Quotulatiousness

March 30, 2013

All those manufacturing jobs are never coming back

Filed under: Britain, Business, China, Economics, USA — Tags: , — Nicholas @ 08:37

Tim Worstall explains why this is at the Adam Smith Institute blog:

I’m always rather puzzled by those who shout that we’ve got to bring manufacturing back to the UK. Apparently this will solve all our problems over what to do with dim Northern lads or something. Once they’re all hammering out whippet flanges then we just won’t have a problem with unemployment ever again. The problem with this idea is that modern manufacturing simply doesn’t provide many jobs. And if it were to provide mass employment it would be very badly paid employment too:

    Americans working to produce traded goods and services earn, roughly, according to their productivity. If low-skill workers in America aren’t much more productive in manufacture of traded goods and services than low-skill workers in China, then they can’t earn much more than workers in China while being employed in manufacture of traded goods and services. They can earn a rich-world wage in production of non-traded goods and services, like sandwiches and haircuts, so long as there is sufficient local demand. In other words, the only way to get less-skilled Americans a good wage in a manufacturing industry is to significantly raise their skill and productivity level. If that can’t be accomplished, they can only hope to find good wages in non-traded industries. At least, that is, until wages of less-skilled workers across the developing world come much closer to converging with those in America.

Of course, that’s all about America but the same logic pertains here as well. Chinese manufacturing wages are around $6,000 a year at present. Meaning that if we had mass employment in manufacturing, as they do, then wages would need to be around that level. Or, alternatively, UK based manufacturing would have to be much more productive to support higher wages. And “more productive” is the same as saying “uses less labour”. Thus you can have few well paid jobs (in the Rolls Royces etc of this world) or you can have many badly paid jobs (Shenzen). It isn’t actually possible to mix and match between the two.

March 7, 2013

North Korea rhetorically re-starts the not-officially-ended Korean War

Filed under: China, Military, USA — Tags: , , , — Nicholas @ 09:46

The Chinese news agency Xinhua reports that North Korea wants to scrap the armistice that brought the Korean War to a halt in 1953:

The Democratic People’s Republic of Korea (DPRK) has vowed to nullify an armistice that ended the 1950-53 Korean War from March 11, and warned of more and stronger countermeasures if the United States and South Korea continued joint military drills.

The announcement, made by DPRK’s top Army Supreme Command on a rare appearance on the state TV, came when the UN Security Council is ironing out penalties against Pyongyang over its third nuclear test on Feb. 12. Diplomats said that a Council resolution condemning the test and toughening sanctions on DPRK will be put to a vote as early as this week.

March 11 marks the start of the annual joint South Korea-U.S. military exercises, which will involve 10,000 South Korean and 3,500 U.S. troops. The drill, dubbed Key Resolve, was denounced by DPRK’s official KCNA news agency as a prelude to an invasion.

Experts said the DPRK’s latest move aims to defy the possible new UN sanctions and seeks to replace the armistice agreement with a peace treaty that guarantees Pyongyang’s security, as requested by DPRK at the six-party talks.

March 5, 2013

China claims the shipbuilding title

Filed under: Business, China — Tags: , , , — Nicholas @ 09:02

Strategy Page talks about the success of Chinese shipyards:

Last year South Korea lost its decade long battle with China to retain its lead in ship building. Because of a five year depression in the world market for shipping, South Korean ship exports fell 30 percent last year, to $37.8 billion. China, helped by government subsidies, saw ship exports fall only 10.3 percent, leaving China with $39.2 billion in export sales. The Chinese government has also been giving its ship builders lots of new orders for warships, which made its yards more profitable and better able to beat South Korea on price. The Chinese government also provides its ship builders with more loans, allowing the builders to offer better credit terms to customers. South Korea is still ahead of China in total orders for ships. As of last year South Korea had 35 percent of these orders versus 33.3 percent for China.

China has been helping its shipyards for over a decade and that has enabled Chinese ship builders to gradually catch up to South Korea and Japan. It was only four years ago, sooner than anyone expected, that China surpassed South Korea as the world’s largest shipbuilder in terms of tonnage. In late 2009, Chinese yards had orders for 54.96 million CGT of ships, compared to 53.63 million CGT for South Korea. Thus China had 34.7 percent of the world market. In 2000, South Korea took the lead from Japan by having the largest share of the world shipbuilding market.

CGT stands for Compensated Gross Tons. This is a new standard for measuring shipyard effort. Gross tons has long been used as a measure of the volume within a ship. CGT expands on this by adding adjustments for the complexity of the ship design. Thus a chemical tanker would end up with a value four times that of a container ship. China is producing far more ships, in terms of tonnage of steel and internal volume, than South Korea, mainly because a much larger portion of Chinese ships are simple designs. South Korea has, over the years, pioneered the design, and construction, of more complex ships (chemical, and Liquid Natural gas carriers.)

February 28, 2013

North Korea struggling with loss of faith in the state

Filed under: Asia, China, Government — Tags: , , , , , — Nicholas @ 08:50

Strategy Page on the challenges facing the government as the younger generation grows up:

A major source of information about North Korea is obtained by South Korean intelligence experts interviewing the steady flow of refugees arriving in South Korea (via China and the South Korean embassies in neighboring countries like Thailand). For the last decade, over a thousand of these refugees have arrived each year. In the last few years China and North Korea have increased their efforts to reduce that number, which peaked at 2,900 in 2009 and was 1,500 last year. These determined and desperate people keep coming. Separate interviews are compared and checked against each other to obtain an updated and accurate first-hand view of life in the north. This also helps detect the spies North Korea tries (often with success) getting into the south via the refugee route. While the refugees detail the growing decline in living standards up north, it’s also become clear that there is a very real generational shift in loyalties in the north. The generation who grew up during the 1990s famine (that killed about ten percent of the population and starved most of the rest for years) no longer believe in the North Korean dictatorship. Many who came of age before 1990 still do, but for most everyone under 30 the state is the enemy and self-reliance, and not a benevolent dictatorship, is the only way to survive. The North Korean government has been fighting these attitudes more and more, as this generation of unbelievers grows larger each year. The more astute members of the northern leadership see this as a no-win situation. Eventually most North Koreans will be very hostile to the state and more adept at making money in spite of the government, or simply getting out of the country. Most of the leadership is still afraid of enacting Chinese style economic reforms because they believe a more affluent population would seek revenge for the decades of misrule and tyranny. The Chinese say that didn’t happen in China. The North Koreans point out that, as bad as the Chinese communists were in the 1950s and 60s (killing over 50 million people via starvation, labor camps and execution) that was not as bad (proportionately) as what the North Koreans have suffered. Moreover, the North Korean leaders point out that, historically, Koreans have been a bit more excitable and brutal when aroused by misrule. The Chinese say times have changed but the North Korean leaders are not yet willing to bet their lives on that being the case.

The refugees report that most North Koreans understand that the police state up there is strong enough to suppress any uprising now or in the foreseeable future and that the only real threat to the dictatorship is intervention (openly or via a coup) by China. Refugees also report that it’s common knowledge that hundreds of North Koreans have died of radiation poisoning or been born with birth defects because of the uranium mining and working with nuclear materials. The government has responded by offering large cash bonuses to those who will work in the uranium mines. The refugees report in detail many other ways the Kim government abuses their subjects.

February 5, 2013

Japan lodges formal protest after Chinese ship targets Japanese ship near Senkaku/Diaoyu islands

Filed under: China, Japan, Military — Tags: , , — Nicholas @ 09:13

The BBC has the details:

“On 30 January, something like fire-control radar was directed at a Japan Self-Defence Maritime escort ship in the East China Sea,” Mr Onodera told reporters on Tuesday.

The minister said Japan’s Yuudachi vessel and the Chinese frigate were about 3km (one mile) [ed: conversion error here, 3km is about 2 miles] apart at the time, Japan’s Kyodo News reports.

Asked about the delay in filing the protest, Mr Onodera said it took the ministry until Tuesday to determine that a fire-control radar had indeed locked on the Japanese ship.

He added that a Japanese military helicopter was also targeted with a similar type of radar by another Chinese frigate on 19 January.

“Directing such radar is very abnormal. We recognise it would create a very dangerous situation if a single misstep occurred,” he said.

Senkaku/Diaoyu Islands

January 28, 2013

India’s Chinese border to be reinforced

Filed under: China, Economics, India, Military — Tags: , , — Nicholas @ 09:43

Strategy Page on the Indian government’s planned upgrades along the shared border with China:

The Indian Army wants $3.5 billion in order to create three more brigades (two infantry and one armored) to defend the Chinese border. Actually, this new force is in addition to the new mountain corps (of 80,000 troops) nearing approval (at a cost of $11.5 billion). The mountain corps is to be complete in four years. The three proposed brigades would be ready in 4-5 years. By the end of the decade India will have spent nearly five billion dollars on new roads, rail lines and air fields near the 4,057 kilometer long Chinese border.

The Indian Army currently has 37 Divisions including; 4 RAPID (Reorganised Army Plains Infantry Divisions) Action Divisions, 18 Infantry Divisions, 10 Mountain Divisions, 3 Armored Divisions and 2 Artillery Divisions. There are also 12 independent combat brigades (five armor and seven mechanized infantry). Most of the army has been organized and trained to fight the Pakistani army in flat terrain. The Chinese border is largely mountainous.

Three years ago India quietly built and put into service an airfield for transports in the north (Uttarakhand) near their border with China. While the airfield can also be used to bring in urgently needed supplies for local civilians during those months when snow blocks the few roads, it is mainly there for military purposes in case China invades again. Uttarakhand is near Kashmir, and a 38,000 square kilometer chunk of land that China seized after a brief war with India in 1962. This airfield and several similar projects along the Chinese border are all about growing fears of continued Chinese claims on Indian territory. India is alarmed at increasing strident Chinese insistence that is owns northeastern Indian state of Arunachal Pradesh. This has led to an increased movement of Indian military forces to that remote area.

India quickly discovered that a buildup in these remote areas is easier said than done. Moreover, the Indians found that they were far behind Chinese efforts. When they took a closer look three years ago, Indian staff officers discovered that China had improved its road network along most of their 4,000 kilometer common border. Indian military planners calculated that, as a result of this network, Chinese military units could move 400 kilometers a day on hard surfaced roads, while Indian units could only move half as fast, while suffering more vehicle damage because of the many unpaved roads.

January 2, 2013

Potential hotspots for 2013

Filed under: Africa, Asia, China, India — Tags: , , , , — Nicholas @ 09:37

Strategy Page has the advance listing of places around the world where peacekeeping or peace-making may be required this year:

Planning for peacekeeping works a lot better if you have a good idea of where the next crises will occur. For 2013 there are several potential hotspots where diplomats can’t handle the mess and armed peacekeepers may be needed. In some cases, there might also be a call for more peacekeepers in an existing hotspot. That might happen in the eastern Congo, where the largest force of UN peacekeepers has been trying to calm things down for nearly a decade, but the violence just keeps going. There’s increasing hostility between Sudan and newly created South Sudan. There are some peacekeepers there, but, like Darfur (western Sudan) the violence never seems to stop.

There’s always been the possibility of large scale fighting between Afghanistan and Pakistan. There’s been more and more small scale violence on the border and growing threats from both countries. There is still a lot of tension between Pakistan and India, over Pakistani support for Islamic terrorists making attacks in India. Pakistan denies any responsibility, despite a growing mountain of evidence. Neither country would be very hospitable to peacekeepers.

And then there the developing mess in the Western Pacific off China, where Chinese claims to a lot of uninhabited rocks and reefs is causing a growing outrage from the neighbors. China keeps pushing and with all those armed ships and aircraft facing off, an accidently, or deliberate, shot is possible. China will also be a major player if North Korea finally does its political collapse. The North Korean economy has already tanked as has morale and living standards. If the government loses control China and South Korea have both made claims on responsibility for taking over and dealing with the mess.

December 23, 2012

China’s rare earth monopoly bid goes smash

Filed under: Business, China, Economics, Technology — Tags: , , — Nicholas @ 11:20

Remember the headlines from a few years back, when China was the source of a disproportional amount of the rare earth required for many of our modern electronic toys like iPhones and hard drives and such? China’s ham-handed attempt to constrain supply and jack up the prices has signally failed:

For I’ve been saying for years now that this “China will control all the rare earths” thing is nonsense and so it has turned out to be: nonsense.

Not that it hasn’t tried to control it all, mind, it’s just that it has failed. Failed for the reason we’d expect from communist state: its officials don’t understand free market economics. Specifically, it’s possible to successfully exercise monopoly power only if that monopoly is not contestable.

[. . .]

We were also continually reminded that China has 30 per cent of the world’s reserves: which simply shows that people don’t know what a reserve is. It’s not, as just about everyone assumes, the amount of something that’s available. It’s an amount whose exact location is known, which we’ve measured, drilled, sampled and baked a fluffy cake from – and which we can mine with current techniques AND with which we make a profit at current prices. Miss any of those steps (except maybe the cake) and it is not a reserve: it’s a resource. And resources of rare earths are vast: several are individually more common than copper for example. China has 30 per cent of the proven fluffiness, not 30 per cent of all that is available.

I will admit to a certain suspicion that the stories we heard were rather more a well-organised PR campaign to allow a couple of companies to suck subsidies out of the US taxpayer. Or perhaps even, given the conversation I had with a lobbyist about how to try to get on that gravy train, a plot to enrich lobbyists via companies paying to try to suck subsidies out of the US taxpayer.

So, now that I have finished puffing out my chest to “We Will Rock You”, on to what to economists is the blindingly obvious point of this story and what it means for the tech business. You might well have a monopoly: but it ain’t going to do you much good if, when you try to exercise your monopoly power, people come along and successfully contest your monopoly. We thus need to divide monopolies into two classes: those that are contestable and those that are not.

Back in 2010, I commented on Tim’s original debunking of the story:

So, if they have a monopoly on 95% of the world supply, why won’t it hold up? Because in spite of the name, they’re not as rare as all that … and there are substitutions that can be made for some or all of the current application needs. By restricting the supply and/or driving up the price, China will spur new competitors to enter the field and new sources of rare earths to be developed. In the short term, it will definitely create price increases (which, of course, will be passed on to the consumer), but in the medium-to-long term they will create a vibrant competitive marketplace which will almost inevitably drive the prices down below current levels.

Isn’t economics fascinating?

November 28, 2012

Chinese aviators start carrier landing practice

Filed under: China, Military, Technology — Tags: , , , — Nicholas @ 09:52

Strategy Page updates us on the development of China’s aircraft carrier capabilities:

A Chinese aviator, flying a Chinese made J-15 fighter, made the first landing and takeoff from a Chinese aircraft carrier just two months after the ship was commissioned (on September 25th). The first Chinese aircraft carrier, the Liaoning is a 65,000 ton, 305 meter (999 feet) long ship that had spent over a year on sea trials. During that time Liaoning was at sea for about four months. This was all in preparation for flight operations. Last year China confirmed that the Liaoning will primarily be a training carrier. The Chinese apparently plan to station up to 24 jet fighters and 26 helicopters on the Liaoning and use the ship to train pilots and other specialists for four or more additional carriers.

Five years ago the Chinese Navy Air Force began training carrier fighter pilots (or “aviators” as they are known in the navy). In the past Chinese navy fighter pilots went to Chinese Air Force fighter training schools, and then transferred to navy flight training schools to learn how to perform their specialized (over open water) missions. Now, operating from carriers, and performing landings and take-offs at sea, has been added to the navy fighter pilot curriculum. The first class of carrier aviators has finished a four year training course at the Dalian Naval Academy. This included learning how to operate off a carrier, using a carrier deck mock-up on land. Landing on a moving ship at sea is another matter. The Russians warned China that it may take them a decade or more to develop the knowledge and skills needed to efficiently run an aircraft carrier. The Chinese are game and are slogging forward. The first landing and takeoff was apparently carried out in calm seas. It is a lot more difficult in rough weather (when the carrier is moving up and down and sideways a lot) and at night. The latter, called “night traps” is considered the most difficult task any aviator can carry out, especially in rough weather.

They also point out that the US Navy’s experiments with naval UAVs continue and are putting technological pressure on both Russia and China to do the same:

Over the last few years, the U.S. Department of Defense decided that the air force and navy be allowed to develop combat UAVs to suit their particular needs. The X-45 was meant mainly for those really dangerous bombing and SEAD missions. But the Pentagon finally got hip to the fact that the UCAV developers were coming up with an aircraft that could replace all current fighter-bombers. This was partly because of the success of the X-45 in rapidly reaching its development goals, and the real-world success of the Predator (in finding, and attacking, targets) and Global Hawk (in finding stuff after flying half way around the world by itself.)

The U.S. Navy expects UAVs to replace most manned aircraft on carriers and the Chinese are aware of that. So the age of manned aircraft operating from Chinese carriers may be a short one. Chinese engineers are well aware of automatic pilot software and how it works. Now they will have feedback from Chinese carrier pilots and be able to do what the Americans have done.

The usual caveats about UAVs in combat should be noted.

November 25, 2012

21st century navies to watch: China and India

Filed under: China, India, Military, Pacific — Tags: , , , , — Nicholas @ 12:07

The Economist provides some background on a growing naval rivalry between the two biggest powers in Asia:

… Samudra Manthan is the title of a new book on this topic by C. Raja Mohan, an Indian writer on strategic affairs, for whom the myth is a metaphor for the two countries’ competition at sea. This contest remains far more tentative and low-key than the 50-year stand-off over their disputed Himalayan border, where China humiliated India in a brief, bloody war in 1962. But the book raises alarming questions about the risks of future maritime confrontation.

[. . .]

China’s naval plans receive more attention. By 2020 its navy is expected to have 73 “principal combatants” (big warships) and 78 submarines, 12 of them nuclear-powered. Last year its first aircraft-carrier, bought from Ukraine, began sea trials; indigenous carriers are under construction. Proving it can now operate far from its own shores, China’s navy has joined anti-piracy operations in the Gulf of Aden. Of course this evolution is not aimed at India, so much as at building a force commensurate with China’s new economic might, securing its sea lines of communication and, eventually perhaps, challenging American dominance in the western Pacific, with a view to enforcing China’s view of its national sovereignty in Taiwan and elsewhere.

Indian strategists, however, tend towards paranoia where China is concerned. China’s close strategic relations with India’s neighbours, notably Pakistan, have given rise to the perception that China is intent on throttling India with a “string of pearls” — naval facilities around the Indian Ocean. These include ports China has built at Gwadar in Pakistan; at Hambantota in Sri Lanka; at Kyaukphyu in Myanmar; and at Chittagong in Bangladesh.

[. . .]

India’s naval advances are less dramatic. But it has operated two aircraft-carriers since the 1960s, and aims to have three carrier groups operational by 2020, as part of a fleet that by 2022 would have around 160 ships and 400 aircraft, making it one of the world’s five biggest navies. Like China, it also hopes to acquire a full “nuclear triad” — by adding sea-based missiles to its nuclear deterrent. While China has been testing the waters to its south and south-west, India’s navy has been looking east, partly to follow India’s trade links. India fears Chinese “strategic encirclement”. Similarly, China looks askance at India’s expanding defence ties with America, South-East Asia, Japan and South Korea.

November 11, 2012

The natural lifecycle of a “monopoly”

Filed under: Asia, China, Economics, Technology — Tags: , , — Nicholas @ 12:53

In Forbes, Tim Worstall celebrates the natural end to a “monopoly” — the quasi-monopoly of Chinese exports of rare earth compounds:

These past several years I’ve been shouting to all who would listen that while China does indeed have a stranglehold on current production of rare earths that’s not something that we really need to worry about. For the important thing about rare earths is that they’re not rare (nor earths either). There are plenty of deposits around and we can get all we need from other areas of the world if we should care to.

    The same cannot be said of Kuantan, the Malaysian locale where Lynas plans to build a rare earth processing plant, a type of facility residents and Australian supporters say, in online campaigns, will result in “millions of tonnes of toxic radioactive waste left behind”.

    Residents took Lynas to court in Malaysia, resulting in the suspension of its operating licence. That decision was overturned yesterday.

Lynas is the company desiring to mine the Mt. Weld deposit (a nice rich one it is too). They are going to separate the RE concentrate at that plant in Malaysia. There’s been a vocal campaign against the licensing of that extraction plant and Lynas has, as above, just succeeded in over-turning a previous license refusal. Once up and operating fully the plant should supply some 20,000 tonnes a year of REs. This is a substantial portion of demand outside China: it’s some 15% or so of entire global demand in fact.

And thus we again see how an apparent monopoly isn’t really all that much use to the supposed monopolist. It certainly was true that China supplied 95-97% of the world’s REs. Largely because they were willing to mine and supply at prices that made it not worth anyone else’s while to do so. But when they tried to constrain supply, to exercise that monopoly, instead of being able to exploit us all they simply encouraged the competition that destroys that monopoly.

Markets do indeed work and the only monopoly that can really be exploited is one that isn’t contestable. And an attempted monopoly in something as common as rare earths simply is contestable and thus cannot be exploited.

November 6, 2012

China’s economic statistics

Filed under: China, Economics — Tags: , — Nicholas @ 11:52

If you’ve been following the blog for a while, you’ll know that I’ve been rather skeptical about the official statistics reported by Chinese government and media sources. I’ve been rather more skeptical about western media outlets that depend on these statistics as if they were issued by the US, Canadian, or British governments — China does not have a stable and transparent way of gathering or compiling economic data, but even more to the point they have significant political reasons for using the reported statistics for political reasons.

In Forbes, Tim Worstall looks at retail car sales in China’s luxury market for a recent example:

For China is a large enough place, and different enough, that you can spin the same statistics any way that you want to. For example, take a couple from today’s new about car sales in the country. Apparently you can now buy the top of the line Bentley on same day service, no wait for delivery [...]

The jump in sales was 30% for China. So are car sales slowing down? Or not? Is BMW’s stonkingly good quarter just because they have been filling the dealers’ lots? Is Bentley’s bad one because they did that last quarter? Are BMW counting deliveries to dealers, as the official statistics do, or are they counting true sales?

This is one of the problems with looking at Chinese economic statistics. The place doesn’t necessarily compile all the numbers the same way we do: nor does it necessarily compile them in a consistent manner across the country.

October 20, 2012

The Himalayan fault line of 1962

Filed under: China, History, India, Military — Tags: , , , — Nicholas @ 00:02

In a brief but bloody altercation high up in the Himalayan mountains, Chinese forces attacked and defeated Indian troops along part of the extensive border between the two nations. In History Today, Gyanesh Kudaisya looks back at the events of 50 years ago:

China and India share the longest disputed frontier in the world, extending over 4,000 km, with a contentious Line of Actual Control across the Himalayas. Fifty years ago, on October 19th, 1962, border skirmishes between China and India escalated into a full-scale war across the mountainous border. Hostilities continued for over a month, during which China wrestled 23,200 sq kms of territory from India and inflicted heavy casualties. The Indian government acknowledged the loss of over 7,000 personnel, with 1,383 dead, 1,696 missing in action and 3,968 captured by the enemy. The Chinese also conceded ‘very heavy’ losses. Then, quite suddenly, on November 21st, China announced a unilateral ceasefire and a return to border posts held by its army prior to the conflict, while retaining some 4,023 sq km of territory in the Ladakh region.

This brief war has come to define relations between Asia’s two largest countries and the border issue remains unresolved. Beijing still claims over 92,000 sq km of territory, mainly in the northeastern Indian state of Arunachal Pradesh.

The war was a dramatic turning point for India. Most Indians saw it as a ‘stab in the back’, a grave act of betrayal by the Chinese leadership, whom Jawaharlal Nehru, India’s first prime minister (1947-64), had lauded as brothers in the heyday of a friendly relationship in the mid-1950s. This was reflected in Panchsheel, ‘Five Principles of Peaceful Coexistence’, upon which in 1954 China and India inked a bilateral treaty, and the 1955 Bandung conference, where Nehru had personally introduced Chinese premier Zhou Enlai to Afro-Asian delegates in order to minimise China’s isolation.

October 13, 2012

Chinese shipyards adapt to slower international sales

Filed under: Business, China, Military — Tags: , , — Nicholas @ 11:17

Strategy Page on one of the ways Chinese ship builders are adapting to a tougher market for new ships:

Recent photos from China show three 1,500 ton coastal patrol ships (“cutters” in American parlance.) being built simultaneously, next to each other. This is part of a 36 ship order, in part to help the domestic ship building industry, for the China Marine Surveillance (CMS). Seven of the new ships are the size of corvettes (1,500 tons), while the rest are smaller (15 are 1,000 ton ships and 14 are 600 tons). The global economic recession has hit shipbuilding particularly hard over the last four years, and China is one of the top three shipbuilding nations in the world. For a long time coastal patrol was carried out by navy cast-offs. But in the last decade the coastal patrol force has been getting more and more new ships (as well as more retired navy small ships). Delivery of all 36 CMS ships is to be completed in the next two years.

The CMS service is one of five Chinese organizations responsible for law enforcement along the coast. The others are the Coast Guard, which is a military force that constantly patrols the coasts. The Maritime Safety Administration handles search and rescue along the coast. The Fisheries Law Enforcement Command polices fishing grounds. The Customs Service polices smuggling. China has multiple coastal patrol organizations because it is the custom in communist dictatorships to have more than one security organization doing the same task, so each outfit can keep an eye on the other.

CMS is the most recent of these agencies, having been established in 1998. It is actually the police force for the Chinese Oceanic Administration, which is responsible for surveying non-territorial waters that China has economic control over (the exclusive economic zones, or EEZ) and for enforcing environmental laws in its coastal waters. The new program will expand the CMS strength from 9,000 to 10,000 personnel. CMS already has 300 boats and ten aircraft. In addition, CMS collects and coordinates data from marine surveillance activities in ten large coastal cities and 170 coastal counties. When there is an armed confrontation over contested islands in the South China Sea, it’s usually CMS patrol boats that are frequently described as “Chinese warships.”

October 10, 2012

Is “national security” just another term for “protectionism”

Filed under: Business, Cancon, China, Government, Technology — Tags: , , , — Nicholas @ 10:16

Daniel Ikenson at the Cato@Liberty blog:

Chinese telecommunications companies Huawei and ZTE long have been in the crosshairs of U.S. policymakers. Rumors that the telecoms are or could become conduits for Chinese government-sponsored cyber espionage or cyber attacks on so-called critical infrastructure in the United States have been swirling around Washington for a few years. Concerns about Huawei’s alleged ties to the People’s Liberation Army were plausible enough to cause the U.S. Committee on Foreign Investment in the United States (CFIUS) to recommend that President Bush block a proposed acquisition by Huawei of 3Com in 2008. Subsequent attempts by Huawei to expand in the United States have also failed for similar reasons, and because of Huawei’s ham-fisted, amateurish public relations efforts.

So it’s not at all surprising that yesterday the House Permanent Select Committee on Intelligence, yesterday, following a nearly year-long investigation, issued its “Investigative Report on the U.S. National Security Issues Posed by Chinese Telecommunications Companies Huawei and ZTE,” along with recommendations that U.S. companies avoid doing business with these firms.

But there is no smoking gun in the report, only innuendo sold as something more definitive. The most damning evidence against Huawei and ZTE is that the companies were evasive or incomplete when it came to providing answers to questions that would have revealed strategic information that the companies understandably might not want to share with U.S. policymakers, who may have the interests of their own favored U.S. telecoms in mind.

It’s not just the United States, either: Canada is also getting wary of Huawei.

The Canadian government has said that it will be invoking a “national security exemption” as it hires firms to build a secure network, hinting that Chinese telco Huawei could be excluded.

The exemption allows the government to kick out of the running any companies or nations considered a security risk, which coming in the wake of the US report earlier this week labelling Huawei and ZTE as security threats, strongly indicates they’re out of the bidding.

Prime Minister Stephen Harper’s top media spokesman refused to say for sure whether the government had Huawei in mind when invoking the exemption.

“The government is going to be choosing carefully in the construction of this network and it has invoked the national security exception for the building of this network,” he said, according to the Calgary Herald.

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