BANNON LAYS GROUNDWORK FOR ECONOMIC WAR IN CHINA

The promise Bannon made as a White House adviser may soon become a reality.

BY TINA NGUYEN

“We’re at economic war with China,” Steve Bannon told The American Prospect just days before he left the White House. 

The interview, which presaged his return to Breitbart, appeared to suggest the broad contours of Bannon’s thesis regarding the complex power struggle currently taking place in East Asia. 

China, which shares a 900-mile border with North Korea, accounts for 90 percent of the country’s trade. 

The United States and South Korea, meanwhile, have been close allies since the Korean War. 

The cold war being waged across the DMZ on the Korean Peninsula remains, in may ways, a proxy between the U.S. and the People’s Republic, which have long been engaged in skirmishes over I.P. theft, price undercutting, and job exportation. 

“One of us is going to be a hegemon in 25 or 30 years and it’s gonna be them if we go down this path,” Bannon opined to Robert Kuttner, who days before had compared his boss, Donald Trump, to the “arrogant fool” Kim Jong Un. 

“On Korea, they’re just tapping us along. It’s just a sideshow.”
Donald Trump entered the White House prepared to hold China accountable for what he saw as currency manipulation, among other economic maneuvers. 

But Trump hasn’t quite stood by his harsh rhetoric. 

But Bannon, who is now comfortably outside the confines of the West Wing, appears prepared to turn his anti-China war into reality, enlisting allies from Henry Kissinger to Hong Kong investment banks in his fight against Chinese trade practices. 

In an interview with Bloomberg’s Joshua Green, author of the recent magnum opus Devil’s Bargain, Bannon agreed with the common perception that China’s systematic intellectual-property theft was crippling the U.S. economy. 

“There have been 4,000 years of Chinese diplomatic history, all centered on ‘barbarian management,’ minus the last 150 years,” he told Green. 

“It’s always about making the barbarians a tributary state... Our tribute to China is our technology—that’s what it takes to enter their market, and [they’ve taken] $3.5 trillion worth over the last 10 years. We have to give them the basic essence of American capitalism: our innovation.”
It’s one thing for Bannon to talk up a trade war with China, but it’s another for him to be actively agitating for one. 

Earlier this month, Bannon spoke at a conference in Hong Kong, sponsored by a Chinese bank, in which he called the former British colony “the heart of the economic-nationalist movement [that] is standing up to China.” 

He also took several meetings with Cold War-era figures, including Kissinger, the Nixon-era secretary of state who opened the door to trade with China and has been enjoying lucrative consulting fees pretty much ever since, in which the two discussed the Committee on the Present Danger, a foreign-policy interest group. 

“They understood that you couldn’t do it from inside,” Bannon says. 

“You had to go outside and, like a fire bell in the night, wake up the American people.”
For now, Bannon does not have an ally in the White House, which is currently full of figures like Gary Cohn, Steve Mnuchin, Dina Powell, and other “globalists,” who present as unlikely stewards of Trump’s campaign promises. 

He also doesn’t have much of an ally in the American electorate. 

Bannon hopes that he and his allies can pressure Trump from the outside to keep to his China promises—a similar tactic he’s used in his other political activities, such as backing the populist Roy Moore against the Trump-endorsed Luther Strange in the recent Alabama Senate race. 

Now that Bannon has made his influence known, he told Green that he was ready to keep flexing his newfound political muscle, with the goal of getting populist, hard-line, anti-China candidates into Congress. 

“Every day we are going to be making China a huge part of the ’18 and ’20 elections,” he promised.

"China is our number one adversary with respect to economic espionage." -- William Evanina

Top U.S. Spymaster Warns American Firms About Deals With China

By Sara Forden and David McLaughlin

The top U.S. counterintelligence official said American firms need to be cognizant of the national security risks that could arise from selling to Chinese buyers or entering into joint ventures with them.
William Evanina, the Director of the National Counterintelligence and Security Center, said it’s understandable that executives and owners of American companies want to do the most lucrative deals, but they don’t always understand the potential risks to national security.
Evanina’s comments come as the Trump administration and lawmakers in Washington move to toughen the framework for reviewing acquisitions by Chinese investors.
"China is our number one adversary with respect to economic espionage," Evanina said in an interview at Bloomberg in Washington Thursday. 

"Their ability to steal proprietary information and trade secrets is proficient and it’s aggressive."
Evanina’s comments show the extent of concern within the U.S. intelligence community about China’s push to acquire U.S. technology. 

A slew of proposed deals by Chinese investors have struggled to gain approval from a secretive panel that reviews takeovers by foreign buyers for national security threats.
Among the deals under review by the Committee on Foreign Investment in the U.S. are MoneyGram International Inc.’s proposed sale to Ant Financial, the financial-services company controlled by Chinese billionaire Jack Ma, and Genworth Financial Inc.’s $2.7 billion sale to China Oceanwide Holdings Group Co.

Broken Deals
Several proposed takeovers by Chinese investors have fallen apart over opposition from CFIUS. 

The latest came Tuesday when Chinese investors, led by digital-map provider NavInfo Co., called off plans to buy a stake in counterpart HERE Technologies. 

Earlier this month, U.S. President Donald Trump blocked a China-backed takeover of Lattice Semiconductor Corp. on the recommendation of the panel.
Evanina outlined a scenario in which the sale of a defense-based technology company could harm the U.S.’s ability to ensure supplies for military equipment such as fighter jets and ships.
"That’s where we have to be really creative to explain that this is a national security threat," he said. "It’s something we have to continue to drive, especially when it involves technology."
Congress is planning to reshape the CFIUS framework as concerns about China’s deal-making have intensified in Washington. 

Republican Senator John Cornyn of Texas, who has warned that Chinese investment has the potential to undermine U.S. military capabilities, says CFIUS should have broader scope to review foreign takeovers. 

The panel should examine joint ventures and minority stakes, not just acquisitions, he said at a June speech in Washington.
Evanina said he supported reforming how CFIUS works.
"The CFIUS process is old, antiquated and it’s being reformatted," he said. 

"There are a lot of people in the government working very hard to make it a useful tool for what we want to do."

Sick men of Asia

Sex Dolls Are Replacing China’s Missing Women
The country's gender gap has left young men desperate for plastic alternatives.
BY MEI FONG

China’s sharing economy took a new turn recently, as a new app, its symbol a single yellow banana, briefly brought rentable sex doll to Chinese phones. 

Called Ta Qu, to resemble the English word “Touch,” the app enables users to rent the life-sized dolls, which come in various models, for $45 a day — with a $1,200 deposit. 

The operators assured users that they would be washed between rentals.
But Ta Qu climaxed all too soon, and it was rapidly shut down by the authorities after the story went viral on the Chinese internet. 

But they’re only the tip of a massive and growing market in Chinese society for sex dolls, as the country grapples with a growing shortage of women.
Thanks to a long-held cultural preference for sons, coupled with over three decades of restrictive population planning policies, China is forecast to have over 30 million surplus men by 2030. 

This preference for boys has slowly dwindled, especially in the cities, but the country still faces a critical gap for the next few decades.
To help alleviate this and other demographic woes, Beijing in 2015 announced a switch to a nationwide two-child policy, but the damage to this generation’s sexual relationships has already been done. 

Chinese authorities cannot magic up a Canadian-sized population of women to be the wives, mothers, and caregivers the country desperately needs now.
This has led the nation in search of solutions, ranging from the improbable — proposals to revive wife-sharing — to the unspeakable, such as a rise in sex trafficking.
It has also led to a dramatic rise in the popularity of sex toys for lonely men.

While reliable industrywide numbers are unavailable, sales of sex toys on online platforms such as Alibaba and Taobao surged an average of 50 percent year-on-year in the last five years, according to a report by Global Times. 

The lifestyle news site StartUp Living China reported last year that Singles Day — China’s biggest online shopping event — saw a surge in the sale of sex dolls, with one seller offloading 500 units with an average of one sale per minute. 

Over 65 percent of sex toys sold online were to males between the ages of 18 to 29, according to the report.
I didn’t anticipate this explosion in 2013, when I visited a sex doll factory in Dongguan, southern China. 

I was researching my book on the consequences of the one-child policy and was curious about where a nationwide absence of women might lead. 

But I was operating more on hunch than certainty that demand for sex dolls would escalate. 

Even the company I profiled, Hitdoll, was hinging their business model on a mix of domestic and global sales. 

Proprietor Vincent He wasn’t sure China’s burgeoning market of bachelors would be their best customer base, saying, “Thirty-year-old single men tend not to spend the money on dolls. They can go for real women.”
That said, sex toy usage — though not dolls — was already being normalized in China to a degree that was not the case in the West, in part propelled by a vast, and mostly male, migrant population separated from their families. 

I knew from my reporting that the shopping areas they frequented sold products such as artificial vaginas. 

There seemed to be less social stigma around the idea than in the West, judged both by the prominence with which they were displayed in the ubiquitous corner sex stores and the open discussion of the virtues and flaws of different devices in male-dominated forums online.
Aside from demographics, China has a demonstrated manufacturing capacity to bring prices down and tip sex dolls from niche to mainstream, a combustible mix.
With this in mind, in 2013 I set out to Dongguan, the pulsing heart of China’s manufacturing belt in the south. 

Clad in a leather jacket and jeans, He, an affable man in his early 50s, met me at his workshop. 

His company used to make office furniture for export, but rising labor costs had pushed profits down, so they began casting around for a new product.

Manufacturer Vincent He demonstrates the features of his sex dolls in his Dongguan factory during a 2013 visit. 

The workshop was small, churning out some 10-12 customizable life-sized models shipped out in coffin-like crates every month. 

Scantily clad buxom models lounged in chairs; some, like the Venus de Milo, missing limbs. 

He and his employees showed me around the premises with a matter-of-fact air, cupping rubbery teats and parting silicone thighs with as much sangfroid as if they were still making office chairs. “The nipples — they are very tough,” said He, tugging vigorously. 

“Normal ones,” he said, “could never withstand such treatment.” 

At this point all major companies making high-end dolls were overseas. 

China was better known for cheaper blow-up dolls that could be easily transported. 

Leading companies such as California-based Abyss Creations crafted customizable models capable of limited speech and body warmth costing about $8,000 to $10,000. 

Hitdoll, in time-honored Chinese manufacturing tradition, was looking to replicate this with fewer features and a much lower price point.
For three years, Hitdoll experimented with different prototypes at a test facility in Guangzhou’s university district. 

They used college students as testers, advertising with flyers that said things like, “Fake Dolls, Real Love.”
To my surprise, these testers formed a group that met regularly to eat and sing karaoke. 

They even had a name, the Kawaii Club — using a Japanese term for cuteness, especially as applied to young women, adopted into Chinese. 

Feng Wengguang, a former Guangdong University of Technology student, was a member. 

His description of his experiences sounded like a perverse telling of Goldilocks and the Three Bears. Early on, the Kawaii Club members complained the prototypes were too stiff, too cold, too unreal. (The manager, He, remembered receiving feedback such as, “Your doll is so cold, like a dead body.”)
Hitdoll’s makers experimented with materials (silicone and TPE, or thermoplastic elastomers, found in bottle-cap liners and dental guards) breast size (C to EE) hair (synthetic, animal, human) and ethnicity (African, Asian, Caucasian).

Feng , then 24, viewed all this as playful experimentation. 

He never saw himself as part of Hitdoll’s audience demographic.

He and the other Kawaii Club members were sure they could “find real woman.”
Weren’t they worried about hygiene issues? 

Vincent He showed me the disposable rubber vaginas they used. 

Each Kawaii member got to keep them after the trials, he said. 

It was a real perk, he assured me: such things typically retailed for about $15. 

All in all, the Kawaii Club soldiered through 100 prototypes before Hitdoll developed a model worthy of exhibiting at the Guangzhou Sex Culture Festival.
Most of that reporting trip didn’t find its way into my book. 

For one thing, I worried that a great deal of this was speculative. 

Nobody knew for sure how China’s gender gap would play out in the long run, and I didn’t want to overstate the importance of what might be a small-bore attempt to address a big problem.

The head of a sex doll made by the HitDoll factory in Dongguan, taken in 2013.

It also sounded unbelievable, especially to Western ears. 

A sex doll maker called “He,” pronounced “Her”? 

And his workshop was in Guangzhou’s university district, known in Chinese as Longdong? (I still remember firmly pressing the “delete” button on my computer after spelling it out.)
In retrospect, my visit to Dongguan was significant given China’s current gender chaos. 

The city, a manufacturing hub of the Chinese south, embodies skewed gender relations: it’s powered by female factory workers, yet ruled by men. 

In its heyday, visiting male executives spent several months there away from their wives, with extended off-work bacchanals at the numerous karaoke bars, clubs, and brothels that earned Dongguan the nickname “Eastern Amsterdam.” 

Like Silicon Valley, Dongguan owes its existence to globalization and expansiveness but is riddled with hidebound, intense sexism. 

There is perhaps no more apt place for birthing the instruments that could take China’s gender wars into its next phase.
Soon after my visit, the government launched a major crackdown on prostitution in Dongguan, turning the notorious red-light city a “deep pink.” 

The crackdown, which began on Valentine’s Day, proved so ruinous it wiped out an estimated $8 billion in takings, about one-tenth of the city’s total revenues, according to Lin Jiang, a finance professor at Sun Yat-sen University.
Dongguan never completely recovered its anything-goes air as China’s mecca of prostitution. 

But as trading of real women flagged, the market for fake women in China began to take off.
The increasing use of sex dolls has of course amplified concerns as to whether this sexually objectifies real women and encourages a Westworld-like rise in violence. 

“Men’s rights activists” online have long argued that widespread use of sex dolls will deprive women of their power over men.

Some supporters of sex dolls even argue it could actually decrease rape culture and reduce demand for sex trafficking.

The U.S. State Department this year named China one of the worst offenders in the global sex trade. 

It’s unclear exactly how many women are trafficked into China from neighboring countries, but numbers are definitely on the rise, spurred by the absence of young women from the marriage market, especially in rural areas. 

Vietnam alone had an estimated 4,500 women trafficked between 2011-2015, with 70 percent taken to China, where a Vietnamese “bride” could fetch about $18,500.
These arguments are of course echoed in other parts of the world where usage of sex robots are increasingly more popular, including even the opening of a sex doll brothel in Spain. 

But what might appear to be a whimsical desire in, say, Japan, looks expeditious in Jiangxi, where the gender ratio is 138 men to 100 women. (The average global ratio is 105 men for 100 women.)

Sex dolls on display at the 2016 Shanghai International Adult Toys and Reproductive Health Exhibition in Shanghai on April 14, 2016.

China’s gender gap is already contributing to a rise in violent crime, with China’s bachelors demonstrating lower self-esteem and higher rates of depression and aggression. 

The gains made by its educated female workforce are already sparking nostalgia for the past, including the rising popularity of lectures promoting subservient women. 

In my book, I described one such workshop, where the lecturer, Ding Xuan, said strong women are more cancer-prone because, “The gods are helping you, as you do not want to be a woman any more.”
Linda Pittwood, who studies the representation of women in Chinese art, said the dolls are “an extreme representation of women as submissive objects of fantasy, available to be borrowed around by a number of men.” 

She added, “These are all really damaging ideas, which I think will leak out from the sex doll-sharing service and reinforce where women are regarded in these ways in wider culture.”
The controversy is bound to intensify as sex dolls become more popular — and lifelike. 

Hitdoll’s competitors, the Dalian-based DS Doll and 2015 newcomer J-Suntech, are already rolling out models that can be programmed for limited speech and movements through smartphone apps. (The models on Ta Qu’s stymied doll-share app can be programmed to make moaning sounds.)
It’s ironic, but arguments that sex dolls are dehumanizing will only strengthen as the models become more realistic.

Ta Qu promised a variety of fantasy women, from “Wonder Women” to “Hong Kong Student.” 

But they all shared the same still, unnatural face, and fell squarely into the uncanny valley between human and machine. 

More realistic dolls, however, could blur the boundaries between real women and sex objects.

“Realistic” women are the aim of many Chinese robot-makers, even if most of them aren’t doing it for straight-up sexual purposes. 

Jia Jia, developed by the University of Science and Technology of China in Hefei, was able to conduct a stilted interview with Wired writer Kevin Kelly. 

A former Huawei computer engineer created a robot he found so realistic he “married” it in 2016. Fed up of being teased about his bachelor status, Zheng Jiajia held a faux marriage ceremony with robot Yingying, vowing to eventually upgrade the robot’s abilities until it can walk and do housework.
Still, a country desperately trying to raise birth rates and keep its economy churning might have bigger problems. 

As Pittwood pointed out, “That is one thing that the sex dolls can’t offer: babies.”

Chinese Aggressions

How China is Eroding Japan's Control Of Its Sea
By Ralph Jennings

This photo taken on Dec. 23, 2016 shows Chinese J-15 fighter jets on the deck of the Liaoning aircraft carrier during military drills in the Yellow Sea, off China's east coast. 

China sent four maritime police ships this week into a Japanese-controlled tract of sea that’s claimed by both countries. 

Beijing’s State Oceanic Administration described that mission, the second in less than a week, as “cruising in the seas around Senkaku Islands.” 

The sea is the East China Sea and Senkaku a chain of eight uninhabited islets. 

Japan functionally controls the islets and the waters around it.
But China says it’s all theirs, and this year it has made these cruises a standing routine aimed at eroding Japanese control. 

It may already have taken a step toward that goal, per some views.
By way of background, Beijing officials are trying in general now to lock in claims to lands and seas it disputes with other countries. 

Chinese say other countries stepped on them in history so they should use their world third-ranked military to get what they believe is due. 

One such tract happens to be the East China Sea zone near those islands and encompassing four nearby undersea oil fields also disputed by Japan.
Japan has logged an average of 10 sightings per month this year, through August, of Chinese government vessels near the islets, coast guard data from Tokyo show. 

The islets sit near prime fishing grounds in a geopolitically strategic waterway. 

Numbers have gone higher in the past, for example 28 sightings in one month of 2013, over the five years China has been sending over its vessels to assert sovereignty. 

But before this year there were also months when just four or five vessels showed up.
This year’s data point to an unwavering month-to-month pattern of passage around the islets that sit 410 kilometers west of Okinawa.

China's Ambassador to Japan Cheng Yonghua. Japan summoned China's ambassador on August 9 after the country's ships were spotted near disputed East China Sea islands for a fifth straight day. 

Japan normally parries Chinese ship movement by ordering the vessels to leave followed by diplomatic protests.
But China is effectively eroding Japan’s control, some scholars argue. 

Chinese ship movement has stopped Japanese from accessing the islands themselves, says Yun Sun, East Asia Program senior associate at the Stimson Center think tank in Washington. 

Access might allow the Japanese activists to reach the islands or someone to build on them. 

In 1996 activists build a lighthouse on one islet. 

Others have simply made landfall.
“By regular patrol of the surrounding area, China believes it has successfully established a new status quo,” Sun says. 

Stopping access to the islands would help China establish “evidence of exercise of sovereignty,” she adds.
Officials in Beijing believe Chinese people discovered, named and fished the rugged islets first. 

But the United States held them from World War II through 1972, when it gave them to its staunch post-War ally Japan. 

China already resents Japan for what it sees as lack of penitence over its occupation of mainland Chinese territory from 1931 through 1945.
Taiwan also claims the uninhabited islands but seldom takes action. 

Perhaps to show favor, in 2013 Japan opened 4,530 square kilometers of water to Taiwanese fishing boats but not to the Chinese.
China ultimately seeks sovereignty over the islets and more of the waters around it, Sun says.
Over the past five years, "Beijing has not only sought to create an overlapping administration of the disputed areas, but also taken constant, though incremental, measures that would shift the balance of control in the disputed areas to its favor," University of New South Wales associate International and Political Studies Professor Zhang Jian says in a July paper posted here.
How? 

By inciting "concern and protests" in Japan over patrols such as 23 Chinese marine surveillance vessels that showed up in August last year and 851 Chinese fly-overs in 2016, Zhang writes.
Japan at least will struggle to tighten any grip as long as its maritime police and self-defense forces keep busy chasing Chinese ships and planes away.
Beijing will sustain “regular” movement of vessels to avoid “compromise” over the islands, says Alexander Huang, strategic studies professor at Tamkang University in Taiwan. 

“China will have everything to lose if it softened the position,” he says, because Japan would concede nothing. 

“If China scales down the patrol in the region or if China leaves the region for a period of time, the Japanese maritime police and maritime self-defense patrol will come back to the Senkakus," Huang says.

Axis of Evil

On North Korea, China is taking away with one hand and giving with another

By Zheping Huang

You've got a friend: If the lips are gone, the teeth will be cold.

North Korea conducts roughly 90% of its trade with China. 

So when the Chinese customs agency released its August trade data earlier this week, people looked closely for signs of how much pressure Beijing is really applying on Pyongyang, following the United Nations’ harshest ever economic sanctions on the rogue regime.
The official data show that China’s trade with North Korea jumped in August to its highest level since December. 

A closer look at the breakdown of the August trade (which was released later on Sept. 26) shows a mixed picture of the bilateral relationship. 

The main takeaway: while China certainly appears to be limiting trade of some products with its troublesome neighbor, it’s also trying to keep the regime afloat.

Coal

In February, China banned imports of North Korean coal until the end of this year, in response to the UN’s earlier move in December to restrict North Korea’s coal trade. 

But coal shipments resumed in August when China purchased 1.6 million metric tons (1.8 million tons) of coal from North Korea, according to the data.
Last month, the UN Security Council unanimously passed new sanctions against North Korea that include a complete ban on coal exports. 

China’s latest purchase of North Korean coal came just before the sanctions went into effect on Sept. 5. 

Zhao Tong, a nuclear-policy specialist at the Carnegie-Tsinghua Center in Beijing, read the move as China taking advantage of the window of opportunity to go a bit softer on North Korea. 

“China has decided to back away from an aggressive enforcement of sanctions, and apply a degree of pressure closer to the minimum requirements stipulated by UN resolutions,” Zhao told the Wall Street Journal (paywall).
A spokesman for the Chinese commerce ministry said today (Sept. 28) that China has "strictly" implemented UN sanctions on North Korea, which allowed for a buffer period for the coal ban.

Energy
Meanwhile, China’s gasoline exports to North Korea in August dropped 96% from a year ago to 180 metric tons (198 tons), according to customs data. 

Last week, China’s commerce ministry announced (link in Chinese) that the country would ban exports of condensate and liquefied natural gas to North Korea from Sept. 23, and cap exports of refined oil products from October. 

The moves are in line with the latest UN sanctions, which were approved earlier this month and aim to cut overall oil supply to North Korea by an estimated 30%.

Food
Things are very different when it comes to food. 

China’s corn shipments to North Korea surged 4,600% in August from a year earlier—with almost all of its corn exports going to North Korea—and wheat exports jumped more than 50 times in the same period, according to the data. 

The huge increase in food exports comes as North Korea suffers its worst drought in more than a decade, with tens of thousands of people facing severe food shortages, according to the UN. 

South Korea stopped sending aid to North Korea in response to the regime’s weapons program (though the current progressive government in Seoul recently announced it would provide $8 million in humanitarian aid to Pyongyang). 

China is quite literally a lifeline for North Korea.

China Threat

New Delhi wants to buy US drones to monitor China in the Indian Ocean
By Nyshka Chandran

New Delhi is expected to purchase two dozen unarmed drones from the United States to monitor growing Chinese activity in the Indian Ocean.

General Atomics' Guardian drone, which is the maritime version of the company's Predator B or MQ-9 Reaper unmanned aerial vehicle.

President Donald Trump's administration authorized the sale in June, with the price tag estimated at $3 billion, according to defense researcher Jane's IHS Markit. 

The U.S. approval was the first such clearance to a friendly, non-NATO nation, but the transaction has yet to be finalized and was a key topic of discussion during General James Mattis' visit to India this week.
Manufactured by American defense contractor General Atomics, the unmanned devices— called Guardians — are "the world's most advanced maritime reconnaissance drones and can help India track the movement of Chinese warships with its multi-mode maritime radar," said Harsh Pant, head of the strategic studies program at the Observer Research Foundation, a New Delhi-based think tank.
Privately held General Atomics makes the drone in question as a maritime variant of its Reaper unmanned vehicle.

China moves into Indian Ocean
The world's second-largest economy has ratcheted up maritime patrols around the Indian Ocean, which is home to seaborne routes crucial to global trade as well as a major U.S. military base. 

The mainland has also built up a presence in other countries around the region.
July saw Beijing establish its first overseas naval base in Djibouti, located on the ocean's northwestern side. 

That same month, state-owned China Merchant Port Holdings acquired Sri Lanka's Hambantota Port, which juts out into the strategic waterway, in a move expected to facilitate Chinese naval deployments. 

It's a similiar story in Bangaldesh, where state-owned enterprise China Harbour Engineering Company bought a majority stake in Payra Port, located at the southern-most tip of the country. 

The mainland is also looking to take an 85 percent stake in Myanmar's deep sea port of Kyauk Pyu on the Bay of Bengal, according to reports.
Occuring right in India's backyard, these projects — part of China's massive "Belt and Road" infrastructure program — are a worrying development for New Delhi, which has long held sway as the region's major power and comes just weeks following the end of a Sino-Indian border dispute in the Himalayas.
As a result of increasing Chinese influence, Prime Minister Narendra Modi's government has been taking steps to boost its capabilities in the Indian Ocean, reflected by initiatives such as the Guardian drone purchase.
All that comes amid Beijing's use of underwater drones in the South China Sea, a separate body of water where Xi Jinping's administration is trying to enforce a tremendous, 1.4-million square mile claim despite losing a legal case on that claim last year.
"Unmanned vehicles, like those whose sale has been proposed by the United States, would allow India to monitor activities in the region much better... Clearly, there are concerns about the militarization of the Indian Ocean, including the increased presence of China's People's Liberation Army Navy," explained Dhruva Jaishankar, foreign policy fellow at Brookings India.
Those worries are shared by the White House, which remains wary of China's intentions in the Asian region. 

Speaking on Wednesday, General Joseph Dunford, chairman of the U.S. Joint Chiefs of Staff, said a security relationship with New Delhi was critical to ensuring freedom of navigation in the Indian Ocean.
China was the main factor behind Washington's approval of the Guardian drone sale, noted Pant of the Observer Research Foundation.
India's air force has also requested for 90 armed Avenger Predator drones, also produced by General Atomics, that many believe could be used for cross-border strikes on Pakistani militants in the Kashmir conflict.
"Armed drones can be used for a number of functions, including counter-terrorism activities," said Jaishankar. 

"The U.S. has used them quite effectively against groups in Pakistan and Afghanistan."
However, the sale of armed drones is subject to approval by U.S. Congress members who retain concerns about intellectual property and the danger of misuse by third parties, Jaishankar warned.

China Threat

Siemens and Alstom Form European Train Giant to Beat Chinese Competition

By JACK EWING and LIZ ALDERMAN

Siemens Alstom would make systems and equipment for two of Europe’s high-speed rail lines, Germany’s ICE and France’s TGV, which can zip between cities at about 185 m.p.h.

FRANKFURT — Once, the merger of two iconic European companies might well have been derailed by regional political rivalries. 

But in the case of a deal between Siemens and Alstom, those concerns have receded in the face of a larger threat: China.
The proposed merger of Europe’s two largest train makers, one German and one French, demonstrated on Wednesday that economic imperatives are pushing the Continent together even as populist politicians try to pull it apart.
Siemens, a German electronics and engineering giant, and France’s Alstom, a maker of the high-speed TGV, said late Tuesday that they will merge their units that make trains, streetcars and signaling systems. 

The deal is backed by the French government, and the two companies provided details of the deal the following day.
The new company, to be called Siemens Alstom, is a response to intensifying competition from China Railway Rolling Stock Corporation, the state-backed train maker that has been winning contracts in the United States and emerging markets where mass transit is a fast-growing business.
The company’s success is emblematic of China’s increasing economic power, which, combined with a more isolationist American foreign policy, is forcing European leaders to violate old taboos in order to improve the functioning of the European Union and its economy.

“The message of this merger is that the European spirit is alive,” Joe Kaeser, the chief executive of Siemens, said at a news conference in Paris on Wednesday. 

“That’s a powerful message in times that are marked by populism and nationalism and social and political divides.”
The announcement comes just days after a far right party won seats in the German Parliament for the first time since World War II. 

On Tuesday, Emmanuel Macron, the French president, called for “the rebuilding of a sovereign, united and democratic Europe” that would include stronger border controls but also a European budget large enough to help countries in economic trouble.
Competition from China has already been a factor in other big European mergers. 

Last week, the German steel giant ThyssenKrupp said it would merge its European steel operations into a joint venture with Tata Steel. 

And last year, Nokia of Finland acquired Alcatel-Lucent, a French maker of telecommunications equipment, in part to address intense competition from China’s Huawei.
Other sectors, like shipbuilding or semiconductors, could also be ripe for mergers.
Mr. Macron has made competition from China a central focus of his European policy drive. 

This year, he proposed Europe-wide scrutiny of any new major stakes by Chinese companies in European industrial jewels, but was met with resistance by small countries like Greece and Hungary, which are eager for new investment.
The French president and other European leaders have grown increasingly alarmed that the E.U. is ceding control of advanced technology to China. 

In a recent speech in Athens, Mr. Macron called for strengthening the bloc into a “power that can face the U.S. and China.”
Those concerns deepened after a state-owned Chinese chemical company, ChemChina, bought the Swiss pesticides and seeds group Syngenta this summer for $43 billion. 

The Chinese state-backed shipping conglomerate Cosco recently took a majority stake in Greece’s Piraeus port to anchor China’s New Silk Road through Europe. 

Germany itself has been no stranger to takeover bids by Chinese state-backed firms.
Just weeks ago, Chancellor Angela Merkel of Germany tightened rules to limit takeovers of German strategic assets, a move aimed at Beijing.
Chinese competition was a driving factor in Mr. Macron’s backing to seal a deal between Alstom and Siemens, despite outcries from political opponents in France that he was handing over a French icon to the Germans.
“The big story here is the French willingness to let this happen,” said Mikko Huotari, director of the international relations program at the Mercator Institute for China Studies in Berlin. 

“Alstom is one of the crown jewels of French industry.”
The Siemens-Alstom deal is in part a bid that being bigger may be a better way to counter China Railway Rolling Stock, known as CRRC, which has grown into the world’s largest and most competitive maker of railway equipment. 

The European company could yet grow further: Ahead of Tuesday’s announcement, there had been speculation that Siemens could link up with Bombardier of Canada. 

On Wednesday, Mr. Kaeser of Siemens did not rule out that Bombardier could later become part of the combined company.
Still, with sales of over $33 billion last year and 180,000 employees worldwide, CRRC is bigger than the train businesses of Siemens, Alstom and Bombardier combined.
Last year, the Chinese company secured contracts to build 64 subway cars for the city of São Paulo, and sold more than 800 railway cars to Chicago for $1.3 billion, winning the deal by submitting a cheap bid with good technology.
“Of course CRRC is extremely strong, and has changed a little bit the picture of the market,” Henri Poupart-Lafarge, the chief executive of Alstom, told reporters Wednesday.
Mr. Poupart-Lafarge will be chief executive of the new company, which will have its headquarters in Paris. 

The Mobility Solutions unit of Siemens Alstom, which provides systems to control rail traffic and is more profitable than the unit that makes trains and streetcars, will be based in Berlin.
The new company will have annual revenue of €15.3 billion, an order backlog valued at €61.2 billion and more than 62,000 employees worldwide.
Alstom in particular is a symbol of national technological might for the French, with high-speed TGV trains racing across the countryside, and Eurostar trains connecting Paris to London in just over two hours through the Eurotunnel.
While populist parties such as the National Front are hostile to closer political ties in the European Union, they are less likely to oppose corporate mergers that protect European companies from foreign competition.
Pro-European political leaders like Mr. Macron have themselves not been averse to government intervention to protect jobs at home.
Despite pledges to be less protectionist than his predecessors, Mr. Macron has shown a willingness to involve the state in industrial policy by getting involved in big deals. 

Last month, he temporarily nationalized one of France’s biggest shipyards, STX France, to prevent it from being taken over by an Italian competitor.
As France’s economy minister, he pushed through a government plan last year to order €630 million worth of new TGV trains — most of which were not calibrated to run on faster tracks — from an Alstom factory in the eastern town of Belfort to prevent hundreds of jobs there from moving to another plant.
The Alstom deal with Siemens also reflects, however, a willingness to be flexible to protect broader French interests.
On Tuesday, the country’s finance minister, Bruno Le Maire, said the French government welcomed the deal with Siemens, characterizing it as one that protected French jobs at Alstom.

Sina Delenda Est

Sino-American War likely if Kim Jong Un’s regime collapses
By David Tweed and Ting Shi

In discussions between the U.S. and China about reining in North Korea, one topic remains taboo: What would happen if Kim Jong Un’s regime collapses?
For years, China has rebuffed U.S. attempts to raise the topic at so-called Track 2 dialogue sessions between academics in each country’s foreign policy establishment, according to Bonnie Glaser, senior adviser for Asia at the Center for Strategic & International Studies in Washington, who has led the U.S. side in such talks. 

Attendees included people from Chinese government-affiliated research institutions and military officers, she said.
From China’s perspective, officially broaching the issue could alarm its neighbor, which has received Beijing’s backing since the Korean War in the 1950s. 

There’s also a fear that it would give the U.S. an advantage in one day reunifying the Korean peninsula on its terms.
“When we first started these efforts, the Chinese told us -- and many other people, including U.S. officials -- that if they engaged in such discussions with the United States it would come out, it would get leaked, North Korea would find out and they would retaliate,” Glaser said.
Still, as the U.S. and North Korea trade threats of military action and Kim -- who is believed to be in his early 30s -- develops nuclear weapons, observers are starting to game out worst-case scenarios. President Donald Trump told reporters on Tuesday that the U.S. is prepared to use “devastating” military force against North Korea, though it’s not a preferred option.
No matter whether a military miscalculation, coup or other event prompts the demise of Kim, it may not be long before soldiers from the world’s two biggest economies come face-to-face.

Nuclear Arsenal
The U.S. has about 28,500 troops stationed in South Korea, which has another 625,000 in its standing army and 3.1 million in reserve. 

China has roughly 2 million soldiers, and its Northern Theater Command bordering North Korea consists of at least three army units and three rocket units.
“If we intervene and the Chinese run into our people and if we run into their people, what are we going to do?” Bruce Bennett, a defense researcher at Rand Corp. who wrote a 342-page report in 2013 on policy recommendations in case North Korea collapses, said by phone. 

“Are we going to shake hands or what? All of that needs to be really thought about seriously.”
If North Korea starts to collapse, both the U.S. and China are likely to send in troops to secure its weapons of mass destruction, Bennett said. 

Most of those sites -- including the Yongbyon nuclear plant -- are closer to China than South Korea.

U.S. intelligence officials have concluded that North Korea can miniaturize warheads to fit on missiles, and has as many as 60 nuclear bombs, the Washington Post reported last month. 

South Korea’s 2016 Defense White Paper said Pyongyang also has a stockpile of between 2,500 tons to 5,000 tons of chemical weapons, and is capable of producing biological agents such as anthrax and smallpox.
Any incursion by Chinese troops into North Korea risks drawing in South Korea, whose constitution covers the entire peninsula. 

Similar to China, authorities in Seoul would also be worried about large flows of refugees who might flee, particularly if war leads to shortages of food and other essential goods.

Safety Zone
Jia Qingguo, dean of the School of International Studies of Peking University, wrote in a Sept. 11 article for the East Asia Forum that China’s military should consider creating a safety zone within North Korea to prevent a large flow of people into its northeastern provinces.
Authorities in Beijing would probably also want to discuss overseeing any situation that requiring the U.S. to move north of the 38th parallel, including securing North Korea’s nuclear weapons and restoring order in Pyongyang, Jia wrote. 

Another issue will be whether to let the international community oversee the formation of a new government in North Korea.
“Beijing doesn’t have a good plan, the U.S. doesn’t have a good plan, and the entire world doesn’t have a good plan,” Jia said by phone. 

“It’s beyond the point that a neat solution can be found. So, hope for the best and prepare for the worst."
China certainly has planned for worst-case scenarios including refugees and potential nuclear proliferation, said Su Hao, an international relations professor at China Foreign Affairs University, which is affiliated with the country’s foreign ministry.

“It’s strategically premature for China to discuss it with South Korea or the U.S.,” Su said. 

“However, it’s likely for China to inform Russia because their interests on the peninsula are more aligned.”
In public, all the major powers say they agree on the goal of a denuclearized Korean peninsula. 

The U.S., China and Russia have also said they back the so-called Four Nos: No regime change, regime collapse, accelerated reunification and military deployment north of the 38th parallel.
Still, mistrust remains. 

President Trump’s recent comments to the United Nations that communist and socialist governments are failed ideologies that contribute to human suffering may fuel suspicions within China that the U.S. ultimately seeks regime change in Beijing.
“Let’s remember that the Chinese believe that the ‘color revolutions’ were really aimed at overthrowing Communism everywhere,” Glaser said, referring to a wave of movements in the former Soviet Union and Balkans in the early 2000s. 

Chinese bid for mapping company falls at US hurdle

Chinese seeking stake in Europe-based Here told to ‘apply directly’ to Trump 
By Yuan Yang in Beijing

Chinese investors seeking to buy a stake in a European mapping company were told to “apply directly” to the US president after their €241m offer failed to win regulatory approval, according to one of the bidders.
Beijing-based NavInfo, a mapping provider for tech giant Tencent, together with Tencent and Singapore’s sovereign wealth fund GIC agreed last year to buy a 10 per cent stake in Amsterdam-headquartered Here to provide high-resolution maps of China for autonomous cars.
The mapping technology company is owned by German carmakers Audi, BMW and Daimler, and US chipmaker Intel.
The Committee on Foreign Investment in the US weighed in on the deal, which received the green light from German regulators in January, due to Here’s assets in Chicago.
Cfius made NavInfo and its fellow investors go through multiple hoops, but did not ultimately approve the deal.
“[Cfius] didn’t stop us from reapplying again, and actually recommended we apply directly to US President Donald Trump,” said NavInfo.
“We think there are two main reasons: the whole atmosphere after the election has changed at Cfius, and we hear there are not enough employees,” the company added, suggesting the new and smaller team at Cfius was more likely to withhold approval. 
The Here decision comes at a time when China-US relations have been strained by Mr Trump’s harsh rhetoric against Chinese trade, as well as foreign policy disagreements over North Korea.
Mr Trump earlier this month blocked a $1.3bn plan by Canyon Bridge, a China-backed private equity group, to acquire Lattice Semiconductor.
Financial holdings company China Oceanwide is in the midst of re-filing an application to Cfius to acquire Virginia-based insurer Genworth Financial for $2.7bn.
As Beijing has moved to rein in an ambitious spate of offshore dealmaking by private groups, Chinese outbound investment by government-backed groups soared in the first half of the year to $28.7bn, despite scrutiny overseas over national security concerns.
“For the past six months [Cfius] has continuously asked us to change our application, but even the emails they gave us were very vague, and just mentioned ‘national security reasons’,” NavInfo said on Wednesday.
NavInfo said Cfius had told the consortium to refile its application, which it did, giving up investor rights such as shareholder votes, but the group still did not receive approval and does not understand why.
The consortium decided to drop the deal rather than apply directly to the US president, NavInfo said. The company added that although the decision changes its plans for shareholding, it will not affect its mapping projects with Here, with which it has a joint venture in China.
NavInfo said it will cancel the loan it had arranged with BNP Paribas to finance its part of the acquisition.
Tencent and GIC did not immediately respond to requests for comment.

Sina Delenda Est

Top US general: China will be greatest threat to US by 2025
By Ryan Browne

From left: Army Gen. Vincent K. Brooks, commander of Combined Forces Command and U.S. Forces Korea; South Korean Chairman Army Gen. Lee Sun-jin; Marine Corps Gen. Joe Dunford, chairman of the Joint Chiefs of Staff; Japanese Chief of Defense Adm. Katsutoshi Kawano; and U.S. Pacific Command commander, Navy Adm. Harry B. Harris Jr., pose for photograph at the Pentagon, Oct. 14, 2016. The senior military leaders met to discuss trilateral collaboration in order to respond to increasing Chinese threat.

America's top military officer, Gen. Joseph Dunford, told Congress Tuesday China is likely to be the "greatest threat" of any foe to the US within a decade.
"I think China probably poses the greatest threat to our nation by about 2025," Dunford told the Senate Armed Services Committee during a hearing on his re-appointment as Chairman of the Joint Chiefs of Staff.
Dunford was responding to a question from Hawaii Democrat Sen. Mazie Hirono, who noted that the general had previously identified Russia, followed by China and North Korea, as representing the greatest military threats to US national security during a 2015 appearance before the same committee.
But on Tuesday Dunford took the opportunity to reshuffle his list of national security concerns, saying that North Korea now "poses the greatest threat today" due to the "sense of urgency" involved as Pyongyang's develops its nuclear and missile programs.
He also said that Russia remained the greatest threat overall due to its military capabilities in the realms of nuclear weapons and electronic warfare as well as Russian military activity in places like Crimea, which it invaded and annexed in 2014, and eastern Ukraine, where Moscow is backing armed separatists.
However, Dunford said that China would become the greatest threat by 2025.
"If I look out to 2025, and I look at the demographics and the economic situation, I think China probably poses the greatest threat to our nation by about 2025," he said.
Dunford also told the committee that "China is focused on limiting our ability to project power and weakening our alliances in the Pacific."

"Chinese leaders seem committed to increases in defense spending for the foreseeable future," the report added, saying "China's military modernization is targeting capabilities with the potential to degrade core US military technological advantages."
The Pentagon's 2017 assessment of China's military capabilities noted that Beijing's "officially disclosed military budget grew at an average of 8.5% per year in inflation adjusted terms from 2007 through 2016."
"We use, largely, Russia and China to benchmark our capabilities," Dunford said Tuesday, warning that in the face of Russian and Chinese military modernization, the US would need to boost the annual defense budget by somewhere between 3% and 7% for the next five years in order "to maintain a competitive advantage over those peer competitors" in the mid 2020s.

US, China have many difficult issues
Dunford visited Beijing in August where he struck a deal with Chinese military forces ensuring better communications between the two world powers.
Speaking at the time, the general said the United States and China "have many difficult issues where we will not necessarily have the same perspectives," and the agreement would reduce the chance of "miscalculation."
In August a US destroyer, the USS John S. McCain, sailed close to one of the artificial islands China claimsin the South China Sea as part of a freedom of navigation exercise.
Beijing said the move was a "flaunting of force."
The US regularly conducts similar Freedom of Navigation exercises in the South China Sea, which China claims as its territory but the US insists are international waters.
In the East China Sea, US officials have accused Chinese jets of carrying out multiple "unsafe" intercepts of American aircraft in recent months.
In one incident, a Chinese J-10 fighter jet came within 300 feet (90 meters) of a US plane forcing it to take "evasive action," US officials told CNN.
Beijing maintains an Air Defense Identification Zone over a large part of the East China Sea, a zone which the US does not consider valid.

The Godfather's Daughter

Ivanka Trump's China business ties are more secret than ever

• Public information about the companies importing Ivanka Trump goods to the U.S. has become harder to find.
• Information that once routinely appeared in private trade tracking data has vanished, leaving the identities of companies involved in 90 percent of shipments unknown.
• The deepening secrecy means it's unclear who Ivanka Trump's company is doing business within China.

AP

Ivanka Trump attends Donald Trump's strategy and policy forum with chief executives of major U.S. companies at the White House in Washington, February 3, 2017.
It is no secret that the bulk of Ivanka Trump's merchandise comes from China. 

But just which Chinese companies manufacture and export her handbags, shoes, and clothes is more secret than ever, an Associated Press investigation has found.
In the months since she took her White House role, public information about the companies importing Ivanka Trump goods to the U.S. has become harder to find. 

Information that once routinely appeared in private trade tracking data has vanished, leaving the identities of companies involved in 90 percent of shipments unknown. 

Even less is known about her manufacturers. 

Trump's brand, which is still owned by the first daughter and presidential adviser, declined to disclose the information.
The deepening secrecy means it's unclear who Ivanka Trump's company is doing business within China, even as she and her husband, Jared Kushner, have emerged as important conduits for top Chinese officials in Washington. 

The lack of disclosure makes it difficult to understand whether foreign governments could use business ties with her brand to try to influence the White House — and whether her company stands to profit from foreign government subsidies that can destroy American jobs. 

Such questions are especially pronounced in China, where state-owned and state-subsidized companies dominate large swaths of commercial activity.
"There should be more transparency, but right now we do not have the legal mechanism to enforce transparency unless Congress requests information through a subpoena," said Richard Painter, who served as chief White House ethics lawyer for George W. Bush, and is part of a lawsuit against Donald Trump for constitutional violations. 

"I don't know how much money she's making on this and why it's worth it. I think it's putting our trade policy in a very awkward situation."
An AP review of the records that are available about Ivanka Trump's supply chain found two potential red flags. 

In one case, a province in eastern China announced the award of export subsidies to a company that shipped thousands of Ivanka Trump handbags between March 2016 and February of this year, Chinese public records show — a violation by China of global fair trade rules, trade experts said.

Workers on a production line at the Huajian shoe factory, where about 100,000 pairs of Ivanka Trump-branded shoes have been made over the years amongst other brands, in Dongguan, in south China's Guangdong province.

The AP also found that tons of Ivanka Trump clothing were exported from 2013 to 2015 by a company owned by the Chinese government, according to public records and trade data. 

It is unclear whether the brand is still working with that company, or other state-owned entities. 

Her brand has pledged to avoid business with state-owned companies now that she's a White House adviser, but contends that its supply chains are not its direct responsibility.
Ivanka Trump's brand doesn't actually make its products directly. 

Instead, it contracts with licensees who oversee production of her merchandise. 

In exchange, those licensees pay the brand royalties. 

The AP asked Ivanka Trump's brand for a list of its suppliers. 

The company declined to disclose them. 

The clothing, footwear and handbag licensees contacted by AP also declined to reveal source factories.
Abigail Klem, president of IT Operations, which manages Ivanka Trump's brand, said the company does not contract with foreign state-owned companies or benefit from Chinese government subsidies. However, she acknowledged that its licensees might.
"We license the rights to our brand name to licensing companies that have their own supply chains and distribution networks," Klem said in an email. 

"The brand receives royalties on sales to wholesalers and would not benefit if a licensee increased its profit margin by obtaining goods at a lower cost," she added.
But Michael Stone, chairman of Beanstalk, a global brand licensing agency, said lower production costs for licensees would ultimately benefit Ivanka Trump by freeing up money for marketing or lower retail prices, both of which drive sales.
"It gives her a competitive advantage and an indirect benefit to her financially," Stone said. 

"The more successful the licensee is the more successful Ivanka Trump is going to be."
The AP identified companies that sent Ivanka Trump products to the United States by looking at shipment data maintained by ImportGenius and Panjiva Inc., private companies that independently track global trade. 

Panjiva's records show that 85 percent of shipments of her goods to the U.S. this year originated in China and Hong Kong, but beyond that, it's becoming more difficult to map the brand's global footprint.
The companies that shipped Ivanka Trump merchandise to the U.S. are listed for just five of 57 shipments logged by Panjiva from the end of March, when she officially became a presidential adviser, through mid-September. 

Panjiva collects data from U.S. Customs and Border Protection, which did not immediately release the missing data to AP.
While in many cases the manufacturer ships goods directly, merchandise can also be made by one company and shipped by another trading or consolidation company.
There used to be more visibility. 

Last year, 27 percent of the companies that exported Ivanka Trump merchandise to the U.S. were identified in Panjiva's records, and back in 2014 a full 95 percent were named. 

For two of Ivanka Trump's licensees — G-III Apparel and Marc Fisher Footwear — the number of shipments appears to plunge in 2015, likely because they "requested to hide" their shipment activity, according to Panjiva records. 

Neither company responded to AP's questions.
The brand declined to comment on the growing murkiness of its supply chain.
Chris Rogers, an analyst at Panjiva, said any company can ask customs authorities to redact its information for any reason. 

About a quarter of companies request anonymity, he said, but the majority don't mind disclosing who they're doing business with.
"A lot of companies have said, 'yes there might be a commercial disadvantage, but we want to be transparent about our supply chain,'" he explained. 

"'Why would we want to cover up the fact that we're working with this particular company?'"
While ethics lawyers may see disclosure as the best antidote to conflict of interest, many brands see it as a tool to keep supply chains scandal-free. 

Public outcry over sweatshop conditions and worker suicides prompted companies like Nike Inc. and Apple Inc. to disclose the names and addresses of their manufacturers, and a growing number, including Gap Inc., the H&M Group, New Balance Athletics Inc., Adidas AG and Levi Strauss & Co., publicly identify their suppliers.
Ivanka Trump should do the same, said Allen Adamson, founder and CEO of BrandSimple Consulting. 

"It's a missed opportunity to lead by example."
What shipping records do show is that a company called Zhejiang Tongxiang Foreign Trade Group Co. Ltd., a sprawling conglomerate once majority-owned by the Chinese state, sent at least 30 tons of Ivanka Trump handbags to the U.S. between March 2016 and February 2017.

People walk past the 'Ivanka Trump Collection' shop in the lobby at Trump Tower in New York.
Zhejiang province's commerce department said in June 2014 that it would help lower export costs for that same company, along with nine other local enterprises, through a special three-year trade promotion program. 

Among the measures outlined were export insurance subsidies and funding for online trading platforms and international marketing, as well as special funds earmarked for foreign trade companies with large-scale, fast-growing exports.
The value of the subsidies is unclear, as are details about how the directives were implemented, but using subsidies to reduce the price of exports is considered so destructive to fair trade that the World Trade Organization generally bans the practice. 

Chinese government subsidies hurt American workers but can lower costs for U.S. companies that import made-in-China merchandise, potentially boosting their profits.

Donald Trump has called companies that benefit from foreign government subsidies "cheaters."
The AP spoke with four trade experts in the United States and China who said the Zhejiang measures appeared to violate World Trade Organization rules. 

"These are clearly export subsidies," said Gary Hufbauer, a trade expert at the Peterson Institute for International Economics in Washington.
Zhejiang province's Department of Commerce and the Zhejiang Tongxiang Foreign Trade Group declined to comment.
The AP also found that from Oct. 2013 to Jan. 2015, Jiangsu High Hope International Group, a conglomerate majority-owned by the Jiangsu provincial government, shipped 45 tons of Ivanka Trump clothing to the U.S., according to records from ImportGenius and Panjiva.
High Hope told AP it had "a small number of business dealings" with Ivanka Trump licensee G-III Apparel, but declined to answer questions about whether the relationship is ongoing.
G-III, which is based in New York City, declined to respond to specific questions but said in a statement that it is "committed to legal compliance and ethical business practices in all of our operations worldwide." 

Ivanka Trump licensee Mondani Handbags & Accessories Inc., also headquartered in New York, did not respond to requests for comment.
Ivanka Trump's brand said it was in the process of reviewing its supply chains with the help of "independent experts whose mission it is to advance human rights" and emphasized that all licensees, manufacturers, subcontractors, and suppliers are required to abide by the law, as well as ethical practices set forth in a vendor code of conduct.
The AP asked to see the code of conduct, but the brand declined to share it.

Gestapol

China hosts Interpol meeting amid concerns Beijing is using the police network to pursue political foes overseas.
By CHRISTOPHER BODEEN

Interpol opened its main international annual meeting in China on Tuesday amid concerns that Beijing is using its growing influence over the police network to pursue political foes overseas.
Xi Jinping said in a speech to the Interpol General Assembly that China wants to work with other countries and organizations to achieve "global security governance."
However, New York-based Human Rights Watch said Interpol needs to address China's misuse of the organization's "red notice" system to seek the arrest and extradition of wanted people.
The election of Chinese Vice Public Security Minister Meng Hongwei as Interpol's president last year alarmed rights advocates who cite abuses, opacity and political manipulation within China's legal system.
China has used red notices to flag cases bearing a decided political taint, making the individuals involved vulnerable to law enforcement action by foreign government bodies.
Human Rights Watch raised the case of Dolkun Isa, an activist in Germany for the Turkic-Muslim Uighur ethnic group native to China's far-western Xinjiang region. 

It said Isa has had trouble traveling internationally since a red notice was issued against him more than a decade ago. 

China routinely accuses overseas Uighur advocates of supporting terrorism while providing little evidence to back up their claims.
The group also mentioned U.S.-based activist Wang Zaigang, whom it said appeared to have been targeted with a red notice in response to his activities promoting Chinese democracy.
Those served with red notices risk torture and other forms of ill-treatment given China's record of abuse, Human Rights Watch said.
"Interpol claims to operate according to international human rights standards, but China has already shown a willingness to manipulate the system," Sophie Richardson, the group's China director, was quoted as saying in a news release. 

"And with China's vice-minister of public security ... as president, Interpol's credibility is on the line," Richardson said.
The Ministry of Public Security is China's main police agency, charged with silencing and detaining critics of the ruling Communist Party, often outside the letter of the law.
Chinese politics expert Willy Lam said China has been using its economic heft to influence groups such as Interpol to further the party's foreign and domestic policy aims.
Lam pointed to cases where the line has blurred between accusations of corruption and apparent attempts to retaliate against those who make allegations against members of the communist leadership, such as outspoken businessman Guo Wengui.
Pressure on Guo has been building since April when a red notice was issued seeking his arrest on corruption-related charges. 

Chinese authorities sentenced several of his employees for fraud in June and have also opened an investigation into rape charges against Guo brought by a former assistant.
In recent months, Guo has become a widely followed social media presence by serving up sensational tales of corruption and scandal within the Communist Party's innermost sanctum, including among Xi's closest allies.
"China has turned Interpol into another venue for projecting its power," Lam said. 

"They've put a lot of investment into pursuing fugitives abroad, those wanted for political reasons."

Chinese Peril

As China has boosted renewable energy it’s moved dirty coal production to Africa

By David Obura

Got coal?

China is transforming its sources of energy domestically in a bid to reverse decades of environmental pollution. 

But the switch to renewable energy has brought about a conundrum: what to do with the jobs and industries that have no future in this new system?
Export them. 

Several African countries are accepting the poisoned chalice of China’s subsidised development through the construction of outdated, dirty coal plants.
Kenya is one. 

Its coastline is a national asset for fisheries, tourism, a growing population and economic development. 

But Amu Coal—a consortium of Kenyan and Chinese energy and investment firms—is set to start building a coal plant on the only part that is untouched by industrial development. 

The plant is planned to be some 20 kilometers from the town of Lamu on the mainland coast, at the mouth of Dodori Creek.Lamu. 

Quite apart from the unfavourable economic and financing aspects for generating energy from coal, the plant may be Kenya’s single largest pollution source.
The problems should be set out in the Environment and Social Impact Assessment study required by Kenya’s Environment Act and vetted through the National Environment Management Authority. 

But three key issues are omitted or glossed over by the study. 

Any one of them should be cause for the environment authority, other arms of the Kenyan government and certainly the public to oppose the coal plant.
Thankfully, opposition is growing.

Key issues against plant
The first is a classic Industrial Revolution, Victorian issue. 

Toxic pollution. 

Coal releases a range of toxic substances into the environment. 

These go into the atmosphere, rain, groundwater, and seawater – and then to flora, fauna and people. 

These substances are barely mentioned in the assessment study. 

There are also no detailed estimates on the amounts that could be released and how they could be reduced by mitigating actions. 

The coal intended for use – initially to be imported from South Africa, and classified as “bituminous”, releases large amounts of toxins, particularly if improperly burned.
The impact study also doesn’t clearly state the full size of the mountain of coal residue left behind after burning—almost 4km long by 1km wide and 25 metres high. 

No credible plan for disposing of the waste is presented.
Second is Kenya’s contribution to global carbon dioxide emissions. 

Under the Paris Agreement on climate change the Jubilee government committed to reduce these by 30% by 2030. 

The impact study dismisses the carbon emissions from the plant as negligible on a global scale, at only 0.024% of global emissions. 

But what it attempts to hide is that the emissions of the coal plant alone will double Kenya’s energy sector’s entire CO2 emissions. 

This at the same time that citizens, businesses and the government are investing in efforts to reduce their carbon footprints, through – for example through wind, solar and geothermal power generation.Cars parked under solar panels at Africa’s largest solar carport in Nairobi’s Garden City shopping mall. 

The third reason is a chimera of the above—climate change and toxic pollution combined. 

It is reasonably certain that sea levels will rise due to climate change. 

Estimates suggest this could be in the order of half to one metre by the end of this century, and very possibly more. 

The toxic waste mountain left by the plant will be on Kenya’s flattest shoreline, built on sand. 

Its base will be maybe 2-3 metres above sea level, and tens to 100m from the shoreline. 

This is the most vulnerable part of Kenya’s coast where sea level rises, and yet the massive toxic dump is to be placed there.
Part of the impact assessment argues that “the area is remote” so few people will be affected by pollution. 

Quite apart from the flawed logic that it’s okay to pollute natural wilderness areas, if plans for a major urban development under the LAPSSET project—Eastern Africa’s largest and most ambitious infrastructure project bringing together Kenya, Ethiopia and South Sudan—are concluded, there will be a city of over one million people in the area by 2050.
The report contains nothing about exposure of this number of people to toxic waste. 

Even the Strategic Environment Assessment for the LAPSSET project, conducted in the last few years, doesn’t include the coal plant in its assessment. 

The logic is that the plant is “not part of LAPSSET” yet even the simplest understanding of the purpose of both impact assessments and strategic environment assessments is to consider all interacting threats, and particularly the biggest ones, to the environment and people.
Improved standards are undoubtedly needed in Kenya’s Environment Impact Assessment sector. 

The country will develop, by hook or by crook, with or without a vision for 2030. 

Strengthening environment and social impact assessment as a tool to facilitate the right sort of development—where currently it’s viewed by business and most government authorities as a pesky bureaucratic step at best—will be one of the single most significant steps the government can take to protect and grow the natural and social assets that secure, healthy and equitable development is founded on.