July 4, 2016: China has told the UIN what additional economic sanctions it would be willing to impose on North Korea but the details have not been made public yet. China and Russia have joined South Korea, the United States and Japan in an effort to get North Korea to abandon its nuclear weapons program. North Korea is not cooperating even though China is apparently prepared to do the unthinkable and cut off all trade with North Korea. While the UN sanctions do not prohibit imports of essentials, like food and these continue, China can simply close its North Korea border to any trade. Because of the legal market economy in North Korea that means some food would be still available but at higher (market) prices. The government continues to import enough Chinese food to avoid another famine like the one that killed over a million people in the 1990s. The North Korean government has also refused to do what China has done and let the market economy legally spread to larger enterprises (like manufacturing or farming and mining). That means the North Korean government can no longer pay workers in food as it was able to do since the 1950s because of food and other aid coming in from Russia (mostly) and China. Most of that disappeared after the Soviet Union collapsed in 1991. For the growing number of North Koreans who have seen how the Chinese economy works they know that if China cut all trade with North Korea the shortages, especially of food, in North Korea would have catastrophic consequences within weeks or months. Chinese know this and during the first week of June senior Chinese and North Korean officials met to try and improve diplomatic and economic relations between the two countries. This involves the essential role China plays in keeping North Korea alive. This year North Korea got a very visible and painful reminder of that in March when China began enforcing all the UN trade sanctions against North Korea. Now China promises more pain if North Korean rulers do not become more cooperative. So far the North Korean leadership remains defiant.

Defiance In The South China Sea

China recently announced a week of naval exercises in the South China Sea. The exercises will end on July 11^th, just before the Permanent Court of Arbitration is to announce its decision regarding Filipino accusations that China is acting illegally with its claims in the South China Sea. Britain and other Western nations have already announced their belief that the Court of Arbitration ruling would be binding and they would enforce any penalties levied. China cannot ignore that the way it is trying to ignore the court deliberations. The Philippines, America, Australia, Japan and South Korea all openly oppose the Chinese claims. Other nations in the area (Taiwan, Indonesia, Vietnam, Malaysia and India) held back for a while but are now also in open opposition. China is now offering to hold regular talks with the Philippines over these disputes. The Philippines refuses because it does not consider the situation a dispute but rather a case of unwarranted Chinese aggression.

The Filipino policy may change because the newly elected president ( Rodrigo Duterte) has made it clear that he will not go to war (at least not unless America does) with China over conflicting territorial claims in the South China Sea. He pointed out that the Philippines is vastly outnumbered by the Chinese military. Duterte says he asked the Americans if they would help the Philippines fight to retain off shore areas that are legally Filipino and the U.S. told him such active military assistance would only be provided if the Philippines were attacked by China. This is what the Chinese hoped for and why they have always stopped short of actual combat in forcing (or intimidating) other nations out of disputed South China Sea territories. Duterte points out that the Philippines should concentrate its increased defense spending on security problems at home, like Islamic terrorism, Moslem separatism and the many private militias maintained in the Philippines, especially in the Moslem south.

July 1, 2016: A Taiwanese warship accidentally fired a Hsiung Feng III anti-ship missile, which travelled over 70 kilometers before detecting and hitting a Taiwanese fishing trawler, killing the captain and wounding two other crew. Chinese naval officers were alarmed because the fishing ship involved was smaller than most Chinese warships a Hsiung Feng III would be used against and not as “detectable” as most Chinese warships.

June 30, 2016: The government revealed that a recent test of a space satellite capable of refueling other satellites was a success. Many satellites are equipped with small rockets so they can move to different orbits. One reason the United States built its Space Shuttle was because it provided an opportunity to keep expensive spy satellites operational longer by refueling them and even replacing failed components. The Space Shuttle program was shut down in 2011 because of cost. The U.S. does not plan to test a similar refueling satellite until 2020.

June 29, 2016: The government announced a ban on what it described as “fake news and the spreading of rumors” especially if the details are obtained from social media on the Internet. This means more work for the many people who work (full or part time) for the Chinese Internet censorship organization. This “Great Firewall of China” has had some success but unlike pre-Internet media, the Internet cannot be completely purged of news the government does not want freely available. This announcement was not a surprise. It comes after a rare event in which Chinese leaders criticized, in public, their own Propaganda Department for not doing its job. The Propaganda Department is the several hundred people who direct the vast censorship operation that is supposed to block “inappropriate messages” (that make the Communist Party look bad) and encourage approved ideas. In addition to controlling most mass media in China the Propaganda Department supervises how more than $10 billion a year is spent on pro-China publicity outside the country. Inside China this media manipulation effort employs millions of full time and part time personnel who, since the 1990s, have concentrated more on the Internet. Over a decade ago the rulers of China (which remains a communist police state) noted that they were losing control of their media, which had long been a key component of maintaining a dictatorship. The effort to regain the pre-Internet media monopoly has not been going well and until recently received little official notice. The recent criticism concentrated on failures to keep the traditional mass media (radio, TV, newspapers) in line. This is not unexpected because the massive efforts to censor the Internet have only been partially successful and the disturbing (to the Communist Chinese Party that rules China) new ideas that began spreading in the Internet have spread to the traditional mass media, despite the fact that most media personnel in China are government employees.

June 25, 2016: South Korean media published numerous reports from northwest China that North Korea had resumed counterfeiting Chinese and American currency. There were similar reports in April when Hong Kong media spent weeks doing stories about high quality counterfeit Chinese currency showing up in China. The Chinese government tried to keep this quiet but it appears the North Korean counterfeiting operation resumed in 2015. North Korea had been turning out similar high-grade counterfeits of American and Japanese currency for decades. In North Korea counterfeiting currency is a government monopoly. Since 2009 foreign (mainly Chinese and American) currency has been preferred in North Korea because the local currency is seen as worthless and unpredictable. The counterfeit Chinese 100 Yuan notes (worth about $15) began showing up in North Korea earlier in 2015 and moved into China via unsuspecting merchants and tourists. Officially the North Koreans deny any responsibility for the fake currency and always have. But back in 2015 North Korea openly said it would strike back at China for enforcing UN economic sanctions. North Korea has long considered counterfeiting currency as a weapon. China is now blocking essential (in terms of obtaining foreign currency) North Korea exports like coal and iron ore. Imports of aviation fuel are also blocked and more bans are threatened. To North Korean leaders, counterfeit Chinese currency helps balance the books. But the latest information (via refugees) from North Korea indicates the production of counterfeit Chinese 100 Yuan notes began in 2013 when small numbers of bills were put into circulation to test how effective they would be in the marketplace.

June 24, 2016: China claimed that there were now 47 nations that back Chinese claims in the South China Sea. When pressed for details China admitted that most of these nations would not go public with their support and those few that did were obviously bought and paid for (like land-locked African states that have heavy Chinese economic involvement) and nations like Sri Lanka that depend on China to counterbalance the influence of powerful neighbors (in this case India).

June 23, 2016: China continues to deploy more troops to the UN peacekeeping operations in Sudan and South Sudan. There are about 230 Chinese troops in South Sudan and about a thousand in Sudan. A Chinese infantry battalion (700 men) is stationed near South Sudan’s capital, Juba. A reinforced engineer company of 300 is operating near the city of Wau. However, China is criticized for what local rebels and aid groups call preferential support for the South Sudan and Sudan governments. Both of these nations supply China with oil. The Chinese government has majority ownership in three of the five major oil consortiums operating in Sudan and South Sudan. At least one west Sudan (Darfur) rebel group has threatened to attack Chinese troops over perceived favoritism, though as yet no specific attacks have occurred.

June 22, 2016: The government banned any further mention in Chinese media (including the Internet) of continuing protests and political unrest in the southern coastal town of Wukan. These protests, against corrupt local officials and the unwillingness of provincial or national governments to do anything about it have resumed. The protests against government inaction have gone on for nearly a week and the government response is to restrict access to Wukan and forbid mention of the matter in media. Many Chinese have been following events in Wukan with great interest. This ban ends public discussion of what happened in Wukan since 2011. Wukan became national news in 2012 when an anti-corruption effort turned into what amounted to an uprising. It ended with one of the rebel leaders being made the local Communist Party head. That did not lead to the expected crackdown on corruption. This all goes back to the fact that the Communist Party is still the ultimate power in China, which is still a communist dictatorship. But the government allows, and encourages, business owners and entrepreneurs to join the party. While the party still has some true-believers in radical socialism, the leadership is dominated by advocates of a market economy. When implemented in the 1980s local party leaders quickly used their power to get rich themselves, often with corrupt practices. Many local and provincial party leaders, like those in Wukan, screwed too many of the locals. That led to lots of demonstrations and, in 2011, open rebellion in Wukan. The national government eventually ordered provincial officials to side with the rebels against the corrupt local officials. This was a bold move, but is also in line with the policy of bringing the most effective people into the party. For most of December 2011 the town of 20,000 was in open rebellion because of corrupt local officials (who also killed a popular protest leader). The national government apparently ordered provincial officials to be the good guys and quiet things down as quickly as possible, with the least amount of mess (dead bodies and general destruction.) While police surrounded the town and banned foreigners, especially journalists, from the area, news got out anyway. Internet access was cut off, but there were still cell phones and people sneaking in and out. The government does not want stuff like this to spread, because there have been hundreds of outbreaks similar (but not as extensive) to Wukan during 2011 and 20012. Enough Wukans happening at the same time and in the same area could spark a wider rebellion. It's happened many times before in China's history, and Chinese officials, especially at the national level, paid close attention to history. So the Wukan situation (and several others in the south) were exploited by the national leadership as an opportunity to punish some local officials and serve them up as examples to the many more local officials who do the same thing, but more discretely. The national officials would like to get rid of corruption, but more discreet corruption is an acceptable alternative. The new Communist Party leader of Wukan was unable to bring corrupt local officials, especially at the provincial level, to justice. The rebel leader turned local Communist Party leader was recently arrested for continuing support of local demands that the government act on corruption and right past wrongs (like stealing of land). The locals realized the government claims that it was doing something about corruption were only true some of the time and that in many provinces the local officials were powerful (or clever) enough to escape punishment and continue as before. Limiting the spread news about Wukan is what government control of the mass media is all about.

June 17, 2016: An Indonesian warship intercepted a dozen Chinese fishing ships illegally operating off the Natunas islands, fired warning shots and seized one of the Chinese ships and its crew and charged them with poaching. This is the third such incident this year and Indonesia accuses China of deliberately sending these fishing boats to poach in order to establish a claim that the Natunas are “traditional Chinese fishing areas” and thus belong to China. The Natunas are 3,000 kilometers from China and within the Indonesian EEZ (Exclusive Economic Zone). Waters 360 kilometers from land are considered the EEZ of the nation controlling the nearest land. The EEZ owner can control who fishes there and extracts natural resources (mostly oil and gas) from the ocean floor. In the past China has escorted Chinese fishing boats that were illegally fishing near Indonesia and several times used the threat of force to prevent the arrest of the Chinese fishing boats. In response to this Indonesia began sending larger warships to make arrests. There were no Chinese warships in the area this time. China justifies their armed intervention because the Chinese trawlers were in “traditional Chinese fishing grounds” but seems to have backed off sending warships since Indonesia responded with its own warships and demonstrated a willingness to use force to defend its EEZ.

June 15, 2016: Four American EA-18G electronic warfare aircraft arrived in the Philippines to assist in dealing with any Chinese efforts to interfere with American air and ship patrols in South China Sea areas claimed by China. The U.S. said the EA-18Gs were there for joint training with Filipino forces but these aircraft can also be used to test Chinese military electronics being used in the South China Sea.

June 14, 2016: Japan warned China to stay away from the Senkaku islands. This came in response to a Chinese Navy ship, for the first time, entering territorial waters (within 22 kilometers) off the Senkaku islands. The Chinese Navy electronic monitoring vessel (“spy ship”) was following two Indian warships that were in the area for joint training exercises with Japanese and American warships. The Chinese spy ship moved away after about an hour. China says it was a legal intrusion because the spy ship was unarmed and thus not a warship. That is not how international law interprets “free passage.” Earlier in 2016 Japan announced the creation of a new naval task force to patrol and defend the Senkaku Islands. This force consists of ten new 1,500 patrol ships and two older vessels carrying helicopters. China has been increasingly aggressive about sending coast guard and navy ships into waters around the Senkaku Islands that both China and Japan claim. These are actually islets, which are 167 kilometers northeast of Taiwan, 360 kilometers from China and 360 kilometers southeast of Japan's Okinawa Islands and have a total area of 6.3 square kilometers. Taiwan also claims the Senkakus, which were discovered by Chinese fishermen in the 16th century, and taken over by Japan in 1879. They are valuable now because of the 380 kilometer exclusive economic zone (EEZ) nations can claim (via an international treaty) in their coastal waters. This includes fishing and possible underwater oil and gas fields. Technically parts of the Senkakus fall within the EEZs of China and Taiwan as well as Japan. But Japan has controlled the Senkakus for over a century and says it will use force to retain possession.

June 9, 2016: In Tibet some 250 Chinese troops crossed the Indian border into Arunachal Pradesh, stayed a few hours then left. This was not supposed to happen because of border agreements China and India negotiated in 2013 and 2014. China said the incursion was an accident and the troops left as soon as India contacted China (per the border agreements) and China was able to contact the border troops involved. There have been fewer of these incursions since 2014 but China still claims to own Arunachal Pradesh. In 2014 India began forming 12 new border police battalions, each with about a thousand personnel to detect and deal with this sort of thing along the 3,500 kilometer long border with Chinese Tibet. In 2013 there were 411 of these Chinese border violations, following 426 in 2012 and 213 in 2011. In 2014 China protested India building roads near the Chinese border in northeastern India. The roads were in an area that new (2014) Chinese maps showing Indian territory claimed by China as actually being part of China and within China’s borders. This is just another escalation in a long-running border dispute over who owns areas like Arunachal Pradesh. In this part of northeast India there are few, if any, ethnic Chinese. The locals know that a Chinese takeover would mean drastic changes because the first thing China does in places like this is move in a lot of ethnic (Han) Chinese and marginalize the natives. This rarely ends well for the locals. While these Chinese claims have been on the books for decades, since 2000 China has become more vocal about it. That's one reason India has been rapidly increasing its defense spending. But since both nations have nuclear weapons, a major war over these border disputes is unlikely. Constant Chinese pressure is another matter. China is applying the same tactic in all its recently activated territorial claims. Constant pressure while avoiding anything that might trigger a war is seen by China as a slow but certain way to secure its claims.