Monthly Archives: December 2011

China’s Moon Dreams

That a long-term ambition of Beijing’s space program is to put a Chinese on the Moon has been as badly a kept secret as the PLA-Navy’s wish to establish a carrier fleet. This Bystander noted in 2010, as China launched its second lunar probe, intended to test technologies that will allow it to land and return an unmanned mission on the Moon in 2013 (see artists impression below), that 2025 to 2030 had been pencilled in for a manned flight. The recently published white paper on China’s space program publicly confirms the goal but adds nothing to the potential timing, saying only that the tasks for the next five years include conducting “studies on the preliminary plan for a human lunar landing”.

Only a dozen people, all Americans, have put foot on the Moon. The most recent were there in December 1972. Like the U.S. and the old Soviet Union before it, China sees its space program as both fostering the development of advanced technologies for military and civilian use, and as a statement of its emergence as a world power. The illustration above from state media suggests that China’s space scientists may have more than dreams of just getting one of their countrymen to the Moon and back again dancing in their heads.

1 Comment

Filed under Space

Religious Extremism Said To Be Surging In Western China

More trouble on China’s western borders, this time inside them. Eight people have been killed in another clash between police and suspected Uighur separatists in Hotan, the prefecture containing the Xinjiang city of the same name close to the border with the Pakistan-controlled part of Kashmir. In July, 14 people died in a firefight in the city after a group of 18 men took over a police station in the city, replacing the Chinese flag flown there with a pro-Jihadist banner. The militant East Turkestan Islamic Movement (ETIM) subsequently claimed responsibility for the attack, and for two attacks in Kashgar the same month.

In this latest incident, police say they rescued two hostages whom they say “violent terrorists” had kidnapped in a remote mountainous southern area of the prefecture, killing seven of the kidnappers and wounding four others. One police officer died and another was wounded in the operation, which took place overnight Wednesday/Thursday. Earlier this month, another kidnapping and killing had been reported, of a Uighur man accused of drinking alcohol. State media links both incidents to what it calls “a surge in religious extremism” in the Muslim ethnic Uighur-dominated area that borders Kashmir. The “extremists are becoming bolder, and their attacks more brutal,” Xinhua says.

China is desirous of a return to the stability along its borders that it had grown accustomed to until recently where it touches Pakistan and Burma. While it can only exert diplomatic pressure on those two countries, enforcing social order within its own territory is within its own hands. Previous outbreaks of ethnic violence in resources rich Xinjiang, which is heavily Muslim and has more in common culturally with Central Asia than with much of China to its east, have been met with crackdowns, even as Beijing has poured billions of yuan of development investment into the region. However, much of the fruits of that has gone to newly arrived Han Chinese, who now constitute a majority, only deepening the divide with native Uighurs, as does Beijing’s campaign of cultural assimilation.

Leave a comment

Filed under Politics & Society

China’s First Aircraft Carrier Sets Out On Third Sea Trials

China’s first aircraft carrier is conducting its third set of sea trials, the defense ministry says. The Varyag had set out on its second sea trials at the end of November, during which it was photographed at sea for the first time by an American satellite. The picture above is one of the latest of the vessel to be published, and is believed to be of the former Soviet carrier again leaving its berth in Dalian where it had been refurbished. That it is dated December 22nd suggests the carrier has been at sea for several days.

1 Comment

Filed under Defence

China Facing Large Jump In Cereal Imports

The latest look-ahead for China by the UN’s Food and Agriculture Organization (FAO) sees a big jump in cereal imports. The FAO’s recently published Global Information and Early Warning System, GIEWS, country brief says that total cereal (barley, maize, wheat and rice) imports for the 2011/12 grain marketing year, which runs from July to June, will reach at least 9.2 million tonnes, a new record, and a 92% increase on the 2010/2011 figure. This is despite ‘significant’ increases in cereal production over the past few years, including another record harvest this year which saw prolonged drought conditions in several regions in the country.

The increase reflects government efforts to provide irrigation to drought-affected farmers, and higher procurement prices intended to encourage the production needed to meet rising self-sufficiency targets. Supply still struggles to keep up with demand so government will need to sustain its policy measures to stabilize domestic cereal prices, whose sharp rises over the past year have been significant contributors to consumer price inflation.

Footnote: During last winter and spring, China spent 216 billion yuan ($34 billion) on infrastructure to improve water supplies to farmland, an official with the Ministry of Water resources told the annual central conference on rural work in Beijing this week. That was a 44% increase on the same period a year earlier. Spending is expected to rise a further 10% to 258 billion yuan during this winter and the coming spring as the push to sustain agricultural production is maintained.

1 Comment

Filed under Agriculture

Dai The Diplomat

China’s top diplomat, Dai Bingguo, has been busy in troublesome places for China’s foreign policy just beyond the country’s outer marches, first visiting Myanmar, now Pakistan: two outlets for China’s overland energy routes to the oil of the Middle East, and forming a pincer around India.

The two countries provide mirror image challenges for Beijing’s foreign policy. In Myanmar’s case, a fast ally turning towards Washington; in Pakistan’s case, an ally of Washington, if never a fast one, falling out with its erstwhile friend and turning toward Beijing. In both places, there is unrest: ethnic minorities fighting for autonomy in northern Myanmar along the border with Yunnan; the overspill of the Afghanistan conflict in the other, along the border with Xinjiang, Beijing also believes that its own rebellious Uighurs take shelter in exile in northwestern Pakistan.

Beijing’s interest lies neither in turning allies nor picking sides, however. It is in stability, so it’s strategic commercial interests, such as CNPC’s new oil exploration deal in Afghanistan, can thrive and its hydropower stations, oil terminals, pipelines, and the coaling stations for its blue water fleet — its string of pearls around the Indian Ocean — can be constructed without disruption.

1 Comment

Filed under China-Central Asia, China-India

Positioning For The Future

It is getting harder to get lost. China has joined the U.S. and Russia in running a satellite navigation system of its own. Beidou‘s Compass has started operation following the launch of its tenth satellite earlier this month, with coverage of China and surrounding areas accurate to within 10 meters for civilians, better for the PLA. Six further planned satellite launches will provide Asia/Pacific regional coverage next year. Global coverage will take until 2020, by when Beidou will have at least 30 satellites aloft. That is a year after the EU plans to deploy its system.

Beidou is run by China Aerospace Science and Technology Corp., the military-backed, state owned defence manufacturer that is the leading contractor for China’s space program. The system is being promoted as the underpinning of a potential 400 billion yuan civilian business providing navigation, positioning and timing services for industries ranging from car making to logistics, sports and fisheries. It also weans the PLA from dependence on foreign, and particularly the U.S.’s Global Positioning System (GPS) technology, for missile targeting and other military navigation.

Footnote: December’s launch was China’s 16th space launch of the year, passing the record set in 2010. By comparison, the U.S. had 18 launches this year and Russia 26. China and the U.S. had one failure apiece, Russia three.

Leave a comment

Filed under Defence, Industry

East Asia Free-Trade Area Comes Nearer

China, Japan and South Korea have been discussing creating a free-trade zone for some years. Every time their leaders meet, in pairs or collectively, the language used to describe progress is increasingly purposeful. Prime Minister Wen Jiabao and his visiting Japanese counterpart, Yoshihiko Noda, now say the discussions have reached the point where formal negotiations could start next year.

The three countries are already closely tied by trade and investment as well as physical proximity. Japan and South Korea are China’s largest trade partners after the U.S. and the E.U. The agreement to settle yuan-yen trade currency conversions directly, also announced during Noda’s visit, will only help boost economic ties.

Similarly Beijing’s approval for the Japan Bank for International Cooperation (the old Ex-Im Bank) to issue yuan-denominated bonds in China–a first for a foreign government agency– and Tokyo’s plan to hold a small amount of Chinese government bonds in its official reserves support the internationalization of the yuan, and thus provide a growing alternative to the dollar as the working currency of any trilateral free-trade zone.

Those existing and coming economic links make it more likely that a free trade agreement can be stuck between the three before agreement is reached on setting up the much larger proposed Trans-Pacific Partnership (TPP) that the U.S. now wants to join and promote but from which China is being excluded. Indeed the TPP may have provided some impetus to China, Japan and South Korea’s discussions. Together the trio account for 16% of world GDP, so a free trade agreement between them would create a formidable bloc just by dint of their economic size alone.


Filed under China-Japan, Trade

Social Management In Wukan And Beyond

In defusing the Wukan protest, the Party has taken the high ground of beneficent paternalism, just as it did after violent protests by migrant workers in Guangdong in July. This is becoming a standard method for containing and defusing social unrest, though it risks promoting by example the idea that, for the aggrieved, escalating a protest works.

In the Wukan land-grab case, blame has been laid squarely on the shoulders of local officials. They are accused of incompetence, not corruption, mishandling a legitimate grievance thus letting it escalate into a ‘mass incident’. Detainees are being released. An autopsy will be conducted into the death in police detention of a village leader ; the original contentious land deal will be investigated. A police blockade of Wuhan has been lifted while villagers have dismantled their makeshift barricades. State media praised high-level Guangdong officials for resolving the matter and reminded all lower level local ones that they need to “grasp the interest and demands of the masses”. The subtext: we don’t want to see any repeats of this sort of challenge to Party rule; get them sorted before they blow up.

Zhou Yongkang, the Politburo member who was once China’s top policeman, has repeated the message, but with a rider to remind the masses who carries the big stick. At a conference on political and legal issues in Beijing this week he told authorities to “crack down on crimes and violence against national unity in order to maintain national safety and stability”.

The spotlight of world attention that the Wukan protesters were able to occupy gave them a deal of protection against being cracked down upon. A parallel protest in Haimen, over alleged police violence and the environmental damage caused by a local power station along the coast from Wukan, is struggling to do the same. Tear gas was fired at protesters there a day after thousands of locals closed a highway and clashed with armed police.

Authorities have proven ways of managing isolated protests over local abuses of power, which are increasingly common–230,000 a year now on some estimates–and sometimes violent. Beyond riot policing with a heavy hand and rapid deployment, they try to keep them localized and grievence-specific. Beijing’s fear is that social unrest coalesces across social classes into a broader movement that threatens the Party’s rule, as in 1989. Many protestors understand the rules, appealing, as in the Wukan and Haimen cases, over the heads of local officials to higher-levels of government, explicitly not questioning the legitimacy of the Party as such.

That does not make the Party’s concern about social unrest as a byproduct of economic development any less acute. This year, for the first time, China has spent more on public security than on its military. Police stations are being modernized, personnel trained and equipped with state-of-the-art technology, such as Harbin police’s new armed anti-personnel carriers.

What Beijing doesn’t want is local officials undermining its social management, for reasons of either greed or incompetence. At their national annual meeting this week, the country’s prosecutors said that between January and November they investigated 2,475 government officials at county level or above for abuses of power. Their priority targets for next year are crimes related to the abuse of power by officials, dereliction of duty and work-related crimes in major accidents, bribery in local elections, the practice of buying and selling official posts and protecting mafia-style gangs. No protest from the villagers of Wukan about any of that.


Filed under Politics & Society

Chinese Lessons For North Korea’s New Leadership Generation

One way to look at the leadership transition in North Korea, and the prospects it holds, is to put a Chinese generational template over it. China’s new leadership that will be taking over from next year comprise the fifth generation since Mao’s revolutionaries. In North Korea, Kim Jong Un represents only the third generation of leaders, and, because of his young age, its vanguard, perhaps even only the forward scout of the vanguard.

It is the second generation–Kim Jong Il’s generation–that rules North Korea. The Dear Leader was only 69 0r 70 when he died, so there is still wind in his contempories’ sails. They are what any Chinese would recognize as princelings, the privileged offspring of the original revolutionary leaders–and overwhelmingly the sons in North Korea’s case. Like their Chinese counterparts, while they will have factional interests, they have a much greater vested interest in maintaining the status quo on which their position, power and privilege depend. Any interest in economic or political reform is subordinate to that.

The second generation of North Korean leaders bear some similarities to China’s third generation of leaders in that they were all Soviet or Soviet bloc educated, but unlike China’s third generation, and their own fathers, they neither fought against the Japanese in the 1940s nor against the Americans and South Koreans in the early 1950s. Nonetheless the military holds greater sway over the civilian elite than it did in China. The National Defence Commission governs the country and the industrial-military complex is pretty much the economy.

Like celebrities who are famous for being famous, North Korea’s second generation ruling elite is primarily interested in maintaining its position as the ruling elite. The third generation that Kim Jong Un’s succession may usher in is an unknown quantity. Many of its members have been schooled in some part in Western Europe and the U.S. (Like Kim Jong Un they study abroad under assumed names and pass themselves off as the children of embassy staff.) Whether that gives them a different world view to their predecessors and whether, if it does, the elite Kim Il Sung University to which they return snuffs it out, is anybody’s guess.

They are too young–with one obvious exception–to have risen to positions of power in the military or the Workers Party of Korea yet. They may be the best long-term bet for changing the focus in North Korea from the poverty of socialist self-sufficiency to economic reform along Chinese lines, but this Bystander, at least, wouldn’t bet the bank on them to do more than ensure their own positions are secure. That may be the bargain that Beijing will have to strike to nudge its neighbor towards the economic development that China, and most everybody else, sees necessary for regional stability.

Nor, as far as we know, is there a North Korean equivalent of Deng Xiaoping waiting to make a political comeback and launch economic reform. When the Dear Leader  purged, like his father before him, he purged for the generations.


Filed under China-Koreas

China’s Property Bubble: Bursting or Deflating?

Talk of a Chinese property bubble bursting is becoming newly fashionable, at least in the Western press. Yet Beijing, as a matter of policy, has been driving down real estate prices since early 2010 through a mix of administrative controls and credit restraints.

These policies have had an effect. In November, new home prices fell month-on-month in 49 of the country’s 70 largest cities, with four showing year-on-year falls, according to the National Bureau of Statistics. Standard Chartered Bank pegs the fall in prices in the Tier 1 and 2 cities at 10% from the peak. More dramatic has been the decline in the number of new home sales, especially in big cities where property markets have been frothiest. Residential real estate sales in Shanghai were down 16.5% in the first 11 months of this year, for example. Tales of unoccupied properties and restive investor-buyers abound.

Against a background of slowing economic growth–and a growing realization of how great a share real estate accounts for in China’s GDP (10%+, more than the share in the U.S. just before the sub-prime mortgage crisis blew up)–the fall in prices has opened the debate about whether the current property curbs should be eased. It boils down to whether you think the overheated property market has been sufficient and sustainably cooled, or not. Steve Dickinson of the China Law Blog has an example from Qingdao about how local officials’ views can be diametrically opposite to those of central governments. (While we are on recommend reading, Patrick Chovanec’s piece in Foreign Affairs provides an excellent primer on the why prices ran up as high as they did.)

However that debate breaks, the two core reasons for the run-up in real estate prices–low real interest rates and the dependence of local governments on land revenues–are not being addressed. That is where the real worry should lie as they speak directly to the ticking time bomb of local government debt, and the danger that poses to the banks who have funded it. This Bystander believes as a result that prices could a further 10% to fall in the larger cities, but that Beijing won’t want them to fall much below that. Policymakers are already showing some targeted local relaxation of the credit constraints to preempt a wave of real-estate bankruptcies. The bubble is being let down, beyond doubt, but it has been for a while. It is only now that we are starting to see, in American investor Warren Buffett’s phrase, who has been swimming naked.

1 Comment

Filed under Economy