August 14, 2016: Lately the state-controlled media is running a lot more stories about how effective the new and improved Chinese military is. Of particular interest are stories about how Chinese naval and amphibious forces are so much better trained and ready for combat. One story described how increased training and new techniques enabled the 1st Amphibious Mechanized Division to reduce, by a third, the time necessary for it to mobilize, get on ships and make an attack once the order was given. This division has long been seen as a primary component of any invasion of Taiwan but the story indicates that other Chinese amphibious troops have made similar improvements in responsiveness. Given the large number of Chinese disputes that involve islands (in the South China Sea or off Japan and South Korea) the message is clear. The Chinese have invested heavily in new amphibious ships and landing craft as well as training troops for moving by helicopter or (for paratroopers) by fixed wing aircraft to quickly take territory. New weapons, new communications systems and lots of money for training exercises are all traditional signs that a nation is serious about improving its military capabilities, usually to achieve some important objective.

At the same time the state-run mass media also announces, rather more quietly, the growing number of senior military officers being arrested for corruption. Some of the recent arrests indicate that no one is immune if they have betrayed their role in making Chinese armed forces more effective. While China has failed many times to suppress corruption in the military, as had the preceding imperial governments for thousands of years, the current effort is different. Past anti-corruption campaigns were carried out quietly since the biggest offenders were senior officials, most of whom were immune because of political connections. Chinese military corruption in the past is often well documented but it was never something the government wanted publicized. That has changed and the current media effort is providing lots of historical examples of how Chinese troops were defeated because they had been crippled by corruption. This sends an encouraging signal to most Chinese who understand that this is a rare public (if indirect) admission of how corruption cripples the economy in general and in ways that most Chinese suffer from. Unfortunately the “strenuous efforts” to reduce corruption in the military have been going on since the 1990s and the corruption, while reduced, still exists and, according to secret police reports, the actual combat capabilities of the military are still crippled by corruption. While these reports are secret, the evidence of continued military corruption is not. Those in the military (or who recently left) as well as civilians working for or with the military have all seen the corruption in action and know it is still there. The government controlled mass media keeps visible examples (avoidable accidents and blatant theft or abuse of power) from being widely distributed but cell phones and the Internet get a lot of that stuff, especially when there are pictures and video available, wide attention. In response the government publicizes its anti-corruption measures in the military. This includes new measures like special anti-corruption inspection teams for making surprise visits to military organizations and seeking out obvious or hidden evidence of corruption. These teams have tremendous authority and cannot be overruled by officers of any rank. Then there is yet another ban on military involvement in commercial activity. These bans began in the 1990s but officers and troops kept finding ways to get around it. So additional bans are issued that, at the very least, mean military personnel have to break more laws (and face more punishment if caught) if they continue their bad behavior. Another anti-corruption measure directed at the military is the Communist Party efforts since 2013 to increase party control over the military. Thus president Xi now also serves as the peacetime commander-in-chief of the military. Such command is expected in wartime, when the president (who is also head of the ruling Chinese Communist Party) takes direct control. The latest change means the president takes more direct control of planning and even day-to-day military operations. This takes up time but Xi sees it as worthwhile. An important reason for continued corruption in the military is the dramatic growth in military spending. China continues to increase its military spending but now blames that on growing foreign (mainly American) resistance to Chinese efforts to take possession of the South China Sea. In the last decade the United States has cut defense spending about four percent (to the current $595 billion) while China’s more than doubled (to the current $214 billion).

New Tanks

China recently revealed a new version of their most numerous tank, the Type 96. This new model, the Type 96B appears to have a more powerful engine (1,200 HP instead of 1,000 HP), more efficient and reliable mechanical components (especially tracks and wheels) as well as improved armor and electronics. The original Type 96 (also called Type 88C) design entered service in 1997 and Type 96s have since become the primary tank in the Chinese army. That comes to nearly half of the 6,000 medium tanks China still have in service). The next most numerous model, the Cold War era Type 59 is being phased out. There are also about 500 Type 79s and 80s, both of which were stepping stones to the 90 series and several hundred of the latest designs, the type 98 and 99. The Type 96 is apparently going to remain the primary Chinese medium tank for some time as the Type 98 and 99 models are more expensive, heavier and not that much more effective than the Type 96B. From now on all new Type 96s will be the upgraded “B” models.

The 50 ton Type 96 has three man crews and modern sensors and electronics. The 90 series tanks are Chinese designs, based on the Russian T-72, a Cold War era design that showed up two decades after the post-World War II T-55 became the primary Russian tank. In 2009 there were about 5,000 Type 59s in Chinese service but by 2016 over half of these had been retired or sold off. By the mid-2020s all the Type 59s will be gone. The main threat this large tank force existing to deal with are the large tank forces of India, Russia and South Korea. The Russians and Indians both depend on another improved T-72; the T-90. The Type 96B is still considered (by Russians and Indians) as inferior to the T-90 but the new B model is another example of how China is catching up. South Korea uses a locally developed and built K-1 tank that is based on the American M-1. In any event China wants all these tanks not so much to fight some huge (and costly) tank battle but to intimidate opponents to backing off. Since antiquity that has been the Chinese way of war. Usually it works. But when it doesn’t things tend to go very badly for China.

The Financial Market Tanks

More bad news on the economic front. Foreign and private investors are backing away from China. The latest indicators have been foreigners dumping Chinese bonds. This is not unexpected because the economy has been slowing down for several years and, in some areas, contracting. The main problem is government supported (and often corrupt and counterproductive) investments. Until recently many foreign investors believed Chinese propaganda that the economy was under control, despite foreign analysts pointing out that portions of the Chinese market were inflated (a bubble, especially real estate and the stock market) with share prices at over 80 times earnings and similarly overvalued real estate. The foreigners have noted that the government is largely pretending to act but does nothing effective and seems to believe its own propaganda. That is always a bad sign. Then there is the 2015 stock market crash. The reaction was rather chilling as the Chinese stock market has, since 2015, largely been abandoned by Chinese investors and is kept going (with little activity) by government controlled corporate investors. The latest (July) government reports show that GDP growth continues to fall (to 6 percent now) and other indicators of economic activity continue to decline to show why the economy is slowing down. The government says all is well but a growing number of foreign economists and Chinese business leaders have doubts. The foreigners can speak openly while Chinese critics must be discreet. The government predicted GDP growth for 2016 to be about 6.5 percent which and that estimate has not wavered. But the official government data indicates a lower number. There are growing doubts inside China that government economic statistics have been and still are modified to mask bad news. That makes a lot of experts wary, because as time goes by more evidence of past falsification of data become obvious. There are a lot of old problems that can no longer be hidden. These include massive pollution, corruption, and unprofitable state owned industries. These problems have gotten worse and are crippling economic growth and must be tended to.

Showing the Neighbors Who Is In Charge

Japan protested but did not respond militarily as China sent 230 fishing boats and seven armed coast guard ships into Japanese territorial waters (within 22 kilometers of land) around the Senkaku islands on August 5th. Japan issued an official protest which China dismissed because China does not recognize Japanese claims to Senkaku. Now it is up to Japan to act, or not act, to stop the Chinese from physically taking possession of the Senkakus and the surrounding waters. This is a major escalation and if Japan does not get China to withdraw this will be a signal to the growing anti-China coalition that resistance is futile. The Americans said they stand by Japan but it is unclear if the United States will participate in any military action to keep the Chinese from simply taking possession of the Senkakus. The Chinese, and Japan’s local allies, don’t really care what the Americans say but will pay attention to what the Americans do. For a long time the Chinese did not physically challenge the 22 kilometer limit but then a Chinese Navy ship, for the first time, entered territorial waters off the Senkaku islands in mid-June. 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. The Senkaku Islands 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. China has challenged Japan and its allies to do just that.

Until now Japan has treated the Chinese threat as a largely economic and diplomatic conflict and thought it was winning. For example Japan has quietly stepped up and replaced China as Burma’s largest foreign investor. This has made it practical for the new (elected) Burmese government to oppose China regarding the South China Sea dispute. Burma, much to the dismay of China, did not denounce the recent international court ruling that China was acting illegally. China saw this coming and was trying to avoid it. Since early 2016 China has been conducting a “charm offensive” with the new, non-military government of Burma. Currently China is eager to buy some regional allies (especially Thailand, Burma and Malaysia) to get some support for Chinese expansion efforts in the South China Sea. China is willing to pay a lot for such support. But Burmese officials knew that most Burmese feared China and backed cracking down on illegal economic activity on the Chinese border and punishing Chinese firms that behave badly while building large new mines and power plants in thinly populated rural areas. Japan also noted that the Chinese threat to all its neighbors had turned Japan into an acceptable ally. Since World War II Japan has been hated through the region for Japanese atrocities during that war. The Japanese had driven out European colonial governments and called it liberation. But the reality was worse than the Europeans and Japan long refused to recognize that misbehavior. That has changed and, along with the Chinese threat, Japan has gone from old enemy to new friend.

August 13, 2016: The Philippines took a bold initiative to deal with the South China Sea dispute. The Philippines has enlisted former (1992-98) Philippine president Fidel Ramos to visit China and arrange formal negotiations between China and the Philippines over territorial disputes in the South China Sea. After several days of discussions in China the Filipino team reports that a proposal to separate discussions over the territorial dispute be kept separate from talks about Chinese investments in the Philippines was listened to but there was no response. China always links economic investments with other objectives and is unlikely to make an exception for the Philippines.

August 10, 2016: Popular protests, and accusations of corruption and disregard for health risks, caused local officials in the coastal city of Lianyungang (500 kilometers north of Shanghai) to cancel plans to build a $15 billion nuclear waste reprocessing facility. This is part of a growing trend where angry locals force polluting (or potentially polluting) activities to shut down.

August 7, 2016: South Korea continues to get threats from China about South Korea buying the American THAAD anti-missile system. Because of continued North Korean nuclear and ballistic missile development South Korea now plans to have THAAD operational in 2017. China, Russia and North Korea have long opposed THAAD. South Korea wants THAAD for protection from North Korean missile attack and always resisted Chinese objections, even when China hinted that failure to drop THAAD might result in less trade with China. That was a signal to South Korean voters to carefully consider the cost of defying China. That did not work and now China is backing off its criticism of North Korea in general as part of a continued effort to get the South Koreans to obey. China will not come right out and say it but they object mainly because THAAD would also make South Korea less vulnerable to intimidation by Chinese ballistic missiles. South Korean voters understand that so all the threats are having less impact than China expected. South Korean public opinion polls show voters are even more enthusiastic about the high tech and very expensive (over $100 million per launcher and associated equipment) THAAD system now that North Korea continues launching ballistic missiles and preparing for more nuclear tests. China also sees this defiance as a sign that South Korea does not believe Chinese assurances that it has North Korea under control. This move also means that South Korea is not ready to abandon its alliance with the United States and instead accept the patronage and protection of China, the traditional local superpower.

August 5, 2016: New Zealand has joined a long and growing list of countries using warships to prevent Chinese ships from stealing fish (poaching) from offshore areas where China has no fishing rights. This poaching has been going on with increasing frequency since the 1990s. But now many of the victims have done the math and noted that the most frequent offenders are Chinese ships. These are either Chinese owned fishing ships or ships from other countries that register themselves as Chinese to gain a measure of immunity from being stopped or punished by the nations being plundered. But some nations are not just complaining, they are fighting back and often using warships and expensive punishments to send China a message. China insists it is innocent that this is all a misunderstanding.

August 3, 2016: The Philippines government warned Filipino fishermen to avoid Scarborough Shoal, for their own safety. This comes as a surprise to the fishermen who have long worked the waters around Scarborough Shoal. After all on July 12th the Permanent Court of Arbitration backed the Filipino accusations that China is acting illegally with its claims in the South China Sea and that it was illegal for China to build artificial islands (as happened in Scarborough Shoal) and claim them as Chinese territory. China said it would not recognize the court decision and now threatens to use force to protect its claims in the South China Sea. Most Filipinos do not want to back off. In June, just before newly elected Filipino president Duterte took office, a group of Filipino nationalists tried to plant a Filipino flag on one of islets around Scarborough Shoal but were physically prevented from doing so by Chinese Coast Guard vessels. This is the sort of treatment Filipino fishing boats have been getting for years. The Chinese have been particularly active at this in 2016. Chinese Coast Guard vessels tend to be around Scarborough Shoal nearly all the time and when they are they will violently (without using weapons) force Filipino fishermen from their traditional fishing areas. Chinese coast guard ships now visit Scarborough Shoal more frequently and apparently with orders to force foreign vessels, especially fishing boats, they encountered away from the area. China was unable to spin all this in their favor and now they have more bad press because of how the Filipino political activists were treated. Scarborough Shoal is 220 kilometers from one of the main Filipino islands (Palawan) and 650 kilometers from Chinese territory (Hainan Island) and according to international law it is Filipino. The Chinese coast guard has a reputation for ignoring international law and other illegal activity by Chinese ships. It appears that China encourages its coast guard to do whatever they can get away with to drive foreign fishermen from their traditional fishing grounds that are now claimed by China. These claims are backed up by artificial islands created near Scarborough Shoal and elsewhere in the South China Sea. China stations military personnel and weapons on these tiny island fortresses. In preparation for the island building China wants all foreign vessels out of the area. President Duterte has also 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 is now seeking alternative ways to settle the dispute.

July 28, 2016: South Korea also has problems with Chinese poachers. Many of these Chinese fishermen are armed with knives, saws, and axes and willing to use force to repel South Korean coast guardsmen seeking to arrest them. China protests the “rough treatment” of its fishermen but does little to curb the poaching or violence against South Korean coast guardsmen. South Korean regards this as another example of Chinese arrogance. While South Korea and China are big trading partners, they are also at war here. This is low level stuff off the South Korean coast where, the South Korean coast guard has seized thousands of Chinese fishing boats for poaching. Chinese fishermen consider the risk acceptable because the fish stocks off the South Korean coast are much richer (in quantity and quality) than off China (where overfishing has done a lot of damage). South Korea has become more forceful against the poachers but they keep coming and the Chinese government insists it cannot control them. North Koreans have a similar but more sinister problem. A Chinese firm apparently solved the North Korean problem by purchasing fishing rights off both North Korean coasts for $75 million. The seller was a North Korean state owned firm that employed thousands of poorly equipped North Koreans whose main source of income was fishing. The sale of fishing rights was not made public in North Korea or China but became obvious as dozens of modern Chinese fishing trawlers were suddenly operating in waters previously guarded by North Korean patrol boats that had orders to shoot on sight any foreign fishing boats caught poaching. The new arrangement ignores the plight of the many now unemployed North Korean fishermen. No wonder this deal never made it into the state controlled media of North Korea or China.

July 27, 2016: India ordered four more American P-8I maritime reconnaissance aircraft for their navy, mainly to help find Chinese submarines. Each new P-8I costs about $250 million and delivery will be by 2019. This is in addition to the first eight ordered in 2009. The first one of those arrived in 2013 and spent months being flown around to various naval air bases that was to operate from. This included the naval air base in the Andaman and Nicobar Islands, where P-8Is are being used monitor the three main Chinese trade routes through the Indian Ocean. By late 2014 six P-8Is had been delivered and the last of the first eight were in service by the end of 2015. The Indian crews and senior commanders are very pleased with the performance of the P-8I, which mainly serves as a maritime patrol aircraft. Training has shown that Indian subs (similar models to what China has) can be detected and tracked by the P-8I. So far the Chinese have not provided enough of their own in the Indian Ocean for the P-8Is to go after but the Indians expect that to change soon. Since 2010 Indian naval planners have warned that India needed at least 24 P-8I aircraft. But so far have only been able to convince the government to buy a dozen. Indian admirals expect the performance of the P-8I to convince the government to pay for another twelve.