China's Capacity to Project Power Is Going Global

Tuesday, Chinese Foreign Minister Wang Yi said that China is looking to build “some infrastructure facilities and support abilities,” Beijing’s code for military bases, outside China. “I believe that this is not only fair and reasonable but also accords with international practice,” he said.

If Wang sounded defensive, it is because for decades China adamantly insisted it would never maintain such bases outside its borders.

At the moment, however, the Chinese navy is building “support facilities” in Obock in Djibouti, on the Horn of Africa, which guards the southern entrance to the strategically important Red Sea. The location is generally considered, inside China and elsewhere, as the first of the country’s foreign military bases.

More are on the way as China develops port projects around the Indian Ocean. Take the Chinese-funded Colombo International Container Terminal, for instance. In both September and October 2014, the Sri Lankan government allowed a Chinese submarine and its tender to dock there, which shocked and angered New Delhi.

As Trade Tumbles, China and Russia Inaugurate New Rail Line

On Saturday, China inaugurated a “new freight route” to Russia as a train left Harbin, the capital of northeastern Heilongjiang province, for Yekaterinburg in Russia, 5,889 kilometers away.

The new route will slice 30 days off the previous 40-day journey by land and sea.

Chinese and Russian media celebrated the departure of 47 containers carrying $1.46 million of bicycle parts and other light industrial products, mostly manufactured in southern China.

Beijing and Moscow are trying to keep up appearances, missing no opportunity to publicize economic ties. Many aspects of the relationship between the two capitals are blossoming, but trade is not one of them.

Last year, bilateral commerce between the two giants amounted to a miniscule $64.2 billion, down 27.8 percent from 2014 according to China Customs.

Obama Administration's Secret Overture to North Korea

Yesterday, the Wall Street Journal reported that at the turn of the year the Obama administration discussed the initiation of talks with North Korea with the goal of formally ending the Korean War, which was only suspended by a truce, not ended with a treaty, in 1953.

According to the Journal report, the White House dropped the US’s long-standing precondition that the North would have to end its nuclear program before talks could begin. Instead, the administration said that denuclearization would simply be an agenda item in the peace negotiations. The North reportedly rejected Obama’s overture, refusing to permit its nuclear program to even be placed on the agenda. Pyongyang then detonated a nuclear device on January 6, ending the White House’s “diplomatic gambit.”

The paper’s report, if true, indicates the Obama administration was willing to execute another stunning reversal of American policy by essentially accepting the Democratic People’s Republic of Korea as a nuclear state and condoning its violations of the Nuclear Non-Proliferation Treaty.

Could a Missile Defense Plan Turn China on North Korea?

On Monday, China’s Foreign Ministry urged Washington to start direct talks with North Korea over its most destructive weapons.

“The focus of the nuclear issue on the peninsula is between the United States and North Korea,” said Hong Lei, ministry spokesman, at the daily news briefing. “We urge the United States and North Korea to sit down and have communications and negotiations, to explore ways to resolve each other’s reasonable concerns and finally reach the goal we all want reached.”

Beijing, with the urging of the Bush administration, had sponsored the so-called Six-Party Talks, which began in 2003. The concept was that progress was possible when the US and all regional stakeholders—China, Russia, Japan, and South Korea—were present in discussions with North Korea.

The White House thought that giving China a leading role would bring out the best in Beijing, which would then use its considerable leverage to “denuclearize” the Kim regime. North Korea and China are each other’s only formal ally.

China Communist Party Elder Speaks Out Against Censorship

Censorship has gone too far, contends Zhou Ruijin, 76, in an essay published in China in January and on Phoenix TV’s ifeng.com early this month. “To be frank, some leaders in the party’s propaganda department were managing the press like how they would manage a train schedule, directly intervening in the approach and procedure of news reporting,” he wrote.

Zhou, a leading liberal writer in the 1990s, attacked today’s propaganda chiefs for taking down offending websites and deleting postings, calling these actions contrary to the concept that the Communist Party govern the country according to law. Moreover, he condemned “waves of campaigns, strict clampdowns, and public shaming,” the last a reference to the parading of people making Cultural Revolution-style confessions on television.

“In a phase of social transition, it is normal that there are different views and discussions in the field of ideology, that the public air their own opinions on deepening reforms,” wrote Zhou. “They can only be guided, but not repressed.”

Where Is China’s Central Bank Chief?

In China and elsewhere, there is increasingly intense speculation as to why Zhou Xiaochuan, the highly acclaimed governor of the People’s Bank of China, has for months been silent about the renminbi, the ailing Chinese currency. His silence and absence is most unusual and apparently prompted IMF Managing Director Christine Lagarde to chide Beijing at Davos last month for the government’s inadequate communication with financial markets.

Zhou, notably, stayed away from the central bank’s August 13 press conference, held just two days after the shock devaluation of the yuan, as the Chinese currency is informally known. Though he appeared at a G-20 finance meeting in Ankara in early September, he has since vanished. That he skipped Davos, raised eyebrows.

China-Iran Upgrade Their 'Comprehensive Strategic Relationship’

Chinese President Xi Jinping just wrapped up his three-nation tour to the Middle East with a visit to Iran.  

The global narrative is that Beijing and Tehran are strengthening relations and for good reason: during the visit the two sides inked 17 accords, treaties, and letters of intent.

The two republics—one “People’s” and the other “Islamic”—also declared they had agreed, in the words of the official Xinhua News Agency, “to elevate their ties to a comprehensive strategic partnership.” And they appear to have meant it. As Xi’s Iranian counterpart Hassan Rouhani said on Saturday, “Today we discussed the strategic relationship between both countries, setting up a comprehensive 25-year plan and also promoting bilateral relations of up to $600 billion over the next 10 years.”

China's Economy Slides, Stocks Tumble, Capital Takes Flight 

Stocks around the world have generally tumbled this month, but last Tuesday was a bright spot as equity markets surged. Then, Beijing's National Bureau of Statistics reported its first estimate of China's gross domestic product for 2015.

The official agency pegged last year's growth at 6.9 percent. The percentage increase, roughly in line with analyst expectations, was the lowest in 25 years.

So why does a dour report trigger optimism among stock investors? Investors now believe the Chinese central government will step up stimulus to restart growth, which has been falling since 2011. Furthermore, there is a hope that state entities and government-backed funds in China—the so-called “National Team”—will begin a new round of buying in China’s two share markets. Both developments are considered good for Chinese stocks.

And what is good for stocks in China is often thought to be good for stocks everywhere else.

Will South Korea Rethink Its Nuke Policy?

On Monday, a “US official” speaking anonymously to Reuters, said the Pentagon was not thinking of reintroducing nuclear weapons to the Korean peninsula.

Earlier in the day, Seoul had suggested Washington was considering the possibility. “The United States and South Korea are continuously and closely having discussions on additional deployment of strategic assets,” South Korean Defense Ministry spokesman Kim Min-seok said.

By “strategic assets” the unnamed US official said the Defense Department was referring to nuclear-capable bombers. South Korean media had been reporting that Washington and Seoul were discussing the deployment of American B-2 bombers, F-22 fighters, and nuclear submarines to the Korean peninsula.

President George H. W. Bush in 1991 announced the unilateral withdrawal of tactical nuclear weapons from South Korea and other foreign countries, and today there is virtually no apparent support in the Pentagon for redeploying them.

Have Chinese Agents Abducted Hong Kong Publisher, Book Sellers?

The case of five missing Hong Kong residents connected to a Hong Kong publisher and bookshop took a strange turn Monday when the wife of one of the missing individuals withdrew her request for police assistance. Choi Ka Ping said she had heard from her husband that day and no longer needed help.

The police, however, said they would continue the investigation into the disappearance of the husband, Lee Bo.

The first to disappear was Gui Minhai, owner of Mighty Current, a publishing house that since 2012 has released about 80 books highly critical of China’s Communist Party. The last known contact from him was an e-mail message sent on October 15 to a printer from the Thai resort of Pattaya.

Japan, South Korea Reach Historic Agreement on ‘Comfort Women’

On Monday, Japan and South Korea, in parallel statements of their foreign ministers, agreed to a “final and irreversible” settlement of the so-called “comfort women” issue. 

 During Japan’s colonization of Korea last century, Korean females had been forced to provide sexual services to Japanese soldiers in military-run brothels. 

 Pursuant to the deal, Tokyo agreed to pay 1 billion yen ($8.3 million) into a South Korean fund for the 46 surviving comfort women. More important, Japan’s foreign minister, while in Seoul, delivered the apology of his country’s prime minister. Fumio Kishida said Shinzo Abe “expresses anew his most sincere apologies and remorse to all the women who underwent immeasurable and painful experiences and suffered incurable physical and psychological wounds as comfort women.” 

China Threatens to Shoot Down Australian Planes

On November 25th the Royal Australian Air Force conducted a “routine maritime patrol” in the South China Sea as a part of Operation Gateway, a program of periodic flights. An AP-3C Orion surveillance plane flew near a reclaimed Chinese feature in the Spratly island chain, in the sea’s southern portion.

In response, the Global Times, a Beijing-based Communist Party newspaper, published an editorial that essentially threatened to start a war: “It would be a shame if one day a plane fell from the sky and it happened to be Australian.”

Australian Defense Minister Marise Payne responded to Beijing’s bluster with remarks that left something to be desired. “We always navigate in a very constructive way in the region,” she said.

US Diplomat is Roughed-Up in Scuffle in Beijing

On Monday, unidentified men, many of them wearing smiley-face stickers on their jackets, shoved journalists so that they fell onto American diplomat Dan Biers as he was reading a statement in Beijing about the persecution of Chinese human rights lawyer Pu Zhiqiang. Biers, a deputy political counselor at the US Embassy, had to stop reading but was later able to finish.

The incident took place while Biers was standing outside Beijing No. 2 Intermediate People’s Court, where Pu’s trial is being held.

The men, almost certainly from Beijing’s Public Security Bureau or a similar unit, also interrupted a European Union delegate. Diplomats from 10 countries other than the US were on hand for the proceeding—“the capital’s biggest political trial in two years,”  according to the Wall Street Journal’s “China Real Time Report”—and many of them were also harassed.

‘Airpocalypse’ in Beijing

Monday afternoon, the Beijing municipality issued its first-ever red alert for air pollution. The warning, the highest in a four-level system, expires at noon on Thursday.

During this alert, primary and secondary schools are closed, as are kindergartens. Individual cars are only allowed on the road on alternate days. Government offices must reduce car use by 30 percent. Public transportation operates on extended schedules. Heavy trucks must stay off the roads. All outdoor construction is stopped. Factories are required to close for two days. Fireworks and barbecues are banned.

The air in Beijing is now a dark gray. And it is deadly. PM2.5 readings, which measure the most hazardous particulates, exceeded 900 in recent days. The World Health Organization’s safe level is 25. In China, some 4,000 people a day die from bad air, according to one study.

Kim Calls First Party Congress in 35 Years

At the end of October, North Korea’s official Korean Central News Agency announced that the ruling Workers’ Party will hold its next congress in May 2016. The congress last met 35 years ago, in October 1980, during the reign of Kim Jong Un’s grandfather, Kim Il Sung.

KCNA, with typical grandeur, announced that the meeting reflected “the demand of the party and the developing revolution that witness epoch-making changes in accomplishing the revolutionary cause of Juche, the cause of building a thriving socialist nation.” 

There is no indication of what will be on the agenda, and Korea analysts know they will learn about that only when the congress finally meets. After a  month of consideration, however, they have reached a basic consensus about what the holding of the congress means: that the party has consolidated power at the expense of the Korean People’s Army, and that Kim Jong Un, the country’s youngish ruler, has taken full political control of the regime.


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