January 13, 2012:  The U.S. has announced a new defense strategy, which combines cutting the defense budget about ten percent a year, and concentrating resources to maintain access to the Western Pacific and the Indian Ocean. China has already been claiming control of the South China Sea and the many contested (with neighbors) islands. China protested this new American policy, which was sort of expected. China's neighbors were more enthusiastic, which was also expected. One worrisome aspect of the new policy, for American allies over there, is the U.S. plans to cut its ground forces and depend more on air and naval power to thwart China. China's ground forces are still a ramshackle force but the Chinese Army is undergoing reform and upgrades. In another decade or so that might mean effective Chinese ground forces. Historically, the Chinese have rarely been able to create highly effective military forces in peacetime. Chinese history is full of the disasters that follow when the Chinese forces are sent off to war after years of peace. The last time such a disaster occurred was when China invaded Vietnam in 1979, and did very poorly. The Chinese are aware of this, but the corruption and other cultural factors are proving to be hard to deal with. The worst case situation is the Chinese leadership believing their armed forces are more powerful than they actually are and trying to limit foreign naval or commercial shipping in nearby waters. (South China Sea, or even the Straits of Malacca, the busiest maritime route in the world, with a daily transit rate of up to 200 ships.)

Last year China lost its lead as top shipbuilder to South Korea. For the last three years China and South Korea have been neck and neck in this area. As a result of this competition the world shipbuilding industry is dominated by China, South Korea, and Japan. These three nations build over 80 percent of the new merchant ships. China was expected to eventually surpass South Korea and Japan and remain the biggest shipbuilder. South Korea fought back, concentrating on more complex and expensive ships. The worldwide recession has been particularly hard on shipbuilding, with work in Chinese yards falling nearly by half for a while. But now orders for cheaper ships are picking up again. As with the United States a century ago, this domination of the commercial shipbuilding industry gives China the experience to build better warships, and to do it fast. Japan and South Korea have already demonstrated this, with both nations building warships that rival American vessels in quality and capability.

With the death of hereditary North Korean dictator Kim Jong Il a month ago, China has emerged with more influence over the inefficient, old-fashioned, communist government in North Korea. China approved the third generation of Kim's taking power in North Korea and apparently has a lot more say on needed reforms there. At the same time, Japan and South Korea have sent diplomats to China to hold discreet peace talks with North Korean officials. This is apparently being done under the supervision of the Chinese, who do not want the economic and social situation in North Korea to get any worse. North Korea is getting close to social and political chaos, which would be painful and expensive for China. This is where millions of North Korean refugees would flee to.

Increased economic sanctions on Iran (which refuses to halt its nuclear weapons program) have made it more difficult for nations to buy Iranian oil. For China, this is an opportunity, as most Iranian oil is exported to China, South Korea, and Japan. The latter two nations are willing to join the embargo. That would make China Iran's largest oil customer. This would enable China to demand a lower price. For this reason, China is unwilling to comply with the new UN sanctions on Iran.

In Hong Kong, police have arrested over fifty people for corruption during elections last November. Only 41 percent of the (over two million) eligible voters voted but nearly all Hong Kong residents agree on the need to keep elections honest.  

With the New Year the government implemented its new policy for television programming. In effect, some 70 percent of the most popular TV shows have been taken off the air (or, at the very least, out of prime time). In their place there are more uplifting or educational programs. In effect, entertainment has been replaced with propaganda. The people are not happy, and TV station owners are expecting big losses as their advertisers react to much smaller audiences. Just another reason for the Chinese people to dislike their government. The government says it wants to keep out poisonous Western culture. But many TV executives see the new policy as a way to get more advertising revenue for the state owned TV network. It's the privately owned TV networks that were producing and showing most of these Western shows (dramas, comedies, variety, and reality type programs). This kind of media manipulation is, after a fashion, backfiring. By forcing more people to seek alternative entertainment more Chinese are making the effort to get around the Chinese Internet censorship system and being exposed to unfiltered news about China today, and yesterday. This is often shocking to Chinese, because the communist government of China has eliminated from the official history the many horrendous past acts of the Chinese communists. This includes even heavier use of censorship in the past. But despite government efforts to stop it, more Chinese are adopting Western attitudes.  

In the south, the unprecedented uprising in the coastal town of Wukan has ended with the provincial officials coming in and siding with the rebels against the corrupt local officials. But some of the rebel leaders have been sent to prison and the town will be under heavier police observation for some time. For most of December, the town of 20,000 was in open rebellion because of corrupt local officials (who also killed a popular protest leader). The national government apparently ordered provincial officials to be the good guys and quiet things down as quickly as possible, with the least amount of mess (dead bodies and general destruction). While police surrounded the town and banned foreigners, especially journalists, from the area, news got out anyway. Internet access was cut off, but there were still cell phones and people sneaking in and out. The government does not want stuff like this to spread because there have been hundreds of outbreaks similar (but not as extensive) to Wukan in the past year. Enough Wukans happening at the same time and in the same area could spark a wider rebellion. It's happened many times before in China's history and Chinese officials, especially at the national level, pay close attention to history. So the Wukan situation (and several others in the south) are being exploited by the national leadership as an opportunity to punish local officials and serve them up as examples to the many more local officials who do the same thing, but more discretely. The national officials would like to get rid of corruption, but more discrete corruption is an acceptable alternative.

January 6, 2012:  The Indian Air Force cancelled the visit of a 30 man delegation to China because China would not issue a visa to one of the Indian officers who was a native of Arunachal Pradesh. The Chinese did this because they have, in the last few years, demanded that India turn over a contested area in northwest India (Arunachal Pradesh). In the last few years, China has escalated its demands by refusing to allow Indians from the disputed area to visit China. The Indian Air Force visit was part of an official exchange. Last month, a Chinese delegation visited India and none of the Chinese officers had a problem getting a visa. This Chinese behavior has angered India. In 2010 India announced a five year plan to increase Indian abilities to deal with any Chinese aggression against Arunachal Pradesh (which China claims as a part of Tibet). The Chinese claims have been on the books for decades but in the last four years China has become more vocal about it. That's one reason India has been rapidly increasing its defense spending. But since both nations have nuclear weapons, a major war over Arunachal Pradesh is unlikely. But India fears that China might try to carry out a lightning campaign (a few days, or a week), and then offer peace terms (with China keeping all or part of Arunachal Pradesh). Since neither country would be willing to start a full scale nuclear war over Arunachal Pradesh (a rural area with a population of about a million people, spread among 84,000 square kilometers of mountains and valleys), the "grab and parley" strategy has to be taken seriously. In the meantime, China keeps finding ways to annoy India over this issue.

January 4, 2012: A Japanese official came ashore on one of the uninhabited Senkaku Islands and stayed for two hours. China, along with Japanese, both claim ownership of the Senkaku Islands. A year ago a Chinese warship approached the Senkakus. A nearby Japanese Coast Guard vessel warned the Chinese ship to leave waters claimed by Japan, and the Chinese ship complied. Chinese warships and commercial vessels are constantly operating around the Senkakus, apparently as part of a long-range campaign to wear the Japanese down.  China is also more active in disputing Philippine claims to the Spratly Islands. The Philippines have stronger claims to some of these islands, but China has a growing fleet that increasingly disputes the Filipino claims.

January 3, 2012: There was a major riot in north central China (Ningxia Hui Autonomous Region) where local demonstrators tried to stop a thousand police tear down a new mosque that had been put up despite orders from local officials not to do so.