Bharat Rakshak

India's navy will open a third air base in the far-off Andaman and Nicobar islands on Thursday to beef up surveillance of Chinese ships and submarines entering the Indian Ocean through the nearby Malacca Straits, military officials and experts said.

New Delhi has grown concerned over the presence of China's bigger navy in its neighbourhood and the network of commercial ports it is building in an arc stretching from Sri Lanka to Pakistan that India fears could become naval outposts.

The Indian military has seized upon the Andamans that lie near the entrance to the Malacca Straits to counter the Chinese challenge, deploying ships and aircraft since Prime Minister Narendra Modi took office in 2014 promising a more muscular policy.

Indian navy chief admiral Sunil Lanba will commission the new base, called INS Kohassa, about 300 km (180 miles) north of the archipelago’s capital, Port Blair, the navy said in a statement.

The facility, the third in the islands, will have a 1,000-metre runway for helicopters and Dornier surveillance aircraft. But eventually the plan is for the runway to be extended to 3,000 metres to support fighter aircraft and longer-range reconnaissance aircraft, navy spokesman Captain D.K. Sharma said.

About 1,20,000 ships pass through the Indian Ocean each year and nearly 70,000 of them pass through the Malacca Strait.

"The underlying thing is the expanding Chinese presence. If we have to really monitor Chinese presence, we need to be adequately equipped in the Andaman islands," said former navy commodore Anil Jai Singh.

"If you have air bases you can cover a larger area," he said, adding he expected the navy to permanently deploy more ships to the islands in the next phase of the buildup.

A Chinese submarine docked in Sri Lanka's Colombo port in 2014 that drew such alarm in New Delhi that Modi's government raised the issue with the Sri Lankan authorities.

Both India and China have been locked in a contest for influence, with New Delhi trying to push back against Beijing's expansive diplomacy in the region.

This week, Indian defence officials are due to hold talks with the defence minister of the Maldives, Mariya Ahmed Didi, where New Delhi is seeking to repair ties after the ouster of its pro-China leader in a presidential election last year.

n the other hand, a weakening China may well be a more dangerous one. One of the most disturbing aspects of China’s rise over the past two decades has been its increased suspiciousness of the world. Chinese believe that the world, which has done nothing but try to integrate their country into the global-trading and economic system, is now trying to contain China and weaken it. This leads to growing nationalism and assertive positions over Chinese interests. Xi Jinping’s rhetoric has grown more strident, threatening Taiwan and repeatedly ordering his military to prepare for war. A Chinese leadership that faces potential unrest at home over a darkening economic picture may use foreign adventurism to release domestic pressure. Similarly, Beijing may act preemptively to ensure that it grabs as much territory in the South China Sea, for example, as it can while it is still far stronger than its neighbors. As it sees its economic and potentially military strength wane, it might decide it can’t wait. Hence, all the talk about reunifying Taiwan with China. A weaker China could turn out to be the greater threat, ironically, than a confident, stronger one (as was Japan in the early-1940s).Whatever we thought that the “Asian Century” might be, it is clear that our halcyon views were mistaken. The great challenge for America in the next decade-plus will be to manage whatever spill-over occurs from a weakening China. It will be a time of potentially great danger, but also great opportunity.

One of India’s most remarkable diplomatic achievements has been that it has settled its maritime boundaries with all its eastern neighbours. This has been achieved, not only through bilateral agreements on maritime boundaries with Bangladesh, Sri Lanka, Myanmar, Thailand and Indonesia, but also tripartite agreements to determine tri-junctions, with Myanmar and Thailand, Indonesia and Thailand and across its eastern and western shores, with Sri Lanka and Maldives.

Even arriving at an agreement to demarcate our maritime frontiers with Pakistan will not be difficult, once the land boundaries are demarcated. In any case, there have rarely been any maritime tensions with Pakistan.

The readiness to delineate its maritime boundaries in accordance with international law gives India the reputation of being a responsible power, across its eastern neighbourhood. This is in marked contrast to China, which has maritime boundary disputes with Japan, South Korea, Taiwan, Vietnam, the Philippines, Brunei, Malaysia and Indonesia.

India readily implemented a verdict by an International Tribunal, which went against its claims on its maritime boundary with Bangladesh. China has, however, violated the UN Convention on the Law of the Sea by rejecting a similar decision, on its maritime boundary with the Philippines. Beijing has also used military intimidation to enforce its maritime claims on countries like the Philippines and Vietnam. This difference in behaviour between a benign India and a territorially avaricious China has been noted across its eastern neighbourhood and even internationally.

Land borders settled

Another important factor in dealing with our eastern neighbours has been the development of cooperation across our land borders, with Myanmar and Bangladesh. We have settled our land borders with both these countries and have moved forward in strengthening trade, investment and connectivity cooperation with them. Both Bangladesh and Myanmar have been helpful and cooperative in dealing with Indian separatist groups, which seek to operate from their soil.

Tough action by Sheikh Hasina forced armed separatists and their leaders like Paresh Barua of the ULFA, to move out of Bangladesh, and seek refuge in areas of Myanmar, where the writ of the Myanmar government is at best, tenuous. Prospects for such cooperation have been augmented, as Bangladesh and Myanmar welcome increasing regional cooperation in BIMSTEC.

A crackdown by the Myanmar Army on Muslim “Rohingyas” in Myanmar’s Rakhine Province, has led to over 7,00,000 Muslim Rohingya refugees from Myanmar fleeing to, and imposing a huge economic burden, on Bangladesh. To make matters worse, the repatriation of refugees is becoming harder than expected.

Despite prolonged negotiations and promises of aid for refugee resettlement from India, China and Japan, there are just not adequate facilities for the displaced and traumatised refugees to return. Relations between Bangladesh and Myanmar have worsened, with Myanmar alleging that Rohingya refugees are being armed in Bangladesh, amidst angry denials by Bangladesh.

These developments are occurring when China is blatantly interfering in Myanmar’s internal affairs, while ostensibly professing to promote contacts between the Myanmar government and armed insurgent groups, operating across the China-Myanmar border. There are today 25 armed insurgent groups in Myanmar, with 15 actively resorting to armed insurgency.

The most powerful of these groups, the United Wa State Army (UWSA), operates from China, across the Shan State, in western Myanmar. India’s concerns, however, arise from the fact that the UWSA is now allied to a “Northern Alliance,” comprising armed groups linked to the Kachin Independence Army (KIA). The KIA operates from the Kachin State, bordering Arunachal Pradesh. It has links with the Rohingya-dominated Arakan Rohingya Solidarity Army in Myanmar’s Rakhine State, bordering India.

Moreover, members of the National Socialist Council of Nagaland (NSCN-K), involved in armed insurgency in Manipur and Nagaland, also routinely move across the Myanmar-China border.

Growing Chinese influence in Kachin State, which borders Arunachal Pradesh, undermines Myanmar’s sovereignty. It also adversely affects India’s security interests. The ‘United National Liberation Front of Western South East Asia’ (UNLFW) is a front of armed Indian separatist groups, comprising the United Liberation Front of Assam, the National Socialist Council of Nagaland, the Kamatapur Liberation Organisation and the National Democratic Front of Bodoland. It operates out of Myanmar’s Kachin State.

Its members and leaders like ULFA’s Paresh Barua reside near the border town of Ruili, in China’s Yunnan Province, with total freedom to enter and leave China’s Yunnan Province. The UNLFW was responsible for the ambush of 18 Indian soldiers in Manipur in one of the deadliest attacks against Indian security forces for decades. The UNFLW also operates out of Myanmar’s Sagaing Division bordering Manipur.

As Myanmar faces growing international pressures, because of its alleged persecution of Rohingyas, it is turning increasingly to China for support. Not surprisingly, China is taking advantage of this, by attempting to compel Myanmar to accept it as a mediator, for working out a political settlement with the trans-border armed, ethnic groups.

China is also demanding Myanmar’s consent to go ahead with the massive, but ecologically damaging Myitsone Dam hydroelectric project. The Myitsone Dam’s construction has been strongly opposed by the people of Kachin State. Given its location, the electricity produced by this project will be largely consumed in China’s Yunnan Province. The dam project has also been controversial in Myanmar, because of the environmental impact on its huge flooding area and its location, barely 60 miles from the earthquake prone Sagaing faultline.

Japan, like India, appears to recognise the dangers of pushing Myanmar to a corner, on the Rohingya issue, because it will make the country even more dependent on Chinese support in the UN. The focus of attention of the international community should be on rehabilitation of refugees, rather than propagandistic posturing on “human rights”.

Both India and Japan would be well-advised to work jointly, in both Myanmar and Bangladesh, to persuade Aung San Suu Kyi and the military in Myanmar and Sheikh Hasina in Bangladesh, to amicably settle the problem of repatriation and resettlement of refugees.

The SAARC is now non-functional, thanks to Pakistan’s sponsorship of terrorism. BIMSTEC is, however, showing promise, complementing connectivity and trade. Differences and tensions between Myanmar and Bangladesh should not be allowed to worsen, as they will undermine our efforts to promote regional cooperation in our eastern neighbourhood.

The writer is a former High Commissioner to Pakistan

Ismaïl Omar Guelleh, the Dijibouti national who was conferred Padma Vibhushan, India’s second highest civilian award, may be lesser known in this country but he is no ordinary citizen being the President of strategically located country along East Africa’s coast for the past two decades.

Djibouti may not ring bells here but it is important for India as it is only country that hosts Chinese maiden military base abroad as of date. Japan’s maiden military base abroad is also based in Djibouti, that plays a key role in combatting piracy in the Western part of the Indian Ocean region. Japan is India’s key partner for projects in Eastern Africa as part of Asia-Africa Growth Corridor that seeks to balance China’s BRI. In fact Djibouti is home to more foreign bases than any other country.

Therefore, when President Ram Nath Kovind chose to visit Djibouti in 2017 it was without no reason. Delhi wants to cultivate Djibouti not only as part of its rejuvenated Africa policy and Indo-Pacific strategy but also because of the reason that Djibouti was the base for evacuation of Indians from Yemen in early years of the current crisis.

Guelleh has visited India twice over past four years – first as part of the third edition of the India-Africa Summit and on that occasion he met PM Narendra Modi on the sidelines. Later he was here for the International Solar Alliance Summit. India has opened a centre of leadership and entrepreneurship in Djibouti at the request of its President. India reportedly has shown interest to set up a military base in Djibouti as India eyes maritime partnership with this strategically located nation in the Horn of Africa.

Situated on the northwestern edge of the Indian Ocean, at the southern entrance to the Red Sea, Djibouti controls access to the Suez Canal and the Indian Ocean, home to some of the world’s busiest shipping lanes. Djiboutian ports overlook waters that account for 25 percent of the world's exports that flow into Asian and Mediterranean markets.

In addition to hosting many Western military bases including those by France, Italy and USA, Djibouti has also become a focal point for counter-terrorism activities on the African continent and the training of special forces in neighboring countries. Saudi Arabia is also setting up a military base in Djibouti. While Djibouti has approached Turkey to set up a base, Russia has shown interests.

Brahma Chellaney @Chellaney

My op-ed: It's not just capital that’s fleeing China; rich Chinese choose to live overseas. In an informal vote of no confidence in the Chinese system, more than a third of surveyed millionaires in China said they were “currently considering” emigrating.

China's lonely rise: After decades of heady growth, Beijing is suddenly facing resistance at home and abroad

Xi Jinping's word may be law, but faced with difficult choices on China’s new challenges, he now finds himself under pressure



As the People’s Republic of China prepares to celebrate the 70th anniversary of its founding later this year, the limits of its Communist Party-led model are becoming apparent. And more than ever, the world’s longest-surviving and most-powerful autocracy faces difficult choices at home and abroad.

By China’s own statistics, its economy is registering its most sluggish growth in nearly three decades. The world’s second-largest economy grew by 6.6 per cent in 2018, the lowest rate since 1990, when the fallout from the massacre of as many as 10,000 people in a tank and machine-gun assault on pro-democracy demonstrators in Beijing’s Tiananmen Square a year earlier kept growth to a humble 3.9 per cent.

At a time when China appears to have entered a new era of uncertainty after more than a quarter century of phenomenal growth, it is perhaps fitting that this year marks the 30th anniversary of that massacre.

The uncertainty is evident in a new phenomenon – the flight of capital from a country that, between 1994 and 2014, amassed towering piles of foreign-exchange reserves by enjoying a surplus in its overall balance of payments.

But now, faced with an unstoppable trend of net capital outflows, President Xi Jinping’s government has tightened exchange controls and other capital restrictions to prop up the country’s fragile financial system and sagging currency. The regime has used tens of billions of dollars in recent months alone to bolster the yuan’s international value.

It is not just capital that’s fleeing China, as more and more Chinese choose to live overseas. In an informal vote of no confidence in the Chinese system, more than a third of surveyed millionaires in China said they were “currently considering” migrating to another country. An earlier report found that almost two-thirds of rich Chinese were either emigrating or have plans to do so.

Today, China’s mounting internal challenges are being compounded by new external factors. Chinese belligerence and propaganda, for instance, have spawned a growing image problem for the country internationally, which is apparent even in regions where China has invested heavily, from Africa to Southeast Asia.

More significantly, Beijing has come under international pressure on several fronts – from its trade, investment and lending policies to its human rights record, including its incarceration of more than a million Muslims from Xinjiang, a sprawling territory Mao Zedong annexed in 1949. Perhaps China’s free ride, which helped propel its rise, is coming to an end.

In modern-day “re-education” prisons, China is accused of forcing Uighurs and other Muslim groups to forsake Islamic practices and become secular citizens.

The Soviet Communist Party that ran gulags was consigned to the dustbin of history. But now the Chinese Communist Party has set up its own gulags that are more high-tech and indiscriminate and have Islam as their target. The network of concentration camps is designed to dismantle Muslim identities and change the outlook of entire communities – a grim mission of unparalleled scale.

Yet, even as international criticism has mounted, the West still seems reluctant to hold Beijing accountable for its harsh treatment of ethnic minorities, deciding against, for instance, introducing sanctions.

China, meanwhile, is confronting growing US-led pressure on the trade and geopolitical fronts, accentuating Beijing’s dilemmas and fuelling uncertainty at home. As long as the US-China trade war rages, flight of capital will remain a problem for Beijing, whose foreign-exchange reserves have shrunk by about $1 trillion from their peak of just over $4 trillion in mid-2014.

At a time when China’s imperial project, the Belt and Road Initiative, is running into resistance from a growing number of partner countries, Beijing is also confronting an international pushback against its telecommunications giant Huawei. In fact, the pushback has broadened from opposition to Huawei’s participation in next-generation 5G wireless networks to a broader effort in Europe, North America and Australia to restrict the use of Chinese technology because of concerns that it is being used for espionage.

The arrest of the Huawei founder’s daughter in Canada, at the behest of Washington, rattled China’s elites, making them angry but also fearful that any one of them could meet a similar fate while travelling to the West. With Meng Wanzhou’s detention, the US signalled that it has more powerful non-tariff weapons than China, which has long used such tools to punish countries as diverse as Japan, Mongolia, South Korea and the Philippines.

Ms Meng was held for an alleged violation of America’s Iran-related sanctions, but even Western onlookers saw her arrest as an example of US high-handedness. Instead of galvanising support against the American move, China responded in typical fashion that, as an American analyst put it, is the “mark of a thuggish state” – by jailing two Canadians.

Indeed, it is Beijing’s open disregard for international rules that explains why it can count on few true strategic allies or reliable security partners. Contrast this with the strong network the US maintains, including close collaboration with many of China’s neighbours. Beijing has alienated almost every significant power in the Indo-Pacific and beyond.

China’s lonely rise could become more pronounced with the newly restructured People’s Liberation Army becoming less of an army and more of a power projection force, the majority of whose troops now are not from the army but from the other services. Indeed, the PLA’s shift away from being a defensive force foreshadows a more aggressive Chinese military approach of the kind already witnessed in the South China Sea, where China has fundamentally changed the status quo in its favour.

The Dalai Lama recently said that, due to Chinese pressure, no Buddhist country, with the sole exception of the nominally Buddhist Japan, is now willing to grant him entry as the exiled leader of Tibetan Buddhism. However, whenever Chinese pressure forces smaller nations to cave in on any issue, it only fuels greater resentment against Beijing.

Against this backdrop, where is China heading? It has come a long way since the Tiananmen Massacre, with its citizens now more prosperous, mobile and digitally connected. Its economy, in purchasing power parity terms, is already the world’s largest.

However, its political system remains as repressive as ever, with Mr Xi centralising power in a way China has not seen since Mao. Under his leadership, the party has set out to systematically quash Muslim, Tibetan and Mongol identities, expand China’s frontiers far out into international waters, and turn the country into a digital totalitarian state.

Yet, one should not overlook what a difference less than a year has made. Few in China dared to criticize Mr Xi when he ended the decades-old, Party-led collective leadership system and abolished a two-term limit on the presidency –actions that theoretically allow him to rule for life.

But, in the new international environment in which China finds itself today, he is facing domestic criticism – however muted — for building a cult of personality around his one-man rule and for inviting an international pushback by overemphasising China’s strength and power.

Mr Xi’s word may be law but, faced with difficult choices on China’s new challenges, he now finds himself under pressure. His primary focus will probably remain ensuring stability at home. Without stability, neither he nor the Party can hope to survive in power.

To calm the economic turbulence, China’s central bank has substantially increased domestic credit to help boost consumption and investment at home. In the medium-term, the US-led tariff pressures are likely to accelerate China’s shift from low-end manufacturing to higher value-added industries like electronics, robotics and artificial intelligence.

The geopolitical pushback, for its part, could force Xi to return to the “hide your capacities, bide your time” strategy of Deng Xiaoping. But such a return can scarcely obscure China’s ambitious goals that Mr Xi has laid bare. Even if Beijing starts soft-pedalling its ambitions, it is likely to adopt a “two steps forward, one step back” strategy to keep progressing toward its goals.

Brahma Chellaney is a geostrategist and the author of nine books, including the award-winning “Water, Peace, and War”

India has virtually finalised an exclusive Rs 5,650-crore military infrastructure development plan spread over 10 years for the strategically located Andaman and Nicobar archipelago — which will allow stationing of additional warships, aircraft, drones, missile batteries and infantry soldiers there — against the backdrop of China’s rapidly expanding footprint in the Indian Ocean region.

Sources say the 10-year infrastructure “roll-on” plan for the Andaman and Nicobar Command, which is the country’s only theatre command with assets and manpower of the Army, Navy, IAF and Coast Guard under one operational commander, has been formulated after prolonged top-level discussions in the defence establishment.

“The plan has also been reviewed by the defence planning committee (chaired by national security adviser Ajit Doval and includes the three service chiefs, among others). The initial plan was pegged around Rs 10,000 crore but a decision was taken to focus largely on land that was already available or under acquisition by the ANC,” said a source.

Parallelly, a comprehensive plan for “force accretion” of the armed forces in phases at the ANC by 2027 is also in the works. Under it, the proposal for an increase in Army manpower and assets is pegged at about Rs 5,370 crore. This will include upgrade of the existing 108 Mountain Brigade there and a new infantry battalion to add to the three (two infantry and a Territorial Army) battalions already there, apart from new air defence, signals, engineer, supply and other units.

Sources point to the visits of PM Narendra Modi and defence minister Nirmala Sitharaman to the 572-island archipelago in the last 30 days to stress that some plans are already under way. Apart from the two existing major airports at Port Blair and Car Nicobar, for instance, the runways at the naval air stations at Shibpur (commissioned as INS Kohassa by Navy chief Admiral Sunil Lanba on Thursday) in the north and Campbell Bay (INS Baaz) in the south will be extended to 10,000 feet to support operations by larger aircraft. Another 10,000-foot runway at Kamorta island is also envisaged as part of the 10-year infrastructure development.

India has already taken to deploying fighter jets like Sukhoi-30MKIs, long-range maritime patrol Poseidon-8I aircraft and Heron-II surveillance drones to the archipelago on a regular basis now. “Additional Dornier-228 patrol aircraft and Mi-17 V5 helicopters will also be based at the ANC soon,” said a source.

Though the ANC was established way back in 2001, internecine turf wars among the Army, the Navy and the IAF and general politico-bureaucratic apathy as well as fund crunches and lack of environmental clearances to build infrastructure have bedevilled the unified command till now.

This when a strong ANC, with requisite military force-levels and infrastructure, can effectively function as a pivot to counter China’s strategic moves in the IOR. “China’s expanding naval forays in the region, which include nuclear submarines, will only grow over time. India needs to seriously bolster its last military outpost in the ANC to keep an eagle eye on the region, and intervene if necessary,” said a senior officer.

Chinese President Xi Jinping has delivered a tough back-to-the-trenches call to his comrades in the Communist Party of China (CPC) to weed out the “grey rhinos” and “black swans” that dare to undermine the economy of China and confidence of its people in its political system.

By referring to “grey rhinos”, the President was asking the CPC to eliminate highly probable events that can rock the markets, resulting in massive financial outflows, haemorrhaging business confidence in the economy. The 2008 financial crisis was a blaring “grey rhino” global event.

Conversely, Mr. Xi’s spotlight on “black swans” was a call on cadres to nail hard-to-predict events that can range from terror strikes to Brexit, which can also attack markets, resulting in extreme financial consequences.

On January 21, when Mr. Xi spoke at the Party School of the CPC Central Committee, his remarks pointed to gathering storms around China, with the trade war and the seeming consensus across party lines in the U.S. to curb China’s rise as the subtext. Mr. Xi’s blunt speech echoed his similar remarks last month, warning that China may encounter “unimaginable terrifying tidal waves and horrifying storms” in the years ahead.

The audience, who heard his rallying call with rapt attention, included senior provincial and ministerial officials, as well as army generals — all decision makers who had been summoned to a special “study session” of the CPC.

Mr. Xi’s major focus has been on improving material conditions, especially by creating opportunities for young people to find employment as the foundation of social stability.

Political education

The President was emphatic in exhorting the 86 million strong CPC machine to adopt concrete measures that would generate a movement for mass-financing micro, small and medium-sized firms, helping guarantee jobs for the youth. Besides, he urged the cadres to go the extra mile to provision to the people social security, medical and health care, food security as well as workplace safety.

But the President was also clear that for ensuring legitimacy, a fresh focus was required on political and ideological education. In remarks that echoed Mao Zedong, Mr. Xi was unambiguous in calling for a robust reinforcement of “ideological and political education among the young.” That, he said, would enable the next generation to have “full confidence in the path, theory, system and culture of socialism with Chinese characteristics”.

Some analysts are of the view that Mr. Xi and others of his generation are hyper-sensitive that China’s generation-next maybe lured into a traumatic cycle similar to the one that led to the Tiananmen Square incident, whose 30th anniversary falls later this year.

However, during his address, Mr. Xi also conveyed to the CPC that exceptional and proactive steps were required for ensuring a balance between domestic stability and reform at a time of “unpredictable international developments”. “We must keep our high alert about any ‘black swan’ incident, and also take steps to prevent any ‘grey rhino’ (threats),” he said .

Mr. Xi strongly messaged that in the current circumstances, it was indispensable to achieve self-reliance in fostering innovation and development of advanced technology — a veiled response to the threat radiating from Washington targeting China’s hi-tech Made in China 2025 project. Besides, he called upon the Party to establish an iron-fisted “security system” that would safeguard his signature Belt and Road Initiative.

In the past decade, China has relied primarily on credit growth to fund its economic ambitions. The country’s banks are now feeling the constraints of this lending binge and need to raise a lot of capital over the next couple of years.

The way China handles this challenge will determine its economic health. With 267 trillion yuan ($39.4 trillion) of total assets, and home to the world’s four largest banks by this measure, the country’s financial system doesn’t operate in isolation. Whatever happens in China will have a global impact.

Major Chinese banks raised or announced plans to raise 343 billion yuan in 2018, according to a recent note by Nomura Holdings Inc. That’s well below the estimates of UBS Group AG, which just last year said these firms would need 1 trillion to 3 trillion yuan, depending on the targeted capital-adequacy level. Neither forecast counts the additional funds the big four banks need to meet Basel III requirements for systematically important institutions by 2024.

The fundamental problem is the conflicting pressures on the sector. Despite talk of deleveraging in 2018, as nominal GDP growth slowed to 9.7 percent, total loans outstanding grew 13.5 percent. To prop-up the economy, Chinese banks have been lending well in excess of deposit growth. Since the beginning of 2016, as loans outstanding grew 41 percent, deposits rose just 29 percent. That put balance sheets under increasing strain. Officially, capital adequacy ratios improved to 13.8 percent in 2018 from 13.4 percent two years earlier. In reality, this was only achieved with an accounting sleight of hand.

With the Chinese economy slowing, Beijing has been leaning on banks both to absorb the build-up in shadow assets and continue lending to drive investment-dependent growth. With new loans outpacing new deposits by 20 percent in 2018, and a similar trend expected this year, capital is becoming increasingly constrained. Almost every cut to banks reserve requirements over the past year has coincided with a significant repayment to the central bank. In other words, banks are borrowing from themselves to reimburse the Peoples Bank of China.

Bank’s simply don’t have the ability to continue lending as much as they do without additional capital.

Chinese banks and regulators thus need to establish a plan to raise funds. They’ve made a start: On Thursday the PBOC announced measures to help banks raise capital by issuing perpetual bonds. Whether officials also consider convertible bonds or secondary offerings to name just a few of the possibilities they need to speed up approvals and encourage firms to address their balance-sheet weaknesses more promptly. Waiting for an economic slowdown or external event to raise capital isn’t a wise strategy.

As Beijing comes under fire for favouring state-owned firms over private ones, it should urge the larger dinosaurs to deleverage faster, making it easier to allocate credit to smaller enterprises. China needs to move away from favouring the firms that consume the largest amounts of capital inefficiently.

Bank-capital levels may not grab headlines, but continuing to lend faster than deposits are growing and reducing the ability to cushion a slowdown can only continue for so long. Regulators need to address this problem before it becomes a crisis.

U.S. universities have already felt the sting of Trump’s China policies. The State Department shortened the length of visas for certain Chinese graduate students. And the administration is considering new restrictions on Chinese students entering the United States. Chinese students are by far the largest group of international students in the United States and provide a lucrative source of revenue for universities.

Prasad wrote:https://twitter.com/nycsouthpaw/status/ ... 7440798725
Should DOJ have maybe redacted this paragraph in the Huawei indictment? It appears the US govt managed to image the Huawei CFO's device, or otherwise search it for *deleted files,* as she entered the US at JFK airport in 2014.

https://t.co/RQpYRWnVNc - US DOJ link

"Dear USA-chechi, those pics of Mohanlal-annan's thighs in my HDD are because I like watching his fights in slow-motion and nothing else. They have not been hurriedly deleted because I read this article and thought you guys will be idiots enough (like those paki hackers) to think I am collecting Indian military leadership's risque photos"

Singha wrote:the malaysian HSR was supposed to link into Singapore iirc over the causeway.

Prasad wrote:https://www.caixinglobal.com/2019-01-29 ... 75782.html

Policy reversal to stop the one-child policy has had little effect in arresting the decline and this is pushing up wages. I hope to god some of our folks are listening and actively camping in soko and taiwan to bring more mfg into India.

The US Justice Department on Monday charged Huawei and its CFO Meng Wanzhou — currently under the watch of law enforcers in Canada after being arrested at the behest of the US — for trade and financial violations and even attempt to steal intellectual property. The indictment escalated the pressure on the Chinese telecom giant, which is increasingly being firewalled by many, with the exception of India.

Recap:

Huawei is the world’s largest telecom equipment maker, providing the technological backbone of data services across the world. But it is viewed as being too close to Communist Party of China, and thus, with the world moving to 5G — which could integrate telecom with every smart gadget, cars, industries and more — the fear is Huawei could give Beijing a backdoor entry to crucial information.

What now:

Huawei has strongly rejected the allegation has even offered a review of its equipment. But the arrest of Wanzhou, the daughter of the company’s founder, and the indictment have escalated the situation. The indictments, citing company’s internal emails, describe a plot to steal testing equipment from T-Mobile; cite internal memos obtained from Meng that links her to a bank fraud that helped Huawei evade Iran sanctions; argue it tried to hamper investigation by destroying evidence and moving staff out of the US. This and the arrest of an employee in Poland on a separate case regarding spying for China put the company firmly in the dock.

And India? :

The US has long blocked Huawei from much of its market, and it’s a policy that was followed by Australia and being mulled by Britain. Even Japan has excluded Huawei and ZTE from 5G business. The outlier is India, and officials in New Delhi have so far argued Huawei is not the only company to source products from China. But the indictment shows the matter is deeper, it’s about the very ethos of the company. Should India sail the other way, especially when its track record on data protection is not good?

syam wrote:I thought we are done with fighting white man's battles.

Kashi wrote:

syam wrote:I thought we are done with fighting white man's battles.

Given the state of India-China relations, these concerns are very much a part of our battle. Or should we disregard all the anti-India stuff that Cheen has been upto?

SSridhar wrote:AFAIK, India has allowed Huawei to take part in 5G trials and that is in the NCR.

syam wrote:Agree, there might be some backdoor in Huawei equipment which can be used against us.

But what about US? Almost every piece of data we are sharing online is hosted on US soil. I don't see anyone discussing that 'threat'. Forget about their own 'backdoors' to our present equipment. May be many don't consider US as enemy. After all they are benign to us in every case. They welcome our PM on red carpet, invest billions of dollars in our market.

I thought we are done with fighting white man's battles.

China is likely to continue to increase its maritime presence in the South China Sea and build military and dual-use infrastructure in the Spratly Islands to improve its ability to control access and project power, a newly released American intelligence assessment of global threats warned.

Beijing seeks to influence the politics and economies of countries in its backyard, and is expected to increase its engagement in South-east Asia to build its influence while diminishing the influence of the United States and its allies, said the annual report submitted to the US Senate on Tuesday (Jan 29).

It said that in the coming year, China and Russia would compete more intensively with the US and its allies and partners in an expansive race for technological and military superiority, thus presenting greater threats to US national security.

"China's military capabilities and reach will continue to grow as it invests heavily in developing and fielding advanced weapons, and Beijing will use its military clout to extend its footprint and complement its broadening political and economic influence, as we have seen with its One Belt, One Road," said US intelligence chief Dan Coats as he presented the report to the Senate in an open hearing.

"As part of this trend, we anticipate China will attempt to further solidify and increase its control within its immediate sphere of influence in the South China Sea, and its global presence further abroad," he added.

The intelligence report said that China sought to achieve effective control over its claimed waters with a whole-of-government strategy, compel South-east Asian claimants to acquiesce to its claims - at least tacitly - and bolster Beijing's narrative in the region that the US is in decline and China's pre-eminence is inevitable.

In the wake of Washington's withdrawal from the Trans-Pacific Partnership trade deal, China has promoted a unified stance with Asean in defence of multilateralism and World Trade Organisation reform, said the report.

Beijing also fosters a shared perception with Asean that US freedom of navigation operations through Chinese-claimed waters in the South China Sea were threats to regional stability, it added.

The report described China as currying favour with numerous Pacific Island nations through bribery, infrastructure investments and diplomatic engagement with local leaders, while also shielding Myanmar from international sanctions in response to the humanitarian crisis and alleged ethnic cleansing in its Rakhine state.

"Meanwhile, Beijing almost certainly will continue using pressure and incentives to try to force Taipei to accept the One China framework and ultimately Chinese control, and it will monitor the US reaction as an indicator of US resolve in the region," said the report.