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China’s string of pearls 7, May 2009

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China's string of pearls

This (somewhat amateurish) map shows China’s string of pearls. This refers to ports that China has invested in to refurbish and use at their discretion. Those of a more alarmist nature see these moves akin to the establishment of Chinese naval bases by stealth. The map below highlights the reasoning behind these moves.

string-of-pearls1

China’s desire to secure the route for their ever expanding dependence on Middle Eastern oil and gas is understandable. No country in the world would want such a vital supply line out of their guaranteed control. Whilst China has frosty but reasonable relations with India and America, the only countries with the navy to challenge China in that part of the world, China can not count on these relations for ever. Indeed, with the ever increasing race for the Gulf’s oil and gas resources with India and the always-fractious issue of Taiwan with America, there are without doubt issues that can potentially arise.

Despite how understandable one may think China’s actions are, for India they must be arousing serious concerns. Having China’s potential military bases to close to their mainland, not to mention encircling them, is not something that the Indian government can take lightly. It is, therefore, no surprise that India are the second largest weapons importers in the world presently. As for America, they will not be overly pleased to see China’s reach extending towards the straits of Hormuz. Moreover, their preeminence in blue water is now coming under more and more of a threat. The military and the US Administration need to be aware, however, that these Chinese ports – despite what they might signify – are not, in and of themselves, a threat. America needs to keep any bellicose language to itself at this stage and save it for when it really matters.

Best opening line ever 17, March 2009

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Time Magazine’s China Blog quotes what has to be the most gripping and intriguing opening line for a story. It is taken from Emma Graham-Harrison’s article for Reuters and is really rather remarkable.

Only two memories brought tears to Sun Yaoting’s eyes in old age — the day his father cut off his genitals, and the day his family threw away the pickled remains that should have made him a whole man again at death.

What to read on? Of course you do…

(Poor guy; he had his bits whipped off by his father with no anaesthetic, was unconscious for three days, could hardly move for months, finally ‘recovered’ sufficiently and was about to go to the palace to take on a Eunuch-type role when he discovered that the Emperor had just abdicated….how annoying.)

The Chinese are evil/benign [delete as appropriate] 10, March 2009

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As if there weren’t enough threats from the Far East, commentators have come out with another Sinic threat to us all. This new future threat comes hot on the heels of countless column inches extemporising on current yellow-perils terrorising the Western world: China’s overcoming of their ‘century of humiliation’, their massive, rapacious expansion into Africa, their mega-cities spewing out epic levels of pollution, their burgeoning Naval fleet creeping ever further across the Pacific and avian bird flu, to name but a few.

 

This time around China are hoovering up all the ‘rare earth metals’ throughout the world, critical to iPods, lasers and laptops. Furthermore, through aggressive commerce (that some might call capitalism) they are driving their competition out of business, digging up and refining their product at cheaper prices. Imagine the temerity of them trying to create a comparative advantage; David Ricardo would be turning in his grave.

 

Dialling down the sarcasm as well as the hyperbole for just a minute, it does appear as if China are cornering the world market in such critical metals, accruing 95% of the supply of such rare earth metals in recent times. However – and this is a large however – one need not imply nefarious and evil intentions to this. If America or Switzerland or even the peace-hugging Scandanavians had an opportunity to corner such an important and lucrative market, they too would take it. To imply that China are ipso facto up to no good and seeking to set themselves up to extort the world in the future is not actually based on anything. They are – like the good capitalist they are – following the invisible hand eloquently. They could, of course, be just so evil: planning to ransom these commodities to a technology dependent world, but there is nothing as yet to base such a claim on.

 

Granted, their navy’s antics do not contribute to the West’s sense of ease. In recent weeks, Chinese ships have harassed American Navy ships in international waters, buzzing the ships repeatedly, sailing to within metres of them as well as dropping debris in their path forcing emergency stops. Whilst this kind of behaviour is certainly menacing to some degree, my overall impression is that it essentially puerile and childish; hardly a threat to national security.

Like the central theme of the first half of the article, the conclusions that can be drawn from the examples are mostly down to a person’s preference and proclivity. Each side can make a mostly convincing case that each Chinese action is absolute proof of their overall evil/benign intent. I tend towards the less alarmist, look at things from their perspective, type of view point. Yet I acknowledge (unlike many commentators on the topic) that the evidence can be easily manipulated to go both ways.

China’s population/world state map 27, February 2009

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I’ve just found a curiously fascinating blog at wordpress.com which is well worth a browse: http://www.strangemaps.wordpress.com . One of the best maps that I saw was the one below, showing various countries as Chinese provinces by population. Excellent stuff.

China provinces and world population map

There’s some interesting bumf about the populations at the site too.

China’s demand for oil: a tale of three graphs 15, October 2008

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We all know that a picture can tell a thousand words, but how about a graph? For my money, I’d suggest that they can tell rather a lot too. And, to keep the slightly confused mixed-topic-analogies going, one mustn’t forget that there are lies, damned lies, and graphs.

Consider the following graph from this excellent website.

This clearly shows that China’s production of crude oil is rising steeply. This is no doubt a good thing (though not necessarily for the planet). Everyone knows that China’s demand for energy is rising and seemingly insatiable. So if they can produce such an amount (and such a large increase) of oil, this leaves more for the rest of us. This would mean that there would be marginally less demand on, for example, Middle Eastern oil, and this can but only help the price stay one or two cents lower.

However, consider the following graph. This is taken from the same site and shows China’s predicted oil reserves. The rising red line to the orange vertical line is the actual known production. The line on the other side is the predicted curve using the Hubbert curve. This is a formula used for predicting when oil will run out. It suggests that the rate that a country can find and produce oil (how steep the initial curve is) will be mirrored in terms of its downturn after the peak has been reached. The author of this thesis – King Hubbert – was initially ridiculed for this thesis, but was proved eerily correct when he correctly predicted – decades before the event – that American oil supplies would peak and begin to fall in the 1970s.

This graph, obviously, is not as positive. Moreover, it is rather pessimistic. Just look at the predicted precipitous decline of production of barrels of oil, beginning in the next five to ten years. Such a steep decline means that China will inevitably dive into other sources of oil at quite a rate come 2020, according to the prediction. Obviously, China realise this to some degree and are currently scouring the world for oil as we speak, but this search will turn into something of a mad panic should the decrease be as steep as predicted. For it is one thing to plan for a future problem; it is another if and when the problem is immediate and rather larger than expected. Needless to say, such a massive leap in demand would cause an equally large rise in the price of oil.

And the situation gets worse. Look at the following small graph.

The vast Chinese demand for oil can clearly be seen here and there are few indicators suggesting that this demand will slow that much. Certainly it will not drop or even markedly drop off. Therefore, couple this large increase with the previous graph and there is a worrying conflagration of factors that bode ill for oil supplies and in particular the oil price in the near future.

These graphs show that all angles of a problem must be examined before a conclusion is made. If one were only to see first graph, the prognosis might be significantly rosier than it perhaps ought to be. One can only hope that either Hubbert’s equation is wrong this time or I’ve simply missed out a crucial graph or three.

There’s that phrase again… 6, October 2008

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I just read a news article which slipped past me some months ago, about the Qatari state visit to Beijing back in April. During this visit the countries ties up lucrative and important contracts regarding Liquefied Natural Gas (LNG). Qatar is currently the world’s largest exporter and China, ever desperate to get its hands on more fuel, has just signed two important contracts for exportation and development. In the report was the immortal phrase, inserted in to countless such articles, where the nation dealing with China make clear (or have made clear for them) their undying, unyielding, unswerving and fervent commitment to the one China policy.

 

Chinese, Qatari firms ink gas deals

<!–enpproperty 2008-04-11 07:21:54.0Li XiaokunChinese, Qatari firms ink gas dealsQatar, gas1158960National2@webnews/enpproperty–>

By Li Xiaokun (China Daily)
Updated: 2008-04-11 07:21

China’s two largest owners of liquefied natural gas (LNG) terminals Thursday inked deals with Qatargas Operating Co for LNG importation – the first such deal between China and the world’s top LNG exporter.

Qatargas will sell 2 million tons of LNG a year to China National Offshore Oil Corp (CNOOC), currently China’s sole LNG importer, starting from next year, according to the agreement.

Qatargas and its partner Royal Dutch Shell will sell 3 million tons of LNG a year to PetroChina from 2011.

CNOOC, China’s third-largest oil company, also announced Thursday it will open 17 offshore blocks for joint oil exploration with foreign companies this year.

The two agreements were signed between the companies’ chairmen at the Great Hall of the People Thursday, in the presence of Premier Wen Jiabao and visiting Qatari Prime Minister Shaikh Hamad bin Jassim bin Jabr Al-Thani.

The two countries also inked three memoranda of understanding to enhance energy cooperation between the two governments and relevant companies, and expand bilateral cultural cooperation between now and 2010.

During a one-hour talk ahead of the signing ceremony, Wen said energy cooperation between the two nations has made encouraging breakthroughs recently.

He expressed hopes that the two sides can expand cooperation on energy, infrastructure construction and other fields, including culture, education, media, aviation and tourism.

Qatar attaches great importance to Sino-Qatari relations, resolutely adheres to the One-China policy and wished Beijing a successful Olympics, Jabr Al-Thani said.

“China has held many large-scale activities splendidly before. I believe the Beijing Olympics will be as outstanding as the previous ones here,” he said.

With this year marking the 20th anniversary of the establishment of bilateral ties, Jabr Al-Thani said Qatar would like to join hands with China to expand bilateral relations.

The Qatari prime minister arrived in Shanghai on Sunday for a weeklong official visit – the highest-level one by a Qatari leader in seven years.

He was scheduled to travel to Hainan province this morning to meet President Hu Jintao and other foreign heads of state, and deliver a speech at the opening ceremony of the Boao Forum for Asia on Saturday afternoon.

China’s Corruption 25, September 2008

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Here is an excellent article in the International Herald Tribune, expounding on the vicious and widespread problem of corruption in China, the effects of which – unfortunately – are being felt now with the baby food crisis.

China’s Robber-Baron Ways

Only a short time after China’s magnificent Olympic coming-out party, the land of Mao’s successors found itself making less celebratory news.

“Tainted Milk Formula Sickens Thousands of Chinese Infants” read one of many recent headlines. Twenty-two companies that produce or distribute milk powder had been secretly adding melamine, normally used for making plastics and glue, into milk powder, making thousands of infants sick and causing several deaths.

It is one of the puzzling questions about China: How can a country that organized such a splendid Olympic splash be the same country that produces deadly food scares on a regular basis?

The answer says a lot about today’s China. In its March to modernity, Beijing’s ruling Communist Party took off the economic shackles of the Mao years and relaunched the country as a capitalist-communist state – a real oddball coupling, if ever there was one. Part of this process involved the radical devolution of economic power to over 30 provinces, fostering a kind of anarchic federalism.

As with American federalism, the national government in China is responsible for certain duties and the country’s provincial governments are responsible for others. But in China, none of this arrangement is written down or spelled out anywhere, as it is in the U.S. Constitution.

Instead, it is still a work in progress, with provincial officials taking as much rope as they dare. Power at the provincial level is still vested in the local Communist Party, but also intertwined with personal and family networks, motivated by the former leader Deng Xiaoping’s maxim, “to get rich is glorious.”

That’s an odd motivation for the heirs of Karl Marx, and in practice it’s led to lots of cronyism and corruption.

The scale of corruption in China is startling. The Chinese researcher Sun Yan has written that the average “take” in the 1980s was $5,000, but now it is over $250,000. The number of arrests of senior Communist Party members quadrupled between 1992 and 2001. Four provincial governors and one provincial party secretary recently were charged with corruption.

Even at the level of the central government, corruption has been debilitating and helps set the national tone. High-level officials, including the mayor of Beijing, a vice chairman of the National People’s Congress, the former president of the Bank of China, the vice governor of the People’s Bank of China and the director of China’s foreign exchange administration, were arrested and imprisoned for embezzlement and fraud. One of them eventually was executed, and another leaped to his death.

To put that in perspective, says the author Will Hutton, it would be as if the mayor of New York, the speaker of the House of Representatives, and the chief executives of Goldman Sachs and Citibank, along with a governor of the Federal Reserve, were all either imprisoned for fraud, executed or committed suicide.

The Chinese economist Hu Angang has estimated an annual economic loss due to corruption of approximately 15 percent of GDP. In this climate, cutting foreign substances into milk formula, pet food or medicine becomes standard operating procedure, like a drug dealer looking to maximize the street value of his stash by mixing in filler material.

To be fair, not all the provinces and not all the business people or bureaucrats engage in such illicit behavior. And China’s leadership has taken steps to crack down. Punishments have been increased, tougher laws have been passed. Officials now are forbidden to enter business relationships with family members. Audits and anti-corruption screenings have been introduced.

But when I questioned a Chinese official about corruption, his defense – “we’re not as bad as Burma” – was hardly convincing.

Yes, the central government in Beijing can use its authoritarian power to pull off a brilliant Olympics party. And over the past 30 years, the Chinese leadership has accomplished the remarkable feat of lifting 400 million people out of poverty. But China is still very much a developing country, plagued by a mess of contradictions.

It is difficult to imagine how the country’s anarchic, robber-baron ways will serve China well for the next 30 years. Either political reform and accountability will slowly take root, or China’s modernization will falter.

Steven Hill is director of the Political Reform Program of the New America Foundation.

Chinese closure of Mosque in Xinjiang 24, June 2008

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Reuters in Beijing is reporting that the Chinese authorities have closed down a Mosque in the Xinjiang region because it refused to put up posters supporting the Beijing Olympics. Aside from this initial fact, the story descends into something of a ‘who do you believe’ situation.

One the one side, the Chinese authorities trot out the familiar line about how there are terrorists in the area are “supported by Al Qaeda”. Obviously, China are not the first country in the world to take advantage of this new phrase in the political lexicon, which magically conveys gravitas, a suspension of questioning and  – by and large – human rights. Russia and the Central Asian states (not to mention countless Middle Eastern countries) frequently speak of Al Qaeda as a defensive barrier to Western human rights, international law and morality concerns.

And on the other had there is the World Uyghur Congress, who hit all their marks with their reply. They talk of how the government have seized their copies of the Quran, stopped allowing free worship, closed the mosque entirely, and have been torturing Muslims. Many of these instances could well be true, but the beseeching nature their diatribes, beseeching Muslim countries to intervene somehow (hence the buzz words: Quran, Mosque, pray, and torture) I feel takes away some of their gravitas.

China and their defence budget: devious or defensive? 6, March 2008

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There are two broad theses regarding China’s future. The first suggests that China is essentially a peacefully creature looking to expand its economy, improve its society, and generally emerge as a modern developed nation. It will do this by being neither more nor less aggressive than any other country in the state system.

The alternative thesis suggests that China is an angry country. For the vast majority of its history it was the superpower in its corner of the world. This all came to an end with the arrival, interference, and subjugation at the hands of Europeans (and the Japanese briefly). China is, therefore, seeking to emerge from its ‘century of humiliation’ and eager to reassert its rightful place at the top of the international tree. They will pursue this goal single-mindedly and with vigour, spurred on by the painful and humiliating memories of its recent history.

These opinions (though particularly the latter) can clearly be seen as soon as China releases its defence spending figures. Now that the Soviet Union is dead and buried (in its old guise at least) the US Department of Defence (DOD) now produces an annual assessment of the Chinese military threat as opposed to the Soviet one. This time around the headline is China’s 17.6% increase in defence spending. That sounds like a lot. Yet, if the absolute figure is compared to US defence spending and assuming that China has released an honest appraisal of its spending (which many people doubt), then we are comparing China’s paltry $57.2 billion to the US’ mammoth $700 billion. Even accounting for any Chinese ‘creative accounting’ when arriving at the $57.2 figure, it would still be utterly dwarfed by US spending.

However, it is not really the money per se that has the US DOD worried, but what they are spending it on and the apparent furtiveness with which China seek to disguise such spending.

Firstly, the Chinese are – sensibly – employing asymmetric tactics when it comes to thinking about America and its military. For example, the US navy currently has twenty-four aircraft carriers, which is more than twice the number that the rest of the world has put together and twenty-four times as many as China. These gigantic floating fortresses are staggeringly powerful and play a crucial role in guaranteeing America’s pre-eminence in the Pacific and elsewhere. China – somewhat unsportingly as far as the US DOD are concerned – are not spending hundreds of billions of dollars on creating their own fleet of aircraft carriers, but instead only tens or hundreds of millions of dollars on designing and producing highly advanced cruise missiles with the potential capability of taking out America’s aircraft carriers. Other important aspects of China’s asymmetric warfare potential are their development of satellite-killing missiles to take advantage of the US military’s dependence on their spying and communication satellites as well as China’s apparent investment in cyber-warfare.

David Sedney the US deputy assistant secretary of defence for East Asia neatly describes America’s secondary concern.

“China’s military build-up has been characterized by opacity…The real story is the continuing development, the continuing modernization, the continuing acquisition of capabilities and the corresponding and unfortunate lack of understanding, lack of transparency about the intentions of those and how they are going to be employed. What is China going to do with all that?”

America seem to want China to be more forthcoming than rational prudence would suggest is sensible. Of course China is keeping some things a secret from the rest of the world. Why is this such a great shock? All countries do this to some degree. Whilst America may well be one of the most open countries about such things, they are the world hegemon and account for 48% of the world’s spending on the military, as much as China, Russia, the UK, France, Japan, Germany, Italy, Saudi Arabia, South Korea, India, Australia, Brazil, Canada, Spain, Turkey, Israel, the Netherlands, the UAE, Taiwan, Greece, Iran, Myanmar, Singapore, Poland, Sweden, Colombia, Chile, Belgium, Egypt, Pakistan, Denmark, Indonesia, Switzerland, Kuwait, South Africa, Oman, Malaysia, Mexico, Portugal, Algeria, Finland, Austria, Venezuela, the Czech Republic, Romania, Qatar and Thailand put together. They have nearly 170,000 troops between China and America, including nearly 70,000 right on China’s doorstep. This list of the manifestations of American pre-eminence, as you can probably imagine, could go on for a while. In short, it is easy to be sanctimonious and somewhat smug when you have such staggering hegemony.

Yet just think of how China sees the American position. They see, I would argue, American military presence filtered through two prisms: Taiwan and resource procurement. Taiwan is one of the most sensitive subjects for China. They see it as an utterly private and internal matter. They viscerally despise American intervention in it and it is often – rightly – quoted as a potential flashpoint for US-Chinese relations. China, therefore, see the advanced American hardware floating around the South China sea (and indeed, just about every other sea of importance). They see the 70,000 American troops stationed in South Korea (less than a three hour flight away), Japan (less than a four hour flight away) and Guam (armed with long-range stealth B-2s). They see America’s huge defence budget. They see and believe America’s stated stance to defend Taiwan in the event of Chinese aggression, and are, somewhat understandably, nervous.

China’s other prism is that of resource protection. China is becoming ever increasingly dependent on Middle Eastern oil despite numerous attempts to procure other energy sources from other locales. Whilst they have very good relations with the producing states themselves, they still have to get it back to the homeland. The only viable way to do this (for the medium term at least) is to ship it. The problem here is – again – that America rules the waves. No nation on earth would have its lifeline so firmly in the hands of another power, friendly or unfriendly. China has tried to redress this balance by establishing a base on Gwadar in Pakistan, close to the Straits of Hormuz from where they can project some power. Also, as the US DOD report points out, China will have almost twice as many submarines as America by 2010. Whilst this is an important statistic, it must be remembered that the vast majority of these submarines are vastly inferior to their American counterparts and don’t forget the rest of the American hi-tech arsenal. Overall, therefore, China is still woefully outmatched by America on this front. Hence their asymmetric stance.

There is clearly enough information in these arguments which sounds sufficiently plausible and convincing to make either case. The numbers can be alarming. Yet if the situation can be seen from the Chinese perspective many of China’s actions seem like a perfectly reasonable course of action, however much we in the West may see them as unnecessary.

China happy with “smooth” Russian election 4, March 2008

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China left themselves firmly in the minority when they unequivocally welcomed the election of Dmitry Medvedev as Russia’s new President. A Chinese Foreign Ministry spokesman said that China was pleased to see that the election went smoothly. To be honest, one wonders which election he was referring to. Smoothly is about the last adverb that ought to be used to describe Medvedev’s victory.

However, China’s reaction is not in the least surprising given their utterly rigid policy of non-interference and criticism of other country’s domestic affairs. Indeed, it is just this kind inflexibility and apparent choice to be immoral, as opposed to amoral, that lands them on the wrong side of international opinion so often.