Outside the Beltway

China in the News

Four news items and articles about China that have caught my eye.

Dave Schuler · Tuesday, August 31, 2010 · 7 comments

There have been a number of articles and news items about China lately that I’ve found interesting and which I thought received less attention in the United States and in the blogosphere in particular than they deserved.

Chinese Troops in Kashmir

China may have moved thousands of Chinese troops into Kashmir:

The entire Pakistan-occupied western portion of Kashmir stretching from Gilgit in the north to Azad (Free) Kashmir in the south is closed to the world, in contrast to the media access that India permits in the eastern part, where it is combating a Pakistan-backed insurgency. But reports from a variety of foreign intelligence sources, Pakistani journalists and Pakistani human rights workers reveal two important new developments in Gilgit-Baltistan: a simmering rebellion against Pakistani rule and the influx of an estimated 7,000 to 11,000 soldiers of the People’s Liberation Army.

China wants a grip on the region to assure unfettered road and rail access to the Gulf through Pakistan. It takes 16 to 25 days for Chinese oil tankers to reach the Gulf. When high-speed rail and road links through Gilgit and Baltistan are completed, China will be able to transport cargo from Eastern China to the new Chinese-built Pakistani naval bases at Gwadar, Pasni and Ormara, just east of the Gulf, within 48 hours.

The article goes on to note that many of the soldiers may have been brought in to work on the railroad that the Chinese are building there. As a blog-friend of mine put it (alluding to Tibet), the Pakistanis are going to wake up some morning only to learn, much to their surprise, that they are Chinese.

Chinese-Phillipine Relationship Strained by Hostage Deaths

Last week a dismissed police officer took a bus carrying tourists from Hong Kong hostage, killing eight of the tourists before police snipers killed him. This story has been a cause célèbre both in China and in the Philippines. The Chinese, somewhat understandably, are outraged at the deaths:

MANILA, Philippines — China is angry after a violent hostage drama in the Philippines killed eight tourists from Hong Kong, and the Southeast Asian nation can do little to soothe the powerhouse, as a raft of visitor cancellations has hit the country’s tourism industry.

Tens of thousands of people have marched in Hong Kong to denounce the Philippines and thousands of Chinese tourists canceled flight and hotel bookings. Two Chinese recipients of Asia’s most prestigious award failed to show up for the Manila ceremony.

President Benigno Aquino III has asked for China’s forgiveness while vowing “someone will pay” for the embarrassing official handling of the 11-hour hostage-taking Aug. 23 that unfolded live on television.

China is the Philippines’s third largest trading partner after the United States and Japan and counts for a substantial amount of the Philippines’s export trade. Maintaining a friendly relationship with its giant neighbor is important to the island nation’s economic health. The situation is certainly a sad one and the Chinese are clearly right to be upset but I’ve found the Chinese reaction completely out of proportion to what actually went on. There must be more going on here than meets the eye.

China Cuts Exports of Rare Earths

The Chinese government has moved to curtail the export of rare earth elements, citing environmental grounds:

(Reuters) – China’s decision to slash export quotas of rare earth elements was a necessary step to protect the country’s environment, commerce minister Chen Deming said following criticism from Japanese officials.

“Mass extraction of rare earth will cause great damage to the environment and that’s why China has tightened controls over rare earth production, exploration and trade,” Chen was quoted by state news agency Xinhua as saying on Saturday.

China issued export quotas for 30,258 tonnes by the end of July, down 40 percent compared to last year, following a nationwide campaign to consolidate the sector and clamp down on illegal production.

A number of the so-called “rare earth elements” are vital to the production of hybrid batteries, wind turbines, and solar cells.

I found this story the most intriguing of all. China produces nearly all of the rare earth elements that are sold, about 95%. The U. S. produces perhaps 2%. I suspect that the Chinese are trying to improve the price they’re receiving for the minerals and their tightening up on exports has certainly had that effect.

This is a subject I’ve written quite some little bit about over the years. One of the conundrums of the move to “green” energy sources is that we could be trading dependence on foreign oil for dependence on Chinese rare earths.

It may also be that China is restricting exports so that they can keep a lid on just how much in the way of reserves they actually have. The U. S. is coy about its reserves in this area as well so it wouldn’t be completely surprising.

Where’s Zhou?

There have been some rumors floating around about the People’s Bank of China and its chairman, Zhou Xiaochuan. It started with rumors about the bank having mislaid the mind-boggling amount of $430 billion. That was followed with rumors the Zhou had defected:

But the rumors persisted in China. In an apparent attempt to tamp them down, the central bank on Monday posted photos with two news releases on its website showing Zhou meeting foreign guests. And Ming Pao on Monday issued a statement on its website categorically denying that it had ever reported any of the Zhou rumors ascribed to it. Ming Pao “strongly condemns the act of using Ming Pao’s name to spread false information,” the statement said.

Meanwhile, Chinese web pages carrying the rumor became inaccessible and censors began blocking Google searches of Zhou’s Chinese name for users inside China.

Perhaps the story might have lived and died in China, as many rumors do. But then Stratfor — a firm that says it offers “unique insights into political, economic, and military developments” — published a report later Monday on its website calling international attention to the tale. The report, titled “China: Rumors of the Central Bank Chief’s Defection,” was widely circulated among financial market participants in the U.S.

It noted that the Zhou rumors were unconfirmed and said that unspecified “reports by state-run Chinese media appeared to send strong indications that Zhou is in no trouble at the moment.” It also detailed various other past rumors of Zhou’s political demise.

It’s hard to know what to make of this story. It might be a complete fabrication. However, if you happen to see a well-dressed Chinese man walking down the street carrying a satchel with $430 billion in it, please report it to Outside the Beltway.

Winston Churchill called the Soviet Union “a riddle wrapped in a mystery inside an enigma” but the description fits China even better. Its vastness, its enormous population, and its distance from us makes getting comprehensible, reliable information about the country very difficult and the Chinese authorities only compound the matter by their own opacity. That something is difficult does not make it unimportant and I think we’re going to see information about China rise in importance in the coming years if anything.