China: Life Springs from Sorrow, Calamity; Death from Ease, Pleasure


That is a famous quote from Gaozi II of Mencius in which Mencius says, “…if abroad there are not hostile states or other external calamities, a country will generally come to ruin. From the above we see how life springs from sorrow and calamity, and death from ease and pleasure.’

That has been proved by quite a few facts in Chinese history. A typical example was China’s Song Dynasty. Song court enjoyed ease and pleasure in spite of the threat of its powerful northern nomadic neighbor as it believed that it could avoid attack from the neighbor by annual contributions of silver and silk to its enemy. It was finally conquered by its neighbor with the emperor and his relatives, wife and concubines taken prisoners by its neighbor.

Mencius teaches country leaders to have the sense of crisis. Now, Chinese President Xi Jinping proves that he has the vision to see potential risks as soon as they emerged. Reuters’ report “Xi keeps China on high alert for ‘black swan’ events: Xinhua” on January 21, 2019 tells the story of Xi giving a speech at the opening session of a Communist Party meeting in Beijing of hundreds of provincial leaders, ministers and top generals on risk control.

The report says, “China must be on guard against ‘black swan’ risks while fending off ‘gray rhino’ events, President Xi Jinping said on Monday, adding that the economy faces deep and complicated changes, state news agency Xinhua reported.”

Reuters believes that Xi gave the warning due to China’s slowest growth rate last quarter in past 28 years.

Xi would not have been such a great leader enjoying such high respect if he had realized the risks and given his warning so late.

As far back as on September 26, 2018, CCTV’s report on his visit to China First Heavy Industries (CFHI) shows Xi speaking to staff and workers there on the screen, “A hundred-mile journey is half completed at ninety miles. In attaining our two century-goals, we are now closer to success than any other time, but are also encountering so many challenges and difficulties that we have never encountered at any other time.”

Through 4 decades of development, China has grown rich to enable it to enjoy ease and pleasure, but that may cause it to come to ruin. However, China now has wise and brave leaders who have clear sense of risks and crisis and the courage and wisdom to fight and win.

They convene the meeting of high officials to rally them and through them Chinese people in general to strive to avoid potential risks and overcome the difficulties.

Chinese people are a heroic people. With wise and brave leaders they can win under very difficult circumstances. That has been proved by Yu Qian;s defense of Chinese capital in Ming Dynasty when Chinese army was annihilated by the enemy, the Korean War where poorly equipped Chinese troops defeated an enemy with air and sea supremacy and most advanced weapons in the world, etc.

Therefore, deal or no deal, China will win the trade war with the US.

Comment by Chan Kai Yee on Reuters’ report, full text of which can be viewed at https://www.reuters.com/article/us-china-economy-xi/xi-keeps-china-on-high-alert-for-black-swan-events-xinhua-idUSKCN1PF0XL.

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Trump won’t soften hardline on China to make trade deal: advisers


Jeff Mason Jan. 23, 2019

WASHINGTON (Reuters) – As much as U.S. President Donald Trump wants to boost markets through a trade pact with China, he will not soften his position that Beijing must make real structural reforms, including how it handles intellectual property, to reach a deal, advisers say.

Offering to buy more American goods is unlikely by itself to overcome an issue that has bedeviled talks between the two countries. Those talks are set to continue when Chinese Vice Premier Liu He visits Washington at the end of January.

The United States accuses China of stealing intellectual property and forcing American companies to share technology when they do business in China. Beijing denies the accusations.

With a March 1 deadline approaching to reach an agreement or risk an escalation of tariffs on another $200 billion worth of Chinese goods, the two sides are still far apart on key, structural elements critical for a deal, according to sources familiar with the talks.

“We’re not yet in a position where our concerns have been addressed sufficiently,” one U.S. official said, speaking on condition of anonymity. The official said the Trump team, led by hardline U.S. Trade Representative Robert Lighthizer, was focused on such structural issues as well as trade imbalances.

White House economic adviser Larry Kudlow told Reuters that forced technology transfers, IP theft and ownership restrictions remained a top priority for Trump.

“The president’s said many times how crucial that is, and he’s not going to back down,” Kudlow said.

Lack of progress led the Trump administration to decline an in-person meeting with a lower-level Chinese delegation for preparatory talks ahead of Liu He’s visit, a source familiar with the situation told Reuters.

The Financial Times also reported that an offer for preparatory meeting was rejected, but White House officials pushed back on the suggestion that any meeting was canceled.

“With respect, the story is not true,” Kudlow told CNBC, referring to the FT report.

“The teams remain in touch in preparation for high-level talks with Vice Premier Liu He at the end of this month,” said White House spokeswoman Lindsay Walters.

Trump and Chinese President Xi Jinping agreed on a ceasefire in their trade war at the G20 meeting in Buenos Aires last year, setting a 90-day period to discuss differences and agree a deal.

Those talks have yet to produce anything on paper.

“There’s progress in that the two sides are talking. But I look at it like this: there’s still nothing agreed on in writing,” said one source familiar with the discussions.

Trump has painted developments in the U.S.-China trade talks as largely positive, aware of the effect that the tensions have had on stock markets.

The S&P 500 registered its biggest four-week percentage gain since 2011 on Friday after dropping nearly 20 percent from its record September close on Christmas Eve. The benchmark index lost ground on Tuesday after a national holiday on Monday.

“We’ve really had a very extraordinary number of meetings, and a deal could very well happen with China. It’s going very well,” Trump told reporters at the White House on Saturday.

China has offered more than $1.2 trillion in additional commitments on trade, Treasury Secretary Steve Mnuchin said last month.

That is not sufficient for Trump or his team.

“To think that this is going to end with simple ‘commitments,’ I think, is overlooking the historical experience that we’ve had,” the U.S. official said.

Chinese officials pledged to buy enough U.S. products to wipe out the U.S-China trade deficit at talks in Beijing earlier this month but also hedged its position, saying it depended on the demands of Chinese companies, said Scott Kennedy, director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies.

The Chinese have indicated they feel they already addressed U.S. concerns about intellectual property rights through a new law and other actions, Kennedy said.

“These weren’t sufficient to satisfy the U.S. negotiation team. So we’ll see if the Chinese give any more on those or if they still try to focus on sweetening the purchases side, and hoping that Trump bites on the potential big numbers,” he said.

Barring progress at the end of the 90-day period, the Trump administration is scheduled to increase tariffs on $200 billion worth of Chinese goods from the current 10 percent to 25 percent.

“All I’ll say is the meetings coming up at the end of the month with Liu He are very important,” Kudlow said.

Reporting by Jeff Mason; Additional reporting by Michael Martina in Beijing and David Lawder and Chris Prentice in Washington; Editing by Sonya Hepinstall

Source: Reuters “Trump won’t soften hardline on China to make trade deal: advisers”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


Chinese army now makes up less than half of PLA’s strength as military aims to transform itself into modern fighting force


State news agency says PLA has been cutting back on ground forces as part of ‘transformational change’ to military

Number of officers and non-combatants also falls as part of ambitious restructuring of world’s largest armed forces

PUBLISHED : Monday, 21 January, 2019, 11:01pm

UPDATED : Monday, 21 January, 2019, 11:37pm

Liu Zhen

zhen.liu@scmp.com

The Chinese military has significantly boosted its navy, air force and new strategic units and downsized its land-based army as part of a strategic shift designed to transform the People’s Liberation Army into a comprehensive modern force, Xinhua reported.

In a feature report on Sunday highlighting the “transformational changes” made by the PLA, China’s official news agency said: “This new data is unprecedented in the history of the PLA – the army now accounts for less than 50 per cent of the total number of PLA troops; almost half of our non-combatant units have been made redundant, and the number of officers in the PLA has been reduced by 30 per cent.”

The statement indicated that the four other branches of the PLA – the navy, air force, rocket force and strategic support force, which is responsible for areas such as cyberwarfare – now together make up more than half of the Chinese military, overtaking the army, which has traditionally been the dominant unit of the PLA.

Shanghai-based military analyst Ni Lexiong said the overhaul marked a significant strategic shift from having a homeland-based defensive force to one with the capacity to allow Beijing to flex its muscles beyond its national borders and to protect its interests overseas.

Ni also said it also means that branches such as the navy, air force and missile units can now play a bigger roles in the event of conflict by fighting enemy forces beyond China’s borders.

He explained that modern warfare puts a greater emphasis on superiority in areas such as the air, space and cyberspace – further reducing the importance of the ground force.

“The Chinese military used to … operate following the model established in the second world war.

“It had to be reformed and optimised to meet the pressing needs of the changing times and this is the purpose of the overhaul,” said Ni.

“In the old set-up, the PLA had too many officers. In this overhaul, all these officers must find new positions and adapt or they will be made redundant,” he added.

The process of downsizing was first announced by President Xi Jinping in 2015 with a pledge to reduce the number of personnel by 300,000. Currently, China has 2 million active servicemen and women, making the PLA the largest armed force in the world.

The Chinese military currently has five independent branches, including the army, navy, air force, rocket force – the strategic and tactical missile operator – and strategic support force, which is in charge of cyber, space, and electronic warfare.

The last two were established three years ago as Xi stepped up efforts to modernise the military.

The PLA Army, founded in 1927 as the Red Army of China, was the key to the Chinese Communist Party’s victory in the civil war in 1949 and maintained its dominance within the military throughout 10 major overhauls between 1950 and 2005.

The PLA had no navy or air force until 1949 and the PLA Rocket Force, first known as “the Second Artillery Corps”, was founded in 1966.

In 2013, the PLA had a total of 2.3 million servicemen, with only 235,000 in the Navy and 398,000 in the Air Force, according to a 2013 defence white paper.

Source: SCMP “Chinese army now makes up less than half of PLA’s strength as military aims to transform itself into modern fighting force”

Note: This is SCMP’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


Doom for US Carriers China’s Anti-ship Missile Impossible to Intercept


Mil.huanqiu.com says in its report “Expert reveals China’s anti-ship missile able to rise sharply to attack top down after snake-shaped maneuver” that Chinese military expert Cao Weidong reveals that China’s anti-ship missile is hard to intercept.

The missile flies close to sea surface to avoid detection by radar. When it is close to its target it conducts snake-shaped maneuver to avoid interception. When it comes close to the range of enemy CIWS it can rise sharply to avoid interception and then hits its target top down from the dead spot of enemy air defense.

Comment by Chan Kai Yee on mil.huanqiu.com’s report, full text of which in Chinese can be viewed at http://mil.huanqiu.com/world/2019-01/14122292.html.


China Winning Trade War with Diplomacy in Europe and Japan


According to China’s gifted strategist Sun Tze, winning with strategy is the best of the best and with diplomacy the second best. With fight is the next alternative while besieging cities is the last choice.

In its trade war with the US, China’s strategy is to move to countries with cheap labor its enterprises that export labor-intensive products to the US. With his vision that foresees the needs of removal, Chinese President Xi Jinping developed the Belt and Road initiative five years ago to build infrastructures in other countries to facilitate such removal.

However, it take time to build the infrastructures and for the enterprises moved to other countries to become well established there.

In the long run, with that strategy China will inflict overwhelming defeat on the US. China, in addition is supplementing the strategy with wise diplomacy.

Since Trump withdrew from TPP in spite of Japanese Prime Minister Shinzo Abe’s great efforts to try to persuade him no to, Abe has been trying hard to improve relations with China but was rejected by China. However, when there were prospects of trade war with the US, China took a 180 degree turn immediately and has been proactive to improve ties with Japan.

Now, the China-Japan-South Korea tripartite discussions on ASEAN+3 Free Trade Area are making smooth progress. Japan and South Korea may replace the US as China’s major trade partners.

What about Europe, SCMP mentions tension between Germany and China in its report “Germany and China set aside differences to stress importance of cooperation in uncertain economic climate” in saying, “Demands from German businesses for a tougher stance towards Beijing and increasing concern about the Chinese telecoms giant Huawei Technologies have been a growing source of tension”.

However, the report says that due to growing climate of economic uncertainty Germany and China signed agreement to strengthen cooperation yesterday after meetings between German and Chinese relevant officials.

The truth is US pressure has helped Chinese leaders to further open up Chinese market to satisfy German’s requirements. The US might have exploited the above-mentioned tension to have Europe join it in its trade war with China. However, with diplomacy, China has turned a potential enemy into its ally.

As China has further opened its market to Europe, with Germany’s influence there, China’s share in European market will grow fast while US share will drop correspondingly due to its protectionism.

Trade war cannot contain China’s rise. On the contrary, it facilitates China’s rise.

Comment by Chan Kai Yee on SCMP’s report, full text of which can be viewed at https://www.scmp.com/news/china/diplomacy/article/2182787/germany-and-china-set-aside-differences-stress-importance.


Germany Wants a Share in China’s Successful Belt and Road


When countries become prosperous with the infrastructures built by the Belt and Road initiative, the infrastructures, especially power generation, telecommunications and transport ones, will be greatly profitable. Seeing China’s initial success, Germany wants a share in it.

That is why Reuters says in its report “Germany, China pledge to open markets, deepen financial cooperation” yesterday, “The two countries will also support efforts to find areas of cooperation between China’s Belt and Road initiative and the EU’s strategy for linking Europe and Asia, as well as European infrastructure planning.”

Germany certainly will not take such great risks as China is doing in building infrastructures for connection with Asia, Europe, the Middle East and Africa as China’s connections may be blocked by the US that is trying to contain China. There is no danger Europe’s connections to the outside will be blocked by the US. However, when there are prospects of substantial earning, Germany and Europe as a whole certainly do not want to miss it.

Japan, the third largest world economy, has already said it will join China’s Belt and Road. Now, Germany, the fourth largest economy, will follow suit. What will the US, the largest world economy, do? Demonizing China by telling the lies about debt trap and corruption bonanza cannot reduce the initiative’s charm.

Will the US lose the opportunities to make money through the initiative? No. Lots of US large companies are already in China and making big money. They can invest from China in the countries when the initiative is successful instead of investing in the US where labor is expensive and market is saturated. US government will not be benefited but US big money will. Remember, US big money is not patriotic.

Therefore, deal or no deal, China will be the winner in US-China trade war as it is winning with diplomacy instead of tariff warfare. Chinese market and the world market outside the US are much bigger and growing fast, China can afford loss of US market but cheep Chinese goods are indispensable for lots of American people.

Comment by Chan Kai Yee on Reuters’ report, full text of which can be viewed at https://www.reuters.com/article/us-china-germany/germany-china-pledge-to-open-markets-deepen-financial-cooperation-idUSKCN1PC07E.


China finance ministry announces more tax cuts for small firms


January 18, 2019

BEIJING (Reuters) – China’s Finance Ministry on Friday announced further tax cuts for small companies as part of an effort to create jobs and promote economic stability.

Companies with monthly sales below 100,000 yuan ($14,761) will be exempt from value-added tax, the ministry said in a statement. The previous threshold was below 30,000 yuan in monthly sales.

The tax cuts for small firms took effect this month and run to the end of 2021, the ministry said.

Premier Li Keqiang said this month that tax cuts targeting smaller companies will help to support employment and economic stability, and expand the country’s tax base over the long term.

Reporting by Beijing Monitoring Desk and Kevin Yao; editing by Darren Schuettler

Source: Reuters “China finance ministry announces more tax cuts for small firms”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.