Neutering & Defanging Chinese Threat (15-11-2017)

[Kati]

Pompeo, in fiery speech, hammers China over international abuses

https://www.cnbc.com/2020/07/23/pompeo- ... buses.html

KEY POINTS
Secretary of State Mike Pompeo slammed the Chinese government in a sweeping address Thursday, saying the United States will no longer tolerate Beijing’s playbook to usurp global order.
“The truth is that our policies, and those of other free nations, resurrected China’s failing economy, only to see Beijing bite the international hands that fed it,” Pompeo said.
The crumbling relationship between Washington and Beijing, strained from an ongoing trade battle, has intensified as the Trump administration places blame squarely on China for the coronavirus pandemic and its devastation on the global economy.

WASHINGTON — Capping a string of searing speeches by Trump administration officials, Secretary of State Mike Pompeo slammed the Chinese government in a sweeping address Thursday, saying the United States will no longer tolerate Beijing’s playbook to usurp global order.

“The truth is that our policies, and those of other free nations, resurrected China’s failing economy, only to see Beijing bite the international hands that fed it,” Pompeo told an audience at the Richard Nixon Presidential Library in Yorba Linda, California.

The crumbling relationship between Washington and Beijing, strained from an ongoing trade battle, has intensified as the Trump administration places blame squarely on China for the coronavirus pandemic and its devastation on the global economy.

This week, in another sign of escalating tension, the U.S. government ordered the closure of the Chinese consulate in Houston. Beijing vowed to retaliate.

“We opened our arms to Chinese citizens, only to see the CCP exploit our free and open society. It sent propagandists into our press conferences, our research centers, our high-school and college campuses,” the nation’s top diplomat said Thursday, adding that the Chinese government had also “ripped off our prized intellectual property” and “sucked supply chains away from America.”

Pompeo then sharpened his focus to Chinese telecom giant Huawei, a firm that he has previously described as a “Trojan horse for Chinese intelligence.”

“We have stopped pretending Huawei is an innocent telecommunications company ... we have called it what it is, a national security threat, and taken action accordingly,” he said.

U.S. officials have long complained that Chinese intellectual property theft has cost the economy billions of dollars in revenue and thousands of jobs. They have also said that it threatens national security. Meanwhile, Beijing maintains that it does not engage in intellectual property theft.

Pompeo’s remarks follow those of U.S. Attorney General William Barr, national security advisor Robert O’Brien and FBI Director Christopher Wray.

In a blistering speech last week, Barr accused the Chinese government of human rights abuses, espionage and economic blitzkrieg.

“The American people are more attuned than ever to the threat that the Chinese Communist Party poses not only to our way of life, but to our very lives and livelihoods,” Barr said.

Last month, O’Brien slammed China for a laundry list of offenses before saying that “the days of American passivity and naivety regarding the People’s Republic of China are over.”

Similarly, Wray said the Trump administration would not allow the Chinese to carry on with espionage and cyberattacks against the United States which has amounted to what he called “one of the largest transfers of wealth in human history.”

[KLNMurthy]

https://www.news18.com/news/india/there ... 30627.html

There Will Be No Business with China as Usual until Complete Disengagement at LAC: Indian Envoy to Russia

JULY 23, 2020, 10:56 PM IST

India's Ambassador to Russia Venkatesh Varma on Thursday said that New Delhi has made it clear it will not do business with China as usual until there is a complete disengagement of military forces along the Line of Actual Control (LAC) and de-escalation in Eastern Ladakh.

I don’t like this. He is saying that if Chinese pull back at LAC, sab chalta hai once again.

[Suraj]

He's a foreign policy official. It's part of his job to speak diplomatically. The resoluteness and long term permanence is best judged from actions, not the words of a selected cadre of people who are paid to say soothing things that leave open hope.

It's a concept of warfare that you never completely take away hope in the other side. Doing so makes them resolve to fight to the end. When you leave hope - even when you have no desire to ever offer it - it makes them agonize between choosing the hopeful option and the head on collision.

[Gyan]

I think Xi is not a Complicated man. He wants to an Emperor "now" and that's it. He is "not" thinking of China.

Off course he calculated Economic power of China + Ability to bribe important leaders, and decided its time to Act.

Indian bureacrats are underestimating the problem. They are caught in their own stupidity.

There is no rational explanation for what Hitler did, he just did. Or what Radical Islam is doing for 1400 years. They just do.

Xi did what he did and he will not stop here. Our Economic policy has been idiotic, hope some course correction takes place.

I think we are not factoring in the influence China "thinks" it has by buying out/bribing key world leaders. George Bush Sr. Was going to destroy China till Clinton happened. Clinton brought China into WTO unleashing a monster which has hundreds of powerful US & European business leaders in its pocket.

Our Bureaucrats, official think tanks & military leaders are "mentally" unprepared. Their most important task was to choose between two imports, drink Scotch & kick Indian poor. Suddenly they are being asked to take some decisions which involves personal responsibility.

[Sonugn]

China entered covert deal with Pakistan military for bio-warfare capabilities against India, Western countries: Report

As part of a broader offensive against India and Western rivals, Pakistan and China have entered a secret three-year agreement to expand potential bio-warfare capabilities, including several research projects related to the deadly agent anthrax, the Klaxon reported citing multiple intelligence sources.

As per the intelligence sources cited by The Klaxon, they have serious concerns about the covert project which involves China testing biological agents outside its borders to minimize the "risk of drawing condemnation from the international community".

he Klaxon report said the "covert China-Pakistan project has conducted "successful soil sampling tests" to isolate Bacillus Thuringiensis (BT), which has a "striking similarity" to Bacillus Anthracis - or anthrax."

Sources told The Klaxon that the China-Pakistan biological project had already undertaken experiments on the Crimean-Congo Hemorrhagic Fever Virus (CCHFV), a rapid-onset fever virus that causes death in about 25% of cases and is similar to the Ebola virus.
Pakistan is allegedly carrying out tests on CCHFV in laboratories which are not equipped to handle Bio-Safety Level-4 diseases, the report stated.

[KLNMurthy]

He's a foreign policy official. It's part of his job to speak diplomatically. The resoluteness and long term permanence is best judged from actions, not the words of a selected cadre of people who are paid to say soothing things that leave open hope.

It's a concept of warfare that you never completely take away hope in the other side. Doing so makes them resolve to fight to the end. When you leave hope - even when you have no desire to ever offer it - it makes them agonize between choosing the hopeful option and the head on collision.

Well, from your keyboard to God’s ears certainly, but in my experience no one says specific words that don’t have intent behind them. Unless he is brazenly and intentionally lying.

But consider what we have: the man is an official, and he speaks for the government. His words clearly seem to be setting a very quantifiable and measurable condition, leaving (to my reading) very little ambiguity about what will happen if that condition is met: we go back to business as usual, though maybe the ban on the apps will remain.

I don’t know of Indian officials at his level ever publicly, shamelessly and deliberately dissembling. Sure, they will lie by omission, but to say decision Y will follow condition X with such a degree of precision when he meant nothing of the kind at all?

If he wanted to be soothing and diplomatic, he would have spewed some ambiguous, generic platitude; surely as a diplomat he is trained in exactly that sort of thing.

Does GoI believe it is engaging in warfare? And lying about it to the whole world? The official says words to the effect that we are not interested in waging economic warfare. What basis do we have for believing that he is lying? Are there any other occasions when GoI lied about something like that? (Genuine question, no snark at all, and praying that the answer is yes. Maybe for Pokhran?)

That’s a lot of tea-leaf reading. It makes sense to Occam it and assume that what we are hearing is what we are getting and revise as we get more information.

Based on this statement I am forced to conclude that GoI’s sole and entire objective is, in fact, what they have been saying all along (which maybe I was not inclined to hear) a restoration of the status quo ante May 1 or so, which means a Chinese withdrawal to their side of the LAC, and the Indians resuming imports of Chinese goods and services without let or hindrance; all the restrictions imposed post-Jun 15 being nothing more than bargaining chips to get the Chinese to withdraw.

If I were the Chinese at this point, I would do what they are actually doing right now—delay and drag on the withdrawal while building up troop and equipment levels, one of the goals being to raise the level of anxiety and psychological tension on the part of the Indians, so that they would be more likely to settle for less than their ask. At any rate, the intended effect of the tension would be to make the Indians feel like they have achieved a win if the Chinese give them anything at all. Negotiation 101, sure, and maybe my adversary will easily counter it by, what? Threatening to walk? And then do what? He gets nothing unless he is prepared to go to war over a lowball objective.

OTOH, my Indian adversary has already said in so many words what he wants, that too a lowball requirement like status quo ante, so he is probably *not* going to walk, and I should keep up my pressure.

As an Indian I am certainly hoping that the Chinese will, instead, remain too caught up in Han echandee and tactical brilliance to do the rational thing and instead do something stupid again to provoke an Indian reaction.

But hoping that the adversary will make an unforced error after he has already made one and paid for it? If that’s the entirety of my game plan, that’s not very good.

[Nihat]

Between our resolute armed forces and the people of India stands a inherently terrified bureaucracy.

I just heard the words that Pompeo used against China and they don't even have a border issue with them. On the other jams here we are, who can't even name china properly, I mean for heavans sake what is this 'land border' language.

We are barring investments from countries with land borders. So do Bhutan, Bangladesh and Nepal also undergo additional scrutiny because we dare not name china.

While our forces go face to face with Chinese pigs, the government cannot find the guts to name china for all the blatant violations they are conducting.

Is this how we plan to neuter and defang China

[KLNMurthy]

Between our resolute armed forces and the people of India stands a inherently terrified bureaucracy.

I just heard the words that Pompeo used against China and they don't even have a border issue with them. On the other jams here we are, who can't even name china properly, I mean for heavans sake what is this 'land border' language.

We are barring investments from countries with land borders. So do Bhutan, Bangladesh and Nepal also undergo additional scrutiny because we dare not name china.

While our forces go face to face with Chinese pigs, the government cannot find the guts to name china for all the blatant violations they are conducting.

Is this how we plan to neuter and defang China

Are we sure it’s the bureaucracy and not the political leadership?

Bureaucracy didn’t stand in the way when the political directive was given to draft the abrogation of Article 370, did it?

I think there is an overall governmental consensus that they want India to be always seen as law-abiding, hence the broad formulation of “land border,” so that, in some theoretical universe in which Chinese respect international trade rules, they won’t drag us before the WTO tribunal for unfair trade barriers (gurus? Does this make sense?)

What I imagine might have happened is, PMO or NSC told the Commerce Ministry: hey, come up with something we can use for restricting the Chinese, and the latter thought like Commerce Ministry babus and came up with this gem. Maybe PMO /NSC took itself out of the loop after making the request to Commerce? Or maybe it was in the loop and had no problem with the language as they thought it would give them plausible deniability?

I have no idea, someone who actually knows how government at that level operates can weigh in. I am finding that, just saying, babus have done this because they have xyz character defect, is much too amorphous. Babus work for the political leadership, if they are able to sabotage their bosses—who are not the weak, gibbering politicians of the yes-minister flavor—there is likely a process issue or the political leadership itself is being overly cautious.

[Suraj]

Well, from your keyboard to God’s ears certainly, but in my experience no one says specific words that don’t have intent behind them. Unless he is brazenly and intentionally lying.

But consider what we have: the man is an official, and he speaks for the government. His words clearly seem to be setting a very quantifiable and measurable condition, leaving (to my reading) very little ambiguity about what will happen if that condition is met: we go back to business as usual, though maybe the ban on the apps will remain.

I don’t know of Indian officials at his level ever publicly, shamelessly and deliberately dissembling. Sure, they will lie by omission, but to say decision Y will follow condition X with such a degree of precision when he meant nothing of the kind at all?

If he wanted to be soothing and diplomatic, he would have spewed some ambiguous, generic platitude; surely as a diplomat he is trained in exactly that sort of thing.

I'm forced to restate what I mentioned earlier - that I can't parse the words the same way you choose to. It may seem completely unambiguous to you, but it sounds to me like the kind of ambiguous generic platitude you suggest he should say.

Over the course of post Galwan actions by GoI, many of these have been characterized by the lack of much actual talking, but substantial acts of economic sabotage. For example, the blocking of goods at ports is the sort of thing the US or China routinely does to put pressure in a sort of expressionless-face-while-twisting-knife way, and act of power where the Chinese are the ones having to respond by anxiously 'seeking clarifications from New Delhi regarding why port clearances aren't happening'. The customs blockage remains in place, several weeks later.

You might be choose to argue it, but in my view, the sum total of post-Galwan actions by the government have been far more punitive than the actions of probably all the Indian governments of the past 3-5 decades combined - certainly the most effective if you combine the Doklam response to the post-Galwan economic blockading measures. When was a prior instance when official US policy prescriptions for China used Indian actions as a precedent to recommend doing exactly the same themselves, e.g. TikTok and other app ban ?

I find value in these actions because I see them as visible cues of a government that recognizes that despite having a trade deficit, it understands how to use that to its advantage from a seemingly weaker position to impose costs. Now going back to the words of the diplomat...

Quite literally, what he says is the epitome of what the Chinese say - 'do this now and I promise to act so and so way later'. In my view you're not giving this government enough credit here. You're readily taking at face value that we might 'act so and so way' later. And what if China does withdrawal now and asks for us to do our part, and we claim we said no such thing ? They'll take us to court like a jilted woman crying "but he promised to marry me!" ?

India has historically never been in s position to make demands of China to act in the present, in exchange for some suggested future reward. It has willingly done the reverse, e.g. recognized one China Policy and that Tibet is a part of China, hoping for Chinese to act better.

I'm surprised that the reversal in power dynamics here isn't obvious. I don't mind GoI making all kinds of promises, breaking them repeatedly while continuing to increase economic costs and compel Chinese to offer concessions in the present for future nonsense promises. That's exactly what the Chinese do as a matter of routine whether in geopolitical acts or industrial espionage or any other domain.

[nam]

We are barring investments from countries with land borders. So do Bhutan, Bangladesh and Nepal also undergo additional scrutiny because we dare not name china.

Typical of GoI action there is an amendment to this rule.

"All neighbors with land border have to go through the rule." Amendment: Doesn't apply to countries who receive Indian aid or line of credit

There is a reason we get the best among us to create convoluted rules! And make us look fair.

[kit]

We are barring investments from countries with land borders. So do Bhutan, Bangladesh and Nepal also undergo additional scrutiny because we dare not name china.

Typical of GoI action there is an amendment to this rule.

"All neighbors with land border have to go through the rule." Amendment: Doesn't apply to countries who receive Indian aid or line of credit

There is a reason we get the best among us to create convoluted rules! And make us look fair.

This is how its done, there will be an agency to "determine" the country receives aid or not.This is where the screws will be applied.Just like the annual presidential certification to certain amendments in khans land. Carrot and Stick.

[RaviB]

KLNMurthy garu, they may not have that much time either due to economic/fiscal reasons or they fear some kind of uprising within the year. Probably nCV damaged them a hullva lot more than they are letting out. HK is there for all to see but what were the effects of nCV and COVID19 on their polity, party power dynamics, and economy? Only they know and hence the sense of urgency, perhaps.

I'll go a bit into detail here. The question why now? is key. There appears to be consensus at the top in China that concept of "peaceful rise" has outlived its usefulness.

The Chinese see the present as a period of "once in a century change", which is very close to the situation in the world around the beginning of the First World War. That triggered the formation of a new world order, which finally got crystallised following WW2.

in June of 2018, GEISHA remarked that: “At present, our country is in its best stage of development in modern times, and the world is experiencing a once-in-a-century major change.”

Now with the Covid19, they see western democracies flailing to control the situation, which according to them demonstrates the superiority of the Chinese model. So, now is the time to start forming a world order that will serve them for the next 100 years because they are stronger than ever and everyone else is weaker than they have been in a long time.

You can see how they see their past year of diplomacy in this piece (in Chinese) "China's Confidence and Responsibility in the Changing Situation of China in the Past 100 Years: In 2019, President Xi Jinping led the great-country diplomacy with Chinese characteristics and profoundly affected the world"

Once again, this has the theme of "once in a century change".

There is a very important article by Yuan Peng (English translation and commentary) which brings together the "once in a century change" with the Covid19 pandemic by comparing it to a major war or historically critical event:

His argument is that the coronavirus pandemic will serve the same historic function as major wars in recent history: ushering in a new international order whose shape remains uncertain. Yuan compares current Sino-American relations, in geopolitical terms, to relations between Great Britain and the United States at the end of WWI. In hindsight, it is clear that Britain’s historical moment was waning; the cost of the war and the maintenance of empire were more than the budget could bear and decline was inevitable. At the same time, while America was on the rise, she was not ready to take Britain’s place. Today’s America, in Yuan’s view, is like Britain a century ago; not overextended but thoroughly dysfunctional, as the coronavirus is currently demonstrating, and incapable of making the hard choices necessary to engineer a national revival. China is vibrant, dynamic, but not yet ready to lead.

Where does India fit into this picture?

For China, India is a secondary threat, militarily ineffectual but still to be taken seriously because of the shared border. What they are doing right now is maybe something like USA fighting Mexico after annexing Texas, permanently settling their boundary and securing their borders against any future threats. This was a different historical period but a useful analogy. Imagine if the USA put off settling its boundary by military force till the first world war, it would be a terrible distraction.

Why are they willing to walk away from 50 Billion $ of profits from India?

- The 50 Billion is a notional sum, not a certainty. If you expect India to go into economic ruin, then it's not 50Billion but maybe 10 Billion you are sacrificing. Considering the scale of the challenge, it's no big deal.
- The CCP is not a trade regulating body sitting around with Excel sheets, it sees itself as the guider of Chinese destiny. Think Qin Shi Huangdi and you have some feel for their vision. Trade balances is how everyone else sees China, not the CCP. I mean of course its very important but it's not their primary focus. (Jaitley ji once told me that even if politicians are corrupt, it does not mean they cannot have a vision for the country)

For them right now India is on the verge of collapse: economic, social and political. They expect India to be totally devastated by Covid19; they foresee India's economy (which was already slowing) coming to a grinding halt; they expect India to break up into several parts; they expect a civil war between Hindus and Muslims. I have posted elsewhere about how China sees India, please take a look if you are interested.

viewtopic.php?f=3&t=7810&p=2441143#p2441143
viewtopic.php?f=3&t=7810&p=2441202#p2441202

They currently see themselves as being more powerful than anytime in the past 100 years; they see their opponents being weaker than ever; they see the present as setting the stage for the next 100 years; they see India as a distraction to their major competition with the USA

Additional comment:
- About 1962, the Chinese say "they won in name but lost in practice" because the loser kept the territory. They see Arunachal as a massive loss and one they probably will not be able to redress. So they are also "getting revenge" for their loss of territory and according to the common narrative, they lost the territory because they were "too soft" and withdrew to be fair and create the basis for a friendly settlement. (the mental gymnastics might make you dizzey but it is important to understand what they think they are doing)

[Gyan]

I think GoI wanted to close the issue after Galwan incident by declaring victory. They may have even allowed business activities with China as usual.

Its constant media leaks which is forcing their hand to take some minimal economic actions against China.

I am not expecting any War. I think soon China will buy out Silence of Media and it will be business as usual.

Except for some media news about Delegated financial powers to Military Generals, there is no sense of Urgency about military procurement & preparation for War, in the Air.

Except for Wishful thinking that China will go back soon.

[schinnas]

Some posters don't seem to understand why India does not name China for investment and public contracts. That is because of WTO. India cannot name a single country and sanction it. But by saying countries that share land borders but don't get any development assistance from India, this covers only Pakistan and China. A clever move!

[SriKumar]

THe words from Sec. of State Pompeo is pretty strong and vehement language (will not tolerate China's playbook to usurp world order). That's tantamount to saying 'enough is enough'. Tough political positions has been taken (would not quite call it battlelines yet).

About Indian MEA and babucracy, it just struck me that the current bureaucrats have never had the experience of declaring war, or conducting a war (i.e. conduct of war beyond military tactics). Those in their mid-20s in 1970 would be retired now. This is brand new terrirtory for the current gang. THey must be wondering what to do and thinking chess moves 100 steps ahead. (Kargil does not count because it is not the same- from the get-go Kargil was going to be a war localized to a 10-15 spots along a border of a few 100 km. THis one, if there is battle, could well involve strikes well inside Tibet, China and perhaps even naval engagements from Malacca to perhaps Djibouti. This is a very different game from anything the babus have seen (not to mention at what point, if at all, will a nuclear option come on the table. I think India did away the NFU with China?)).

[pankajs]

Our China policy was being driven from the very top. Whatever the babus are doing/saying is based on inputs from PMO/NSA/FM. Babu's statement may be dull or bright but the content is being dictated from the top.

A statement like Pompeo would have to come either form PM/FM/RM or NSA not the babus.

[pankajs]

India is not naming China is because India is climbing the latter very slowly and purposefully.

1. One doesn't go from 0 to 100 in one shot.
2. India's top minds are still hoping against hope that China will step back and allow for a semblance of normalcy in relationship going forward. Therefore, it is keeping a slight opening in most moves.

[pankajs]

I think GoI wanted to close the issue after Galwan incident by declaring victory. They may have even allowed business activities with China as usual.

Its constant media leaks which is forcing their hand to take some minimal economic actions against China.

I am not expecting any War. I think soon China will buy out Silence of Media and it will be business as usual.

Except for some media news about Delegated financial powers to Military Generals, there is no sense of Urgency about military procurement & preparation for War, in the Air.

Except for Wishful thinking that China will go back soon.

Plain wrong ... GOI has enough heft on its own to shut down all leaks broadcasts of leaks but it is not. Rest all points get negated based on this one fact.

GOI's urgency on military procurement cannot fill the gaps that currently exist for major platform if a war were to happen now. GOI is already expediting the ammo/basic shortfall that will be useful in the short-term. Therefore, decision on major acquisitions does not have to go through the emergency procurement process.

Business activity clampdown with China will have to be staggered just as it is happening. However, I agree with you, GOI is still hoping against hope that the situation will normalize through talks.

[Suraj]

I've heard of this 'once in 100 year moment'. In my view, it encapsulates China's anxiety to accomplish something that in reality it's nowhere close to. To make itself believe it's at this point, it has to construct a narrative of its own standing that is at odds with reality. First and foremost in this narrative is that it needs to demonstrate its standing over others - from US to India to anyone else.

The $50 billion surplus being lost is not an 'Excel spreadsheet cell'. The reality of that matter is that China does not have ascendancy over India anymore. For ages, China dictated terms. Through a process of continuous border incursions, they gave themselves the place to demand actions now (recognize One China policy, recognize Tibet as part of China...) in exchange for future assurance of withdrawal. Meanwhile, through MOUs with a venal INC, they dominated the trade engagement, going from a $12 billion deficit at the end of NDA-1 to $55 billion surplus by late 2010s.

Today, they don't have any levers. Not only do they have little to gain from their latest border incursion, but India reacted in a manner that they cannot respond to by imposing a greater cost to show the alpha dog role. They have nothing like the ability of the Royal Navy 150 years ago to respond to an attack on the British empire by sending a flotilla to pound a coastal city into pieces.

The Indian economic blockade gives them two options - try to soothingly defuse and get India to halt its actions, or attack us further. BOTH are loss mitigation strategies. Big powers with delusions of grandeur do not mitigate losses. They deliver punishment and a warning not to do that again, and get back to controlling the dynamic of the interaction. China does not have that luxury. They can claim 'India is a lost cause, US lackey' but again, that's something they need to tell themselves to keep up appearances. The Chinese see ascendancy over the US, and yet India and China trade with USD; the INR RMB exchange rate is static for 5 years (~Rs.10/RMB).

And the Covid as a sign of India's collapse ? The Chinese would like to believe Chinese deaths stopped in March because they stopped reporting data then. Choosing to delude themselves deliberately is their own choice. Never get in the way of someone so intent on fooling themselves.

The Chinese delusion of 'having arrived' has a cost. It's no surprise that they wanted to get back to great standing. Deng, Jiang and Hu all asserted this goal. But all focused on getting there. Xi is the first to claim he's already there. He's ended the 2-term restriction, which in effect means he doesn't want the next guy to have the glory.

Any system that stops upward movement builds pressure within it. People want to move up in life. They keep it going by not permitting more than 2 terms at the top and having constant mobility. Or they do it like Stalin - top stays the same and purges in the middle gives space to move up into. The USSR started dying in the 1960s when Brezhnev stalled upward mobility while also stopping purges of Stalins scale. When Xi does the same, he needs to relieve pressure somehow. If he can't offer mobility, he at least needs to command power and standing on par with at least some of the top 5 or 10 greatest Chinese emperors.

Thus anyone's strategy in dealing with China is simple - stall them, block them, make Xi look ineffectual - even caricaturization as Winnie the Pooh in Indian SM is great. Make them wait and draw it out. The most effective hurdle to Chinese greatness has been their own tendency to implode when faced with crises that build up internal faultlines. Xi has pushed himself and his country into a position where he either has to deliver their great power standing or face a major internal crisis because he's stopped the system from working like it did.

[Kati]

Still pocketbook is the best approach to hit the red panda....

Panic Selling Grips Chinese Stocks After U.S. Tensions Worsen
Bloomberg
Bloomberg News
,Bloomberg•July 24, 2020

Panic Selling Grips Chinese Stocks After U.S. Tensions Worsen
More
(Bloomberg) -- China’s traders, company insiders and overseas investors are all fleeing the country’s stock market.

Sentiment is quickly souring amid the biggest threat to Beijing’s diplomatic ties with Washington in years. Traders based beyond mainland China sold more than $2.3 billion worth of Chinese stocks Friday, one of the largest ever outflows via Hong Kong’s exchange links. Some of China’s controlling tech shareholders are getting out as soon as they can.

The CSI 300 Index fell 4.4% at the close, while the ChiNext Index dropped 6.1%, the most since Feb. 3. Losses accelerated in the afternoon after the Chinese foreign ministry said it ordered the U.S. to close its consulate in the southwestern city of Chengdu. The Trump administration earlier this week ordered the closure of a Chinese consulate in Houston.

The escalation in tensions comes at a particularly volatile time for China’s stocks, with the government taking steps to manage a debt-fueled frenzy that had pushed equities to their highest since 2015. Bullish traders have pushed leverage to an almost five-year high.

“Worries over China-U.S. relations will dominate the market,” said Raymond Chen, a portfolio manager with Keywise Capital Management (HK) Ltd. “People will be closely watching how the U.S. reacts to the closure of Chengdu consulate. I expect more panic selling in the near term.”

China’s yuan fell as much as 0.28% to 7.0238 versus the greenback, the weakest since July 8. China’s government bonds extended gains, with futures contracts on 10-year notes climbing as much as 0.36% to the highest since July 3. The yield on debt due in a decade dropped 5 basis points to 2.86%, the lowest since July 1.

Overseas investors sold 16.4 billion yuan of China stocks Friday, the most since a record 17.4 billion yuan was dumped on July 14. Turnover rose to 1.3 trillion yuan, the 17th session over the 1 trillion yuan mark.

Even after today’s losses, the CSI 300 is up 10% for the year, among the best performances among global benchmarks. Sun Jianbo, president of China Vision Capital in Beijing, said he took advantage of the selling to raise the portion of equities in his fund’s total assets to 90% from 70%.

“We’ve been cutting stocks for days and locked in profits at high levels already so we had enough ammunition in the armory,” he said. “We can’t predict what’s happening next on macro events so we just focus on firms’ growth potential over the next three years.”

For more articles like this, please visit us at bloomberg.com

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©2020 Bloomberg L.P.

[VinodTK]

^^^

I've heard of this 'once in 100 year moment'. In my view, it encapsulates China's anxiety to accomplish something that in reality it's nowhere close to. To make itself believe it's at this point, it has to construct a narrative of its own standing that is at odds with reality. First and foremost in this narrative is that it needs to demonstrate its standing over others - from US to India to anyone else.
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Very thoughtful and good writeup Suraj.

[SriKumar]

As a point of clarification on my previous post- the comment on Pompeo is completely indepedendent of my comment on MEA/babus etc. Not related, though they are in the same post. The Pompeo comment was to remark on the tough stance taken by GotUS. It appears to signal a departure from status quo and move in a new direction (to my reading, it appears even more serious an indication than the closure of the Chinese consulate in Houston).

[Gyan]

Some posters don't seem to understand why India does not name China for investment and public contracts. That is because of WTO. India cannot name a single country and sanction it. But by saying countries that share land borders but don't get any development assistance from India, this covers only Pakistan and China. A clever move!

Have you read WTO Treaty? I have! You are completely wrong. India can name China & impose tariffs, sanctions etc on them, well within WTO treaty provisions.

I see so much off the cuff remarks about WTO Treaty & FTAs, without anyone bothering to read them.

[Suraj]

What's your point here ? India should replace the law with a new law just naming TSP and PRC explicitly ? Or else what happens ?

[RaviB]

The $50 billion surplus being lost is not an 'Excel spreadsheet cell'. The reality of that matter is that China does not have ascendancy over India anymore. For ages, China dictated terms. Through a process of continuous border incursions, they gave themselves the place to demand actions now (recognize One China policy, recognize Tibet as part of China...) in exchange for future assurance of withdrawal. Meanwhile, through MOUs with a venal INC, they dominated the trade engagement, going from a $12 billion deficit at the end of NDA-1 to $55 billion surplus by late 2010s.

Excellent points as always Suraj ji.

I was pointing out that the chinese (mis)calculation was that a) their surplus would go down anyway as India's economy went down (there was a consensus it would go down). b) India was completely trade dependent and would lack the resolve and the ability to respond c) this is perhaps the most important, India was politically too split to respond cohesively.

They have been proven wrong on all these points. Also the app ban is really a very smart move. Lots of these firms including Bytedance have PLA money, so the impact has been quite tailored, kind of like if we were to ban cornflakes from Pakistan. Even scarier for them, these actions could "go viral" leading to other countries boycotting them too.

Today, they don't have any levers. Not only do they have little to gain from their latest border incursion, but India reacted in a manner that they cannot respond to by imposing a greater cost to show the alpha dog role.

I think this is one of the getting drunk on your own kool-aid moments. For the past 15 years, every think tank in the West has been talking about the China miracle, while the Chinese were always a bit more cautious. For the past 3-4 years, their think tanks have all been proclaiming China's arrival. At some point, they might actually have started believing their propaganda. The big advantage of democracies is that someone is always willing to call BS on stupid ideas. In PRC Geisha only gets to hear echoes of his own speeches.

The Indian economic blockade gives them two options - try to soothingly defuse and get India to halt its actions, or attack us further. BOTH are loss mitigation strategies.

This is a very good point.

And the Covid as a sign of India's collapse ?... Never get in the way of someone so intent on fooling themselves

The collapse of India narrative has always existed, but it started getting louder earlier, around the time of the CAA protests and the Delhi riots kind of were the "I told you so" moment. They thought Covid was going to be the coup de grace that would finally put India under.

Xi is the first to claim he's already there. He's ended the 2-term restriction, which in effect means he doesn't want the next guy to have the glory.

Good point, this might add to the urgency of Chinese actions, Xi is probably aiming for 15-20 years of rule, so he needs to get started, ready or not.

Any system that stops upward movement builds pressure within it. People want to move up in life. They keep it going by not permitting more than 2 terms at the top and having constant mobility. Or they do it like Stalin - top stays the same and purges in the middle gives space to move up into. The USSR started dying in the 1960s when Brezhnev stalled upward mobility while also stopping purges of Stalins scale. When Xi does the same, he needs to relieve pressure somehow. If he can't offer mobility, he at least needs to command power and standing on par with at least some of the top 5 or 10 greatest Chinese emperors.

I think he can't do it. He's bound to end up in a plane crash or further education. Even the top emperors were usually assassinated. Even India successfully imposing military costs on China might be a sufficient trigger to cause his downfall.

Thus anyone's strategy in dealing with China is simple - stall them, block them, make Xi look ineffectual - even caricaturization as Winnie the Pooh in Indian SM is great. Make them wait and draw it out. The most effective hurdle to Chinese greatness has been their own tendency to implode when faced with crises that build up internal faultlines. Xi has pushed himself and his country into a position where he either has to deliver their great power standing or face a major internal crisis because he's stopped the system from working like it did.

I completely agree

[Gyan]

Sarkari leaked position seems to be:-

Galwan lost in 1962
Pangsong Lake Area in 1999
Depsang Area in 2013
Dhoklam is in Bhutan

We lost nothing. Don't worry be Happy! Let's import & import. But as too much information has reached public domain, we must look like doing something

[Kati]

FBI arrests Chinese researcher for visa fraud after she hid at consulate in San Francisco
PUBLISHED FRI, JUL 24 202012:44 PM EDT
Amanda Macias
@AMANDA_M_MACIAS
KEY POINTS
A researcher who took refuge in the Chinese consulate in San Francisco after allegedly lying to investigators about her Chinese military service was arrested.
The researcher, Juan Tang, will appear in court on Friday, according to a senior Justice Department official.
Tang allegedly made fraudulent statements on her visa application by concealing that she served in the Chinese military.
China's national flag is seen waving at the China Consulate General in Houston, Texas, July 22, 2020.
China’s national flag is seen waving at the China Consulate General in Houston, Texas, July 22, 2020.
Adrees Latif | Reuters
WASHINGTON — A researcher who took refuge in the Chinese consulate in San Francisco after allegedly lying to investigators about her Chinese military service was arrested and will appear in court on Friday, according to a senior Justice Department official.

According to court documents unsealed earlier this week in the Eastern District of California, Juan Tang, a researcher at the University of California at Davis, applied for a non-immigrant J1 visa in October 2019. The visa was issued in November 2019 and Tang entered the United States a month later.

Tang allegedly made fraudulent statements on her visa application by concealing that she served in the Chinese military. The FBI concluded that Tang was a uniformed officer of the People’s Liberation Army Air Force after photographs of her were uncovered on electronic media seized pursuant to a search warrant.

“I won’t discuss the circumstances of the arrest,” said the official, who spoke on the condition of anonymity, adding that the individual did not have diplomatic immunity. The person said that the details of the arrest could be released when the defendant appears before the Eastern District of California court on Friday.

“The issue here is that their true status wasn’t disclosed by visa application,” the official said, adding that the arrest was not a tit-for-tat move as tensions between Washington and Beijing simmer.

On Thursday evening, the FBI arrested Tang, who had avoided arrest by taking refuge in the Chinese consulate in San Francisco. If convicted, Tang faces a maximum statutory penalty of 10 years in prison and a fine of $250,000.

Tang’s arrest for visa fraud follows the arrests of three other Chinese researchers in California and Indiana. The arrests were described as “a microcosm of a broader network of individuals in more than 25 cities,” the Justice Department official explained.

“By their very nature consulates are a base of operations for foreign governments to the United States, including their intelligence services and it’s understood that there will be some activity here by those services,” the person said.

“But because of their location within the United States and their status of sovereign territory of a foreign country, they can be exploited and the espionage and influence activities run out of a consulate can rise, ultimately to a level that threatens our national security,” the person added.

A person walks past the Consulate General of the People's Republic of China in San Francisco, California on July 23, 2020.
A person walks past the Consulate General of the People’s Republic of China in San Francisco, California on July 23, 2020.
Philip Pacheco | AFP | Getty Images
The arrests come as tensions between the United States and China soar following a series of tit-for-tat responses between the world’s two largest economies.

On Wednesday, the Trump administration ordered China to close its consulate in Houston, Texas. Officials said the move was made to secure U.S. intellectual property and curb Chinese espionage. On Friday, Beijing ordered Washington to close its consulate in the city of Chengdu, in southwestern China’s Sichuan province.

China’s Foreign Ministry spokesman Wang Wenbin said some U.S. Chengdu consulate personnel were “conducting activities not in line with their identities” and had harmed China’s security interests, but would not elaborate.

A senior State Department official said that the arrests and the closure of the consulate in Houston are about targeting nefarious Chinese activity inside the United States.

“On their decision to close Chengdu, you’re going to have to ask them, the MFA, about how they picked that,” said the person, who spoke on the condition of anonymity. The official added that the Trump administration was prepared to deal with second- and third-order effects in the wake of the consulate closure.

[Kati]

Fugitive Chinese researcher arrested overnight, being held in Sacramento County Jail

https://www.sacbee.com/news/local/article244461702.html

[Kati]

Chinese Army Major Arrested At LAX, Accused Of Stealing Medical Research from UCSF

SAN FRANCISCO (CBS SF) — A major in China’s People’s Liberation Army has been arrested at Los Angeles International Airport, telling federal authorities that he has been stealing secrets from the medical researchers at the University of California, San Francisco and sending them to a military lab in China, officials announced Thursday.

In a joint statement, U.S. Attorney David Anderson and FBI Special Agent in Charge, San Francisco, John Bennett announced that Xin Wang was taken into federal custody on June 7th as he was attempting to board a flight to Tianjin, China.

Federal prosecutors said Wang had entered the United States on a fake passport on March 26, 2019 posing as medical researcher interested in doing work at UCSF. He had joined the lab and begun accessing medical research.

Investigators have determined he is, in fact, a major in the People’s Republic of China’s People’s Liberation Army. He said on his multiple entry visa application that he had left military medical service in 2016 and was involved in private research.

According to court documents, Wang — who had traveled back forth from United States and China — was part of an elaborate plot that included observing the layout of the UCSF lab and bringing back information on how to replicate it in China.

“(US Border Patrol agents) received information that Wang had studies from UCSF with him which he was taking to share with his PLA colleagues, and he had sent research to his lab in China via email,” officials said in a release. “Wang similarly told his supervising UCSF professor that he had duplicated some of the work of that professor at the lab in China.”

Federal officials said some of the work of the UCSF lab was funded by grants from the United States Department of Health and Human Services, National Institutes of Health.

Wang is charged with visa fraud. If convicted, he faces a maximum statutory penalty of ten years in prison and a fine of $250,000.

[Suraj]

Kati: please stop posting full articles without any link to source.

[pankajs]

US is in an escalation mode with China.

The Huston embassy closing and Pompeo's speech might be the moment when the pivot happened.

[Philip]

China has through the BRI infra hugely reduced its % of trade and energy that transits the IOR.The land road/ rail route through Central Asia,Russia,etc.with mega container trains is moving its goods faster into Europe than by sea. But not everything can be moved by sea,larger heavy machinery,etc. like gantry cranes which we' ve ordered for Chahbahar,yet to arrive ,delayed by a rew years tx . to US sanctions.We have to plan judiciously multiple maritime strike/ sieze ops in the IOR to mirror their invasive attitude on the LAC.

[kit]

China has through the BRI infra hugely reduced its % of trade and energy that transits the IOR.The land road/ rail route through Central Asia,Russia,etc.with mega container trains is moving its goods faster into Europe than by sea. But not everything can be moved by sea,larger heavy machinery,etc. like gantry cranes which we' ve ordered for Chahbahar,yet to arrive ,delayed by a rew years tx . to US sanctions.We have to plan judiciously multiple maritime strike/ sieze ops in the IOR to mirror their invasive attitude on the LAC.

I thought it was repeated quite often in this forum BRI was never a replacement for a transoceanic shipment. The scale of economies can never be achieved by land shipments besides the risks !! BRI will be most likely the noose that will hang Pakistan.

[pankajs]

https://twitter.com/GregPoling/status/1 ... 9448086534

Greg Poling @GregPoling

Australia rejects all Chinese maritime claims in the South China Sea which are inconsistent with UNCLOS and the 2016 arbitral award. The CLCS note verbale equivalent of a smackdown from Canberra to Beijing.

Pressure building up in Champa sea.

[abhik]

China has through the BRI infra hugely reduced its % of trade and energy that transits the IOR.The land road/ rail route through Central Asia,Russia,etc.with mega container trains is moving its goods faster into Europe than by sea. But not everything can be moved by sea,larger heavy machinery,etc. like gantry cranes which we' ve ordered for Chahbahar,yet to arrive ,delayed by a rew years tx . to US sanctions.We have to plan judiciously multiple maritime strike/ sieze ops in the IOR to mirror their invasive attitude on the LAC.

Any sources with actual numbers to back this claim? Only thing I have read was that the train route was completely uneconomical, and little used.

[Manish_Sharma]

Another kick in cheeni belly

TWITTER

@FrontalAssault:

Big Breaking: Govt of India has announced new security protocols for Chinese companies manufacturing in India. The move will hit Chinese Mobile manufacturers, Drug Companies.

https://twitter.com/FrontalAssault1/sta ... 99873?s=19

[darshan]

Founded in 2013, HONOR is part of the Huawei Consumer Business Group’s dual-brand strategy, taking advantage of Huawei’s accumulated expertise in ICT fields and creates trendsetting smartphones for young people around the world. By adopting an Internet-based, asset-light business model, revenue has soared to over 10 billion USD in the last five years. As a result, HONOR is now the largest smartphone e-brand in China.

Honor Partners With Flipkart To Enter Laptop Segment In India
https://swarajyamag.com/insta/honor-par ... t-in-india

[KLNMurthy]

Suraj:

I'm forced to restate what I mentioned earlier - that I can't parse the words the same way you choose to. It may seem completely unambiguous to you, but it sounds to me like the kind of ambiguous generic platitude you suggest he should say.

If it does boil down to my own dhoti-shivering, I can at least say that it is not without foundation. Simla 1972.

Power dynamic massively in our favor. Yet an even more massive failure of imagination and audacity led us to throw the advantage away. We pursued a small, nominal and incremental (Kashmir is bilateral) goal, under an assumption that we are dealing with “gentlemen” who are “just like us”, with an exaggerated belief in our own weakness and vulnerability (USSR won’t support us if we put the pakis on trial for genocide, USA—read Nixon & Kissinger—will be even angrier with us) with too small a sense of our own righteousness—it stopped at we are gentlemen, never gave ourselves credit for being the only righteous force against genocide in the world.

I haven’t seen much of a fundamental qualitative change in these factors that underlay the Simla disaster. (I won’t go into the details here for fear of getting too sidetracked). I am reading our diplomat’s statement with the national psychological background of which Simla was emblematic.

Over the course of post Galwan actions by GoI, many of these have been characterized by the lack of much actual talking, but substantial acts of economic sabotage. For example, the blocking of goods at ports is the sort of thing the US or China routinely does to put pressure in a sort of expressionless-face-while-twisting-knife way, and act of power where the Chinese are the ones having to respond by anxiously 'seeking clarifications from New Delhi regarding why port clearances aren't happening'. The customs blockage remains in place, several weeks later.

You might be choose to argue it, but in my view, the sum total of post-Galwan actions by the government have been far more punitive than the actions of probably all the Indian governments of the past 3-5 decades combined - certainly the most effective if you combine the Doklam response to the post-Galwan economic blockading measures. When was a prior instance when official US policy prescriptions for China used Indian actions as a precedent to recommend doing exactly the same themselves, e.g. TikTok and other app ban ?

I find value in these actions because I see them as visible cues of a government that recognizes that despite having a trade deficit, it understands how to use that to its advantage from a seemingly weaker position to impose costs. Now going back to the words of the diplomat...

Complete head-nodding agreement here. GoI is playing a good game here, at the tactical level.

Question is, for what stakes, exactly? They won’t, and shouldn’t, disclose that for obvious reasons. That puts us in tea leaf-reading zone. Which brings us to the parsing of the diplomat’s statement.

Quite literally, what he says is the epitome of what the Chinese say - 'do this now and I promise to act so and so way later'. In my view you're not giving this government enough credit here. You're readily taking at face value that we might 'act so and so way' later. And what if China does withdrawal now and asks for us to do our part, and we claim we said no such thing ? They'll take us to court like a jilted woman crying "but he promised to marry me!" ?

Again, you are right. You are painting a scenario of GoI being a deceitful, wily street thug in relentless pursuit of a high and noble cause against an unspeakably vile enemy (think keechaka-vadha episode in Mahabharata).

And I find myself unable to give it enough credit for having the capacity to be that thug.

India has historically never been in s position to make demands of China to act in the present, in exchange for some suggested future reward. It has willingly done the reverse, e.g. recognized one China Policy and that Tibet is a part of China, hoping for Chinese to act better.

You might have put your finger on the reason for my dhoti-shivering.

Wielding power (and wealth) isn’t a thing that comes naturally or automatically to one who has hitherto been without power. It is something to learn, and make a habit of. (I am confident that you know and understand this). Without volitionally learning and understanding this, it’s a good bet IMO that one will, at best, squander the advantage, and at worst, find oneself in a far worse position (other party will play for higher stakes precisely because you have shown your power).

I circle back to Simla 1972, which, to me, is a classic illustration of this point.

The diplomat’s words sent a shiver down my dhoti because they were a reminder of my dread that we have never, as a people, sat down and worked out the lessons of that failure.

I'm surprised that the reversal in power dynamics here isn't obvious. I don't mind GoI making all kinds of promises, breaking them repeatedly while continuing to increase economic costs and compel Chinese to offer concessions in the present for future nonsense promises. That's exactly what the Chinese do as a matter of routine whether in geopolitical acts or industrial espionage or any other domain.

Again, from your keyboard to Lord Krishna’s ears. May he guide our inner Bhima.

[KLNMurthy]

very important article by Yuan Peng (English translation and commentary) which brings together the "once in a century change" with the Covid19 pandemic by comparing it to a major war or historically critical event:

His argument is that the coronavirus pandemic will serve the same historic function as major wars in recent history: ushering in a new international order whose shape remains uncertain. Yuan compares current Sino-American relations, in geopolitical terms, to relations between Great Britain and the United States at the end of WWI. In hindsight, it is clear that Britain’s historical moment was waning; the cost of the war and the maintenance of empire were more than the budget could bear and decline was inevitable. At the same time, while America was on the rise, she was not ready to take Britain’s place. Today’s America, in Yuan’s view, is like Britain a century ago; not overextended but thoroughly dysfunctional, as the coronavirus is currently demonstrating, and incapable of making the hard choices necessary to engineer a national revival. China is vibrant, dynamic, but not yet ready to lead.

Obvious flaw here is that US:Britain (1918) is nothing like China:US (2020)

There was never any question of US and Britain having a war of any kind.

Chinese are, if not exactly idiots, severely constrained by believing their own BS.

We are constrained too, except our BS is an underestimation of ourselves, learned over the centuries.

[Suraj]

I think events from two generations ago are not very useful as a template to understand current policy . Yes there are homilies like ‘those who forget history ...’ to throw around . But historical precedent also needs empirical basis for comparison. 1971 an example of a wise general knowing how to do his job. It has nothing to do with the political leadership - had it been a few years later IG would have just used her greater authority to overrule Manekshaws ‘wait until winter’ recommendation and probably screwed up, as she later did with the Khalistanis. At no time did the political leadership demonstrate much competence then.

My view of the present has empirical basis - the government clearly understands the leverage it has, because almost every day it’s coming out with new policy measures that make it hard for the Chinese to retaliate. Folks like Gyan want ‘name China’, but that’s stupid - enabling them to make a simple case at WTO is pointless when we can instead go full retard babu on them with regulations that increase their costs to the point that they’re no longer competitive. There’s nothing they can do to impose an even greater economic cost on us - that’s one of the benefits of having a large deficit...

In other words, through shrewd writing of explicit rules, or through implicit acts of omission (eg blocking imports at ports) , the current government is demonstrating its understanding of its own power against a supposedly superior foe, and it’s level of comfort with acting punitively, both explicitly and implicitly, from supposedly a position of weakness. From the very beginning of the Galwan episode I advocated the same approach - that their trade surplus is a juicy target to hurt them with - the #CostliestWarTheyEverFought meme I cultivated

Yes I think the unfamiliarity and discomfort with imposing power is a factor in thinking here. We marvel at TSPs brazenness . They arguably understand power much better than us. So does PRC. We were the bumbling good natured giant in comparison . TSP on the other hand can train terrorists to knock down skyscrapers in NYC and then convince the US they are an ally in the fight against those terrorists, then take aid money and and weapons which the give those terrorist. Meanwhile we go 'hah they've done clucked up, the USAF will bomb Isloo by lunchtime', then get appalled at what happened instead.

However, I don’t see that as the case under the present administration. They’ve turned another potential 1962 into instead one where the Chinese at best have some notional territorial gains in return for substantial and widening economic losses as other countries do what we did. Territory now that they could quickly lose in future vs economic gains essentially gone for the long term ?

The diplomats words are very interesting to me. He didn’t speak to China . He has nothing to do with the Chinese mission - he’s the consular representation to Russia instead. I’ve never seen GoI talk like that - demanding something of a much larger foe now in exchange for some hope of later improvement in the losses they face now. The statement reflects the best kind of bheda . It is not 'wily and street thug' like - such small time bullies have an exaggerated view of their own power (like TSP) and that is their downfall.

I see ‘discomfort with trickery’ as just a phase of lack of internalized awareness that Indian strategic thought has always been clear of the distinction between personal probity and affairs of the state. I'm trying to make a conscious effort to avoid my own biases or historical knowledge when looking at the Government's actions, and instead looking at it in terms of how they act given the circumstances they are in. What I see in their actions suggests an entity vastly different from 1971, where the political leadership continuously bumbled before and after, and the armed forced under a legendary general made the difference.

Here instead is a government that speaks very little, but progressively performs actions that if you look at them, you realize 'someone is really thinking carefully about how to do these things'. Blocking imports at ports and pretending nothing happened, banning apps - which all stop working the very next day (and the mighty US has senators writing to Trump asking 'see India is doing it, lets do that too'), funny but well written laws like 'countries that share a land border but which we don't offer development aid' are signs of a government who understands levers of power and how to use it to further its interests.