both delegations met in the vicinity of Daulat Beg Oldie (DBO) and Tianwendian (TWD). While the Indian delegation was led by Colonel Rinchen Dorje, the Chinese were commanded by Colonel Song Zang Li.What is interesting is that a local Ladakhi represented the Indian Army. This is what makes India’s strength; China is today unable to incorporate Tibetans or Uyghurs in its defence forces, as they can’t be trusted by Beijing.Does all this mean that like in the early 1960s, India is slowly being put to sleep by China?
No! In fact, Delhi has decided to go ahead with its border defenses.Take the installation of latest gadgetry along the LAC to monitor movement of the Chinese troops near the LAC. A few months ago, The Excelsior had reported that the MHA and MoD had decided to install high resolution sophisticated cameras to keep surveillance on the PLA activities on the Indian side.Army sources told the J&K daily that the new surveillance cameras would be first installed about 20 kilometers inside the Indian Territory to ensure that the system doesn’t fail like the previous ones. And roads and advanced landing grounds are also built on a war-footing.

[member_19686]

China takes umbrage at plan for ISRO station in Vietnam
Updated: January 6, 2016 18:43 IST | PTI

India’s plan to activate a new data reception and tracking station in Vietnam has been criticised by a Chinese think-tank, terming it an attempt by India to “stir up trouble” in the disputed South China Sea region to serve its own ends.

The Indian Space Research Organisation (ISRO) has set up a Data Reception and Tracking and Telemetry Station in Ho Chi Minh City, which will be activated soon and linked with another station in Biakin, Indonesia, state-run Global Times quoted reports from India as saying.

India also has a satellite tracking station in Brunei.

Reacting to the report, Gu Xiaosong, a researcher of the Southeast Asian studies at the Guangxi Academy of Social Sciences told the daily that “India has no territorial disputes with China in the South China Sea. It wants to stir up trouble in the region to serve its own ends, which is to counterbalance China’s influence.”

Complicating surf war

It clearly indicates India’s attempt to complicate the regional dispute, the researcher has said.

The news comes close on the heels of the Foreign Ministry’s criticism of Vietnam’s protest over China landing its first flight on a newly build artificial island.

“India toeing U.S., Japan line”

India has been calling for freedom of navigation and over-flight in the South China Sea which Chinese officials say echo with the stand of the United States and Japan.

China, which has objected to U.S. naval ships and planes going close the waters of its artificial island in the South China Sea, has no problem with freedom of navigation.

Peaceful resolution mooted

India has also been advocating peaceful resolution of the dispute.

China states that the dispute over South China Sea with Vietnam, the Philippines, Malaysia, Brunei and Taiwan should be resolved through direct consultations between parties concerned.

http://m.thehindu.com/news/internationa ... 073184.ece

[Philip]

China doing quite well on its own,with its eco-boom going bust as the balloon deflates.
However,it is going to have its effect on the rupee too,as Chinese goods will now be more competitive.
When will the day come when currency flight goes to the Rupee?! Not in my lifetime.

http://www.theguardian.com/business/201 ... ng-minutes

China share trading halted after market plunges 7% in opening minutes

‘Circuit breaker’ mechanism deployed to protect economy for second time in a week as China sparks jitters by speeding up devaluation of yuan

China halted the day’s trading within 30 minutes of opening on Thursday morning as shares plunged by more than 7% – triggering an automatic “circuit breaker” – and authorities accelerated the devaluation of the Chinese yuan.

China’s recently installed “circuit breaker” mechanism paused trading for 15 minutes after the CSI300 index fell 5% in the first 13 minutes of trading. On resumption of trading it fell further, triggering the day’s halt.

China stock market intervention fuels flight to dollar and yen

The CSI300 index finished down 7.2%, the SSE composite index fell 7.3% and Shenzhen dropped by 8.3%.

Christopher Balding, a professor of finance and economics at Peking University’s HSBC business school, said he expected more government action to halt the stock market drops, “whether it is changing the circuit breakers, whether it is again intervening in the market, whether it is extending the ban on large selling by institutions.”

“I’d be surprised if they let this continue going down. By almost any measure, the Chinese stock market is pretty over valued and so you would be looking at a pretty significant fall to get back to a reasonable valuation. I would be surprised if they allowed it to move back to more appropriate levels.”

“2016 in China is getting off on the wrong foot.”

On Thursday Hong Kong’s Hang Seng index, which continued to trade, hit its lowest point since July 2013, down by more than 3%.

It was the second time this week that the circuit breaker device, intended to bring stability to the markets, has been deployed.

The stock market turbulence brought back recent memories of when China suffered a humiliating bout of financial chaos that saw the future of the prime minister, Li Keqiang, called into question.

China surprised markets on Thursday by speeding up the devaluation of the yuan to its lowest level in nearly five years.

China bolsters markets with $20bn injection and hints at curbs on share sales

That unexpected move sent currencies across the region tumbling, as investors feared the Asian giant was kicking off a virtual trade war against its competitors.

The People’s Bank of China set the official midpoint rate on the currency at 6.5646 yuan per dollar, the lowest since March 2011.

That was 0.5% weaker than the day before and the biggest daily drop since August 2015, when an abrupt near 2% devaluation of the currency also roiled markets.

“People are definitely nervous. People are paying a lot of attention to this stuff, whether it is the stock market or the changing currency,” said Balding. “I think psychologically the currency issue is a bigger issue for Chinese and it is definitely a bigger issue for a lot of firms. Between the two issues there is a lot of worry right now.”

The Australian dollar, often used as a liquid proxy for the yuan, swiftly fell half a US cent.

A sustained depreciation in the yuan puts pressure on other Asian countries to devalue their currencies to stay competitive with China’s massive export machine.

It also makes commodities denominated in US dollars more expensive for Chinese buyers, which could hurt demand and thus further depress commodity prices.

“It appears at least initially that the Chinese government is telling the market that they are going to steer the RMB [yuan] closer and they are not going to intervene in the stock market,” said Balding. “But they have done this before when they don’t exactly rush to maintain it and they don’t tell people that everything is going to be OK and the market craters for a couple of days and then they step in. So whether or not this maintains through even tomorrow, who really knows?”

Patrick Chovanec, a China expert and the chief strategist at New York’s Silvercrest Asset Management, said the latest bout of stock market turbulence was the 2015 crisis continuing to play out.

“To me this isn’t what about is happening now in China, it is really a correction that should have happened last summer and they didn’t let it happen. It has just been postponed.”

“The first time [this week] it went down 7%, people pointed to the PMI [Purchasing Mangers Index] number. This time they are pointing to the currency fix. All it takes is a catalyst. When you’ve got a market where the median value is 65 times earnings and they are trying to prop it up like that something is going to come unglued.”

On China’s unexpected devaluation of the yuan, Chovanec said: “It seems like they don’t really quite know what they are doing. They had these sudden moves, they said back in the summer that they were not going to devalue, that this was all really about preparing for SDR [special drawing rights] status in the IMF. They seem to have lost control of the narrative when it comes to what their plan is and what their policy is towards the exchange rate.”

Angus Nicholson, a Melbourne-based analyst for IG, said China’s currency intervention had “really shocked markets” by hinting that the country’s economy was in far poorer shape than Beijing has admitted.

He said: “What it has really fuelled is a concern that perhaps the economic situation in China is actually far worse than many had assumed and is easily perceived from the public released economic statistics. The People’s Bank of China and other senior financial and economic institutions have access to greater insights as to how the economy is tracking.”

“If they are easing the currency at such a dramatic rate and such a rapid pace that really does heighten concerns about how the economy is actually tracking and that perhaps things are going far worse than many had expected.”

[SSridhar]

Explaining the yuan's rout - Ravi Velloor, Straits Times

On Aug 12 last year, a day after China announced a shock devaluation of its currency and called it a one-off thing, I wrote a piece in this newspaper under the headline: Expect More Yuan Slides.

The reasoning was simple: China had been dipping its vast forex treasure trove to shore up the currency, was only holding back from further cuts as it sought reserve currency status with the International Monetary Fund and was facing unprecedented headwinds on the trade front.

More tellingly, capital flight was being evidenced in myriad ways, even as the government foreign exchange regulator claimed that there had been "no large and continued capital flight so far".

All this, plus the efforts to put a floor under cascading share prices was costing the government dearly, and winding down the impressive reserves, which, at one point, amounted to some US$4 trillion. Clearly, it was not a sustainable situation.

"China's economic managers, generally known for their sagacity," I wrote, "have been signalling panic lately." The devaluation move had that element.

Now, the chickens have come home to roost. China's currency has consistently been guided lower since it managed to get the IMF to include the yuan in its basket of currencies for the Special Drawing Rights. Indeed, it has fallen on every trading day of the New Year.

This is on account of two factors: As I wrote in August, fear that the slowdown in the broader economy is worse than let on is a key reason. The other is that China's economic managers are not on top of the situation. Indeed, since we know now that even China is not immune from economic cycles, the second point is the bigger worry. The decision to suspend the share market's short-circuit mechanism two days after it was introduced suggests a knee-jerk response that buttresses the point. Pitifully, rather like former Malaysian Prime Minister Mahathir Mohamad at the height of the Asian financial flu in September 1998, the PBOC has blamed "speculative forces trying to reap gains" for the currency's fall.

China's steep devaluation in 1994 hurt the exports of the rest of Asia and was partly responsible for the Asian flu that started with the Thai baht's crash in July 1997. It then won enormous goodwill by not taking further steps to devalue, when the rest of East Asia was suffering mightily. But times have changed. The rundown of its reserves is becoming intolerable, and could even affect its strategic goals such as the OBOR project. Manufacturing is seeing job losses-- this week, reports appeared that a provincial government had offered Foxconn what amounts to a subsidy to retain jobs that are being shed as Apple Iphone orders shrink.

China is not seeking to beggar its Asian neighbours but only trying to save itself. The devaluation is not so much aimed at improving the competetitiveness of its exports vis a vis East Asia, but with an eye to Europe, where manufacturing across the Eurozone has been expanding on the back of an easing euro. China, in the past decade, has handily passed Japan as the top exporter of high-end engineering goods. These compete with the goods sent out of industrial powers such as Germany and France.

The fallout from China will have to be managed carefully. It is time for regional central banks to have a deep conversation with their financial industry stalwarts and prepare for the reverberations that will inevitably follow.

[SSridhar]

Seeking that 18th camel - Ravi Velloor, Straits Times

There is this desert fable about a wealthy Arab who bequeaths 17 camels to his three sons, with instructions that the eldest be given half the lot, the middle son a third, while the youngest is to get a ninth as his share.

Upon his death, unable to find a way to distribute the inheritance without cutting healthy animals in half, the boys approach a wise old man who asks them to bring the camels to his home.

There, the old man adds his own camel to the lot and, suddenly, a solution is available. The oldest would get nine, the middle boy, six and the youngest, two. Thereupon, the wise one withdraws his own animal and sends the lads away.

As Asia confronts the multiple challenges that loom in 2016, it will need the wisdom of that ancient Bedouin to manage the issues before it. It does not look as though that will be easily available.

The contest over territorial claims and the rivalry between the United States and China are set to worsen at a time when economies are slowing. In many nations, internal security is under strain amid an escalating threat of terrorist violence.

As more and more boulders are being rolled into China's path with the strengthening US network of alliances, China's resolve to hold on to what it has grabbed, or controlled, is getting stronger. Unable to articulate a compelling normative vision of Asia that is acceptable to the region, its actions instead spread such a sense of insecurity that it serves to coalesce all sorts of disparate forces. This then serves to feed back into Beijing's insecurities.

Just look at last week's test flight into the newly constructed airstrip on Fiery Cross Reef in the Spratlys, an area also claimed by Vietnam and the Philippines. Both Asean states instantly protested but there was little either could do to stop it. The US State Department expressed concern. Now, it remains to be seen how the Obama administration will respond in the months ahead. With the November presidential elections looming, any perceived weakness over China could dent the Democratic Party's chances of retaining the White House. Yet, it would not be prudent for the US to raise tensions.

In any case, it is not at all clear that the US, beyond herding a widening band of skittish Asian nations into a loose paddock, has a clear strategy. It did conduct a dramatic Freedom of Navigation Operation (Fonop) in disputed waters last October, enraging China. But it also confused everyone by suggesting that the Fonop was done under the right of innocent passage, which comes close to recognising Chinese sovereignty over the islands.

A letter from Defence Secretary Ashton Carter to Senator John McCain that came to light this week provided the definitive clarification on that manoeuvre. It asserted that the destroyer USS Lassen had sailed inside the 12 nautical mile zones of a number of countries, including China, and that it had done so without prior intimation to the nations involved. The operation "involved a continuous and expeditious transit that is consistent with both the right of innocent passage, which applies only in a territorial sea, and with the high seas freedom of navigation that applies beyond any territorial sea", Mr Carter wrote. So, it was both Fonop and innocent passage!

Meanwhile, China continues to build and test runways that can take all types of aircraft except the Space Shuttle.

If the Chinese continue their construction projects, "you can imagine a network of missile sites, runways for their fifth-generation fighters, and surveillance sites", Admiral Harry Harris of the US Pacific Command told the Senate Armed Services Committee last September. "China would have de facto control over the South China Sea in any scenario, short of war."

But China has not been the only one constructing in the South China Sea. A Japanese defence paper published on Dec 22, which raised concerns about Chinese manoeuvres in the East Sea, also noted that in the 1980s and 1990s, Vietnam, the Philippines, Malaysia and Taiwan had all built runways on land features they control in the South China Sea.

"All these countries have (now) done facility maintenance and development. Reports suggest that Vietnam has recently conducted reclamation work," it added.

To be sure, not all is gloom. The China-Taiwan summit in Singapore was a stunning development. The Japanese outreach to South Korea in late December and Seoul's promise to desist forever from bringing up the issue of comfort women have been no less a diplomatic coup, even as nationalists in either country express dissatisfaction. The foreign ministers of China, Japan and South Korea have also met in Seoul lately.

Elsewhere in Asia, Indian Prime Minister Narendra Modi has risked tremendous political capital with a major outreach to Pakistan. He is also sending his National Security Adviser (NSA) to China for strategic consultations. That China visit had to be postponed for two weeks because of a major terrorist strike on a forward base of the Indian Air Force, blamed on the Jaish-e-Mohammed terror group in Pakistan, underscoring how there are plenty of vested interests seeking to stymie normalisation of ties. A Chinese spokesman's revelation that the NSA visit was not related to the boundary question is, in some ways, a positive thing: It indicates that Asia's tectonic plates are in close touch at very high levels on a number of security issues.

But all these contacts are but straws in the wind for now. And they could blow either way; for instance, the Japan-South Korea rapprochement was seen by many as Japanese Prime Minister Shinzo Abe acting against his instincts to oblige Washington, which is aware that Beijing sees Seoul as a potential weak link in the US alliance system. For the foreseeable future, therefore, a sense of drift is the order of the Asian day.

Surely, the assertive behaviour China has displayed since 2008 is the principal reason for the unease. But to portray the mainland as an expansionist power, hell bent on upsetting the status quo on the strength of its bulging sinews, is to miss the insecurities that drive Chinese actions.

As Beijing's power and influence have risen, so too has the perception that the benign environment in which it flourished is being deliberately altered in order to block its path. China is critically dependent on the Indian Ocean but fears that the US is coordinating with India to check its access. Its other major fear is that in the event of a crisis, its nuclear submarines, particularly its SSBNs, will be sitting ducks in the shallow pond that is the South China Sea, as they emerge from their bases to move towards the Indian and Pacific oceans. The often-intrusive US surveillance around its exclusive economic zone makes it feel helpless and angry.

"It is bad enough that you come to my window and peer in," a senior colonel in the People's Liberation Army told The Straits Times last year. "But if you also want to read the combinations of the locks on my safe, I have a major problem."

So, it is also entirely possible that China is working to a plan. Once it feels sufficiently confident that it has consolidated its grip on the South China Sea, it will probably attempt the diplomatic outreach to present a more benign face and, indeed, even move on a Code of Conduct with Asean states.

To an extent, let's face it, it has already succeeded with its strategic goals in the South China Sea. Possession, they say, is 90 per cent of law. As Ms Yun Sun, a senior associate at the Henry L. Stimson Centre in Washington, put it: "By building something out of nothing, China has harvested many things."

A presidential change of guard in the Philippines could provide the opportunity for China to repair that bilateral relationship, even if some senior Chinese officials privately think Manila is too far down the road with its current approach to facilitate an easy reversal. The North Korean hydrogen bomb test pushes Beijing, Pyongyang's only ally, closer to Japan and South Korea. Besides, China and India, and several other significant Asian states, have much to think about together as they face a common enemy: terror threats from radicalised Muslims. All these threats will need trust and adjustment of positions, sharing - and innovating solutions.

For now, though, the 18th camel looks elusive. There is no shortage of wise men in the region. Only that the lads are not willing to bring the camels to them.

[SSridhar]

X-post from India-Japn thread. Originally posted by A_Gupta.

Relevant to the ringing of China.
http://www.canindia.com/japan-britain-a ... operation/
"Japan, Britain agree to boost defence cooperation"

Tokyo, Jan 9 (IANS) Japanese Defence Minister Gen Nakatani and British Defence Secretary Michael Fallon in Saturday agreed to bolster bilateral cooperation.

Nakatani and Fallon met on Saturday in Tokyo. Fallon came to Japan for a meeting of foreign affairs and defence chiefs that was held on Friday, public broadcaster NHK reported.

Nakatani said it is meaningful that the ministers exchanged views on North Korea and China. He added that he wants to deepen defence cooperation through further discussions.

Fallon said certain parties in the region are changing the status quo not through negotiation but by force and intimidation. He said he wants to study ways to expand bilateral security relations.