Under the Radar News 5.28.10

A weekly compilation of underreported developments in Asia

China and Taiwan will add an additional 120 direct flights by the end of the year. The increase reflects the growth in tourism and trade between the two countries since an easing of hostilities in 2008.

Singapore is set to build the world’s large biodiesel plant by the end of the year. EU requirements for the increased use of biofuels have been a major driver of the effort.

The Vice President of the European Commission has suggested that China’s system of internet censorship is a trade barrier that should be addressed in a case before the World Trade Organization. The US is also considering a WTO case against China due to the impact of Chinese censorship on Google.

A former Japanese Defense Minister has advocated the development of a Japanese Marine Corps. The force would be used to retake Japanese islands if they were captured and could replace US Marines currently stationed on Okinawa.

China has announced that it will hold its first flight using aviation biofuel later this year. By 2020 China plans to replace 15 percent of total diesel and gasoline consumption with biofuels.

Legislators in Taiwan have objected to Japan’s plan to extend its Air Defense Identification Zone into airspace controlled by Taiwan. Currently, Taiwan controls two thirds of the airspace over the small Japanese island of Yonaguni.

The Not-so Strategic Dialogue

The US-China Strategic and Economic Dialogue (S&ED) that wrapped up in Beijing yesterday should lead to the coining of a new diplomatic maxim: the bigger the delegation, the smaller the results. The State Department's outcomes document from the Dialogue is a laundry list of 26 items that most likely could have been “accomplished” without sending 200 US officials -- including 15 Cabinet secretaries and agency heads -- to China for several days of high-profile, low content meetings. Meanwhile, on the really important strategic and economic issues that should occupy center stage -- Iran, North Korea, global economic imbalances -- there appears to have been little movement despite persistent claims of a successful dialogue from both sides. In fact, China's equivocating response to North Korea's unprovoked sinking of a South Korean naval vessel is a good example of the continued wide gulf in the strategic considerations of the two countries.

While the Obama administration has hailed the S&ED -- a combination and dramatic expansion of two parallel high-level Bush-era dialogues with China -- as one of its "signature institutional innovations", other commentators have offered less flattering assessments. In an article hailing the end of “G2” thinking in the Obama Administration, leading China thinkers Elizabeth Economy and Adam Segal from the Council on Foreign Relations advocate downsizing and refocusing the S&ED back to the truly strategic issues. Joshua Cooper Ramo, who coined the term "Beijing consensus" to describe the growing influence of China's economic and political model, goes further and calls for the S&ED to be abandoned altogether. He likens it to "an annual parent-teacher conference with China" that is too large and slow to deal meaningfully with the rapid and diverse challenges the US-China relationship encompasses. Instead, Ramo suggests a more flexible and fluid approach, with a "ruthless defense of American interests as the starting point."

There are merits to both of these approaches to fostering more effective bilateral engagement, but the more important aspect of their analyses is the emphasis on the inherent structural constraints on US-China relations. As the latest round of the S&ED ends with more pomp than substance, it is a good time to evaluate not only the means to engage China, but also the underlying expectations about the quality and ends of that engagement.

Photo: U.S. Department of State

Under the Radar News 5.21.2010

A weekly compilation of underreported developments in Asia

South Korea is stepping up its expenditure for weapons systems to prepare for North Korea’s asymmetrical and irregular warfare and as tensions rise on the peninsula. The 3 trillion won ($2.6 billion) injection will be used to upgrade warship sonar, deployment of sound surveillance systems, three-dimensional anti-air radio, and bombs.

The Philippine government and Moro Islamic Liberation Front (MILF)will work together to dispose landmines in conflict-areas in Mindanao as part of the peace negotiations.

Jakarta has offered to set up a Joint Working Group with China on social welfare cooperation to reduce poverty, provide better services for senior citizens and invalids, and disaster handling. China welcomes the initiative as improving welfare and natural disasters responses are important priorities to maintain internal security in China.

Taiwan has stepped up its naval “stealth” technologies by putting into service its first missile boats, the “Kuang Hua No.6”. This enhances the island’s defense capability although cross-Strait ties have warmed considerably.

Japan and Australia have signed the first bilateral Acquisition and Cross-Servicing Agreement (ACSA)to enhance defense and diplomatic cooperation. The armed forces will provide each other with food, fuel, and logistical support during peacekeeping and disaster-relief missions, and conduct joint military exercises and training.

Malaysia recently proposed a “Clean Energy Development Bank” to develop clean energy-related industries in Malaysia and in the developing states of the Organization of the Islamic Conference.

China has recently fine-tuned prosecution standards for financing terrorism. The new regulation outlines prosecution for 86 economic crimes and draws a clear-cut line between criminal and non-criminal acts.

The Korean Army will dispatch a 320-strong unit and 40 police officers to Afghanistan to protect Korean civilian reconstruction workers in Parwan Province.

China has cut its timber output by one-third less than the allowed level to protect the Greater Hinggan Mountains in an effort to protect the forest after decades of deforestation.

Australia is increasing its aid to various countries including Afghanistan, Indonesia and African countries. Among them, Afghanistan is one of the first countries to benefit from the aid increase to boost AusAID and Australian Federal Police numbers and the newly formed Australian Civilian Corps.

China’s copper industry is not copping out

China has long viewed copper as a strategic resource. It is the demand for the metal in key industries, rather than its scarcity, that has warranted the premium placed upon it by policy planners and the extractive industry. For China, copper is also key to its development, which compounds the strategic value of this versatile metal.

Recently, China’s demand for the metal has been sustained by buoyant economic outlook and the government stimulus injection into copper intensive industries - electricity and construction. Its growing consumption amidst the global financial crisis left some market watchers speculating that China was seeking to diversify investments to hedge against depreciation of their dollar-based assets. At a time when U.S. treasury bonds were at risk of under-performing, China appeared to be investing in inflation-proof resources that can be directly used for driving its economic engine.

Projections for long-term copper demand in China are promising despite a winding down of government stimulus spending. In addition to likely expansion of the electricity system (currently accounting for over half the copper use) and the construction sector, future demand from the hybrid and electrical car industry may also be significant. As a “lifestyle metal” – copper consumption also correlates with improvements in quality of life. Therefore, increasing personal wealth and growing consumer market will likely spur the production of goods, particularly household appliances with copper components.

In anticipation of global economic recovery and future demand, the State Council announced a plan last year to consolidate the country’s metal industry into three to five large producers by 2011. Acquisitions are tentatively underway with the country’s top two producers, the provincially-owned Jiangxi Copper Corporation and Tongling Nonferrous Metals Group, being propositioned by leading state-owned miners Minmetals and Aluminum Corporation of China (Chinalco). If the deals are secured, it will bring the country’s top producers under the control of the State-owned Assets Supervision and Administration of China (SASAC), which is the majority stockholder in Minmetals and Chinalco. Bringing key players under the state-owned enterprises is undoubtedly a reflection of industry’s strategic nature. In the past, SASAC has focused on creating ‘national champions’ in key sectors and supporting their international investments in alignment with the state’s strategic interests.

In the long term, restructuring will enhance Chinese corporations’ standing in the global copper market. Streamlining the industry will provide the fewer, and more powerful, players with greater bargaining power on copper imports as well as enhance competition in the industry. The rise of a few copper giants may also consolidate capacity for international acquisitions or joint ventures to strengthen China’s global resource expansion.

Image source: China Daily

Taiwan Facing Up to the Airbase Survival Challenge

China deploys over a thousand short range ballistic missiles as well as almost 500 fighter and bomber aircraft opposite Taiwan. In the event of a conflict, China could seek air superiority over the Strait by mobilizing a full-scale missile bombardment against Taiwan’s airfields and fighter aircraft fleet. A 2009 RAND report predicted that if the first wave of missiles specifically targeted airbases, China would have a 90% chance of doing sufficient damage Taiwan’s runways to trap its fighters on the ground for hours. While the Republic of China Air Force (ROCAF) faces significant challenges in cross-Strait conflict scenarios, airbase survival appears to be a rising priority of Taiwan’s defense establishment.

Leveraging the island’s unique geography, the ROCAF has constructed a massive underground bunker at Chia-shan on Taiwan’s east coast to house up to 200 of its fighters. Taiwan has also constructed a second mountain bunker at Chih-hang Airbase, near Tai-tung, to protect an additional 60 fighters.

The ROCAF has also taken significant steps towards ensuring operability despite possible runway damage. ROCAF fighters are prepared for operating from sections of the national freeway system in a contingency. Taiwan has also invested in specialized equipment to reduce the impact of runway damage. In 2002, the ROCAF procured more than 300 rapid runway repair kits and holds regular runway repair exercises.

Engineering studies, however, have suggested that Taiwan requires better runway repair equipment to address its unique threat environment. Similarly, a 2006 survey assessed that existing systems have not met Taiwan’s technical requirements.

Indications exist that an indigenous effort may be underway to improve upon existing solutions. For example, Taiwan is researching advanced cementing technologies to quickly repair damaged runways, and outlining innovative methods to clear debris and unexploded ordnance. Taiwan has also conducted technical analysis of runway repair optimization and surveyed international approaches to the runway repair problem. Furthermore, development of electronic attack systems to counter ballistic and cruise missile terminal guidance systems is also under consideration.

U.S. assessments of Taiwan’s airbase survivability assume China will mount a full scale assault as a prelude to an amphibious invasion. Other analysts believe limited coercive use of force is a most likely scenario. Nevertheless, a conflict is less likely to be a long distance race between China’s missile forces and Taiwan’s runway repair capability, but a sprint aimed at achieving political goals rather than a complete military defeat of Taiwan. Responding to China’s strategic philosophy of “rapid war, rapid resolution,” Taiwan’s strategy focuses on “winning the first battle” rather than a war of attrition. While the challenge to Taiwan posed by Chinese missile forces is substantial, the ROCAF’s ability to sustain operations in a limited coercive conflict may be greater than expected.

Under the Radar News 5.14. 2010

A weekly compilation of underreported developments in Asia

A joint study between Japan, China, and South Korea on a trilateral FTA marked the first step towards commencing gAovernment-level negotiations on East Asian economic integration.

North Korea declares success in developing a nuclear fusion reaction, although its use in energy generation remains in the experimental stages. An official newspaper declared the event to be a “breakthrough” in the country’s nuclear technology development.

Taiwan and China have established the first official offices across the Strait since 1949. The recently opened tourism offices, staffed by government officials, seek to promote travel and cultural exchanges and mark a symbolic step in cross-Strait diplomatic relations.

China’s central government and Xinjiang will invest 1.5 billion yuan to promote the exploration of major minerals including coal, iron, copper, lead and zinc in the autonomous region.

Taiwan’s National Space Organization (NSPO) has successfully launched a scientific rocket, Sounding Rocket VII, to collect valuable ionosphere data for enhancing Taiwan’s global position system and telecommunications infrastructures.

China National Petroleum Corporation plans to establish its own tanker fleet to enter the international crude oil shipping market.

ASEAN Defense Ministers approved the guidelines for establishing the ASEAN Defense Ministers’ Meeting (ADMM)-Plus forum later this year. The ADMM+8 format is envisaged to be a platform for cooperation between ASEAN and its partners – Australia, China, India, Japan, New Zealand, Republic of Korea, Russia and the U.S.

Singapore seeks to share its experience in corporate governance and developing infrastructure projects with Indonesia through the public-private partnership model.

Indonesian authority indicates that weapons from recently arrested terrorist suspects were mostly smuggled from the Philippines. Many of the suspects had undergone training in Mindanao, home to Muslim separatist rebels in the predominantly Catholic Philippines.

Japan has reopened its experimental nuclear reactor for the first time since its shutdown in 1995 because of a major accident and cover-up. This costly reactor uses plutonium fuel instead of conventional uranium and is expected to enter into full-fledged operation in 2013.

Malaysia Still Unclear About Nuclear

Last month, Malaysia passed a national export law aimed at curbing nuclear trafficking. The Strategic Trade Bill imposes prison terms of at least five years and million-dollar fines for those importing or exporting material that could be used to make weapons of mass destruction.

The bill marks an important step in Kuala Lumpur’s efforts to shed its reputation as a transshipment point for nuclear smuggling. Malaysia has been linked to illicit supplies of sensitive equipment to Libya in 2003 and Iran in 2008, and was one of the few remaining newly industrialized countries without stringent nuclear export controls. Arms control advocates had long argued that these infringements occurred due to the absence of strict export governance.

The move was also read as a last-ditch effort by Malaysian Prime Minister Najib Razak to avoid embarrassment, lest he attended last month’s Nuclear Security Summit empty-handed, particularly when he was also scheduled to meet President Obama on the sidelines of the summit.

The U.S. has welcomed the Strategic Trade Bill as part of a joint effort to stem proliferation and curb illicit WMD trafficking, praising Malaysia for taking a step to “remedy and close loopholes” in the U.S.-Malaysia relationship.

Yet it may be too early to conclude that Malaysia is serious about addressing non-proliferation and trafficking issues. As Mr. Najib himself noted, establishing the legal framework is “only the first step” in the process of fighting nuclear trafficking. For Malaysia, that first step alone has taken about five years, owing to “the complications in technical matters that had to be understood by all related ministries and agencies”. That suggests it could be several more years before the law is implemented by enforcement agencies, a worrying fact as Malaysia mulls building its own civilian nuclear plants by around 2021.

Kuala Lumpur will also have to balance its efforts to strengthen the global nonproliferation regime with domestic imperatives, particularly given the fragile state of Mr. Najib’s ruling coalition, which has lost seven of the last ten by-elections held. This has already held particularly true with Iran given Malaysia’s status as a Muslim-majority nation. For instance, probably due to rising discontent at home, Mr. Najib denied that his country had cut off gasoline supplies to Iran, contradicting earlier statements by state oil firm Petronas, as well as his own comments in Washington. A similar confusion occurred last year when Malaysia initially voted against an IAEA resolution to censure Iran for building a secret second uranium-enrichment plant, but then, after U.S. pressure, dismissed its envoy and reversed its position.

All this suggests that the way forward for Malaysia’s counter-trafficking efforts remains unclear despite the passage of the Strategic Trade Bill.

Photo: Sulekha.com

Solar power's future looking up in China

Energy security and the urban-rural development gap are important problems for China to tackle. While more and more people are joining the middle class, about 10 million people in villages in the western and northern parts of the country are still struggling with the lack of basic commodities like electricity. China has recognized renewable energy, particularly the underdeveloped solar energy, as a solution to these challenges.

China has the geographical condition to realize the huge power potential of solar energy. Two-thirds of China, mainly in rural provinces of Gansu, Inner Mongolia, and Xinjiang, consists of non-arable land that receives abundant sunlight. With significant concentrations of solar radiation per year (exceeding 140kcal/m2/hr and duration of over 2200 hours per year), the National Laboratory for Clean Energy estimates that China’s current energy requirement can be met by covering a third to half of these areas in solar cells and catching only one-tenth of the energy produced. Despite the staggering potential, solar power development has been lagging behind hydro and wind power because of the high price of solar power output, due to the lack of government subsidy and high cost of silicon-made solar cells.

Recently, several developments have raised prospects of a significant drop in solar power prices in China within the next decade. Several large solar plants are being built in those arid provinces, including the world’s largest solar plant in Inner Mongolia with a capacity of 2 gigawatts, which will start construction in June 2010 and is expected to be completed by 2019. There is also increasing government commitment to solar power. Last year, the Chinese government launched the first pilot program to subsidize 50-70% of the investment cost for 294 solar plants as well as a $2.93 per watt subsidy for solar plants of at least 50 kilowatts. Early this year, Beijing also announced six “golden sunlight” projects to turn the country’s capital into a solar city. Technological advances and economy of scale have reduced the cost of silicon wafers used in solar cells and promoted use of thin-film panels as an even more cost effective alternative to silicon wafers.

The government has set a 20 gigawatts solar power output target for 2020. It remains to be observed whether solar power can be extended for use at the national level due to power grid infrastructure challenges. Since most solar power plants are in remote provinces, substantial infrastructure and grid investments have to be made to bring the power for use to the rest of China. Nevertheless, with these new developments, solar will certainly play a more significant role in providing energy and development for at least the rural parts of China.

Image: World's largest color LED display powered by solar energy in Beijing
Source: China Daily

Under the Radar News 5.7.10

A weekly compilation of underreported developments in Asia

The Taiwanese Air Force will launch an investigation into potential corruption surrounding the sale of Mirage jet fighters to Taiwan in 1993. Taiwan won a $830 million judgment this week against a French defense contractor who sold frigates to the Taiwanese Navy in 1991

China will be increasing its presence in the Arctic region and will send more scientific expeditions to the region. Expeditions will study the impact of climate change on the environment and the possibility of exploiting natural resources in the Arctic.

Myanmar has announced plans to enact a newanti-terrorism law following a series of bomb attacks by separatist groups. In recent months festivals, hydropower plants and military checkpoints have been attacked by ethnic separatist groups.

Malaysia has approved plans to open a nuclear power plant by 2021. Proponents of the plant argue that nuclear power would be more environmentally friendly than expanding the use of coal and oil power.

South Korea has stepped up quarantine efforts in order to stop the spread of an outbreak of disease in its livestock. Foot and mouth disease can spread easily among cattle, goat and sheep and devastate agricultural production.

Guangdong Province in China has announced plans to build an offshore wind farm. The development would be the largest in China and serve as a model for future alternative energy projects.

The government and the Philippines and Moro Islamic Liberation Front have reached agreements on land mine clearance and the treatment of refugees. These agreements may be a step forward in a peaceful resolution for the Mindanao conflict in the southern Philippines.