Posts Tagged ‘China’

China Says It Will Start Pacific Ocean Submarine “Deterrence Patrols” — Says U.S. Actions Prompted The Move

May 26, 2016

Chinese Type 094 Jin Class Nuclear-Powered Ballistic Missile Submarine (SSBN)

  • China says it will ‘deploy nuclear warhead-armed submarines into the Pacific this year’
  • The move is a huge change in China’s defence policy, based on deterrence

China is planning to dispatch nuclear submarines into the Pacific for the first time amid heightened tensions with the US, it has been reported.

Officials claim new US weapons stationed in South Korea have forced its hand – among them is an anti-ballistic system and hypersonic glide missiles.

The prediction comes from a recent Pentagon report for Congress which states China will ‘probably conduct its first nuclear deterrence patrol sometime in 2016’.

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Chinese submarines armed with nuclear warheads will begin patrols into the Pacific Ocean this year, Pentagon officials believe (file image)

Chinese submarines armed with nuclear warheads will begin patrols into the Pacific Ocean this year, Pentagon officials believe (file image)

China's focus has shifted to developing and weaponising man-made islands in the South China Sea so it will have greater control over the maritime region without resorting to armed conflict (file image)

China’s focus has shifted to developing and weaponising man-made islands in the South China Sea so it will have greater control over the maritime region without resorting to armed conflict (file image)

China's island-building program and the Defense Department said three of the land features in the Spratly Islands, in the South China Sea, now have runways (pictured) and large ports in various stages of construction

China’s island-building program and the Defense Department said three of the land features in the Spratly Islands, in the South China Sea, now have runways (pictured) and large ports in various stages of construction

It marks a hugely aggressive change in China’s defence policy and is likely to ratchet up tensions over territorial disputes in the South China Sea.

According to The Guardian, Beijing officials are refusing to comment on when the first patrol will take place but say it is inevitable.

In recent months the US has stepped up its deterrence measures around the South China Sea due to an international territorial dispute.

China claims most of the South China Sea, through which $5 trillion in ship-borne trade passes every year. The Philippines, Vietnam, Malaysia, Taiwan and Brunei have overlapping claims.

Washington has accused Beijing of militarising the sea after creating artificial islands, while Beijing, in turn, has criticised increased US naval patrols and exercises in Asia.

Meanwhile, today China’s Defence Ministry said its had aircraft followed rules after two Chinese fighter jets carried out what the US said was an ‘unsafe’ intercept of a US military reconnaissance aircraft over the South China Sea.

The incident took place in international airspace last week as the plane carried out ‘a routine US patrol’, the Pentagon said.

A US defence official said two Chinese J-11 fighter jets flew within 50 feet of the U.S. EP-3 aircraft. The official said the incident took place east of Hainan island.

China has deployed anti-aircraft missiles to Woody Island, in the South China Sea as it continues on with its strategic aggression

China has deployed anti-aircraft missiles to Woody Island, in the South China Sea as it continues on with its strategic aggression

Chinese Defence Ministry spokesman Yang Yujun told a monthly news briefing China’s aircraft acted completely professionally and in line with an agreement reached between the countries on rules governing such encounters.

Yang Yujun, spokesman of the Chinese Ministry of National Defense.

However, he said the agreement, called the Rules of Behaviour for Safety of Air and Maritime Encounters, could only provide a ‘technical standard’, and the best way of resolving the problem was for the US to stop such flights.

‘That’s the real source of danger for Sino-US military safety at sea and in the air,’ he said.

The encounter came shortly after China scrambled fighter jets as a US Navy ship sailed close to a disputed reef in the South China Sea.

Another Chinese intercept took place in 2014 when a Chinese fighter pilot flew acrobatic manoeuvre around a U.S. military reconnaissance aircraft.

Read more: http://www.dailymail.co.uk/news/article-3610932/China-dispatch-nuclear-submarines-Pacific-latest-expansion-Beijing-defence-policy.html#ixzz49mf4Ih6b
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China says it followed rules in U.S. aircraft intercept

May 26, 2016

Thu May 26, 2016 9:14am EDT
Reuters

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China’s Defence Ministry said on Thursday its aircraft followed the rules after two Chinese fighter jets carried out what the United States said was an “unsafe” intercept of a U.S. military reconnaissance aircraft over the South China Sea.

The incident took place in international airspace last week as the plane carried out “a routine U.S. patrol”, the Pentagon said.

A U.S. defense official said two Chinese J-11 fighter jets flew within 50 feet (15 meters) of the U.S. EP-3 aircraft. The official said the incident took place east of Hainan island.

Chinese Defence Ministry spokesman Yang Yujun told a monthly news briefing China’s aircraft acted completely professionally and in line with an agreement reached between the countries on rules governing such encounters.

Yang Yujun, spokesman of the Chinese Ministry of National Defense.

However, he said the agreement, called the Rules of Behaviour for Safety of Air and Maritime Encounters, could only provide a “technical standard”, and the best way of resolving the problem was for the U.S. to stop such flights.

“That’s the real source of danger for Sino-U.S. military safety at sea and in the air,” he said.

The encounter came shortly after China scrambled fighter jets as a U.S. Navy ship sailed close to a disputed reef in the South China Sea.

Another Chinese intercept took place in 2014 when a Chinese fighter pilot flew acrobatic maneuvers around a U.S. spy plane.

China claims most of the South China Sea, through which $5 trillion in ship-borne trade passes every year. The Philippines, Vietnam, Malaysia, Taiwan and Brunei have overlapping claims.

Washington has accused Beijing of militarizing the South China Sea after creating artificial islands, while Beijing, in turn, has criticized increased U.S. naval patrols and exercises in Asia.

(Reporting by Ben Blanchard; Editing by Robert Birsel)

China “issues a warning” to G7 countries against talks that might worsen tensions in South China Sea

May 26, 2016

By Zhuang Pinghui
South China Morning Post

 

China has warned the Group of Seven (G7) countries against engaging in talks that might worsen tensions in the South China Sea, as leaders of the seven economic powers meet in Japan.

The seven heads of state from Britain, Canada, France, Germany, Italy, Japan and the United States are set to discuss a wide range of topics during the two-day summit that started on Thursday – including China’s claims over the disputed South China Sea.

Members of the G7 must uphold an “impartial and fair position instead of applying double standards or … the mindset of alliances”, Foreign Minister Wang Yi said on Thursday.

“We don’t want to see any discussions or actions that might exacerbate tensions in the region.”

G7 members could decide their own topics of discussion, but they should not do anything that might negatively affect regional tensions, he added.

Wang was speaking during a briefing for the Group of 20 (G20) summit to be held in Hangzhou, eastern Zhejiang province, in early September.

China had always sought to settle disputes with those parties directly concerned, and this practice had won the support of “more and more countries”, Wang said.

The G7 leaders are meeting at a remote resort on Japan’s Kashiko Island near Tokyo.

At last month’s gathering of G7 foreign ministers, a joint statement on maritime security expressed “strong opposition to any intimidating, coercive or provocative unilateral actions that could alter the status quo and increase tensions”.

Beijing has strongly opposed the statement, though it did not name China or cite its “island-building” activities in the South China Sea.

Wang said he hoped to see greater coordination between G7 and G20 member countries so that they would “play a positive and a constructive role in the [upcoming] G20 summit”.

http://www.scmp.com/news/china/policies-politics/article/1955108/china-warns-g7-countries-against-talks-might-worsen

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G7 — Host Shinzo Abe presented data showing global commodities prices fell 55 percent from June 2014 to January 2016 — Leaders discuss avoiding situation like global financial crisis of 2008

May 26, 2016
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Markets | Thu May 26, 2016 4:41am EDT

Participants of the G7 summit meetings (from front in clockwise) Japanese Prime Minister Shinzo Abe, French President Francois Hollande, Britain’s Prime Minister David Cameron, Canadian Prime Minister Justin Trudeau, European Commission President Jean-Claude Juncker,…

Group of Seven leaders voiced concern about emerging economies on Thursday as their host, Japanese Prime Minister Shinzo Abe, made a pointed comparison to the global financial crisis eight years ago.

Abe said the G7 leaders agreed on the need for flexible spending to spur world growth but the timing and amount depended on each country, Deputy Chief Cabinet Secretary Hiroshige Seko told reporters, adding some countries saw no need for such spending.

Britain and Germany have been resisting calls for fiscal stimulus.

“G7 leaders voiced the view that emerging economies are in a severe situation, although there were views that the current economic situation is not a crisis,” Seko said after the first day of a two-day G7 summit in Ise-Shima, central Japan.

Abe presented data showing global commodities prices fell 55 percent from June 2014 to January 2016, the same margin as from July 2008 to February 2009, after the Lehman collapse.

Lehman had been Wall Street’s fourth-largest investment bank when it filed for Chapter 11 protection on Sept. 15, 2008, making its bankruptcy by far the biggest in U.S. history. Its failure triggered the global financial crisis.

Abe hopes, some political insiders say, to use a G7 statement on the global economy as cover for a domestic fiscal package including the possible delay of a rise in the nation’s sales tax to 10 percent from 8 percent planned for next April.

The G7 leaders are also expected to reaffirm their previous commitment to stability in the foreign exchange market.

European Council President Donald Tusk said earlier he would seek G7 support for more global aid for refugees. A flow of migrants from Syria and elsewhere to Europe has confronted the continent with its biggest refugee crisis since World War Two.

“If we (G7) do not take the lead in managing this crisis, nobody would,” Tusk told reporters.

MARITIME SECURITY

Other summit topics include terrorism, cyber security and maritime security, especially China’s increasing assertiveness in the East and South China Seas, where Beijing has territorial disputes with Japan and several Southeast Asian nations.

At a news conference late on Wednesday, Abe said Japan welcomed China’s peaceful rise while repeating Tokyo’s opposition to acts that try to change the status quo by force and urging respect of the rule of law – principles expected to be mentioned in a statement after the summit.

Asked if a G7 summit was the right place to discuss the South China Sea, Chinese Foreign Minister Wang Yi told a briefing in Beijing it was up to the G7 to decide.

“But we believe that no matter what the topic is, they should all adopt impartial and fair positions, and not apply double standards or strike alliances, and especially not take actions to escalate or provoke regional tensions,” he said.

Summit pageantry began when Abe escorted G7 leaders to the Shinto religion’s holiest site, greeting U.S. President Barack Obama and other G7 partners one-by-one at Ise Grand Shrine in central Japan, dedicated to sun goddess Amaterasu Omikami, mythical ancestress of the emperor.

Led by a white-robed priest, each leader walked across a bridge, took part in a tree-planting ritual, strolled through the expansive grounds and posed for a group photo.

Abe has said he hopes the shrine visit will provide an insight to the heart of Japanese culture. Critics say he’s catering to a conservative base that wants to put religion back in politics and revive traditional values.

On Wednesday night, Abe met Obama for talks dominated by the arrest of a U.S. military base civilian worker in connection with the killing of a young woman on Japan’s southern Okinawa island, reluctant host to the bulk of the U.S. military in Japan.

The attack has marred Obama’s hopes of keeping his Japan trip strictly focused on his visit on Friday to Hiroshima, site of the world’s first atomic bombing, to highlight reconciliation between the two former World War Two foes and his nuclear anti-proliferation agenda.

The G7 groups Britain, Canada, France, Germany, Italy, Japan and the United States.

(Additional reporting by Thomas Wilson, Kiyoshi Takenaka, Kylie MacLellan, Ami Miyazaki; Writing by Linda Sieg; Editing by Nick Macfie)

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Sputtering global economy tops agenda at G-7 summit

May 26, 2016

 A summit involving leaders of Group of Seven (G-7) advanced economies opened on Thursday (May 26) with focus on how to spur the sputtering global economy amid volatile oil prices, a steel glut due to an oversupply from China, and a slowdown in emerging economies.

Although the two-day summit is unlikely to end with a full agreement on macro-economic policy,  the G-7 leaders are expected to promote  monetary, fiscal and structural policies in their communique.

The summit comes as the G-7 nations disagree on how to boost the global economy.  Host country Japan wants to boost public spending to drive world economic growth and has pushed for bold spending measures at the G-7 finance ministers’ meeting earlier this month. Countries like France and Italy, however, support the use of fiscal stimulus, creating a rift with  Britain and Germany.

Also expected on the agenda are issues including the June 23 referendum on whether Britain should stay or leave the European Union (EU), territorial disputes in the South China Sea, terrorism, cyber security and Europe’s migrant crisis.

Japanese Prime Minister Shinzo Abe welcomed the leaders of  Britain, Canada, France, Germany, Italy and the United States on Thursday morning at Ise Grand Shrine in Ise-Shima,  about 300km  south-west of Tokyo. The leaders took part in a Japanese cedar tree-planting ritual and strolled through the expansive grounds.

The shrine is the most sacred site of the Shinto religion but is not without controversy. Mr Abe, who practises Shinto, has said the location was chosen to introduce world leaders to Japanese culture and tradition, but critics have argued that it suggests an intent to hark back to religious politics in spite of a secular post-war Constitution.

Among the G-7 leaders was US President Barack Obama, with whom Mr Abe had an hour-long bilateral meeting late Wednesday night.

Their talks were dominated by the recent rape and murder of a 20-year-old Japanese woman in Okinawa, allegedly by a US marine veteran stationed on the island.

At a press conference after the meeting, both leaders pledged  to ensure that justice will be served. Mr Abe said he felt  “profound resentment against this self-centred and absolutely despicable crime”, while Mr Obama extended his “deepest regrets”. He added that the existing US-Japan Status of Forces Agreement does not preclude “the full prosecution and the need for justice under the Japanese legal system”.

On US foreign policy, Mr Obama said since he took office, the US has engaged in a form of diplomacy that has led to “former adversaries working in partnership to provide economic opportunities to both of our peoples, to expand trade and commerce”.

Mr Obama, who arrived in Japan from Vietnam on Wednesday, said Washington’s growing partnership with the South-east Asian country is independent of the rise of China, and has been 30 years in the making.

“The fact that China would perceive that as some sort of provocation to them I think says more about Chinese attitudes than it says anything about our attitudes,” he said.

The US leader added that existing tensions in the South China Sea over conflicting maritime claims involving China and South-east Asian nations such as Vietnam and the Philippines were “not of our making”.

“We would very much like to see a peaceful resolution of those disputes.  What’s preventing that from happening is not anything we’re doing,” he said. “We’re not taking a position on those claims.  So it’s entirely within China’s power to resolve those disputes.”

China is not part of the G-7 group and its state-run Xinhua news agency has issued numerous commentaries in recent days debunking the group’s credibility and asking it to “mind its own business”.

One report pointedly noted that the G-7 countries are facing “serious internal problems”, and that instead of dealing with these issues, “some G-7 members are still making irresponsible remarks and trying to add irrelevant issues to the group’s agenda.”

European Council President Donald Tusk said on Thursday on the sidelines of the summit that the G-7 needs to take a “clear and tough stance” on China’s controversial maritime claims.

“The policy of the G-7 is clear – any maritime or territorial claim should be based on international law and any territorial dispute should be resolved by peaceful means,” Mr Tusk said. “Unilateral action and the use of force or coercion will not be accepted.”

On Friday, Mr Obama and Mr Abe will visit Hiroshima, where about 140,000 people died after US forces dropped an atomic bomb on Aug 6, 1945.

Both leaders are expected to issue a call on denuclearisation. But Mr Abe said on Wednesday he has “no specific plans” to reciprocate with a visit to Pearl Harbour, where Japanese troops launched a surprise attack 75 years ago, drawing the US into World War II.

He reiterated his official visit to the US last year, where he visited the World War II Memorial and “laid a wreath to pray for the souls of all the war dead.

Mr Abe also held talks with British Prime Minister David Cameron on Wednesday night. They discussed the state of the global economy and measures to tackle corruption. They also  supported the early ratification of an economic partnership agreement between the European Union (EU) and Japan.

waltsim@sph.com.sg

http://www.straitstimes.com/asia/east-asia/world-leaders-begin-group-of-seven-nation-talks-with-economy-in-focus

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Economy and security to dominate G7 summit in Japan

Leaders of industrial nations meet in Japan to discuss economy, security and tensions in East and South China Seas.

 
The G7 group includes Britain, Canada, France, Germany, Italy, Japan and the US — May 26, 2016. EPA photo

Leaders of seven leading industrialised countries have converged on Ise-Shima in Japan for a two-day summit expected to focus on the global economy and international security.

Other summit topics include terrorism, cybersecurity and maritime security, including China’s assertiveness in the East and South China Seas, where the country has territorial disputes with Japan and several Southeast Asian nations.

Donald Tusk, the European Union president, said on Thursday that he would seek G7 support for more global aid for refugees.


WATCH: Counting the Cost – The global steel industry downturn


“If we [G7] do not take the lead in managing this crisis, nobody will,” he said.

A flow of people from Syria and elsewhere to Europe has confronted the continent with its biggest refugee crisis since World War II.

Leaders will refer to maritime security in statements issued after the summit ends on Friday, including a call for respect for the rule of law and opposition to provocative acts that try to change the status quo by force, Japanese media said.

Fiscal stimulus debate

Although full agreement on macro-economic policy looks hard to come by, the G7 leaders are expected to promote monetary, fiscal and structural policies to spur growth in their communique when the summit ends.

With Britain and Germany resisting calls for fiscal stimulus, Shinzo Abe, Japan’s prime minister, will urge the G7 leaders to adopt a flexible fiscal policy, taking into account each country’s own situation.

Some analysts say Abe hopes to use a G7 statement on the global economy as cover for a domestic fiscal package including the possible delay in a rise of the nation’s sales tax to 10 percent from  8 percent planned for next April.

 

The G7 leaders are also expected to reaffirm their previous commitment to stability in the foreign exchange market.

The G7 groups are Britain, Canada, France, Germany, Italy, Japan and the United States.

In advance of Thursday’s meeting, Abe took G7 leaders to the Ise Grand Shrine, the most sacred site in Shinto, Japan’s indigenous religion.

Ise Grand Shrine has 2,000 years of history and holds rituals and ceremonies to pray for world peace, a rich harvest and the prosperity of Japan’s imperial family.

Abe has said that he hopes the shrine visit will provide an insight into the heart of Japanese culture. Critics say he is catering to a conservative base that wants to put religion back in politics and revive traditional values.

 

Source: Reuters

 

 

Philippines: Duterte admin should strengthen ties with US, other allies

May 26, 2016
FILE – In this Monday, May 9, 2016 file photo, front-running presidential candidate Mayor Rodrigo Duterte gestures at photographers to move back prior to voting in a polling precinct at Daniel R. Aguinaldo National High School at Matina district, his hometown in Davao city in southern Philippines. The U.S. has upset China by sending on Wednesday, May 11, a destroyer close to the largest man-made island in disputed South China Sea waters. Beijing responded by saying it will step up its own patrols. The likely election of Duterte in the new Philippines could undermine his predecessor’s policy that was unusually hostile to Beijing and relied on U.S. military backing. Beijing sees an opening even as it braces for a possibly unfavorable ruling from a U.N. tribunal, calling the process biased. AP/Bullit Marquez, File

MANILA, Philippines — The incoming administration of presumptive president Rodrigo Duterte should strengthen its alliance treaties with the United States and other countries such as Australia and Japan, a think tank said.

Stratbase Albert del Rosario Institute (ADRi) said that the Armed Forces of the Philippines (AFP) needs to shift its stance from internal security to territorial defense.

“We believe the AFP should now develop a credible defense position that would make a potential adversary think twice before using force against the Philippines,” Stratbase ADRi President Dindo Manhit said in a statement released on Monday.

READ: US Navy deploys strike group to South China Sea

Manhit suggested forming a trilateral armed forces consisting of the Army, Air Force and Navy for maritime territorial security.

The trilateral armed forces would monitor and secure the country’s land features in the disputed South China Sea or West Philippine Sea and adjacent waters.

Manhit added that the next government should focus in strengthening the AFP’s joint operation capabilities for the Philippines to be able to face an assertive China.

The analyst noted that the AFP’s development of its early warning, surveillance, command, control and communication must be designed with allies in mind. This would include strengthening the country’s alliance with the US built around the Enhanced Defense Cooperation Agreement.

“Continuous training with allied forces, including the US and its other bilateral allies such as Japan, Australia, and South Korea should also be prioritized,” Manhit said.

The Permanent Court of Arbitration under the United Nations is expected to issue its ruling on the Philippines’ case against China’s nine-dash line claim by this month. Beijing had refused to participate in the proceedings of the arbitration. — Patricia Lourdes Viray

http://www.philstar.com/headlines/2016/05/26/1587169/think-tank-duterte-admin-should-strengthen-ties-us-other-allies

RELATED: Analyst: Duterte will have difficult balancing act with China, US

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China’s Middle Class Vents Over Growing List of Grievances

May 26, 2016
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By TE-PING CHEN
The Wall Street Journal
May 24, 2016 12:00 a.m. ET
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BEIJING—The death here of a 29-year-old man in police custody—a new father and graduate of a prestigious Chinese university—has exposed increasing anxieties in the country’s growing middle class, already shaken by a decelerating economy and a disparate series of high-profile incidents threatening their sense of stability.Other wide-ranging targets of recent social-media attention include a violent string of attacks on doctors by embittered patients and their families, a demand that apartment owners in eastern China pay extra to secure the land on which their apartments were already built, confusing changes in college-entrance standards, and fatal chemical explosions wiping out homes.

Such disruptions have come as reminders that rising incomes or better education don’t automatically shield China’s expanding middle-class ranks from danger, whether physical or economic, in a society where the law can be arbitrarily enforced and justice is sometimes brutal.

“There’s a gap between expectation and reality,” said He Yunfeng, who heads Shanghai Normal University’s Institute of Knowledge and Value Sciences. “These kinds of incidents concentrated together have created a kind of panic.” Some critics have begun joking that the Chinese term for middle class— zhongchanjieji—would be better depicted by the term zhongcanjieji, or the “tragic middle class.”

Last week, in another case, graphic images circulating online showed the bruised bodies of two college students who local authorities said had been beaten by police. “Have we woken up from the Chinese dream yet?” wrote one commenter on the Weibo social-media platform, alluding to a term popularized by President Xi Jinping to describe his aim of national rejuvenation.

The death of Lei Yang, a Beijing resident with a degree from the respected Renmin University, has stirred particular unease. Mr. Lei left for the airport to pick up relatives around 9 p.m. on May 7, according to a lawyer representing the family. By 9:45 p.m., officials said, he was in police custody and died shortly thereafter.

Police said Mr. Lei had been caught in a prostitution raid at a foot-massage parlor and suddenly fell ill after fighting to escape. State media have cited police as saying no excessive force was used. Family members say that Mr. Lei’s body had bruises on it.

An investigation of his death is under way, and autopsy results are expected in the coming weeks. The Beijing Municipal Public Security Bureau, which is in charge of the police, didn’t respond to a request for comment.

Last weekend, Minister of Public Security Guo Shengkun pledged to improve law-enforcement standards and called for better officer training.

Mr. Lei’s death blanketed social media for days, accompanied by reams of indignant commentary, which China’s censors have stepped in to curb. One homemade video circulating on the popular WeChat application concludes with the exhortation, “The next silent sheep to be slaughtered might be you. If you don’t stand up today, tomorrow you won’t be able to stand up at all.”

A resident whose apartment was damaged in explosions at a chemical warehouse protested in Tianjin last August. The Tianjin blasts are among a series of incidents—most recently, the death in custody of a think-tank worker—provoking concern among China’s middle class.
A resident whose apartment was damaged in explosions at a chemical warehouse protested in Tianjin last August. The Tianjin blasts are among a series of incidents—most recently, the death in custody of a think-tank worker—provoking concern among China’s middle class. PHOTO: AGENCE FRANCE PRESSE/GETTY IMAGES
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In China, complaints about public-security officials meting out harsh treatment aren’t uncommon from migrant workers or people seeking redress from the government. The case of Mr. Lei—who worked for a think tank—was unusual in that it involved someone with a comfortable foothold on the economic ladder.

“This really touches the nerves for the middle class,” said Patrick Poon, China researcher for Amnesty International.

Ivan Sun, a professor who studies criminal justice at the University of Delaware, said China’s better-educated urbanites tend to have lower levels of trust in the police.

“They’re informed, and their education exposes them to broader issues,” he said. “And because they are more comfortable economically, that allows them to also care about social justice.”

RELATED COVERAGE

Though incomes have continued to rise, setbacks to the Chinese economy—growth recently hit a 25-year low—are deepening discontent just as many urban dwellers are already voicing concerns about education, health care and pollution.

In 2015, the percentage of Chinese reporting satisfaction with their household income dropped to 58% from 66% the year before, according to a recent Gallup poll. Gallup also reported that stress has climbed, with 40% of Chinese surveyed saying they experienced a lot of stress, the highest in a decade of recording.

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While middle-class frustration most frequently is voiced online, it periodically spills over into open protests. In several cities in Jiangsu, one of China’s wealthiest provinces, parents demonstrated this month over changes to the university-entrance system that they feared would leave their children at a disadvantage.

After chemical explosions last year killed more than 100 people and damaged thousands of high-rise apartments in Tianjin, many homeowners took to the streets, demanding compensation and asking why hazardous substances had been stored so close to where they lived. While compensation was given, many homeowners felt it was too low.

One poem recently circulating on WeChat put it this way: “A middle class that can be destroyed by a single illness/a middle class that can be destroyed by a stock-market disaster/Even with many homes, your heart feels panicky /the feeling of unease has never been this strong.”

Mr. He said China is pushing to improve rule of law, as well as the social-safety net. “But this process can’t take too long,” he said.

In recent years, China has accelerated a clampdown on human-rights lawyers and tightened media strictures. Under Mr. Xi, the country has also embarked on a push to improve overall rule of law in ways that don’t threaten the party’s hold on power. Mr. He notes that China is also working to improve the social-safety net.

For now, David Goodman, a professor with Xi’an Jiaotong-Liverpool University, said that calls for change remain generally circumscribed. He notes that while members of China’s middle class have their complaints, they are also among the biggest beneficiaries of the country’s political system.

“Their demands are not against the system,” he said. “What they’re mostly asking for is for the system to work better.”

Write to Te-Ping Chen at te-ping.chen@wsj.com

http://www.wsj.com/articles/chinas-middle-class-vents-over-growing-list-of-grievances-1464062403

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China military budget hit by economic slowdown, says Xi Jinping

May 26, 2016

Financial Times (FT)

President links easing growth to lower than expected military spending

© AFP

China’s economic slowdown, responsible for everything from falling luxury goods sales to steel plant closures around the world, has been officially blamed for another casualty — spending on the People’s Liberation Army.

In remarks published in the PLA Daily, President Xi Jinping, who also chairs the Chinese Communist party’s Central Military Commission, linked slower growth to a lower than expected increase in the country’s military budget, which was formally approved in March.

“It is not easy to secure a normal rise in the military budget any more,” Mr Xi said, citing “mounting pressure from the economic downturn”.

At the annual meeting of China’s parliament, legislators approved only a 7.6 per cent year-on-year increase in military spending to Rmb950bn ($145bn). It was the first single-digit increase since 2010, when Beijing was struggling to contain the economic impact of the global financial crisis.

The lower than expected expenditure was approved despite public calls from Chinese military figures for another double-digit increase.

Since Mr Xi assumed power in November 2012, China has adopted a much more aggressive posture in the South and East China seas, where it is embroiled in numerous territorial disputes with regional neighbours.

In an effort to assert its claims, the PLA has emphasised the modernisation of its navy and air force at the expense of the army, the world’s largest land force with more than 1.5m soldiers. Last year, at a parade marking the Japanese Imperial Army’s second world war defeat, Mr Xi announced plans to cut 300,000 military personnel.

To aid the demobilisation effort, state-owned enterprises were ordered to reserve at least 5 per cent of new jobs for former soldiers.

Mr Xi’s explicit linking of lower than expected military spending to a more challenging economic climate is part of a broader propaganda campaign to reinforce the importance of structural reforms, especially in state-dominated industrial sectors.

While China’s gross domestic product grew at a reassuring 6.7 per cent year-on-year rate in the first quarter, that is still its slowest annual rate in a quarter of a century and analysts are increasingly concerned that the growth figure was boosted by an unsustainable surge in credit.

This month a long front-page article in Communist party newspaper the People’s Daily quoted an “authoritative figure”, widely believed to be Mr Xi or a senior party official speaking on his behalf, as warning that China’s debt levels were perilously high. The figure added that regional and local officials should not expect a rebound in economic growth soon, making difficult reforms all the more urgent.

Mr Xi also made clear that many of China’s economic failings are echoed in its military industrial complex. “For some projects, we spend large amounts of money only to find they don’t meet our operational requirements,” he said, warning that the consequence could be future military defeats.

Yue Gang, a retired PLA officer, expressed a similar sentiment.

“When the economy took off in the late 1990s and military spending exploded, the PLA became part of the ‘new rich’,” he told the Financial Times. “The military wanted to do things on a grand scale, investing in projects that were flashy rather than useful.”

Addition reporting by Wan Li

https://next.ft.com/content/9466cb54-2226-11e6-aa98-db1e01fabc0c

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Warning sign: China sets currency at 5-year low — Are China’s leaders bewildered? — Or is there a power struggle in China over economic reforms

May 26, 2016

On Wednesday, China’s central bank weakened its currency. It set the reference rate for the yuan at the lowest level in five years. The actual cut was small: only about 0.3%. It didn’t send world markets into a downward spiral like in August, when China devalued its currency by nearly 2%, or in early January, when it cut by about 0.5%.

 

Nevertheless, it’s a warning sign. The reference rate is the level that the People’s Bank of China sets each day, although the yuan is allowed to trade in a range around that price.

“Whether China stress reemerges is a key unknown,” wrote the economics team at Deutsche Bank Research Wednesday.

China’s Communist Party still claims the country is growing 6.5% to 7% a year. Capital Economics, among other independent forecasters, believes the real number is 4.2%.

Some believe China’s latest currency move was to get ahead of a Federal Reserve interest rate hike, which will probably make the U.S. dollar even stronger. Others point to a slew of ho-hum economic data from China. The bottom line is: the chiefs of the world’s No. 2 economy are still on edge.

Related: The U.S. is ‘basically at full employment’

The Fed vs. China

There appears to a power struggle going on between China’s top leaders on what to do next. Does the Chinese economy need more stimulus spending or not? It’s a big question at a time when the world is also wondering what the Fed will do.

Wall Street and the press have followed the Fed’s every breath with papparazzi-like intensity. There’s about a 50-50 chance the Fed will hike interest rates in June or July. But for all the scrutiny over the Fed, it would be a mistake to ignore the equally mixed signals coming from policymakers in Beijing.

Related: Is China fueling a new commodities bubble?

Power struggle in Beijing?

State investment jumped in early 2016, helping to ease global concerns of a “hard landing.” At one point, global investors got so giddy about Beijing coming to the rescue that global commodity prices rallied. But there are signs Beijing is tapering off.

“I think China’s leaders are bewildered. There seems to be a power struggle going on there,” says economist Ed Yardeni, president of Yardeni Research.

President Xi Jinping sounds like he’s ready to halt stimulus spending. His latest statements in China’s state press sound a lot more concerned with pushing through reforms, especially in the bloated state sector.

In contrast, China’s other key leader — Premier Li Keqiang — appeared focused on maintaining growth near 7% in his remarks in at the National People’s Congress in March.

Related: U.S. dollar jumps on possible June rate hike

China’s new economy

On top of the slowdown, China faces two bigger problems: debt is piling up, and the country is trying to make the very tricky transition from an economy that makes a lot of cheap stuff to one that relies more on its own middle and upper classes buying the goods and services it produces.

This is new territory for China. President Xi and other leaders are clearly experimenting. The result has been a year of yo-yo economic policies. What comes next — and how that impacts the rest of the world — isn’t clear.

Related: Minecraft just landed a huge deal to expand into China

china debt exploded

 

The yo-yo policies are likely to continue until China sets a clearer course. For now the key questions are:

1. How much more stimulus will China do? More would likely be good for the global economy, but too much could backfire. Investors might read it as panic. If there really is a power struggle between President Xi and Premier Li over how much more money to pump into the economy, the leaders might turn to devaluing the currency instead to try to boost exports and growth.

China’s vow last summer to allow the yuan to trade more freely seems to be on hold.

2. Can President Xi push through reforms? Just because the Chinese economy seems to have avoided a “hard landing” doesn’t mean it’s really on better ground. The state economy is still a large crutch.

State firms have to be allowed to fail, says Mark Williams of Capital Economics, and banks have to acknowledge their bad debts.

3. Will China’s debt bubble burst? China’s debt has exploded. Outstanding debt as a percentage of GDP went from about 150% in 2009 to nearly 240% in March 2016, according to Capital Economics.

The debt isn’t likely to be a huge factor in the coming months, but it’s another mess for Beijing to sort out down the road.

New Vietnam PM says won’t pursue military buildup in South China Sea

May 25, 2016
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World | Wed May 25, 2016 8:03am EDT

Vietnam’s Prime Minister Nguyen Xuan Phuc is seen during an interview at the Government Office in Hanoi, Vietnam May 25, 2016.
REUTERS/KHAM

Vietnam Prime Minister Nguyen Xuan Phuc said on Wednesday his country was not pursuing a military buildup over the South China Sea and would work with allies to seek peaceful solutions to disputes, with no use of force.

Speaking in a rare interview with some foreign journalists after a visit by U.S. President Barack Obama, Phuc said the South China Sea dynamic had grown in complexity and needed regional friends and strategic partners to ensure harmony and avoid any disruption to maritime trade.

His comments came two days after Obama removed a decades-old lethal arms embargo on Vietnam, allowing the communist country’s military to engage closer with its U.S. counterparts and procure American defense technology.

“Vietnam does not pursue military buildup, but Vietnam pursues protecting our sovereignty, firstly with peaceful measures, diplomatic measures and even justice measures,” Phuc said.

“Vietnam is a country that loves peace and Vietnam resolves international and regional issues based on international laws … in the spirit of not using force and not using force to threaten each other.”

Phuc made no reference to China during the interview and it was unclear what he meant when he used the word “justice” as a means of preserving Vietnam’s sovereignty claims.

He took office last month and is a member of a leadership triumvirate that has the difficult task of maintaining the Communist Party’s close ties with its Chinese counterpart, while under pressure from its people to stand up to Beijing’s growing maritime assertiveness.

‘NO CONFLICT’

The end of the U.S. arms embargo, one of the last vestiges of the Vietnam War, could be a big boost to what experts say is Vietnam’s pursuit of a deterrent by modernizing its forces to defend a long coastline and forge stronger security ties.

But Phuc said the priority was bringing Southeast Asian states and partners like Japan, to agree to de-escalate tension peacefully and not by “using force to threaten”.

“I repeat this again – no conflict,” he said.

“Vietnam does not have a militarization policy but we have necessary measures of working together with other countries … to ensure peace, freedom of navigation, aviation and commerce.”

Phuc hailed as a success Obama’s three-day visit, which ended on Wednesday. He said Vietnam’s leaders and people had welcomed him with affection and friendship.

“He himself said the welcome of Vietnamese people has touched his heart,” he said. “(He was) very moved and very thankful.”

Asked about whether Vietnam’s political system and conservative values were conducive to realizing its economic ambitions, Phuc said his country’s pursuit of trade liberalization showed communism was not an obstacle.

“Our country is a country led by the Communist party, but our country is a country following a market economy,” he said.

“We can’t say Vietnam is a conservative country. A market economy must be dynamic, it can’t be conservative.”

He said a key priority for Vietnam was managing its spiraling public debt and keeping the ratio below 65 percent of gross domestic product while maintaining annual growth of 6.5-7 percent for the next five years.

(Editing by Robert Birsel)


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