Asia Pacific Geopolitics – January 12, 2022

| January 12th, 2022

The key news of today is Reuter’s report on what has been happening along the China-Bhutan border, with the Chinese stepping up construction. It is vital due to the geographic importance of the area, as from there China can threaten the so-called ‘Chicken Neck’ (the land corridor linking the Indian subcontinent to the Eastern Provinces). Other topics of note are Hong Kong, with mainland commentators stating that Western-style democracy would doom the city to chaos, and Taiwan, which has voted a new defence bill to boost its defences.

  1. CHINA

1.1 China steps up construction along disputed Bhutan border, satellite images show – Reuters

China has accelerated settlement-building along its disputed border with Bhutan, with more than 200 structures, including two-storey buildings, under construction in six locations, according to satellite image analysis conducted for Reuters.

The images and analysis supplied to Reuters by U.S. data analytics firm HawkEye 360, which uses satellites to gather intelligence on ground-level activities, and vetted by two other experts, provide a detailed look into China’s recent construction along its frontier with Bhutan.

Construction-related activity in some of the locations along Bhutan’s western border has been under way since early 2020, with China initially building tracks and clearing out areas, based on material provided by satellite imagery firms Capella Space and Planet Labs, said Chris Biggers, the mission applications director at HawkEye 360.

Images show the work speeded up in 2021. Smaller structures were erected – possibly to house equipment and supplies – followed by the laying of foundations and then the construction of buildings, Biggers said.

Comment: This specific area is one to watch, as it is the most vulnerable point for India. Any disruption along that strip of land would effectively cut off the Eastern Indian provinces from the rest and is one of the potential flashpoints for conflict, even more so than other areas in the Line of Actual Control.

The satellite images provided to Reuters show that the Chinese kept themselves busy and this may be an indication of more trouble to come in the future, especially as the cold season ends.

1.2 Western-style democracy ‘would doom Hong Kong to chaos’, Chinese officials say – SCMP

Hong Kong will be doomed to chaos if its political system cannot ensure patriots are firmly in charge, former and serving mainland Chinese officials said in Beijing on Tuesday.

Wang Zhenmin, head of the Institute of State Governance and director of the Centre for Hong Kong and Macau Studies at Tsinghua University, said socioeconomic problems in the city would “never be solved” if it followed a Western democratic system.

“If Hong Kong imported the American or British style of democracy, we can imagine what Hong Kong would look like today and in the future: the chief executive would naturally be one of their people, with legislative and executive power, and even the governance over Hong Kong would be completely lost to them,” Wang told a forum hosted by the semi-official Chinese Association of Hong Kong and Macau Studies.

He said that if Hong Kong pursued that path, there would be repeated social upheaval and the political scene would be all “about elections”.

Comment: Quite a curious definition of ‘chaos’, as it implies that outside of the tender care of the CCP there would be chaos in Hong Kong. Considering the immense protests in 2019 and the current flight from the city, one must wonder whether that would truly be the case.

With this said, the mainland would never allow Hong Kong to drift away, with the PLA garrison in the city ensuring that it will not happen, along with the appointment of a new chief enforcer, Maj. Gen. Peng Jingtang, a former Xinjiang security official.

1.3 Hong Kong quarantine rules are no longer just an inconvenience – FT

[…] Anyone who spent the festive period in Hong Kong is well aware of this phenomenon, which might be termed “the ghosts of Covid past”. One friend who was quarantined under similar circumstances in November told me that the “golden rule” was to avoid contact with people who were going abroad for less than 21 days. If one such person goes to the UK or US — as many did over Christmas — any infection they incur might trap you.

But apparent absurdities of this kind arise because of bureaucracy and cannot be assessed in isolation. Like China, the Hong Kong government has constructed a vast zero-Covid infrastructure, which, through quarantine and tracing, has kept its dense population largely free of the virus for two years. The city has had 12,786 cases in total — less than the daily case numbers being reported this week in London.

Some people I spoke to who had been subjected to “retrospective quarantine” nonetheless praised the authorities for their vigilance. One squash professional in Hong Kong, who spent New Year’s eve in a quarantine facility next to Disneyland, says the government has done a “great job” compared with the “absolute mess” in the US and Europe. The issue, he adds, is that he couldn’t see “where it was going to stop”.

That issue is more pressing than ever. Hong Kong has now reported a small number of cases of locally transmitted Covid since Christmas, leading to the closure of cinemas, sports facilities and bars and restaurants after 6pm. Flights are banned from eight countries.

Comment: The matter of flights is even more complicated than a mere ban, as the Hong Kong government has blamed Cathay Pacific over the current Omicron outbreak. The company, via its CEO, has hit back, as its crews spent over 73,000 nights in quarantine facilities in 2021 to prevent community infections.

The attack from Carrie Lam arrived because a Cathay Pacific employee was found positive after going to a restaurant instead of remaining in home quarantine. Even assuming that were true, there is a broader issue: crews are getting mentally impacted by the rules, with some outright quitting or taking a leave of absence. At the same time, Cathay Pacific itself is in rough waters, as air traffic plummeted as a result of these draconian Covid restrictions.

There is also another aspect of this story: several senior government officials (more than 200 seem to have been involved) ignored their own rules by going to a karaoke, which caused quite a scandal. A few days later, one of the women at the party tested positive, placing everyone involved in quarantine.

While Carrie Lam was not present, she is still responsible for the behaviour of her government, especially when their policies have been fairly harsh and the vaccination efforts a total disaster. Despite ample resourcing and availability, fewer than a fifth of the over-80s are vaccinated. The Government’s approach to driving up the vaccination rate has been woefully hands-off, wasting months when the city was effectively Covid-free, a time which could have been used for a vaccination drive.

1.4 Five Mao fanatics jailed over articles ‘smearing former Chinese leaders’ – SCMP

Five Mao fanatics who ran an internet rumour mill have been sentenced by a court in central China for circulating articles which “smeared former state leaders” but their ringleader, who awaits trial, remained defiant despite the sentencing.

The people’s court of Xinhua district in Pingdingshan, Henan province, sentenced two men and three women in late December to jail terms ranging from nine months to two years on the official charge of “picking quarrels and provoking trouble”, according to a verdict obtained by the South China Morning Post.

“Picking quarrels and provoking trouble” is a broadly worded criminal charge covering offences such as public disorder and hooliganism, and is also often used by police to muzzle political dissent.

Articles circulated by the group, and with the Pingdingshan court verdict attached, said they had attacked late paramount leader Deng Xiaoping and other reformist leaders for betraying Mao’s revolutionary ideals.

Comment: Deng Yuwen, a former editor of Study Times, an official mouthpiece of the Communist Party’s top academy, said the sentencing showed that Beijing would not tolerate ultra-leftists if they went too far and their actions were deemed to be destabilising before the party’s all-important national congress expected to be held later this year.

This may be true but there is an issue here: Mao and Deng are, doctrinally speaking, incompatible with one another and purposely so. After all, Deng, after Mao’s passing, made drastic changes, including but not limited to ending the Cultural Revolution and its effects.

If one subscribes to Mao’s doctrine, what these people said is correct and has been somewhat validated by how Xi has been behaving. This particular detail makes the arrests peculiar, as there seems to be a balancing act between mimicking Mao and going full on Maoist. This is a dangerous game, however, because it would be difficult to become a leader for life like Mao without turning into him.

1.5 China’s year of living less dangerously – Sydney Morning Herald

[…] With a property crisis, energy crisis, food shortages and a significant slowdown in economic growth, Beijing is seeking to stabilise and consolidate in what is, with the twice-a-decade Communist Party’s national congress looming later this year, a sensitive year for Xi Jinping as he seeks an unprecedented third term as the party’s leader.

[…] If 2021 was a year of disruption as Xi Jinping directed a radical shift in China’s economic and social policies from socialism with Chinese characteristics, which had a core of market-led activity, to a more conventionally socialist/communist “common prosperity,” then policy generation this year ought to be much less volatile and disruptive.

Xi and the party leadership want economic and social stability as the Beijing Winter Olympics and the far more important National Congress near. Achieving that means managing the implosion in the property sector more effectively – overseeing an orderly deflation – managing COVID outbreaks and resolving the issues in their energy and food sectors to avoid the shortages and priced spikes that developed last year.

A complicating and constraining factor might be the divergence of China’s monetary policies from those of the US.

The US is starting to tighten monetary policy even as China (slightly) loosens its, which raises the spectre of a destabilising exodus of capital from China to the US and currency depreciation that would drain liquidity and add to the pressure on Chinese companies with offshore debt.

China blindsided markets and its own companies with its unexpected policy shifts last year. All the circumstances will dictate a less volatile policy environment in 2022 as Xi Jinping tries to stabilise the economy and consolidate and extend his own authority and power.

Comment: Aside from the Fed issue, which may or may not actually tighten between now and then, the underlying premise of the op-ed is correct. 2021 was characterised by an increasingly disruptive crackdown, among other events. The focus has now shifted towards not rocking the boat further, which does not necessarily imply easing.

As of now, the only two risks the CCP is facing are the property developer crisis spiralling out of control, which would force their hand to avoid a total collapse, and Omicron breaching their Zero Covid Policy. In both cases, the CCP would not overtly make changes unless forced to, especially the latter.

On a similar topic, there is this video from the Hudson Institute. In it, Hudson Institute Senior Fellows Thomas J. Duesterberg and Nadia Schadlow discussed with China Beige Book CEO Leland Miller on China’s economic slowdown and implications for the country’s political stability.

1.6 Too big to fail: China eyes Afghanistan investment amid fears of state collapse – Nikkei Asia

[…] Since rolling into Kabul in August and cementing control over the rest of Afghanistan, the Taliban have been in a frenetic round of diplomatic talks to end the country’s economic and political isolation.

U.S. and Western sanctions have destroyed the economy, which, combined with a drought, has plunged parts of the country into near starvation in the midst of winter. The Taliban have placed their hopes of salvation on Pakistan, which has supported the movement since its origin in the 1990s, and on China, which has long-standing ties to Pakistan and an ambiguous, transactional relationship with whichever government reigns in Kabul.

Beijing has so far refused to recognize the Taliban government, known as the Islamic Emirate of Afghanistan, though semisecret negotiations continue via its embassy in Kabul. In August, following the Taliban takeover, the Chinese Foreign Ministry said it was “willing to continue to develop … friendly and cooperative relations with Afghanistan.” In September, China pledged a modest $31 million in food, medicine, COVID-19 vaccines and other aid. About half has been disbursed, according to the ministry of refugees in Kabul. Pakistan has pledged $28 million.

Bilal Karimi, a Taliban spokesman at the ministry of information, enigmatically described China’s relations with the new Islamic Emirate as “mysterious,” referring to the close but secretive discussions that are going on between Chinese officials and the IEA via Beijing’s Kabul embassy, with recognition being one of the key issues.

[…] Afghanistan will be a key test for China. The American-backed government’s collapse last August handed Beijing, almost by default, an unaccustomed leading role in the crisis, as the default superpower in residence. With an unfolding crisis on its doorstep — China and Afghanistan share a short border through a sliver of land called the Wakhan Corridor — China for perhaps the first time has had to consider not only the perks of an ever more global role but also the responsibilities.

Afghanistan’s economy, which was almost entirely dependent on foreign aid, has been crippled by funding freezes as international donors scramble to keep money out of the hands of the Taliban.

The U.S. last year was Afghanistan’s largest aid donor, but Washington has frozen funds belonging to the previous government, which has crippled the financial system and commerce. In response, the new government has asked for help from countries around the world, especially Gulf states that, along with Pakistan, previously backed them.

Comment: China may not be too frilled about getting involved in the Graveyard of Empires, especially as it has been having trouble in Pakistan already. At the same time, Beijing can ill-afford a vacuum West of its borders, as Afghanistan could very easily turn into a staging area for Xinjiang separatists.

Depending on how the situation evolves in Kabul, the Chinese may be forced to do something they have not done since Vietnam ‘79: get the PLA involved abroad, with the risk of potentially showing its weaknesses (as Afghanistan has done on so many other occasions during its history).

2. KOREA

2.1 N.Korea’s Kim calls for more ‘military muscle’ after watching hypersonic missile test – Reuters

North Korean leader Kim Jong Un called for boosting the country’s strategic military forces as he observed the test of a hypersonic missile, state media said on Wednesday, officially attending a missile launch for the first time in nearly two years.

On Tuesday authorities in South Korea and Japan detected the suspected launch, which drew condemnation by authorities around the world and prompted an expression of concern from the U.N. secretary-general. read more

The second test of a “hypersonic missile” in less than a week underscored Kim’s New Year’s vow to bolster the military with cutting-edge technology at a time when talks with South Korea and the United States have stalled.

After watching the test, Kim urged military scientists to “further accelerate the efforts to steadily build up the country’s strategic military muscle both in quality and quantity and further modernize the army,” KCNA news agency reported.

Comment: While it is not exactly comparable, it would not be so different from the Soviet Union at the twilight: internally they had several problems (which were often joked about by Ronald Reagan) but they tried to project strength, including but not limited to their efforts in Afghanistan.

North Korea may not be the Soviet Union but, like them in the ‘80s, they are facing an internal crisis (grave enough to be recognised publicly in the New Year address). Diverting the precious little resources of North Korea towards the military will not help solving the underlying problems, of the contrary, which may even worsen them.

2.2 Senior S. Korean, U.S. diplomats discuss alliance, regional security in phone call – Yonhap News

Senior diplomats of South Korea and the United States held phone talks Wednesday to discuss the bilateral alliance and other issues on the Korean Peninsula, according to officials.

Yeo Seung-bae, deputy foreign minister for political affairs, and his U.S. counterpart Daniel Kritenbrink had comprehensive discussions on regional and global issues, a foreign ministry official said without elaborating.

“I had a great conversation with Deputy Foreign Minister Yeo on the U.S.-ROK relationship and our close collaboration on shared regional and global challenges,” Kritenbrink tweeted, using the acronym for South Korea’s official name, the Republic of Korea.

As for whether North Korea was discussed during the talks, the official said the allies are in close consultations over various matters, including the Korean Peninsula issue. Earlier this week, the North once again test-fired what it claims to be a hypersonic missile.

3. TAIWAN

3.1 Taiwan passes extra US$8.6 billion defence budget as China threat grows – CNA

Taiwan’s parliament on Tuesday (Jan 11) passed an extra spending bill of nearly US$8.6 billion in its latest bid to boost defence capabilities against an increasingly bellicose China.

The government proposed a five-year special defence budget of around TW$237.3 billion (US$8.57 billion) from 2022 as Chinese warplanes breached its air defence zone at unprecedented levels last year.

Democratic Taiwan lives under constant threat of an invasion by authoritarian China, which claims the self-ruled island as part of its territory to be seized one day – by force if necessary.

[…] It aims to acquire various precision missiles and mass-manufacture high-efficiency naval ships “in the shortest period of time” to boost the island’s sea and air capabilities, the government said.

Comment: While Xi has toned down the rhetoric during the New Year’s address, it is good that Taiwan is still working on improving its defences. An actual invasion may never happen, between the inherent risks of an amphibious invasion and all its ramifications, but it is better to be prepared.

After all, there is wisdom in ‘Si vis pacem, para bellum’ (If you want peace, prepare for war): by making themselves more difficult to invade the mainland would have to think really carefully about pulling the trigger. This process already started some time ago and may have been a factor in Xi’s toning down (although not the only one).  

3.2 Taiwan to launch $1 billion Lithuania credit fund amid Beijing pressure – Lithuania

Taiwan will launch a $1 billion credit programme to help fund joint projects between Lithuanian and Taiwanese companies in six business categories, a Taiwan government minister said on Tuesday.

Lithuania is under pressure from China which claims democratically ruled Taiwan as its own territory, to reverse a decision last year to allow the island to open a de-facto embassy in Vilnius under its own name.

[…] “The investment and credit funds will help us strengthen the cooperation,” Taiwan’s National Development Council Minister Kung Ming-hsin told an online news conference.

The credit fund will focus on developing semiconductor talent and facilitating semiconductor development, as well as biotechnologies, satellites, finance and scientific research, said Kung.

Comment: In conjunction with an already announced $200 million fund, the Taiwanese investment in Lithuania is getting considerable enough to potentially offset China’s de facto embargo. Will take time for all to bear fruit, but, if successful, it would be quite a victory for Taipei over Beijing and a powerful precedent for many countries who are not as exposed to China as others (like Germany, in case of the EU).