October 19, 2012: Corruption and its impact on popular support (or toleration) of Communist Party rule is now less worrisome than the damage the misgovernment is doing to the economy. A large chunk of the economy is still composed of state-owned firms and these are generally inefficient, unprofitable, and kept alive by loans (that often do not get paid back) and special favors (that anger many Chinese). All this damage is catching up with the government as the rate of economic growth continues to decline. From ten percent four years ago, it’s now 7.4 percent annual growth. Without this growth, there is a lot less support for the police state government in China. There are also growing suspicions (and evidence) that the government has been manipulating economic data to hide how much worse the economy is actually doing. A growing debate within the Communist Party concerns how vigorously to crack down on corruption and mismanagement by senior party members. To the more astute leaders, avoiding a crackdown only makes political and economic matters worse in the long run. But many leaders would lose a lot of money, and some could get prosecuted, if the corruption were attacked in a big way. The state owned firms are run by well-paid communists who provide crucial support for the senior official who can give out those executive level jobs. If these cushy jobs disappear, the party power structure shifts decisively in favor of the reformers. For China’s nervous neighbors more reform in China means more effective Chinese armed forces. This is not a good thing for the neighbors.

While South Korea and China are big trading partners, they are also at war. This is low level stuff off the South Korean coast where, so far this year, the South Korean coast guard has seized 130 Chinese fishing boats for poaching. Chinese fishermen consider the risk acceptable because the fish stocks off the South Korean coast are much richer (in quantity and quality) than off China (where overfishing has done a lot of damage). The Chinese use tactics that sometimes lead to violence. For example, in the last week the South Koreans found a group of 30 Chinese fishing boats poaching and went to board some of them and arrest the crews. As often happens the Chinese fishermen were armed with knives, saws, and axes and were willing to use force to repel the South Korea coast guardsmen. Using rubber bullets the Chinese were subdued. But one fisherman was hit in the chest with a rubber bullet and later died. China protests the “rough treatment” of its fishermen and does little to curb the poaching or violence against South Korean coast guardsmen. South Korea regards this as another example of Chinese arrogance.

Tensions with Japan (over World War II atrocities and current disputes over islands) have led to more Chinese military activity against Japan. Chinese warships are training near Japan more frequently and the number of Chinese aircraft flying near Japan has tripled in the last three months. Between July and September Japanese jet fighters scrambled 54 times to confront approaching Chinese warplanes (often recon aircraft). That’s still less than Russia, which accounted for 134 incidents. Russia and Japan have a long standing dispute over ownership of islands off northern Japan (which Russia seized after World War II and Japan wants back).

October 18, 2012:  China complained to Japan about two government ministers visiting a shrine commemorating Japanese war dead (including officers convicted of war crimes). At the shrine Japanese soldiers are honored as heroes, despite the many atrocities they committed (including killing over 20 million Chinese). Many Japanese still consider Japan’s World War II actions as justified, although the Japanese government’s official position is more contrite.

Tensions with India can be measured by opinion polls in both countries. Only 23 percent of Chinese have a favorable opinion of India, and only 23 percent of Indians have a favorable opinion of China. In both countries more than twice as many people are hostile to their largest neighbor. In both countries about 43 percent have a favorable opinion of the United States. Nearly half the Chinese population has a favorable opinion towards long-time ally (and foe of India) Pakistan. That is an exception as most of China’s neighbors have an increasingly hostile attitude towards China.

Today China sent eleven warships and eight warplanes to conduct a training exercise off the disputed (with Japan) Senkaku Islands.

October 15, 2012: As part of its plan to take control of all 3,400 small (and mostly uninhabited) islands and reefs in the South China Sea, China is preparing a list of names for the half of these specs of land that do not already have Chinese names. China claims ownership of most of the South China Sea, despite better claims by other nations bordering that body of water.

October 13, 2012: In the northwest (Gansu province) another Tibetan set himself on fire to protest Chinese occupation of Tibet and attempts to suppress Tibetan culture. This is the 54^th Tibetan to die this way since China put down an uprising in Tibet three years ago.

October 8, 2012: The U.S. August government is urging American firms to not buy from Chinese telecommunications firms, especially giants like Huawei and ZTE. These two firms have grown huge because they supplied most of the networking gear needed to put over a third of Chinese on the Internet. Twelve years ago only two percent of Chinese had internet access, now over 34 percent do. That's over 400 million people. Huawei and ZTE began exporting early on and have been very successful in Africa and Asia. But in the West there is fear that the Chinese Internet hardware producers, because they have close ties with the Chinese military, could be slipping special (secret from the users) features that would help China shut down, monitor, or control Internet traffic in countries using Chinese hardware. No one has ever found definitive proof of this. But there is a lot of Internet based espionage from China and that fuels growing paranoia in the West over Chinese capabilities and intentions.

These Chinese firms did whatever it took to keep shipments moving. And this may have had more to do with spreading around some bribes in the right places, than with actual spyware hidden in Chinese equipment. Chinese routers and other Internet gear has been scrutinized for "back doors", "kill switches", and the like but all anyone has been able to find so far is what appears to be sloppy design or programming, some of which would enable a hacker easy access to a network. To some this is a smoking gun, but to others its typical and one reason why many still pay a premium to buy Japanese, South Korean, or American equipment.

October 4, 2012: In the west (Tibet) another Tibetan set himself on fire to protest Chinese occupation of Tibet and attempts to suppress Tibetan culture.