It’s Time for Pentagon to Catch Up with China’s Weapon Development

CNBC says in its article “China’s ability to spend on weapons has the Pentagon eager to develop hypersonics as the US tries to catch up” that according to Mike Griffin, the Pentagon’s top engineer,

the US is lagging behind Russia and China in hypersonics. It quotes Griffin as saying, “We need to be able to not only match but to overmatch, especially the Chinese,”


China has abundant funds while the US is hard up.

Chinese scientists and engineers are working 9 hours 6 days a week voluntarily. Do US ones have such enthusiasm in developing technology for their country?

However, CNBC says in the report, “The United States does not have a defense against hypersonic weapons, which can travel at least five times the speed of sound, or a little more than a mile per second. Combined with blistering speed, maneuverability and long-range flight, these weapons are difficult to track, target and defeat. Russia and China have sprinted to develop a variety of weapons of this caliber, sparking concerns that the U.S. will be outpaced on this front.”

The US is in trouble. It wants to attack Russia and China but now it will be unable to defend the counterattack of hypersonic weapons from Russia and China.

Comment by Chan Kai Yee on CNBC’s article.


Huawei Threatens to break Google’s Monopoly of Mapping Survice

Forbes says in its report “Huawei’s New Google Maps Rival ‘Launches In October’ As Battle Commences” on August 17, “According to Chinese media, Huawei is stepping up its rivalry with Google with plans to launch its own mapping service as soon as October.”

Huawei CEO Ren Zhengfei warned the U.S. this week, that if its hand is forced by a U.S. blacklist which denies access to Google’s full-fat Android operating system, then it will set out to break Google and Apple’s global dominance of the smartphone ecosystem. This would be a clear part of that strategy. “

I said in my previous posts that Chinese engineers and technicians will strike back hard if insulted and cited as an example of China’s development of AEW&C airplanes as advanced as American ones when the US forced Israel to cancel its sell of AEW&C airplanes to China.

Comment by Chan Kai Yee on Forbes’ article, full text of which can be viewed at

Competition between Socialism with Chinese Characteristics, Western Democracy

At Chinese Communist Party’s 19th Congress, Xi Jinping put forth his Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. In his report to the Congress, he stressed that China now has road self-confidence, theory self-confidence, system self-confidence and culture self-confidence (four self-confidences) and put forth Chinese model as an alternative to Western democracy.

Therefore, analysts believe current US trade and tech wars, provocations at the South China Sea and Taiwan Strait and attacks at China’s Belt and Road initiative are in fact a war between two ideologies.

Since China has the four self-confidences why does China not let Hong Kong have Western democracy to compete with socialism with Chinese characteristics?

China indeed has advantages in competing with Western democracy in Hong Kong.

The Hong Kong now is a split city like the US where there are messy politics that have caused the president unable to do what he wants due to obstacles from Congress and courts.

Previously I said in my posts that Xi is a person of quick decision and quick action.

True enough, he now sets Shenzhen as a pioneer demonstration zone for the construction of socialism with Chinese characteristics.

I believe that Xi is wise to see that Hong Kong people’s pursuit of Western democracy cannot be suppressed even by force. Then it is better to let them have Western democracy to compete with socialism with Chinese characteristics in its close neighbor Shenzhen.

SCMP says in its editorial “Shenzhen experiment could shape China’s future growth”, “Shenzhen recently announced tax incentives to attract talent in hi-tech industries, offering a rate lower than Hong Kong. Innovative ideas for growth could include focusing on fintech, legal reforms and easing up on restrictions on the free flow of capital and information, all of which would cut into Hong Kong’s advantages.”

In addition, a chief executive elected by universal suffrage like US president may be hindered by the legislative council. Those who oppose universal suffrage may conduct non-cooperation activities to block train and road traffic and cause commercial areas to close

Moreover, Shenzhen has abundant financial and other supports from the Central government but Hong Kong has none. Its people will be fully cooperative with the government to ensure the success of socialism with Chinese characteristics as they have the above-mentioned four self-confidneces.

If so, Hong Kong will certainly lose in the competition.

Comment by Chan Kai Yee on SCMP’s editorial, full text of which can be viewed at

Vietnam and Indonesia stand out as Belt and Road bets, reports show

Southeast Asia draws flurry of investment but concerns over China linger

DYLAN LOH, Nikkei staff writer

August 18, 2019 03:33 JST

SINGAPORE — Southeast Asia is becoming ever more of a hotbed for investment related to China’s Belt and Road Initiative, two separate reports issued this month show.

Chinese investment and construction contracts in the region almost doubled to $11 billion in the first half of 2019, from $5.6 billion in the last six months of the previous year, one report issued by Maybank Kim Eng’s research arm says.

Within Southeast Asia, Indonesia drew the lion’s share of new BRI contracts, valued at $3 billion in the first half. It was followed by Cambodia at $2.5 billion, Singapore at $1.9 billion and Vietnam at $1.6 billion. Most of the projects were in transport and energy, the report notes.

These numbers reflect thriving interest in BRI participation in the region, also captured in the other report by PwC and the Singapore Business Federation, which represents more than 25,000 companies’ interests in the city-state.

Their report, released at a mid-August conference in Singapore on infrastructure development, named Vietnam, Singapore and Indonesia as the top countries where organizations see BRI opportunities.

The report cites a survey of about 50 public- and private-sector leaders in the region — from industries like financial services, energy and construction — which found that 66% of respondents identified Vietnam as a place with BRI opportunities, followed by Singapore and Indonesia at 57%. Countries like Bangladesh and Sri Lanka drew less interest at 30%, while Pakistan was near the bottom at 18%.

Three-quarters of those polled cited political risk as a top concern associated with BRI projects — a sentiment echoed by private-sector representatives who spoke at the Singapore conference.

“Infrastructure projects are long term,” said Boon Chin Hau, managing director of Singapore sovereign wealth fund GIC, during a panel discussion on inbound investment. “They are there to serve the country, the people. They have social needs and therefore they are very long term. So having very stable government is quite critical to create an environment for private investors to come in.”

The China-led Asian Infrastructure Investment Bank has lauded the role that the Association of Southeast Asian Nations has played in realizing development opportunities. At the conference, AIIB President Jin Liqun noted that while progress varies within the bloc, ASEAN nations are becoming better connected with the rest of the world.

“The vision of a seamless and integrated ASEAN that examines institutional connectivity alongside the physical infrastructure provides common frameworks that can remove trade barriers and maximize the infrastructure investment, and bring benefit to the people,” Jin said.

He noted that ASEAN countries were among the first to help form the AIIB when it was established in 2016, even as others viewed the institution with wariness. “The Asian Infrastructure Investment Bank was conceived and born with the birthmark of China. But it is not China’s bank. It’s an international development institution. It’s been brought up in the international community,” Jin emphasized at the conference, as he addressed over 600 government officials and industry leaders.

But Beijing’s specter looms over BRI ventures, even as businesses demonstrate interest in associated infrastructure projects. A report published in January by the ASEAN Studies Centre highlighted suspicions about China’s presence.

In a survey which included public officials and businesspeople in the region, 47% of about 1,000 respondents said they think the BRI “will bring ASEAN member states closer into China’s orbit.” The report noted that this finding “may have profound implications for Southeast Asia given the region’s concern that China will become a revisionist power.”

Source: Nikkei Asia Review “Vietnam and Indonesia stand out as Belt and Road bets, reports show”

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

China prepares its ‘nuclear option’ in trade war

Published time: 17 Aug, 2019 10:26

As the trade war continues to escalate, China is becoming increasingly active in Iran and is considering retaliating with what has long been described as the country’s ‘nuclear option’.

For the first of these projects – Phase 11 of the supergiant South Pars non-associated gas field (SP11) – last week saw a statement from the chief executive officer of the Pars Oil and Gas Company (POGC) that talks had resumed with Chinese developers to advance the project. Originally the subject of an extensive contract signed by France’s Total before it pulled out due to re-imposed US sanctions on Iran, talks had been well-advanced with the China National Petroleum Corporation (CNPC) to take up the slack on development. As per the original contract, CNPC had been assigned Total’s 50.1 percent stake in the field when the French firm withdrew, giving it a total of 80.1 percent in the site, with Iran’s own Petropars Company holding the remainder. At the same time, Iran was desperate to increase the pace of development of the fields in its oil-rich West Karoun area, including North Azadegan, South Azadegan, North Yaran, South Yaran, and Yadavaran, in order to optimise oil flows ahead of further clampdowns on exports by the US.

Read more

China’s other nuclear option in trade war with US – Rare earth materials

China, though, which at that time was engaged in just the opening shots of the trade war with the US was loathe to completely disregard all US sensibilities when it came to Iran but equally saw itself as a longstanding partner of the Islamic Republic, not to mention always being cognisant of its need to ensure diversity of energy supply. At that point, China agreed a trade-off with the US that in exchange for it halting active development of SP11 it would be allowed to continue its activities in North Azadegan and would be able to go ahead with its development of Yadavaran – the second of China’s major Iran projects. China told the US that its continued involvement in North Azadegan could easily be justified to anyone else who might be interested – such as the mainstream media – on the basis that it had already spent billions of dollars developing the second phase of the 460 square kilometre field. Similarly, China said at the time, its ongoing activities on Yadavaran could be justified by dint of the fact that the original contract had been signed in good faith in 2007, way before the US withdrawal from the nuclear deal in May 2018 and thus, legally speaking, it had every right to go ahead.

The third of China’s major as yet unfinished projects in Iran was the build-out of the Jask oil export terminal, which – crucially, particularly in the current security situation – does not lie within the Strait of Hormuz or even in the Persian Gulf, but rather in the Gulf Of Oman. Even before the new US sanctions, the Kharg export terminal was not ideal for use by tankers as the narrowness of the Strait of Hormuz means that they have to go very slowly through it. With the new sanctions in place and tit-for-tat tanker seizures regularly occurring, China would have little choice but to put at least a couple of its own warships into the Gulf to safeguard their passage or stop buying Iranian oil entirely, neither of which Beijing particularly wants to do.

So, according to the plans, a US$2 billion or so 1,000 kilometre oil pipeline will connect Guriyeh in the Shoaybiyeh-ye Gharbi Rural District, in Khuzestan Province (south-west Iran), to Jask County, in Hormozgan Province (south Iran), with any financing required over and above that provided for Iran to be made readily available from China. Also to be constructed in Jask is an initial 20 storage tanks each capable of storing 500,000 barrels of oil, and related shipping facilities, at a cost of around US$200 million. Overall, the intention is for Jask to have the capacity to store up to 30 million barrels and export one million barrels per day of crude oil. There are adjunct plans to build a large petrochemicals and refining complex in Jask as well, with the prime market for produced petchems – including gasoline, gas oil, jet fuel, sulphur, butadiene, ethylene and propylene, and mono-ethylene glycol – again being China. According to a recent comment by the director of projects at Iran’s National Petrochemical Company, Ali Mohammad Bossaqzadeh, the project would be built and run by Bakhtar Petrochemicals Holding, although ‘other foreign companies’ may take part. In fact, according to the Iran source, China has also offered to send as many engineers and other professionals required in such a project to Iran for as long as necessary.

Having said that, and aware of the leverage that it had with Iran as one of the very few countries still willing to engage in developing its fields in the midst of increasingly vigorously-imposed sanctions, China has sought deal sweeteners from Iran, and has been given them. In order for it to reactivate its development of SP11, China will get a 17.25 percent discount for nine years on the value of all gas it recovers. “This is the value of the gas as applied to CNPC’s cost-return formula against the open market valuation, and currently the net present value of the site is US$116 billion,” the Iran source told For its part, China has agreed to increase the production from its oil fields in the West Karoun area – including North Azadegan and Yadavaran – by an additional 500,000 bpd by the end of 2020. This dovetails with Iran’s plan to increase the recovery rate from these West Karoun fields that it shares with Iraq from the current 5 percent (compared to Saudi Arabia’s 50 percent). “For every one percent increase, the recoverable reserves figure would increase by 670 million barrels, or around US$34 billion in revenues with oil even at US$50 a barrel,” the Iran source said.

If there is any further pushback from the US on any of these Chinese projects in Iran, then Beijing will invoke in full force the ‘nuclear option’ of selling all or a significant part of its US$1.4 trillion holding of US Treasury Bills, with a major chunk of the paper due to be sold in September on this basis. This massive holding of these bonds – through which the US finances its economy and is an important factor both in the value of the dollar and therefore in the health of US international companies especially – has been used as a bargaining chip before by China, especially when it feels threatened. Back in 2007, just before the great financial crisis, a number of senior Chinese figures at various state-run think tanks – through which China often signals its big geopolitical threats – stated that the large-scale selling of this massive Treasury Bill holding would trigger a dollar crash, a huge spike in bond yields, the collapse of the housing market and stock market chaos.

Such a tactic would neatly fit into China’s overall strategy to have the renminbi challenge the US dollar’s status as the key global reserve currency and the prime currency for global energy transactions. “The long-planned sequencing for this was inclusion in the SDR {Special Drawing Rights] mix, which happened in 2016, increasing use as a trading currency, which followed that, use as the key currency of an international energy trading exchange, which has occurred with the creation of the renminbi-denominated Shanghai International Energy Exchange in last year, and the calls from big oil producers and other major trading nations to use the renminbi, which has been happening over the past few years,” the head of a New York-based commodities hedge fund told Only recently, Leonid Mikhelson, chief executive officer of Russian oil major, Novatek, said that future sales to China denominated in renminbi is under consideration and that US sanctions accelerate the process of Russia trying to switch away from US dollar-centric oil and gas trading and the damage from potential sanctions that go with it. “This has been discussed for a while with Russia’s largest trading partners such as India and China, and even Arab countries are starting to think about it… If they do create difficulties for our Russian banks then all we have to do is replace dollars,” he said. “The trade war between the US and China will only accelerate the process,” he added.

The trade war with the US, though, may be the very reason why this policy is not being pushed right now by China, Rory Green, Asia economist for TS Lombard told last week. “With the renminbi weakening, and set to reach 7.50 to the [US] dollar level if the US imposes 25 percent tariffs on all Chinese exports, it is more difficult for China to persuade the big oil producers like Russia, Iran, Iraq, Venezuela, to make the switch away from the dollar,” he said. “For China as well, the timing is not quite right, as its use of Eurodollar financing is currently significant, it has a lot of dollar-denominated bonds rolling over shortly, and its balance of payments needs a relatively healthy US demand profile, but China wants to get away from the dollar system and that is the overall direction of travel,” he concluded.

This article was originally published on

Source: “China prepares its ‘nuclear option’ in trade war”

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

Failure of Pompeo’s Intervention with South China Sea Disputes

China’s survey ship Haiyang Dizhi 8 conducted geological survey in July in the disputed waters in the South China Sea that claimed by both China and Vietnam. Vietnam protested but China simply ignored that. I described it in my post “ Vietnam Merely Watched China’s Survey in Disputed Waters” on July 15.

On August 1, Reuters says in its report “Pompeo blasts Chinese ‘coercion’ in South China Sea”, “U.S. Secretary of State Mike Pompeo on Thursday criticized Chinese ‘coercion’ in the disputed South China Sea, highlighting a divide with Beijing at a meeting of Southeast Asian nations with world powers. “

China’s survey ship left the disputed area on August 7 and gave the impresion that Pompeo’s intervention worked.

However, Reuters says in its report “Vietnam demands Chinese ship leaves its exclusive economic zone” on August 16 that the survey ship has returned to the disputed area.

Pompeo’s intervention has simply been ignored.

Comment by Chan Kai Yee on Reuters reports full text of which can be viewed at and

BRI Spells the End of US World Hegemony, US Dollar Dominance’s article “U.S. imperialism views the One Belt One Road as an existential threat to the domination and monopoly of the dollar” points out the reason of US attacks at China’s BRI initiatives though I do not agree with its orthodox socialist views.

The article says,“U.S. imperialism views the One Belt One Road as an existential threat to the domination and monopoly of the dollar. China is becoming deeply connected to Asia, Europe, and Africa and this spells doom for U.S. imperial hegemony.”

The article has the vision to point out the threat of BRI to the dominance of US dollars.

According to the article BRI has promoted economic growth of participating countries so that trade between China and BRI countries has grown fast to a quarther of China’s entire trade. It says, “The more that China dominates trade and investment worldwide, the less likely that these nations will continue to use the U.S. dollar to conduct its economic affairs.” No wonder the US has been attacking BRI so fiercely.

The article’s orthodox socialist view regards EU as US ally in attacking BRI. No, EU has been fighting against dominance of US dollar for a long time as proved by its development of a unified European currency the Euro.

Moreover, EU has becoming interest in BRI since Chinese President Xi Jinping’s visit to Italy and France. It is certainly interested in the expansion of the market in developing countries cause by BRI.

So is Japan and South Korea as proved by their desire for the establishment of Regional Comprehensive Economic Partnership (RCEP).

I have to point out that China pursues harmony and cooperation instead of conflicts as advocated by the article. It is the US that is used to create conflicts and resort to force when it is able to. US trade war with China is a typical example. China is forced to fight back, but it is still sincere in seeking win-win cooperation with the US. However, the US is fond of conflicts. It always refuses win-win cooperation in the world.

Comment by Chan Kai Yee on’s article, full text of which can be viewed at