U.S. Fighters for Taiwan

The island democracy needs advanced air power to deter China.
The Wall Street Journal

A Chinese armed helicopter assaults targets with rocket projectiles in a live-fire exercise off China's southeast coast, April 18. 

Chinese bombers and warships conducted exercises near Taiwan this month, a show of force that officials in Beijing called a warning not to pursue formal independence. 

Last year the number of Chinese air patrols off Taiwan’s east coast quadrupled, and Beijing under Xi Jinping has stepped up pressure on the island democracy to “reunify” with the motherland.
China’s bullying is raising alarms in the U.S., which is obligated to help Taiwan defend itself under the Taiwan Relations Act. 

The mainland People’s Liberation Army is deploying new jets, ships and other weapons in such numbers that the island’s defenses are in danger of being overwhelmed. 

Past U.S. Administrations failed to sell Taiwan the weapons it needs, and much of its arsenal is outdated.
The island’s most pressing need is air power. 

The mainstay of Taiwan’s fighter force is a fleet of 144 F-16s bought in the mid-1990s. 

Fewer than half the planes are ready for combat at any time, thanks to the maintenance required by aging aircraft and upgrades. 

Taiwan is pleading for new fighters to counter China’s advanced planes such as the Russian-made Su-35.
China also deploys more than 1,500 ballistic missiles within range of Taiwan, some highly accurate. They could damage airfields and destroy planes on the ground in minutes. 

Taiwan has bought advanced versions of the Patriot system to counter this threat, but the number and sophistication of Chinese missiles means many would get through. 

A 2009 Rand study said China could likely achieve air superiority over the island within days.
U.S. Senators John Cornyn and James Inhofe asked Donald Trump last month to support Taiwan’s request to buy the vertical takeoff version of the new F-35 fighter. 

They wrote, “The survivability of the F35B and modern long-range sensors could help Taiwan intercept Chinese missiles, promoting deterrence well into the next decade.”
In a crisis the F-35B can be based almost anywhere, making it hard for Chinese missiles to destroy on the ground. 

Its stealth and other capabilities mean Chinese military planners couldn’t count on air superiority in a conflict.
There are several reasons the U.S. is unlikely to sell Taiwan the F-35B right away. 

One is the difficulty of getting the consortium of nations behind the F-35 to agree amid China’s inevitable howls of outrage. 

Another concern is China’s success in recruiting spies within Taiwan’s armed forces, meaning the plane’s secrets could be stolen.
One solution would be to sell Taiwan the latest version of the F-16 and lease some used fighters as a stopgap. 

Over the next few years, the U.S. could lay the groundwork for the F-35B sale as well as another layer of missile defense, the Terminal High Altitude Area Defense or Thaad. 

That would give President Tsai Ing-wen time to follow through on her promise to increase military spending, a key requirement if Taiwan is to strengthen its defenses.
Beijing keeps pressing the U.S. to abandon Taiwan. 

Last December a Chinese diplomat in Washington threatened war if a U.S. Navy ship visits a Taiwanese port. 

But the threats and intimidation are backfiring, fostering a consensus in Washington that Taiwan needs more U.S. arms and closer security cooperation to deter Chinese adventurism. 

A sizable sale of fighter aircraft this year would shore up a democratic ally and reduce the chance of conflict in the Taiwan Strait.

Why Can’t China Make Semiconductors?

After decades of failure, it may now be on the right track

.By Adam Minter

How hard can it be? 

Jack Ma says he's ready for China to make semiconductors at home. 

It's a longstanding goal for the Chinese government. 

And thanks to a recent crackdown on certain technology exports by the U.S., it's now a critical one. The question is whether China can finally conquer this challenge after decades of failures.
Semiconductors are the building blocks of electronics, found in everything from flip phones to the servers that make up a supercomputer. 

Although China long ago mastered the art of making products with semiconductors produced elsewhere (the iPhone is the most famous example), it wants to move beyond being a mere assembler. It aspires to being an originator of products and ideas, especially in cutting-edge industries such as autonomous cars. 

For that, it needs its own semiconductors.
That's no small challenge. 

China is currently the world's biggest chip market, but it manufactures only 16 percent of the semiconductors it uses domestically. 

It imports about $200 billion worth annually -- a value exceeding its oil imports. 

To cultivate a domestic industry, the government has slashed taxes for chip makers and plans to invest as much as $32 billion to become a world leader in design and manufacturing. 

Yet as history shows, spending won't be enough.
China's earliest semiconductor was built in 1956, not long after the technology was invented in the U.S. 

But thanks to the turmoil of the Cultural Revolution, whatever momentum its engineers and scientists had was soon lost. 

When the country reopened for business in the 1970s, officials quickly realized that semiconductors would be a key part of any future market-based economy.
Almost from the start, though, central planning proved to be a serious impediment. 

Early government ideas included importing secondhand Japanese semiconductor lines that were outdated before they were even shipped. 

Expensive efforts to build a domestic industry from scratch in the 1990s faltered due to bureaucracy, delays and a lack of customers for the kind of chips China was making.
Another weakness was a lack of capital. 

For decades, labor-intensive industries -- such as assembling mobile phones -- were the route to riches in China, attracting investment from entrepreneurs and bureaucrats alike. 

Making semiconductors, by contrast, requires billions in up-front capital and can take a decade or more to see a return. 

In 2016, Intel Corp. alone spent $12.7 billion on R&D. 

Few if any Chinese companies have that capacity or the experience to make such an investment rationally. 

And central planners typically resist that kind of risky and far-sighted spending.
China seems to recognize this problem. 

Since 2000, it has shifted away from subsidizing semiconductor research and production, and toward making equity investments, in the hope that market forces could play a larger role. 

Yet funds continue to be misallocated: Over the past 18 months, there's been a spate of government-juiced overinvestment in semiconductor plants, many of which lack sufficient technology. 

Those that eventually open will likely contribute to a glut in memory chips, spelling financial trouble for the domestic industry.
But perhaps the biggest long-term challenge for China is technology acquisition. 

Though the government would like to develop an industry from the ground up, its best efforts are still one or two generations behind the U.S. 

A logical solution would be to buy technology from American companies or form partnerships with them. 

That's the route taken by cutting-edge firms in Japan, South Korea and Taiwan.
Yet China can't do the same. 

Its efforts to purchase American semiconductor companies (often at huge premiums) are regularly blocked for security reasons. 

Japan, South Korea and Taiwan have put Chinese acquisitions under similar scrutiny. 

By one accounting, China has made $34 billion in bids for U.S. semiconductor companies alone since 2015, yet completed only $4.4 billion in deals globally in that span.
Despite these impediments, China has actually made substantial strides in recent years. 

Companies such as Shanghai-based Spreadtrum Communications Inc. are designing semiconductors for mobile phones and other technologies, then outsourcing production to foreign plants. 

Meanwhile, China's considerable investment in factories that make older technologies has provided managers, engineers and scientists some crucial lessons in how to run a semiconductor fabrication business.
None of these efforts will provide the shortcuts that government officials -- and Jack Ma -- seem to want. 

But they might offer the building blocks for an industry that China has spent half a century trying and failing to create.

"Le Connard" Buys Into China’s Rights Vision

Macron Dismisses Dalai Lama Meeting as ‘Crisis’ Provoking
By Sophie Richardson

It was lofty – and tough – rhetoric from French President Emmanuel Macron: in August 2017, he asserted that his country’s diplomatic and economic interests with China “cannot justify cover-up of the question of human rights.” 

Yet by January Macron’s resolve appeared to weaken, as he failed to publicly raise a single specific human rights case or issue on his first visit to China as president.
This week it appeared Macron’s resolve had fully given way to deference. 

In response to a question during his state visit to the US, Macron said that if he were to meet the Nobel Peace laureate the Dalai Lama it would “create… a crisis with China.” 

Macron, who had met the exiled Tibetan spiritual leader while running for office, praised him as “very inspiring,” but suggested that meeting him now would require prior consultation with Beijing, and that a symbolic meeting would likely be “useless and counterproductive.”
Macron could have used the opportunity to highlight pervasive Chinese government restrictions on Tibetan religious communities, including the installation of Communist Party cadres in the management of monasteries and nunneries. 

He could have spoken about the forced resettlement of Tibetan nomads, pervasive restrictions on Tibetans’ access to passports, or even their right to peacefully protest or criticize government policies. 

He could even have devoted a few words of concern about human rights abuses broadly by Chinese authorities. 

Instead, Macron effectively adopted China’s take on diplomatic interaction with the Dalai Lama.
Macron isn’t the first leader to criticize human rights in China while at home, only to back down once on foreign soil. 

But when the Chinese government is increasingly infringing on rights beyond its borders – threatening dissidents abroad, pressing countries to forcibly return refugees to China, or undermining international human rights institutions – Macron’s answer is more than just discouraging. 

It’s also dangerously short-sighted for France and other countries that have long promoted human rights abroad.

China’s Intimidation Exposes Vietnam’s Lack of Deterrence

Hanoi does not seem to have a strategy to develop the resources that international law says rightfully belong to it. And the economic costs of this predicament are rising.
By Bill Hayton

A Chinese coast guard vessel sails near an oil drilling rig in disputed waters in the South China Sea in 2014. 

Vietnam has lost another sea battle: a $200 million oil and gas development project — known as the ‘Red Emperor’ development — off Vietnam’s southeast coast has been suspended, possibly cancelled. 

Hanoi’s hopes of a hydrocarbon boost to its stretched government budget have been dashed. 

And the culprit is Vietnam’s ‘good neighbour, good comrade and good friend’ to the north.
The project, many years in the making, was a joint venture between Repsol of Spain, Mubadala of Abu Dhabi and the state-owned energy company PetroVietnam. 

Commercial drilling was due to begin this April and oil and gas were expected to flow for at least 10 years. 

A specialised platform built in the port of Vung Tau lies idle, as do the contracted drilling rig and storage tanker.
So far, the Vietnamese government has not admitted that the project has been suspended. 

Nor has it confirmed that another Repsol project on a neighbouring block of seabed was cancelled last year.
Both the Repsol blocks lie within Vietnam’s claimed exclusive economic zone. 

A reasonable interpretation of international law would give it the right to the resources in the blocks. Unfortunately for Vietnam, China does not subscribe to that reasonable view.
Over the past decade, China has increased the degree of intimidation that it is prepared to use to achieve its strategic objectives. 

In 2007, Beijing threatened international energy companies, suggesting that their businesses in China were at risk if they pursued offshore ventures with Vietnam. BP and Chevron were among the companies that folded. 

In 2011 and 2012, Chinese ships used force against Vietnamese oil survey vessels, cutting and snagging their seismic cables. 

In 2017, China threatened to attack Vietnamese positions on the Vanguard Bank in the South China Sea if Repsol’s development was not halted.
It is not yet clear what kind of threat was issued in the latest confrontation. 

But the Vietnamese decision did coincide with China’s deployment of a 40-ship naval flotilla off Hainan, just two days sailing from the drill location. 

This is the situation that Vietnamese leadership finds itself in: a huge neighbour is prepared to imply the use of military force to threaten Vietnam’s vital economic interests.
Vietnam is facing significant economic woes. 

Its public debt is the highest of the ASEAN countries (excluding Singapore). 

Debt has risen rapidly from 50 per cent of GDP in 2011 to 64 per cent in 2016 and is now thought to be bumping the legal ceiling of 65 per cent. 

To try to avoid breaching that limit, sales of stakes in state-owned companies have risen sharply and ministers have pledged to cut the state payroll, including for the police. 

Austerity is being imposed on the traditional tools of Communist Party control.
In addition, taxes are going up. 

The government has introduced a new levy on fuel, ostensibly to cut carbon emissions, but really to try to balance the books. 

Tax increases are never popular but as existing oil fields become exhausted the government urgently needs to replace declining revenue sources. 

The Red Emperor field was planned to be productive within months but the suspension now creates a hole in next year’s state budget. 

Ironically, China’s moves out at sea have made its communist comrade more vulnerable on land.
What options does Hanoi have? 

For some years it has been trying to build up its naval deterrent capabilities with new ships, submarines and missiles. 

Vietnam could probably sink a few Chinese ships if it came to a fight, but the consequences for it — both military and economic — would be dire. 

By backing down over this oil drill Vietnam has demonstrated its lack of a credible naval deterrent. 

Not even the visit of one of the mightiest warships on earth, the USS Carl Vinson, to Da Nang days before the scheduled start of Repsol’s oil drilling was sufficient to give Vietnam the confidence to ignore Chinese threats.
Another option is diplomacy. 

In the days after the Repsol decision, the Chinese Foreign Minister Wang Yi visited Hanoi. 

Talks were friendly but there was a sharp disconnect in the official statements. 

The Chinese talked of ‘exploring feasible ways for joint development’ whereas the Vietnamese suggested that ‘the issues must be tackled in respect of … the United Nations Convention on the Law of the Sea’.
Diplomacy with third countries is tricky for Vietnam given its long-standing aversion to alliances and the Communist Party’s distrust of the United States. 

Vietnam’s current leadership team under General-Secretary Nguyen Phu Trong are ‘system-loyalists’ determined to maintain Communist Party leadership. 

They see their Chinese counterparts as more reliable than the democracy-loving Americans. 

The hardliners are currently engaged in a severe crackdown on political dissidents, reasoning that Washington is unlikely to sanction them given the current geopolitical climate. 

For the same reasons, Beijing can be reasonably sure that Hanoi is not about to jump into the US camp simply because of the loss of oil revenue from the South China Sea.
Hanoi’s options are very limited. 

It, along with all the other Southeast Asian claimant states in the South China Sea, is still refusing to concede on the main Chinese demand for ‘joint development’. 

It continues to court international support and to engage China in discussions. 

But it does not seem to have a strategy to develop the resources that international law says rightfully belong to it. 

And the economic costs of this predicament are rising.

Chinese Aggressions

U.S. air force trains in vicinity of South China Sea
By Tim Kelly, Ben Blanchard

TOKYO/BEIJING -- U.S. Air Force B-52 bombers have carried out training in the vicinity of the South China Sea and the southern Japanese island of Okinawa, the Air Force said on Friday, in what a Chinese newspaper linked to China’s drills near Taiwan.
The U.S. Air Force said the B-52s took off from Andersen Air Force Base on the U.S. Pacific island of Guam and “transited to the vicinity of the South China Sea” on Tuesday.
“The B-52Hs conducted training and then transited to the vicinity of Okinawa to conduct training with USAF F-15C Strike Eagles, before returning to Guam,” it said.
“Continuous Bomber Presence (CBP) missions are intended to maintain the readiness of U.S. forces. The U.S. Pacific Command’s CBP missions, which have been routinely employed since March 2004, are in accordance with international law.”
An Air Force spokeswoman said: “This was a routine mission”.
The exercise was reported in Taiwanese media this week, which speculated it could have been a warning from the United States to China following China’s stepped-up military presence around Taiwan, the self-ruled island Beijing claims as its own.
Chinese Defence Ministry spokesman Wu Qian was asked about the U.S. bombers at a news briefing on Thursday but would only say Chinese armed forces had the situation under control and would defend the country’s sovereignty, as always.
On Friday, the ministry referred Reuters to Wu’s previous statement, without elaborating.
China has been issuing increasingly strident warnings to Taiwan to toe the line and has been flying military aircraft around the island in what China calls “encirclement patrols”.
Beijing fears Taiwan President Tsai Ing-wen, from the pro-independence Democratic Progressive Party, wants to push for the island’s formal independence. 

Tsai says she wants to maintain the status quo and peace with China.
The widely read Chinese state-run tabloid the Global Times said in an editorial on Friday if the U.S. bombers were meant to send a message to Beijing about Taiwan it would not work.
“The U.S. cannot prevent the mainland exerting military pressure on Taiwan,” it said.
“Mainland military aircraft will fly closer and closer to Taiwan and in the end fly above the island,” the paper said.
“If the Taiwan authorities openly promote the ‘Taiwan independence’ policy and cut off all official contacts with the mainland, the mainland will deem Taiwan a hostile regime and has endless means to deal with it.”
Taiwan and the South China Sea are two major faultlines between Washington and Beijing.
China has been angered by U.S. “freedom of navigation” patrols in the disputed South China Sea, where China has reclaimed land for military bases, and by U.S. support for democratic Taiwan.
As part of China’s military modernization, its new aircraft carrier could soon begin sea trials, according to images on Chinese news portals this week of the vessel leaving its dock in the northern city of Dalian.
On Friday, the government warned shipping to keep away from an area off Dalian for a week, for what it called military activities, but gave no further explanation.

Chinese Peril

Interview: ‘Australia is a Very Valuable Prize For The CCP’
By Kurban Niyaz

Author Clive Hamilton in an undated photo.

Australian author and professor of public ethics Clive Hamilton’s new book, Silent Invasion: China’s Influence in Australia, was initially turned down by three publishers citing fears of reprisals from Beijing. 

Finally published in February 2018, Silent Invasion investigates the ruling Chinese Communist Party’s (CCP) influence and interference operations in Australia, the structure of the party’s overseas influence network, and the techniques it uses. 

In the book, Hamilton asserts that Australia’s elites, and parts of the country’s large Chinese-Australian diaspora, have been mobilized by Beijing to gain access to politicians, limit academic freedom, intimidate critics, gather information for Chinese intelligence agencies, and organize protests against Australian government policy. 

He recently spoke with RFA’s Uyghur Service about what he believes are China’s sharp power goals in Australia.

RFA: Why did you choose the word “invasion” for your title?
Clive Hamilton: I'm really talking about an invasion of the influence of the CCP into Australia and throughout Australia's political and social institutions. 

And it's a silent invasion because it has been done secretly, covertly, underneath the radar. 

And that's why it's so insidious ... the influence of the Chinese Communist Party has been secretive and subtle.

RFA: China’s emergence as a new economic power comes amid the expansion of its influence as a “sharp power.” How does sharp power help China to silence overseas dissidents and criticism of the CCP?
Clive Hamilton: Beijing's objective is to ... pacify criticism of Beijing's actions and Beijing's policies. 

If it succeeds in doing that through this campaign of influence in Australia, it will essentially make Australia not so much a client state, but a country which is unwilling to resist whatever Beijing does—for example, in the South China Sea—and essentially succumbs to Beijing's demands. 

And we've already seen some of that happening in the business community and in the political arena. 

Beijing already exerts a great deal of influence in our major political parties, especially the Labor Party. 

So that is what I was drawing attention to in the book.
I think for many years the first objective of the Chinese Communist Party in Australia was to silence dissenting and critical voices in the Chinese-Australian community and from groups like those calling for Tibetan and Uyghur autonomy, and of course Falun Gong, and they have been extremely successful over the last 15 or 20 years in silencing those groups and marginalizing them from the mainstream of political discussion in Australia. 

But then I realized that was only part of the story or the first phase, that the CCP ... wanted to not only silence those critical voices—whether it be Uyghurs or Tibetans or pro-democracy activists in Australia—it wanted to build on that, especially making use of the Chinese-Australian community to build its political influence in the mainstream of Australian society, and that is why it targeted the main political parties and intellectuals and the media in Australia and has made some considerable inroads. 

Although in recent months, many people in Australia are starting to wake up to what is happening and there are significant moves to push back against Beijing's intrusions into this country.

RFA: In 2009, a documentary telling the life story of Uyghur exile leader Rebiya Kadeer was screened at the Melbourne Film Festival, despite strong objections from the Chinese government. People are worried about these kinds of objections leading to self-censorship in Australia. How do you link this kind of behavior with the ongoing Chinese “invasion” of Australia?
Clive Hamilton: I think sometimes successful attempts by the Chinese government to restrict what Australians see at the movies, or read in books or newspapers is outrageous. 

It fundamentally goes against the democratic principles which Australia is built on. 

And it distresses me enormously that sometimes Beijing succeeds in its attempts in Australia and it distresses me even more when governments in Australia go along with that. 

I think that there is a growing awareness among the population in Australia that this is really intolerable. 

And I think that it will become increasingly difficult for governments to turn a blind eye to Beijing's attempts to influence what we in Australia see at the movies or read in newspapers or in books.

RFA: Some scholars argue that you mischaracterize a culture clash as an “invasion” in Australia. How do you respond to this assertion?
Clive Hamilton: My book has been welcomed very strongly and enthusiastically by many Chinese-Australians in this country, because they ... are the biggest victims of Beijing's influence and intrusion in this country. 

So I think that any Chinese scholars who say that Beijing's influence is really a spread of Chinese culture, that's something we can welcome ... 

But not if it's Chinese Communist Party culture and not if it's the political power of the Communist Party that's being veiled behind so-called "Chinese culture" as a way of manipulating this country and the way that Beijing tries to manipulate other countries. 

Many China scholars in Australia have come out and endorsed, in an open letter, exactly the kinds of claims that I am making in my book.

RFA: What might be China’s final goal or motivation in Australia?
Clive Hamilton: I think the Communist Party and especially now under Xi Jinping sees China as a hegemonic power that wants to dominate Asia and that includes Australia. 

Australia is a very valuable prize for the CCP because we are an advanced Western nation allied to the United States at the end of the Southeast Asian region. 

So if Beijing can control Australia, they've won an enormous strategic advantage against the United States. 

That's why they've put so much effort into trying to influence Australia.

RFA: China’s government is increasing its investments in Australia. What role do you see trade and the economy playing in an expansion of China’s “invasion” of the country?
Clive Hamilton: The Chinese Communist Party is a master at using economic blackmail to gain political and security goals in other countries. 

And, of course, we've seen that kind of blackmail exerted particularly strongly on South Korea and Taiwan and Japan. 

In Australia, it's been the threat of it, rather than actual attempts at blackmail, so far, but Australian politicians and businesspeople are very, very afraid of what Beijing might do if we take any measure that displeases it. 

Because people know that Beijing is capable of causing a great deal of economic pain to other countries when they are acting ways it doesn't like, Australian decision-makers are very wary and constrain their own actions in ways that satisfy Beijing because they see what Beijing might do. 

It's a very effective way of exerting influence.

The Coming Clash Between China And India

By Panos Mourdoukoutas

China wants to expand its influence in South Asia -- in all of it, the land, the sea, and the air. 

That’s why Beijing is spending billions of dollars to build long-stretch highways like CPEC and taking over Sri Lanka’s and Pakistan’s ports.
The trouble is that Beijing’s plan has misjudged India—A miscalculation that could revive old animosities, create new ones, and lead to a clash between the two Asian powers.
That’s something foreign investors should watch closely, as a clash between India and China would have devastating effects on the economic integration of South Asia and the performance of the financial markets of the region.
Officially, China and India are moving closer to addressing old and new issues that divide them, with high profile meetings like the one at the end of this week, when Prime Minister Narendra Modi will meet with Chinese dictator Xi Jinping.
The two leaders are expected to bridge the “gap of trust” between the two countries, as some media sources in both countries interpret the high-level summit. 

But unofficially, India and China are moving further apart, due to Beijing’s miscalculation of India’s capability to spoil its plans.
“Beijing’s miscalculations regarding India have created conflict with a regional power that has the capability and desire to disrupt China’s outward push,” explains Raffaello Pantucci in “China’s South Asian Miscalculation,” published recently in CURRENT HISTORY (April 24, 2018). 

It is a calculation that could cause serious complications for China’s broader South Asian vision, and ultimately provoke a clash between the two Asian giants.”
What makes this confrontation more likely is the rise of hawkish voices in both countries, especially In India where there’s a growing sense that China is trying to encircle and strangle it.
“The story is one of growing confrontation, as hawkish national security establishments on both sides increasingly outflank economic pragmatists who want to take advantage of the potential benefits of a more cooperative relationship between the two Asian giants,” adds Pantucci.
Then there’s a shift in fortunes of the economies of the two countries. 

India’s economy is gaining momentum, as China’s economy loses steam.
That could certainly provide India the resources to push back against China with its own checkbook (ie, South Asia diplomacy), further intensifying the antagonism between the two countries.
The Indian economy is expected to grow at an annual rate of 7.4% in 2018 and 7.8% in 2019, according to a recently released IMF Economic Outlook. 

India’s projected 2018-19 growth rates are well above China’s 6.6% and 6.4% over the same period. And things could get even worse for Chinese economic growth over the long-term, due to the continued rise of the country’s nonfinancial debt.
A strong Indian economy will further help India strengthen its naval capabilities and up its participation in joint naval exercises with America, Japan and Australia in the South China Sea and the Indian Ocean, irking China.

China is waging psychological warfare against Australia

Australia is subjected to Communist party campaign to undermine democracy
By Ben Doherty

Australian academic Clive Hamilton has accused the Chinese Communist party of undertaking a campaign of subversion, cyber intrusions, and harassment on the high seas. 

The Australian academic Clive Hamilton has told a US congressional committee China is waging a “campaign of psychological warfare” against Australia, as America’s most significant ally in the region, undermining democracy and cowing free speech.
Hamilton, vice-chancellor’s chair in public ethics at Charles Sturt University, is the author of Silent Invasion: China’s Influence in Australia, a book which was dumped by Allen & Unwin last year over fears of legal action by Beijing, before being published by Hardie Grant.
Hamilton appeared before the Congressional-Executive Commission on China, chaired by US senator for Florida Marco Rubio overnight Australia time, in Washington DC.
He said Australia was currently being subjected to a Chinese Communist party-sponsored campaign of “subversion, cyber intrusions, and harassment on the high seas”.

Chinese government exerts influence across Australian society, MPs told
“Beijing knows that it cannot bully the United States – in the current environment the consequences would be unpredictable and probably counterproductive – so it is instead pressuring its allies,” Hamilton said.
“Last week the PLA Navy challenged three Australian warships sailing through the South China Sea, simply for being there. It has scaled up its threats of economic harm unless Australia changes its ‘anti-China’ path. This psychological warfare is only stage one, with real punishment to follow if needed.”
Hamilton told the committee that, since the publication of his book in February, he has had to go to “extensive measures” to secure his personal safety: suspected Chinese operatives, carrying a suspected “sniffer” phone to intercept communications, have been caught loitering outside and trying to get into his office; Chinese students have been confronted going through his unmarked pigeon hole; and his computers have been infected with malware. 

Now, when he speaks at public event Hamilton is provided security guards.
Author and academic Clive Hamilton.

Silent Invasion was about to be sent for typesetting by Allen & Unwin when it withdrew from publication in November last year citing “potential threats to the book and the company from possible action by Beijing”. 

In the wake of its dumping, other major publishers steered clear.
“Allen & Unwin’s decision to drop Silent Invasion citing fear of reprisals from Beijing was a spectacular vindication of the argument of the book,” Hamilton said. 

“No actual threats were made to the publisher, which in a way is more disturbing. The shadow cast by Beijing over Australia is now dark enough to frighten a respected publisher out of published a book critical of the Chinese Communist party.”
Hamilton said the withdrawal of the book had had a chilling effect on free discussion of China and its geopolitical influence, and that he had been told by China scholars they censored themselves in order not to jeopardise their visas to China for research, and so protect their careers.
Upon publication, China’s ministry of foreign affairs condemned the book as “slander” and “good for nothing”. 

The Chinese embassy in Canberra called the book “disinformation and racist bigotry” carrying a “malicious anti-China mentality”.
The book also divided China scholars. 

An open letter signed by more than 50 academics said there was no evidence China was seeking to export its style of government.

A counter-letter, signed by more than 40 academics, argued that: “Some of the CCP’s activities constitute unacceptable interference in Australian society and politics”.
“We strongly believe that an open debate on the activities of the Chinese Communist party in this country is essential to intellectual freedom, democratic rights and national security.”
After Allen & Unwin pulled out, Hamilton’s cause won wide support in the media and in public debate. 

Several parliamentarians suggested publishing the book in Hansard, as a demonstration of Australia’s commitment to free speech, while offering Hamilton the protection of parliamentary privilege.
But Hamilton said in the furore over his stalled work, Australia’s universities were silent, which he claims was as a result of concern that a show of support could jeopardise their lucrative flow of Chinese students.

“It is no exaggeration to say that Australian universities now tiptoe over eggshells to avoid any action that may offend party bosses in China,” he told the committee.
“Australian universities are now so closely tied into monetary flows and links with China that they have forgotten the founding principles of the western university.”
After Allen & Unwin pulled out, two independent publishers expressed an interest in picking up the book, before also pulling out. 

One of those was Melbourne University Press, whose board overruled the chief executive on publishing the book.
“Sources close to MUP have told me that a factor in the board’s decision was the anxiety of senior university executives about the potential impact of publication on the university’s lucrative revenue flows from Chinese students.”
Hamilton commended the “courage and commitment to free speech of Sandy Grant, the principal of Hardie Grant” for taking the book on.
In 1986, Grant was a publisher at Heinemann, which defied the UK government in publishing Peter Wright’s expose of MI5 and MI6, Spycatcher. 

In a high-profile court case over the book’s publication in Australia, Wright was represented by Malcolm Turnbull, now Australian prime minister.
Had Silent Invasion never been published, Hamilton said, it would have represented a comprehensive victory for the CCP.
Hamilton told the committee many people in Australia were concerned about China’s growing – and undisclosed – influence in the country.
“Many Australians have had an intimation that something is wrong … the scale and nature of the threat is one lay people need to understand.”
The Congressional-Executive Commission on China is an independent agency of the US government, established by Congress in 2000 to monitor human rights and rule of law developments in China.

Rogue Company

Huawei Is Under U.S. Criminal Investigation For Illegal Iran Sales: Here's What's Next

By Jean Baptiste Su

Nearly all of Huawei's telecommunication products (from smartphones to storage, servers, and network equipment) rely, in some shape or another, on American technologies.
On Wednesday, the Wall Street Journal reported that the Justice Department is investigating whether Huawei violated U.S. export sanctions related to Iran.
After the Trump Administration imposed a ban on the sale of American technologies to ZTE last week for similar export violations, this latest development feels like deja vu all over again and could cast a serious shadow over the business of the $92.5 billion Chinese company.
Earlier Wednesday, Bloomberg also reported that Huawei had dropped a planned dollar-denominated bond sale and delayed pricing of a European offering.
This is not the first time that Huawei comes under scrutiny from the U.S Government for export and sanctions violations.
Two years ago, the U.S. Commerce Department's Bureau of Industry and Security (BIS) issued a subpoena for information regarding Huawei's direct and indirect exports and re-exports of U.S. technology over the last 5 years to countries designated as supporters of international terrorism, or subject to U.S. trade sanctions and economic embargoes, including Cuba, Iran, North Korea, Sudan, and Syria.
Several months later, as reported by the New York Times, the Treasury Department’s Office of Foreign Assets Control (OFAC), which oversees compliance of a number of American sanctions programs, also sent a subpoena to Huawei to describe the "technology and services provided to Cuba, Iran, Sudan and Syria over the past five years. It also called for the identity of individuals who played a part in those transactions."
The Chinese company has over 180,000 employees globally.
If Huawei is found guilty of violating American export rules, the U.S. could follow the same playbook it used against ZTE: A large fine ($1.19 billion), active audits, compliance requirements and, in case of non-compliance, a multi-year ban on the purchase of American technology.
Following the U.S. technology ban on ZTE last week, China's second-largest telecommunications infrastructure supplier quickly acknowledged that its survival has become uncertain.
Similarly, since nearly all of Huawei's telecommunication products (from smartphones to storage, servers, and network equipment) rely, in some shape or another, on American technologies, a ban on such components would be fatal for the world's largest telecom equipment maker.

Rogue Company

U.S. Probing Huawei for Iran Sanctions Violations
BY KAREN FREIFELD and Eric Auchard

Beijing's eyes and ears

NEW YORK/LONDON -- U.S. prosecutors in New York have been investigating whether Chinese tech company Huawei violated U.S. sanctions in relation to Iran, according to sources familiar with the situation.
Since at least 2016, U.S. authorities have been probing Huawei's alleged shipping of U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws, two of the sources said.
News of the Justice Department probe follows a series of U.S. actions aimed at stopping or reducing access by Huawei and Chinese smartphone maker ZTE Corp to the U.S. economy amid allegations the companies could be using their technology to spy on Americans.
The Justice Department probe is being run out of the U.S. attorney's office in Brooklyn, the sources said. 

John Marzulli, a spokesman for the prosecutor's office, would neither confirm nor deny the existence of the investigation. 

The probe was first reported by the Wall Street Journal on Wednesday.
The probe of Huawei is similar to one that China's ZTE Corp says is now threatening its survival. 

The United States last week banned American firms from selling parts and software to ZTE for seven years. 

Washington accused ZTE of violating an agreement on punishing employees after the company illegally shipped U.S. goods to Iran.
ZTE, which sells smartphones in the United States, paid $890 million in fines and penalties, with an additional penalty of $300 million that could be imposed.
U.S. authorities have subpoenaed Huawei seeking information related to export and sanctions violations, two sources said. 

The New York Times last April reported the U.S. Treasury's Office of Foreign Assets Control subpoena, issued in December 2016, following a Commerce Department subpoena that summer.
Both companies also have been under scrutiny by U.S. lawmakers over cybersecurity concerns.
In February, Senator Richard Burr, the Republican chairman of the U.S. Senate Intelligence Committee, cited concerns about the spread of Chinese technologies in the United States, which he called "counterintelligence and information security risks that come prepackaged with the goods and services of certain overseas vendors."
Huawei and ZTE have denied these allegations.
Republican Senators Marco Rubio and Tom Cotton have introduced legislation that would block the U.S. government from buying or leasing telecommunications equipment from Huawei or ZTE, citing concern that the Chinese companies would use their access to spy on U.S. officials.
In 2016, the Commerce Department made documents public that showed ZTE's misconduct and also revealed how a second company, identified only as F7, had successfully evaded U.S. export controls.
In a 2016 letter to the Commerce Department, 10 U.S. lawmakers said F7 was believed to be Huawei, citing media reports.
In April 2017, lawmakers sent another letter to Commerce Secretary Wilbur Ross asking for F7 to be publicly identified and fully investigated.
The U.S. government’s investigation into sanctions violations by ZTE followed reports by Reuters https://reut.rs/2H3p0Vl in 2012 that the company had signed contracts to ship millions of dollars’ worth of hardware and software from some of the best known U.S. technology companies to Iran’s largest telecoms carrier.
Reuters also previously reported on suspicious activity related to Huawei. 

In January 2013, Reuters reported https://www.reuters.com/article/uk-huawei-skycom/exclusive-huawei-cfo-linked-to-firm-that-offered-hp-gear-to-iran-idUKBRE90U0CA20130131 that a Hong Kong-based firm that attempted to sell embargoed Hewlett-Packard computer equipment to Iran's largest mobile-phone operator has much closer ties to China's Huawei Technologies than was previously known.

China’s New Aircraft Carrier Is Already Obsolete

The carrier fleet is a frontal assault on the core of U.S. power in the Pacific, an attempt to build a force capable of ending America’s naval dominance with a fleet that could defeat it in a Midway-style battle
BY SAM ROGGEVEEN
China's sole aircraft carrier, the Liaoning, arrives in Hong Kong waters on July 7, 2017. 

China’s first home-built aircraft carrier, which was seen Monday being towed from berth, will begin sea trials imminently. 

When the new vessel enters service some time in 2019 or 2020, China will become the world’s second most powerful operator of aircraft carriers, with a grand total of two. 

It is a position from which it will never be dislodged.
Yes, France, Russia, and Brazil operate a carrier each; Italy has a couple of small carriers; and the United Kingdom is rebuilding a respectable two-ship fleet, as is India. 

Other countries, such as Japan and Australia, operate several helicopter carriers, though not fixed-wing aircraft. 

But China won’t stop at two, nor will it remain satisfied with the inferior Soviet-derived design that was seen Monday. (The first carrier of the People’s Liberation Army Navy, or PLA Navy, is a Soviet-era ship purchased half-finished from Ukraine.)
There are rumors that China’s next ship is already being built, and although it will be smaller than the U.S. Navy’s Nimitz-class and probably not nuclear-powered, in most other respects it will resemble an American supercarrier. 

The follow-on ships will be better still. 

No nation other than the United States has that kind of ambition, and it will give China unquestionably the second-most powerful navy in the world — though admittedly one still a very, very long way behind the U.S. fleet.
But there’s a mystery at the heart of China’s ambitious aircraft carrier program, because over the course of its immense naval modernization effort of the last two decades, China has put so much effort into making aircraft carriers obsolete.
China has acquired dozens of submarines, fleets of strike aircraft, and missiles that can be fired from the air, land, sea, and under the sea, all with one purpose: to make it excessively dangerous for large surface ships to operate near China’s coast. 

China has even invented an entirely new class of weapon — the anti-ship ballistic missile — that has been dubbed a “carrier killer.”


So why is China’s navy, the very institution that has made America’s carrier fleet in the Pacific so vulnerable, now investing in its own carrier fleet? 

It has surely occurred to the Chinese that the United States will respond to the PLA’s carriers just as China has done to America’s. 

In fact, it’s already happening. 

The U.S. Defense Department is now testing a stealthy long-range anti-ship missile that is almost certainly a reaction to the dramatic growth of China’s surface fleet.
So is China making a big mistake? 

Is the aircrafft carrier program a folly driven by the navy brass, with no clear strategic purpose?
We shouldn’t dismiss that possibility. 

In fact, that may be exactly how China’s carrier program started. 

In early 2015, the South China Morning Post published a series of articles revealing the extraordinary pre-history of China’s carrier program. 

In the mid-1990s, a small group of entrepreneurial PLA Navy officers enlisted the help of Hong Kong businessman Xu Zengping to purchase the hull of a half-finished Soviet-era carrier from Ukraine on the public pretense that it would be rebuilt as a floating casino. 

Incredibly, the officers told Xu that this initiative had no official backing from Beijing. 

They were making a potentially transformative arms purchase on their own initiative.
The carrier program has clearly grown since those beginnings and has much further to grow still, so it is safe to assume that the Chinese leadership has now embraced it and has a specific plan in mind for its growing fleet. 

What could that plan be?
China is a great power with a huge economy. 

In fact, a recent Australian government report estimates that by 2030, the Chinese economy will be worth $42 trillion versus $24 trillion for the United States — in other words, in less than 15 years’ time China’s economy could be almost double the size of America’s.
No country of that size would accept that it should remain strategically subordinate to another great power in its own backyard, and China certainly doesn’t. 

Beijing already wants to lead in Asia, and that means having a powerful military with the ability to project power over long distances. 

For China to become Asia’s strategic leader, it will need to push the United States out. 

So the carrier fleet is a frontal assault on the core of U.S. power in the Pacific, an attempt to build a force capable of ending America’s naval dominance with a fleet that could defeat it in a Midway-style battle.
But even for a country as big as China, building a fleet of that size and capability is a formidable and massively expensive challenge. 

At the current pace of modernization, it could take decades to build such a fleet, particularly if the United States and its allies respond by improving their own capabilities. 

And that’s not to mention the heightened risk of a catastrophic great-power war.
So here’s an alternative explanation: China’s carrier-centered navy is not designed so much to challenge U.S. maritime supremacy as to inherit it. 

China may be betting that the United States will slowly withdraw of its own accord because the cost of maintaining that leadership is rising so dramatically. 

Consider America’s defense commitment to Taiwan. 

Before China’s massive investment in anti-ship capabilities, the United States could safely sail its carrier through the Taiwan Strait, and its ability to defend Taiwan remained unquestioned. 

Now, the United States would be at serious risk of losing one or two carrier battle groups in any confrontation over Taiwan. 

The cost of defending South Korea has risen steeply, too, with North Korea close to deploying a nuclear-tipped missile that can reach cities on the continental United States, if it hasn’t already.
As the costs of U.S. military leadership in Asia rise, questions about why the United States needs to maintain that leadership become louder. 

America’s military presence in Asia made sense in the Cold War, but it is much harder to justify now.
If China inherits U.S. leadership in Asia, it won’t need a fleet as big as America’s. 

Some experts predict China will build just six carriers, quite enough to cement its leadership in a post-American Asia. 

And that’s when China’s carrier fleet will really come into its own, for although aircraft carriers are increasingly vulnerable to sophisticated anti-ship weapons, America has demonstrated that they are incredibly useful when you have command of the oceans.
That’s why China’s new fleet is such bad news for the small Southeast Asian nations in particular. 

In a post-American Asia, larger powers such as South Korea, Japan, Vietnam, and Australia have a fighting chance of resisting Chinese coercion if they invest more heavily in their own defense capacities. 

That isn’t an option for smaller powers, particularly as they enter China’s economic orbit via initiatives such as the Belt and Road.
The Chinese aircraft carrier about to put to sea is no match for the U.S. Navy, but that should bring little comfort to the United States and its Asian allies. 

Indeed, China may be betting that it will never have to confront the U.S. fleet and that it can prepare for the day the Navy sails back to home shores.

Sina Delenda Est

Short of war, China already controls the South China Sea: US admiral
ASIA TIMES

U.S. Navy Adm. Philip S. Davidson addresses U.S. Marines with the 24th Marine Expeditionary Unit and sailors with the USS Bataan during a ceremony at the 9/11 Memorial in New York City May 27, 2016. Davidson has been nominated to head U.S. Pacific Command.
If Chinese leaders thought that saying goodbye to their least favorite US military commander, current US Pacific Command chief Admiral Harry Harris, would mean a more amenable replacement is on the way, they had better guess again.
The nominee to take the spot when Harris becomes ambassador to Australia is sounding the alarm bells about China’s operations in the South China Sea, calling for the US to maintain a strong presence in the region and step up advanced weapons development.
In written testimony to the US Senate Armed Services Committee released last week, the likely pick, Admiral Philip Davidson, said that China has already taken control of the South China Sea.
“In short,” he wrote, “China is now capable of controlling the South China Sea in all scenarios short of war with the United States.”
“Once occupied, China will be able to extend its influence thousands of miles to the south and project power deep into Oceania,” Davidson said of forward operating bases that have already been completed. 

“The PLA will be able to use these bases to challenge US presence in the region, and any forces deployed to the islands would easily overwhelm the military forces of any other South China Sea-claimants.”
News Corp Australia noted the admiral’s statements on Sunday in the context of the news that Australian warships had been “challenged” in the waters. 

The meeting of the two navies was downplayed by the Australian Navy, but hyped in the media as a sign of China’s growing assertiveness. 

In response to questions for how to respond to China’s increased military presence in the region, Admiral Davidson advocated a sustained US military presence and investing in weapons technology.
“US operations in the South China Sea—to include freedom of navigation operations—must remain regular and routine. In my view, any decrease in air or maritime presence would reinvigorate PRC expansion.”
Regarding military technology, Davidson outlined a number of crucial areas in which to invest. 

“A more effective Joint Force requires sustained investment in the following critical areas: undersea warfare, critical munitions stockpiles, standoff weapons (Air-Air, Air-Surface, Surface-Surface, Anti-Ship), intermediate range cruise missiles, low cost / high capacity cruise missile defense, hypersonic weapons, air and surface lift capacity, cyber capabilities, air-air refueling capacity, and resilient communication and navigation systems.”

Taiwan to simulate repelling invasion amid China tensions
Reuters

A Taiwanese flag is seen behind standard Type II missiles on Kee Lung (DDG-1801) destroyer during a drill near Yilan naval base, Taiwan April 13, 2018. 

TAIPEI -- Taiwan will simulate repelling an invading force, emergency repairs of a major air base and using civilian-operated drones as part of military exercises starting next week, the defense ministry said on Tuesday amid growing tensions with China.
Over the past year or so, China has ramped up military drills around self-ruled and democratic Taiwan, including flying bombers and other military aircraft around the island.
China claims Taiwan as its sacred territory, and its hostility toward the island has grown since the 2016 election as president of Tsai Ing-wen from the pro-independence Democratic Progressive Party.
China has been issuing increasingly strident calls for Taiwan to toe the line, even as Tsai has pledged to maintain the status quo and keep the peace.
Taiwan’s annual Han Kuang drills, which start next week with a computer-aided command post exercise, do not make explicit mention of China, instead referring to “offensive forces invading Taiwan”.
The major part of it will be a live-fire field training exercise from June 4-8, including “enemy elimination on beaches”, the ministry said. 

“Civilian resources will also be integrated into this exercise to support military operations,” it added.
Tech companies will offer support with drones to mark targets and provide battlefield surveillance, and building companies will help with emergency runway repairs for the Ching Chuan Kang air base in central Taiwan, the ministry said.
The Air Combat Command will issue air raid alerts with an “aerial threat warning system” during the air defense drills, and the Coast Guard will also join in exercises with the navy, it added.
Taiwan is well equipped with mostly U.S.-made weaponry, but has been pushing for Washington to sell it more advanced equipment, including new fighter jets, to help it better deter its giant neighbor.
Military experts say the balance of power between Taiwan and China has now shifted decisively in China’s favor, and China could likely overwhelm the island unless U.S. forces came quickly to Taiwan’s aid.
The United States is bound by law to provide Taiwan with the means to defend itself, but it is unclear whether Washington would want to be dragged into what would likely be a hugely destructive war with China over the island.

Sina Delenda Est

HOW DOES CHINA'S NAVY COMPARE TO AMERICA'S?
BY DAVID BRENNAN 

Every year on April 23, China’s People Liberation Army (PLA) Navy Day commemorates the founding of the service in 1949. 

This year’s celebrations have special significance, as a chance to display the hardware that will define the country’s future place among the world's great powers.
China is preparing to launch its first domestically produced aircraft carrier, the steam-powered Type 001A, for sea trials. 

Naval operations are scheduled from April 20-28 in the Bohai and Yellow seas, and Chinese experts believe the Type 001A could be put to sea during that window.
China has two particularly pressing strategic concerns in East Asia: the continued independence of Taiwan, and the dispute over territorial claims in the South China Sea.
Type 001A, China's second aircraft carrier, is transferred from a dry dock into the water during a launch ceremony at Dalian shipyard in Dalian, northeast China, on April 26, 2017. The carrier could be set for its first sea trials this week.

Beijing is looking to ensure its domination of the region and therefore must have a military capable of standing up to U.S. hegemony. 

In recent weeks the country made a point of executing huge military drills to signify its determination to protect and advance its national interests.
According to the Global Times, the Chinese Ministry of Defense released footage on social media and official websites that detailed China's nuclear submarines and amphibious landing military exercises, among other achievements.
“The Chinese know from history [that] major powers must have a strong navy, and they are moving quickly in that direction,” said retired Rear Admiral Terence Edward McKnight, who commanded a multinational anti-piracy task force in the Gulf of Aden.
China now fields one of the world's largest and most technologically advanced navies. 

Its first aircraft carrier, the Liaoning, was introduced in 2012, having been purchased from Ukraine. Adding more carriers and ensuring the ability to produce them domestically are further signs of China’s ambition.
The significance of China’s carrier program is practical as well as symbolic, explained Matthew Funaiole, a fellow at the Washington, D.C.-based think tank Center for Strategic and International Studies. 

China is investing heavily in its navy, “and the Type 001A is a massive push in the right direction,” Funaiole said.
“It’s one thing to refit an old Soviet carrier, like the Chinese did with the Liaoning. It’s something else entirely to build one from the ground up, even with the help of some reverse engineering,” Funaiole continued.
This photo, taken on December 24, 2016 shows the Liaoning, China's first aircraft carrier, sailing during military drills in the Pacific.

China likely wants to field somewhere between six and 10 carriers, though not all will be top-tier vessels, Funaiole suggested. 

That would make its navy the second most powerful force in the world by some distance, and belies ambitions beyond the South China Sea and Taiwan. 

Indeed, Beijing has already established a naval base in Djibouti, Africa, and is working on a network of ports and airfields in the Indian Ocean.
“China has an interest in shoring up its perceived security closer to home,” Funaiole explained. 

“That said, it is actively looking to expand its navy for far-seas operations, and it's well on its way to seeing this goal through to fruition. It will be interesting to watch what types of missions the PLA Navy is tasked with, in the Indian Ocean in particular.”
It might be moving in the right direction, but the PLA Navy is still behind America in both technology and operational capability. 

The U.S. has a long history of carrier production and operations, and fields the most advanced launch systems, power plants and carrier-based aircraft in the world.
"With China's fast-growing overseas national interests, the [Chinese] navy's mission will be more complicated and significant. 

China now has only one overseas logistics base in Africa, but in the future, the Chinese navy will need more bases around the globe, especially in key regions, to support its overseas mission," Xu Guangyu, a retired major general of the PLA, told Global Times.
One of the main reasons for the purchase of the Liaoning was training: A carrier is nothing without its crew. 

The U.S. has a major personnel and logistical advantage, and China “will face some hurdles in getting a corps of trained pilots, operators and technicians in place,” Funaiole said.
The U.S. Navy has roughly 325,000 service members and approximately 282 deployable battle force vessels, including 11 nuclear-powered aircraft carriers. 

The U.S. Navy also has 3,700 aircraft, the second largest air fleet in the world—only the U.S. Air Force has more. 

That count does not include around 200 auxiliary and reserve ships.
The PLA Navy has around 235,000 personnel and over 700 aircraft. 

Though it has over 700 vessels in total, the number is bloated by a large number of patrol and support ships as well as outdated boats. 

Only approximately 220 are combat ships. 

Beijing hopes to increase that number to 351 by 2020 and is fast retiring outdated vessels.
China's Peoples' Liberation Army Navy sailors march during Hong Kong's Special Administrative Region Establishment Day on July 1, 2015.
Though the U.S. has the more powerful navy, the gap between the U.S. and China “is getting smaller and smaller each day,” McKnight said. 

American naval leaders are well aware of this and have set an expansion target of 355 combat ships by the end of the 2050s. 

But according to McKnight, America simply “can’t build ships fast enough right now to keep up with the Chinese.”
Projecting force is more difficult than fighting close to home. 

The Chinese “know they would never win fighting us off the coast of California… but in the South China Sea we will have a major problem fighting the number of Chinese forces,” McKnight explained.
It may already be too late to challenge China in its home waters. 

For all its protests, the U.S. has been unable to stop or slow the construction of artificial islands in the sea, which have effectively fortified China’s disputed claims. 

“As our young service members fought hard and died in the Middle East the last decade, China has taken control of the South China Sea without losing one sailor,” McKnight said.
Chinese dredging vessels purportedly in the waters around Mischief Reef in the disputed Spratly Islands in the South China Sea, on May 21, 2015.
Admiral Phil Davidson, a nominee to lead U.S. Pacific Command and current head of the Navy’s Fleet Forces Command on the East Coast, told the Senate Armed Services Committee this week that China “is no longer a rising power but an arrived great power and peer competitor.”
The U.S. is moving to meet the Chinese challenge in Asia-Pacific. 

Warships and planes have been conducting freedom of navigation operations near China’s artificial island bases; carriers have been deployed to ports in the region; and new weapons have been made available to Pacific ships. 

America won’t cede influence in East Asia easily.
“They don’t want a war with us, but they want to show us they can control their own backyard—the South China Sea—and be recognized as a true maritime power,” McKnight said. 

“You need a powerful navy to command the seas.”

The Chinese Car Invasion Is Coming

China's rising automakers want to sell the future of driving all over the world.
Bloomberg News

On a bright spring day in Amsterdam, car buffs stepped inside a blacked-out warehouse to nibble on lamb skewers and sip rhubarb cocktails courtesy of Lynk & Co., which was showing off its new hybrid SUV.
What seemed like just another launch of a new vehicle was actually something more: the coming-out party for China’s globally ambitious auto industry. 

For the first time, a Chinese-branded car will be made in Western Europe for sale there, with the ultimate goal of landing in U.S. showrooms.
That’s the master plan of billionaire Li Shufu, who has catapulted from founding Geely Group as a refrigerator maker in the 1980s to owning Volvo Cars, British sports carmaker Lotus, London Black Cabs and the largest stake in Daimler AG—the inventor of the automobile. 

Li is spearheading China’s aspirations to wedge itself among the big three of the global car industry—the U.S., Germany and Japan—so they become the Big Four.
“I want the whole world to hear the cacophony generated by Geely and other made-in-China cars,” Li told Bloomberg News. 

“Geely’s dream is to become a globalized company. To do that, we must get out of the country.”

Inside a London EV Co. plant in Coventry, U.K. The company, owned by China’s Geely Group, makes electric black cabs used in London.

He’s not alone: At least four Chinese carmakers and three Chinese-owned startups—SF Motors Inc., NIO and Byton—plan to sell cars in the U.S. starting next year. 

At the same time, Warren Buffett-backed BYD Co. is building electric buses in California; Baidu Inc.is partnering with Microsoft Corp., TomTom NV and Nvidia Corp. on a self-driving platform; and Beijing-based TuSimple Inc. is testing autonomous-driving big rigs in Arizona.
The industry is set for more upheaval as China unravels a two-decade policy that capped foreign ownership of carmaking ventures at 50 percent. 

The change may energize companies such as Volkswagen AG and Ford Motor Co. to seek a bigger piece of the world’s largest car market and allow Tesla Inc. to set up a fully owned unit. 

Carmakers may get better visibility of their futures, and those Chinese companies that fear losing sales at home may sense a greater impetus to go abroad.
“They are in a better position now than they ever have been,” Anna-Marie Baisden, head of autos research in London with BMI Research, said of Chinese carmakers. 

“They’ve had so much time working with international manufacturers and have become a lot more mature.”
We’ve seen this movie before from China—in the smartphone industry. 

The nation used the shift in technology from basic flip phones to hand-sized computers to dominate the manufacturing industry, trouncing then-dominant makers from Finland, Sweden, the U.S., Japan and Germany.
Last year, three of the top five smartphone handset makers in the world were Chinese, according to Gartner Inc.
Yet the sequel may take longer to become a hit, given the brand loyalty that has existed since Henry Ford debuted the Model T in 1908. 

How will Chinese automakers convince Midwesterners to give up their Ford F-150 pickups or Tokyo residents to switch from their Toyotas?
“Chinese carmakers intend to come over, but what need will they fill?” said Doug Betts, senior vice president of global automotive practice at J.D. Power. 

“What is the reason to buy their cars?”
Chinese cars probably would compete more directly with Japanese and Korean models, said Bob Lutz, the retired vice chairman of GM. 

American consumers mostly cross-shop Asian brands.

Geely Chairman Li Shufu plans to launch a global automaker from China. “To do that,” he says, “we must get out of the country.”

“If they start coming in, they won’t be any more competent than Korean and Japanese cars,” Lutz said. 

“They would probably take share from other Asian brands because the vehicles will be more Asian in character. They’re not going to get much market share.”
And then there’s President Donald Trump. 

Trade tensions between the U.S. and China are simmering as both nations move to slap tariffs on each other’s products. 

This month, China said it would levy an additional 25 percent levy on about $50 billion of U.S. imports, including automobiles and aircraft. 

The move matched the scale of proposed U.S. tariffs, with Trump threatening an escalation.
That’s not to say the road is impassable. 

A few decades ago, South Korea’s Hyundai Motor Group was knocked for fragile engines and rust-sensitive body panels. 

Now it’s one of the five biggest manufacturers in the world, selling about 1.25 million cars in the U.S. last year, according to Bloomberg Intelligence. 

The group also has factories in Alabama and Georgia.
“Competitors emerging from China must be taken seriously,” said Matthias Mueller, former chief executive officer of Volkswagen, Europe’s biggest carmaker. 

“I visited China for the first time in 1989, and the development that has happened there since then is just impressive.”
The creeping global influence of China’s industry isn’t limited to getting their wheels on U.S. and European roads.
Equally important, the Chinese are getting under the hoods of foreign brands by buying up parts suppliers, making batteries for the world’s EV fleet and corralling supplies of the metals that give those batteries life.
Automakers such as Geely, Chery Automobile Co. and BYD started talking a decade ago about cracking the U.S. auto market with an array of low-cost passenger vehicles. 

Those efforts stalled, so the industry built a global presence through acquisitions.
Chinese companies have announced at least $31 billion in overseas deals during the past five years, buying stakes in carmakers and parts producers, according to data compiled by Bloomberg.

The most prolific buyer is Li, who spent almost $13 billion on stakes in Daimler and truckmaker Volvo. 

Tencent Holdings Ltd., Asia’s biggest internet company, paid about $1.8 billion for 5 percent of Tesla.
As software and electronics become just as critical to a car as the engine, China is ensuring it doesn’t lag behind in that market, either. 

Baidu, owner of the nation’s biggest search engine, announced a $1.5 billion Apollo Fund to invest in 100 autonomous-driving projects during the next three years.
“We have secured a chance to compete in the U.S. market of self-driving cars through those partnerships,” Li Zhengyu, a vice president overseeing Baidu’s intelligent-driving unit, told Bloomberg News. 

“Everyone has a good chance to win if it has good development plans.”
“I want the whole world to hear the cacophony generated by... made-in-China cars”
Baidu and Tencent are among the Chinese corporations racing Alphabet Inc.’s Waymo, Uber Technologies Inc. and the major automakers to develop autonomous driving, with an aim for mass adoption by 2021.
The government’s aspiration to deploy 30 million autonomous vehicles within a decade is seeding a fledgling chip industry, with startups like Horizon Robotics Inc. emerging to build the brains behind those wheels.
Then there’s Contemporary Amperex Technology Ltd., the maker of electric-vehicle batteries that’s planning a $1.3 billion factory with enough capacity to surpass the output of Tesla and dwarf the suppliers for GM, Nissan and Audi.
The Ningde-based company plans to raise 13.1 billion yuan as soon as this year by selling a 10 percent stake, at a valuation of about $20 billion. 

The bulk of the new funds would pay for a manufacturing plant that would make CATL the world’s biggest maker of Lithium-ion batteries.
CATL already supplies Volkswagen and owns 22 percent of Finland’s Valmet Automotive Oy, a contract manufacturer for Daimler’s Mercedes-Benz.
To juice those batteries, Chinese companies are leading the way in securing necessary raw materials like cobalt and lithium. 

Chinese companies make about 60 percent of the world’s refined cobalt, according to trading firm Darton Commodities Ltd.
China Molybdenum Co. is the world’s second-biggest cobalt miner after Glencore Plc.

The company, with a market value of more than $24 billion, became a major force in battery metal in 2016 after buying control of the cobalt-rich Tenke Fungurume mine in the Democratic Republic of Congo.

Glencore said in March it agreed to sell about a third of its output during the next three years to GEM Co., a Chinese supplier of battery chemicals.
“China has made no secret of its ambition to have a really big and powerful auto industry,” said Michael Dunne, president of consulting firm Dunne Automotive Ltd. in Hong Kong. 

“China does intend to lead and dominate the electric-vehicle industry.”
The Chinese government sees EVs as its best chance to seize global leadership in an emerging powertrain technology. 

Cleaning the notoriously smoggy air and reducing a dependency on foreign petroleum are bonuses.
China, already the world’s biggest vehicle market, overtook the U.S. as No. 1 for EVs in 2015. 

This week’s Beijing auto show will feature 174 EV models, with 124 of them developed domestically.
Xi Jinping showed his determination to rewrite the rules of the automotive industry during a 2014 trip to Shanghai. 

“Developing new-energy vehicles is the only way for China to move from a big automobile country to a powerful automobile hub,” he said when visiting SAIC Motor Corp., a Shanghai government-owned company that partners with GM and Volkswagen in China.
That set off a chain reaction. 

SAIC, the country’s largest automaker by unit sales, invested more than 20 billion yuan in new-energy vehicles, or NEVs, which include electric cars, plug-in hybrids and fuel-cell vehicles.
Western companies dominated for almost a century because they refined the internal-combustion engine. 

The electric motor threatens to erase that disadvantage, said Hu Xingdou, an economics professor at the Beijing Institute of Technology.
“NEVs can help China to become a global leader in the auto industry,” Hu said. 

“China and the rest of the world can now start from the same starting line.”

At the Amsterdam launch event for the Lynk 02, which will become the first Chinese-branded car to be made in Western Europe for sale there.

First in the blocks is Li, a 54-year-old former photographer who started his career with 2,000 yuan from his father and now has a net worth estimated at about $12 billion, according to the Bloomberg Billionaires Index.
Though Chinese-branded passenger cars are sold throughout Southeast Asia and Africa, none have made it to the U.S. or Europe. 

Li first promised at the 2006 Detroit auto show that he would crack the U.S. market within two years with Geely’s Free Cruiser compact.
That didn’t happen, so he came up with what he considers a better method: make Lynk’s new SUV—called the 02—in Belgium. 

The car will be available from the first half of 2020 in Europe, and then Li plans to hopscotch across the ocean.
“This is the next step,” said Mike Jackson, chief executive officer of AutoNation Inc., the largest U.S. auto-dealer group. 

“And it’s a doable step.”