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Project Dory Monitoring 21 August 2017
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China propping up North Korea with continuous supply of oil
Aug 21, 2017 | The New Daily
By Matthew Carney
China claims it is doing all it can to reign in its neighbour and traditional ally North Korea. -
Solar Panel Sales To North Koreans Soar In The Border City Of Dandong
Aug 20, 2017 | AFP (In Shanghaiist)
By Joanna Chiu
Traders from North Korea visit Yuan Huan's shop in the Chinese border city of Dandong several times a month to place orders, bringing their own translators and wads of cash. -
Tianjin Cruise Port eyes PH as cruise ship destination
Aug 19, 2017 | The Manila Times
More Chinese tourists aboard cruise ships from Tianjin International Cruise Home Port will see for themselves the beautiful islands of the Philippines in the coming years. -
Bannon’s departure has huge implications for the U.S.-China relationship
Aug 18, 2017 | The Washington Post
By Josh Rogin
The sudden departure of White House chief strategist Stephen K. Bannon could disarm his drive to drastically alter U.S. strategy on China. That effort was central to Bannon’s plan to transform U.S. foreign and economic policy. Now it is in limbo. -
Talk of ‘Preventive War’ Rises in White House Over North Korea
Aug 20, 2017 | The New York Times
By David E. Sanger
Not since 2002, as the United States built a case for war in Iraq, has there been so much debate inside the White House about the merits — and the enormous risks — of pre-emptive military action against an adversary nation. -
China has most to lose in US trade showdown, says report
Aug 20, 2017 | Financial Times
By Tom Mitchell
The immediate impact of any trade war between the US and China would be worse for Beijing, according to a new analysis of multinational companies’ exposure to the Chinese market. -
USS John S. McCain Collides with Merchant Ship
Aug 20, 2017 | Maritime Executive
The guided-missile destroyer USS John S. McCain (DDG 56) was involved in a collision with the merchant vessel Alnic MC while underway east of Singapore and the Strait of Malacca on August 21. 10 sailors are missing and five have been injured. -
Filipino Judge Calls for Action in South China Sea
Aug 21, 2017 | Maritime Executive
By Noel Tarrazona
Shortly after ASEAN and China agreed to adopt the South China Sea Maritime Code of Conduct to diffuse violent confrontations, a Filipino judge has accused China of invading Philippine maritime territory.
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China propping up North Korea with continuous supply of oil
Aug 21, 2017 | The New Daily
By Matthew Carney
China claims it is doing all it can to reign in its neighbour and traditional ally North Korea.
It has backed the toughest United Nations sanctions, but on the North Korea-China border it is a different story.
China is propping up North Korea and its military with a continuous supply of oil, and using cheap North Korean workers in its factories.
China is moving to fortify its 1400-kilometre border with North Korea.
The People’s Liberation Army has set up a new border brigade and has conducted live fire drills in recent months.
China is preparing for all options in the event of conflict breaking out, and military strategists say it will most likely go inside North Korea to establish buffer zones if America attempts regime change.
Zhao Tong from the Carnegie Tsinghua Centre for Global Policy in Beijing said China would not tolerate US troops on its border and wanted to ensure it had a stake in any new order.
“If China believes [it is] very much necessary to send troops inside to best serve its interests, I don’t see why China wouldn’t do so,” he said.
From the border, North Korea does not look like it is primed for confrontation – in fact, it looks like a nation in decay.
Children dressed in tattered clothes occasionally can be spotted and decades old small military boats lie almost abandoned on its side of the Yalu River.China not prepared to go all the way on North Korea
The booming Chinese border city of Dandong is a stark contrast.
It is where most of North Korea’s trade passes though.
China supplies about 90 per cent of North Korean trade, but since the toughest UN sanctions passed two weeks ago the trucks that ferry goods across to North Korea on the Friendship Bridge have slowed to a trickle.
China has banned all coal, iron ore and seafood coming from North Korea, costing the regime more than a billion dollars a year.
The port of Dandong is at a virtual standstill and the Dandong Donggang Seafood Market – usually a hive of activity – has closed.
One of the fishmongers said: “Since the ban we don’t have any fresh fish and all businesses have closed.”
But China is not prepared to go all the way to stop North Korea’s nuclear and missile program.
China is North Korea’s sole supplier of oil and a couple of kilometres from the border sits an oil facility with six large storage tanks.
Oil is pumped across the border continuously from the centre into North Korea – they do not want the world to see it, so the site is under military protection.
But it keeps North Korea’s military going and the North Korean economy alive.
It is the best leverage China has over North Korea, but the country refuses to use it.
Dr Zhao said China would not because it feared collapse of the regime.
“What could follow is very uncertain and it will be a very risky process involving many variable factors,” he said.
“We don’t know how it would play out and impact on Chinese security, and on top of that there is a deep mistrust between Washington and Beijing so China won’t take this radical move.
“It needs assurances.”Residents say North Korea should follow China’s lead
Dandong does not look like a frontier town living under the threat of war.
Each day residents enjoy the summer sun and swim casually in the Yalu river right up to the North Korea side.
Like most others, Zhang Wenyi said he believed the chances of war were remote.
“The US and North Korea are just like friends that shout at each other but they’ll never go to war,” he said.
“We all want peace. They should just sit down and have a good talk and solve their problems.
“North Korea should be more open and not have the dictator.”
Dandong is the place where China and North Korea’s history is glorified.
China scarified more than 250,000 soldiers to safeguard the creation of North Korea in the early 1950s but most here, like teacher Cong Yang, said it was time for North Korea to change.
“I think our country is very tolerant and open — we have learned from the world,” he said.
“I think North Korea can also learn from this.”
But ties run deep and one Korean businessman based in Dandong said despite tougher sanctions the trade would continue.
The businessman, who did not want to be identified, said: “Trade by big companies has dropped but the smaller companies now have more trade. They do it in secret.”
He said Chinese businesses, with government help, brought North Koreans into China to work on farms and in textile factories.
“It’s cheaper labour and they can work 15 hours a day for half the price,” he said.
“They can work any time because they live in the factories.”
The businessman showed the ABC one textile factory in the hills behind Dandong where the 500 North Koreans who work there are not allowed to leave.
They make garments for markets in Europe and America but are lucky if they can earn $5 a day.
Kim Jong-un’s regime makes at least $500 million a year from its workers overseas, which the UN has called slave labour.Workers forced to give most of their wage to regime
The latest sanctions tried to limit this exploitation.
The businessman said the North Korean workers had to take propaganda classes and give most their wage to the regime.
“The workers have to pay 80 per cent to the North Korean government, and keep 20 per cent for themselves,” he said.
Dr Zhao said: “There is speculation that [the] North Korean government will use this revenue to fund its military programs, so that’s why many countries want it banned.”
On the border, China has spent millions of dollars on new bridges and free trade zones in the hope of a bigger and deeper partnership with North Korea.
But for now they lie dormant, a testament to the rogue regime’s increasing isolation.
http://thenewdaily.com.au/news/world/2017/08/20/china-north-korea-supply-oil/
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Solar Panel Sales To North Koreans Soar In The Border City Of Dandong
Aug 20, 2017 | AFP (In Shanghaiist)
By Joanna Chiu
DANDONG (AFP) - Traders from North Korea visit Yuan Huan's shop in the Chinese border city of Dandong several times a month to place orders, bringing their own translators and wads of cash.
Yuan, manager of Sangle Solar Power, said sales to North Koreans have soared in the past two years, one of the border businesses still thriving despite growing US pressure for China to limit commerce with the Stalinist regime.
Since North Korea mostly relies on outdated generators, blackouts are common and solar panels are prized for their role as backup power.
Berkeley-based researchers at the Nautilus Institute estimated that at the end of 2014, about two percent of North Korea's population had acquired solar panels.
And despite new United Nations sanctions further narrowing the categories of goods that can be traded with the hermit state this month, solar panels have remained off the growing blacklist.
Yuan's shop offers a window into how Chinese traders do business with North Korea, a country with few allies and whose economy relies heavily on China's patronage.
Every day, trucks filled with cargo cross the Sino-Korean Friendship Bridge that connects Dandong to the North Korean city of Sinuiju.
After receiving orders from North Korean customers, Yuan drops off packages at a riverside depot, and a Chinese logistics company takes care of transport across the waterway.
Some of her North Korean customers place orders by phone, but most prefer to make arrangements in person, she said.
"It is actually quite easy for traders to go back and forth. Some buy over 20 units at a time," Yuan told AFP.
Several North Korean solar energy research and assembly plants have begun operation in recent years, according to domestic media reports, but Chinese panels appear to remain in high demand.
Last year, China exported 466,248 solar panels across the border, according to official figures from Beijing.
Immune from sanctions?China on Tuesday started banning imports of iron, iron ore and seafood from North Korea as it implements the new UN sanctions, which could cost Pyongyang $1 billion per year and were imposed after its two intercontinental ballistic missile tests.
But in Dandong, where some 70 percent of trade between China and North Korea flows, solar panel merchants remain unfazed.
"It seems that overall, there are fewer North Korean traders coming over recently, but we're not affected by what's happening politically," said Shi Zhiyong, manager of the Huang Ming Solar Power shop.
"In 2009, I started seeing more North Korean traders coming to the store and their numbers have only gone up since," Shi told AFP.
Both Yuan and Shi said their best-selling items are rooftop units that provide hot water supply. These cost between 2,700 and 14,000 yuan ($400 and $2,060).
The purchases by households, offices and factories show that many urban residents have adequate disposable income, Johns Hopkins University researcher Curtis Melvin told AFP.
"Aside from a few high-profile cases, such as the increase in fuel prices in North Korea or temporary suspension of coal exports to China, we haven't seen much evidence that (previous) sanctions have had a tremendously negative effect on North Korea's economy," Melvin added.
Dried antsSino-US relations have soured as President Donald Trump has pressed Beijing to step up pressure on North Korea, complaining about their continuing trade.
In the first half, trade between China and North Korea increased 10.5 percent to $2.5 billion, compared to the same period last year.
The Chinese government has defended its trade with North Korea, noting that the UN sanctions do not apply to all commerce -- though AFP journalists recently visited Dandong shops that sold jewellery made with banned North Korean gold.
An array of goods flow both ways.
Shops along Dandong's waterfront offer North Korean ginseng, dried mushrooms and even dried ants, which are meant to be good for joint pain, according to traditional Chinese medicine.
Marc Lanteigne, senior lecturer at Massey University Center for Defence and Security Studies, said China has frequently "drawn connections between peace-building and combating poverty, and stressed that complete economic isolation of North Korea is both counter-productive and dangerous."
http://shanghaiist.com/2017/08/20/solar-panels-dandong-north-korea.php
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Tianjin Cruise Port eyes PH as cruise ship destination
Aug 19, 2017 | The Manila Times
TIANJIN CITY: More Chinese tourists aboard cruise ships from Tianjin International Cruise Home Port will see for themselves the beautiful islands of the Philippines in the coming years.
According to Tianjin Cruise Port General Manager Zhang Zhendong, the Philippines is one of the target destinations being considered under future expansion plans and programs of the largest cruise port in northern China.
”We are considering to have more cruises in countries like Japan, Korea as well as in the Philippines and other Southeast Asian countries,” Zhang told the Chinese and Asian journalists during their recent visit in Tianjin City.
The proposal is expected to boost the Philippines’ bid to increase the Chinese tourist arrivals to one million under the improving China-Philippines relations this year.
Zhang said cruise industry has been increasing “very fast” in China, the world’s top outbound tourism market based on 110 million Chinese tourists who traveled to over 130 destinations in 2016.
“We want to improve the whole industry. We need to make more cruise lines first,” Zhang said.
He said the port also plans to improve the facilities “because as you can see the waiting area is a little bit crowded.”
“We want also to put up duty-free shops, restaurants, children’s playground and comfortable waiting areas,” he added.
Tianjin International Cruise Home Port began operations in June 2010 and has boosted the incremental development of cruise tourism in northern China.
Zhang said Tianjin Cruise Port, one of 11 cruise ports in China, is expecting the number of passengers to increase to 10 million by 2020.
“We are also considering to increase the duration of voyage from present 10 days to at least 46 days to make it global,” Zhang said.
In 2016, the number of cruise ships that used Tianjin home port has increased significantly to 142 from only 96 in 2015 and predicted to balloon at 243 this year.
“When we started operation in 2010, we have only 25 cruise ships with 70,000 passengers but it increased to 142 with 710,000 passengers last year,” Zhang said.
Among the renowned cruise players using Tianjin port are Royal Caribbean International, Costa Cruise Lines, Princess Cruises and MSC or Mediterranean Shipping Company.
At present, three big cruise ships can dock simultaneously at the Tianjin Cruise Port but the number will increase to six once construction of the 62,000 square-meter facility is completed.
Zhang said Tianjin Cruise Port will make a big impact in deepening the tourism industry under the Belt and Road Initiative proposed by Chinese President Xi Jinping in 2013 to deepen areas of cooperation in trade, culture, tourism and people-to-people exchanges in Asia, Europe and Africa.
The cruise ship port is located at the south of Dongjiang Port Area which is divided into dock operation, logistics processing and port integrated service zones.
The Port Area has also a man-made beach and Tianjin cargo port that is the largest port in northern China and the main maritime gateway to Beijing.
Dongjiang Port Area is part of the 119.9-square kilometer China (Tianjin) Pilot Free Trade Zone that was officially established in 2015 to serve as a high-level open platform for the coordinated development of the Beijing-Tianjin-Hebei region.
http://www.manilatimes.net/tianjin-cruise-port-eyes-ph-cruise-ship-destination/345376/
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Bannon’s departure has huge implications for the U.S.-China relationship
Aug 18, 2017 | The Washington Post
By Josh Rogin
The sudden departure of White House chief strategist Stephen K. Bannon could disarm his drive to drastically alter U.S. strategy on China. That effort was central to Bannon’s plan to transform U.S. foreign and economic policy. Now it is in limbo.
Since President Trump’s transition, Bannon had been pushing for a new grand strategy that would consolidate U.S. government efforts on China, confront China economically in multiple ways and revitalize the U.S. pivot to Asia that was initiated but left incomplete during the Obama administration. Bannon was assembling a coalition of like-minded China hands both inside and outside government to help.
Now, those who opposed Bannon’s China efforts inside the administration are positioned to reassert their control over the relationship and stifle many of Bannon’s key initiatives. That could be a boon for the status quo — and a relief to the Chinese government.
One of Bannon’s final acts before leaving the administration was to announce in an interview that to him, “the economic war with China is everything.” He argued the United States must marshal all elements of national power to confront China in various spheres or yield world hegemony.
“Bannon’s particular unique idea was that this is a civilizational challenge,” said Michael Pillsbury, who met with Bannon regularly on China over the past year. “His warning is, if they surpass us, they will have earned the privilege of redesigning the world order.”
As a special assistant to Chief of Naval Operations Adm. Thomas Hayward four decades ago, Bannon became enamored with the work of the Pentagon’s Office of Net Assessment, led for decades by Andrew W. Marshall. Bannon believes the United States needs a long-term strategy for maintaining advantage over China similar to what Marshall helped devise for the Soviet Union, while acknowledging that the China challenge is much harder.
Behind the scenes, Bannon had been busily operationalizing his plan to win the economic war with China. He spent 50 percent of his time on China, he liked to tell colleagues. Several of his China agenda items will continue to have advocates, including National Trade Council Director Peter Navarro and Commerce Secretary Wilbur Ross.
As Bannon has acknowledged, he was opposed by other top officials, including National Economic Director Gary Cohn and Treasury Secretary Steven Mnuchin. The Chinese government has also cultivated close tieswith Jared Kushner and Secretary of State Rex Tillerson, with the help of former secretary of state Henry Kissinger.
The Kushner-Kissinger view holds that the U.S.-China relationship is too complex and important to risk throwing into disarray. They advocate cooperation over confrontation and integration over isolation. China shares that view and wants to set forth a new model of great power relations based on mutual respect and noninterference.
In Bannon’s view, the liberal international order the United States led since World War II has ceased to work in America’s interests. The theory that bringing China into that structure would transform China has failed and now the Chinese government abuses those systems to siphon huge amounts of wealth, technology and know-how from the United States and its partners, he believes.
He also sees a new China policy as a pillar of his plan to reorient American politics around economic nationalism. He views the rebalancing of the U.S.-China economic relationship as key to returning manufacturing jobs to the United States and vice-versa.
Now that Bannon is gone, the Trump administration officials pushing for that realignment have lost their champion. “You had a guy at the chief-of-staff level leading that charge. Losing him creates a huge imbalance now,” one White House official said.
Bannon had some successes on China, but they might not endure. Earlier this month, Trump ordered a review of China’s intellectual property theft. The future of that effort is now in the hands of U.S. Trade Representative Robert E. Lighthizer.
Bannon pushed China hawks for positions throughout the federal bureaucracy but did not last long enough to oust Susan A. Thornton, the acting assistant secretary of state for Asia, as he wished.
The Trump administration has initiated some China-related trade actions, but Bannon was pushing for many more. He also wanted the U.S. government to take a much harder line on Chinese acquisition of American companies and Chinese control over sensitive resources.
Bannon believed he could fuel a growing consensus that the China problem is getting worse, that U.S. strategy on China is adrift and the current international order is failing to address that reality. That diagnosis is correct, but there’s no agreement on the cure.
If the “globalists,” as Bannon calls them, don’t address the real problems with China that Bannon identifies and offer alternative solutions, they will ensure that the eventual confrontation with China that Bannon predicts will play out on Beijing’s terms.
https://www.washingtonpost.com/news/josh-rogin/wp/2017/08/18/bannons-departure-has-huge-implications-for-the-u-s-china-relationship/?utm_term=.d62749c06869
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Talk of ‘Preventive War’ Rises in White House Over North Korea
Aug 20, 2017 | The New York Times
By David E. Sanger
Not since 2002, as the United States built a case for war in Iraq, has there been so much debate inside the White House about the merits — and the enormous risks — of pre-emptive military action against an adversary nation.
Like its predecessors, the Trump administration is trying to pressure North Korea through sanctions to dismantle its nuclear program. But both President Trump and his national security adviser, Lt. Gen. H. R. McMaster, have talked openly about a last-resort option if diplomacy fails and the nuclear threat mounts: what General McMaster describes as “preventive war.”
Though the Pentagon has prepared options to pre-emptively strike North Korea’s nuclear and missile sites for more than a decade and the past four presidents declared that “all options are on the table,” the rote phrase barely seemed credible, given the potential for a North Korean counterstrike against Seoul, South Korea, that could result in tremendous casualties in a metropolitan area of 25 million people.
But as the Trump administration moves ahead on Monday with a new round of long-planned military exercises that involve tens of thousands of American and South Korean troops, computer simulations of escalating conflict and perhaps overflights of nuclear-capable aircraft, the White House is determined to leave the impression the military option is real.
“Are we preparing plans for a preventive war?” General McMaster asked recently in a television interview, defining the term as “a war that would prevent North Korea from threatening the United States with a nuclear weapon.”Continue reading the main storyRELATED COVERAGENorth Korea’s Missile Success Is Linked to Ukrainian Plant, Investigators SayAUG. 14, 2017NEWS ANALYSISTrump Threats Are Wild Card in Showdown With North Korea AUG. 12, 2017Intelligence Agencies Say North Korean Missile Could Reach U.S. in a YearJULY 25, 2017
He answered his own question: “The president’s been very clear about it. He said he’s not going to tolerate North Korea being able to threaten the United States.”
Much of this could be posturing, designed to convince the North’s unpredictable dictator, Kim Jong-un, and Chinese leaders who are eager to preserve the status quo, that they are dealing with a different American president who is determined to “solve” the North Korean problem, as Mr. Trump puts it, rather than hope that sanctions will eventually take their toll.
But even if Mr. Trump has no real intention of using military force, convincing adversaries and allies that he is willing to make a move that Bill Clinton, George W. Bush and Barack Obama all considered too dangerous has significant value.
Whether Mr. Trump is truly prepared or bluffing, presidential advisers, military officials and experts whom the White House has consulted leave little doubt in conversations that the Trump administration is confronting North Korea’s nuclear program with a different set of assumptions than its three immediate predecessors.
There are two notable departures from past assumptions.
General McMaster, a military historian, insists that the United States cannot count on containing or deterring North Korea the way it deterred the Soviet Union and China during the Cold War. That runs contrary to the conclusion of past senior policy makers that what worked against large nuclear powers will suffice against an economically broken nation with a modest arsenal.
And General McMaster and other administration officials have challenged the long-held view that there is no real military solution to the North Korea problem — though they are quick to acknowledge that it would be “horrible,” as Secretary of Defense Jim Mattis put it.
Already those two new assumptions have prompted a sharp reaction. President Moon Jae-in of South Korea, in an effort to calm his own public, insisted at a news conference last week that he holds a veto to any military action.
“No matter what options the United States and President Trump want to use, they have promised to have full consultation with South Korea and get our consent in advance,” he said. “The people can be assured that there will be no war.”
The North has also seized upon General McMaster’s line and declared on Sunday that as the military exercises begin, “the Korean People’s Army is keeping a high alert” and “will take resolute steps the moment even a slight sign of the preventive war is spotted.”
Mr. Trump’s top national security officials seem to be trying to walk a fine line, stopping short of the kind of bald threats that the president has issued in tweets but making clear he is ready to wield a big stick.
“Knowing that North Korea sits with a significant capability already within their grasp, I think it is only prudent that they fully understand the consequences should they make a bad choice for themselves,” Secretary of State Rex W. Tillerson told reporters on Thursday after meeting with the Japanese foreign and defense ministers in Washington.
He never specified the “bad choice.” But as George F. Kennan, the diplomat and the author of the theories for containing the Soviet Union, told students at the National War College in 1946, “You have no idea how much it contributes to the general politeness and pleasantness of diplomacy when you have a little quiet armed force in the background.” Mr. Tillerson seems to be adhering to that advice.
At the same news conference, Mr. Mattis described a situation in which the United States would act without seeking agreement from the South. If American forces in the Pacific detected a missile launch by North Korea toward American or allied soil, “we would take immediate, specific actions to take it down,” he said.
Mr. Mattis’s assertion left open the question of whether the United States would, through direct attack or cybersabotage, try to destroy North Korea’s missiles before they left the launchpad. That, in turn, could trigger a bigger operation — a plan called Kill-Chain that was named in a recent joint statement from the United States and South Korea — to systematically wipe out North Korea’s launch sites, nuclear facilities and command and control centers.
Its own authors have doubts about whether Kill-Chain could be executed swiftly enough to work, but the decision to publicly refer to it was deliberate, senior officials say. While the plan itself is classified, its goal is a systematic elimination of the North’s ability to threaten South Korea, Japan and the United States.
Among the skeptics of a pre-emptive strike was Stephen K. Bannon, Mr. Trump’s chief strategist, who was fired on Friday. Just days before, he had declared in an interview with The American Prospect, a liberal magazine, that “there is no military solution here, they got us.”
That is the conventional view. But General McMaster took issue with his predecessor in the Obama administration, Susan E. Rice, who argued in a recent Op-Ed in The New York Times that preventive war would be “lunacy.”
“History shows that we can, if we must, tolerate nuclear weapons in North Korea — the same way we tolerated the far greater threat of thousands of Soviet nuclear weapons during the Cold War,” she wrote.
General McMaster, appearing on ABC’s “This Week” a few days later, shot back, “How does that apply to a regime like the regime in North Korea?”
Mr. Kim is more unpredictable than the Soviet Union was, aides to Mr. Trump have argued. And they have raised the possibility that Mr. Kim’s real motive is blackmail, according to officials familiar with Situation Room discussions about the North. By threatening Los Angeles or Chicago, they argued, he may be hoping to intimidate the United States into providing aid, or cast doubt in South Korea and Japan that the United States would come to their aid if a regional war broke out.
White House and Pentagon strategists have internally talked about another scenario, in which an uprising in North Korea leads American, South Korean and Chinese forces into a scramble to find the weapons, or tempts a rogue North Korean military officer to let loose a single nuclear device to take out Americans or their allies in one last blast of retribution.
All these factors, American officials insist, lie behind the public talk about taking military action. And they expect diplomacy to fail, they say, doubting that Mr. Kim would ever give up the nuclear deterrent that he views as his only insurance policy. Pyongyang’s official newspaper declared anew on Friday that the country “will never put the nuclear deterrent for self-defense on the negotiating table and flinch even an inch from the road of bolstering up the state nuclear force.”
That leaves Mr. Trump facing the potential consequence of his own threats. If he lets Mr. Tillerson try to negotiate a freeze of nuclear and missile tests in North Korea, as many experts argue he should, he will have delayed the crisis, but not resolved it. If he orders more cyber and electronic attacks, he may delay progress on weapons, but little else. And yet the military options he has so openly threatened may prove hollow.
“There is no such thing as a surgical strike against North Korea,” Bruce Bennett, a North Korea expert at the RAND Corporation, said in one of its recent publications. “We don’t really know for sure where all their weapons are.’’
https://www.nytimes.com/2017/08/20/world/asia/north-korea-war-trump.html
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China has most to lose in US trade showdown, says report
Aug 20, 2017 | Financial Times
By Tom Mitchell
The immediate impact of any trade war between the US and China would be worse for Beijing, according to a new analysis of multinational companies’ exposure to the Chinese market.
Nor would the export sectors of the US and other major developed countries be significantly affected by an economic slowdown in China, says a report by The Conference Board drawing on export data.
The New York-based corporate think tank found that US and EU value-added exports to China were equivalent to 0.7 per cent and 1.6 per cent respectively of national economic outputs. Even for neighbouring Japan, the figure was just 2.1 per cent.
China’s value-added exports to the US, by contrast, were equivalent to roughly 3 per cent of its gross domestic product, suggesting that Beijing has more to lose in any trade showdown with the Trump administration.
“A trade war between the US and China, as seen through these data, doesn’t appear to be a major threat to the US economy,” said Erik Lundh, one of the report’s authors who is a senior Conference Board economist.Mr Lundh, however, warned that the collateral damage from all-out trade war between the world’s two largest economies would be considerable for both sides.
“A trade war between the US and China would spill over into other important facets of the relationship that could be quite painful for the US,” he said, noting that American consumers would be hit by higher prices for imported goods. “A collapse in US trade with China would have an immediate impact on consumers vis-à-vis inflation.”
Last week Steve Bannon, the controversial political adviser to US President Donald Trump who was ousted on Friday, said that the US and China were engaged in an “economic war” from which there could only be one winner.China’s foreign ministry responded that both sides would suffer in the event of increased trade friction between the world’s two largest economies.
In its report released on Monday, The Conference Board breaks down traditional trade data that treats, for example, a Canadian tractor sold in China as an entirely Canadian export even if constructed partly with US-sourced components. The Conference Board’s figures instead count the Canadian tractor’s US components as US exports to China.Similarly, components sourced from South Korea and Taiwan for a China-made iPhone that is ultimately sold in the US are counted as Korean and Taiwanese exports to the US.
The report found that while MNCs’ direct and indirect exposures to everything from Chinese currency policies to outbound tourism are “intensifying in terms of reach and magnitude”, from a trade perspective “the world, by and large, bears low dependencies on China”.Notable exceptions include South Korea and big natural resource exporters such as Australia, whose value-added exports to China are equivalent to 6.8 per cent and 4.4 per cent respectively of their annual economic output. Beijing has used its economic leverage over Seoul in an attempt to prevent the deployment of a US anti-missile system.
Trade figures that capture the complexity of modern supply chains, by tracking the origin of components rather than just finished products, tend to show that bilateral trade imbalances are often exaggerated. In March, The Conference Board estimated that based on value-added goods and services exports, the US trade deficit with China in 2014 was $200bn — or nearly half the $360bn deficit based on traditional trade data. China is the world’s biggest importer of food and energy, buying about 20 per cent of global exports in both sectors. It is also the dominant customer for many small, energy-rich nations. In 2015 China purchased 40-90 per cent of the crude oil produced by Congo, Angola, Oman, Yemen and South Sudan.https://www.ft.com/content/0f5c9b52-83f3-11e7-a4ce-15b2513cb3ff
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USS John S. McCain Collides with Merchant Ship
Aug 20, 2017 | Maritime Executive
The guided-missile destroyer USS John S. McCain (DDG 56) was involved in a collision with the merchant vessel Alnic MC while underway east of Singapore and the Strait of Malacca on August 21. 10 sailors are missing and five have been injured.
The collision with the 600-foot oil tanker was reported at 6:24 a.m. Japan Standard Time, while the ship was transiting to a routine port visit in Singapore. It was dark at the time.
John S. McCain sustained damage to her port side aft. Significant damage to the hull resulted in flooding to nearby compartments, including crew berthing, machinery and communications rooms. Damage control efforts by the crew halted further flooding.
The Maritime and Port Authority of Singapore said no injuries were reported on the Alnic, which suffered some damage to its forepeak tank well above the waterline.
Search and rescue efforts are underway in coordination with local authorities. Malaysian authorities said the collision occurred in Malaysian waters in the South China Sea. Search and rescue efforts continue in coordination with local authorities. The Republic of Singapore Fearless-class patrol ships RSS Gallant (97), RSS Resilience (82), and Singaporean Police Coast Guard vessel Basking Shark (55) are in the area rendering assistance. Additionally, MH-60S helicopters and MV-22 Ospreys from the amphibious assault ship USS America (LHA 6) are in the area providing search and rescue assistance.
The warship has sailed under her own power to Singapore's Changi Naval Base.
The destroyer USS Fitzgerald collided with the Philippine-flagged merchant vessel ACX Crystal on June 17, while operating about 56 nautical miles southwest of Yokosuka, Japan. Seven sailors were killed.
The USS Fitzgerald and USS John S. McCain are sister ships and both part of the same Japan-based destroyer squadron.
https://maritime-executive.com/article/uss-john-s-mccain-collides-with-merchant-ship
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Filipino Judge Calls for Action in South China Sea
Aug 21, 2017 | Maritime Executive
By Noel Tarrazona
Shortly after ASEAN and China agreed to adopt the South China Sea Maritime Code of Conduct to diffuse violent confrontations, a Filipino judge has accused China of invading Philippine maritime territory.
The accusation is that China has deployed ships to guard a newly created island in the West Philippines Sea. Supreme Court Senior Associate Justice Antonio Carpio accused China of deploying two frigates, a Chinese coast guard vessel and two fishing boats near Sandy Cay after Philippine Congressman Gary Alejano released photographs of the vessels earlier this month.
Sandy Cay is 4.6 kilometers (nearly three miles) away from a Pag-asa Island (Thitu Island), a Philippine-claimed island and one of the 10 islands of the Spratlys. There are currently 100 Filipinos residing on Pag-asa Island. Sandy Cay has become permanently above water at high tide because of China's dredging at nearby Subi Reef, says Carpio.
He says the Chinese ships were within 12 nautical miles territorial limit and that they could not invoke freedom of navigation or innocent passage to justify their presence there. Carpio's concerns have escalated because he says the Chinese ships have been preventing a Philippine state-owned boat from going near Sandy Cay.
"Sandy Cay is a Philippine land territory that is being seized (to put it mildly), or being invaded (to put it frankly), by China," he said. "If China acquires sovereignty over Sandy Cay, it can now claim Subi Reef as part of the territorial sea of Sandy Cay, legitimizing China's claim over Subi Reef and removing Subi Reef from the continental shelf of the Philippines," Carpio said.
Meanwhile, the Asia Maritime Transparency Initiative has showed photos taken on August 13 depicting the presence of 11 Chinese ships near Pag-asa Island. One possible explanation for the flotilla’s sudden and provocative appearance, says the Initiative, is that Beijing wanted to dissuade Manila from planned construction on Sandy Cay. The Philippine government has said it plans to spend about $32 million on upgrades including a beaching ramp, desalination facilities and repairs to the islet’s crumbling runway.
Carpio was one of the Philippine legal team who raised the territorial sea dispute to the U.N.'s Hague tribunal court which favored the Philippines claim and invalidated China’s sovereignty over the Philippines exclusive economic zone in the West Philippine Sea.
Carpio has called on Philippine President Rodrigo Duterte and Foreign Minister Alan Peter Cayetano to protest China’s invasion of Philippine territory and send Philippine navy assets to guard Sandy Cay.
“And if the Chinese navy will attack our Philippine Navy then the government can invoke the 1951 US-Philippine Mutual Defense Treaty,” Carpio said. This is an agreement between the U.S. and the Philippines signed in Washington that stipulates that both nations would support each other if attacked by an external party.
When Philippine lawmakers asked Cayetano about the presence of naval ships at Pag-Asa, he said the situation on the island is stable. Neither Duterte nor Cayetano have voiced any serious concern about the presence of Chinese vessels in the area. Duterte is felt to have taken a soft stance on China, announcing last year that he is realigning himself with the nation.
The U.S. government recently gave the Philippine government two new Cessna 208B reconnaissance aircraft worth $33 million to be used for maritime surveillance in the West Philippine Sea. Moreover, the U.S. embassy also announced that it would be turning over a tethered aerostat radar system (TARS) to the Philippine Navy to enhance its maritime intelligence surveillance capabilities.
China has previously stated that any maritime dispute in the South China Sea should be resolved by the claiming parties and not outsiders. The U.S. government has insisted that freedom of navigation should still be observed in the South China Sea, but China views U.S. naval ships exercising that right in the South China Sea as provocative.
https://maritime-executive.com/article/filipino-judge-calls-for-action-in-south-china-sea
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