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China’s Military Parade

a41f726b0511165f43380bOn September 3rd the largest military parade ever held in the People’s Republic of China dominated the streets of Beijing and also the TV screens of the nation. Ostensibly the parade was to mark the 70th anniversary of China’s victory in what it calls the “War of Chinese People’s Resistance against Japanese Aggression”, and what is commonly known in the West as the Second Sino-Japanese War.

The parade itself gave the world a glimpse of some Chinese military hardware that had never before been seen, and an overall impression of a militarily strong country ready and prepared to defend itself should the need arise (not that anyone sensible is suggesting China is under imminent threat of attack from the Japanese, or anyone else for that matter). President Xi Jinping was at the centre of proceedings, greeting the massed troops by declaring “Comrades, you have worked hard”. His speech was littered with references to Japanese aggression and made much of the CCP’s role in defeating global fascism in World War II, a narrative that has become more deeply emphasised in recent years but which is, at best, an exaggeration of the party’s position in China at the time. The speech was also notable for an announcement that the PLA would be reducing its troop numbers by 300,000, something which came as a surprise to many analysts and also, presumably, to some of those in the parade who are now facing redundancy.

The parade was significant for China watchers to see who turned up and who didn’t. Despite some earlier rumours that Japanese Prime Minister Abe had held preliminary discussions about attending the parade, the overt anti-Japanese nature of the event meant that he had far too much to lose domestically by showing his face. In the end, Japan sent no representation and even lodged a complaint with the UN about Ban Ki-Moon’s own decision to appear.

Russia’s President Vladimir Putin was, unsurprisingly, given a great deal of prominence, particularly as Russia was one of 17 foreign countries to participate in the parade itself (others included Pakistan, Mexico and Egypt). South Korea’s President Park Geun-Hye was the most prominent leader from Asia and her presence underscored the recent closeness of China-South Korea relations, defined as much by their mutual dislike of Japan as anything else. North Korea’s leader Kim Jong-Un did not appear (it would have been unprecedented if he had) but the country did send Choe Ryong-Hae, a senior official who has previously conducted international diplomacy on behalf of Kim. In all, there were 20 heads of state present, with a smattering of other top leaders from around the world. Notably absent, in addition to Japan, were any significant delegations from the US, the UK (although former Prime Minister Tony Blair was spotted), Western Europe, Australia or the Middle East.

The attendees confirmed two things. Firstly, the US and its allies continue to resist China’s attempts to position itself as a global leader with legitimacy stemming from both its own power and its demonstrable restraint in exercising it (the parade ended with a symbolic release of doves over Tiananmen Square). Secondly, it proved that China is not as isolated in Asia as is frequently presented, particularly in Japan. That the only significant power in the region not to send a major delegation was Japan itself suggests that it is at risk of becoming the isolated one. The CCP’s version of its place in history is certainly questionable, but its position in today’s global order is far less disputable.

China’s Military – Growing Assertiveness

Introduction

People’s Liberation Army

People’s Liberation Army

Over the last two decades, China has been steadily modernizing its military. This push to modernize reflects China’s desire to have military power commensurate with its growing economic and political status. It also reflects the fact that, from the Chinese perspective, the international realm gives rise to as many strategic uncertainties for China as a rising China does for other nations. In particular, many in China view the US as a strategic rival who wants to prevent China from becoming an equal leader on the global stage. The US’s “pivot to Asia” is viewed by many Chinese as example of the US’s containment effort. China is also unsettled by the US’s efforts to provide US allies and friendly states with weapons systems aimed to counter China’s growing military capability, and by the US’s continued arm sales to Taiwan.

Additionally, China considers Japan’s growing nationalism and Japan’s efforts to overhaul its military and security policies as a mounting threat. Its current alliances with North Korea and Russia notwithstanding, China views North Korea as a politically unstable nuclear power on its border, and Russia as a strategic competitor as well as an ally. China is also engaged in territorial disputes with Malaysia, the Philippines, Brunei, Vietnam, Taiwan and Japan in the South and East China Seas and with India on its western border. Additionally, China considers Taiwan, Tibet and Xinjiang to be its sovereign territory, and will fight their any move toward independence.

Other objectives of its military modernization program include improving China’s ability to fight piracy, to protect its shipping lanes and its access to energy and resources abroad, to help ensure the security of its international assets and to safeguard its growing numbers of citizens working and living overseas. From the Chinese perspective, protecting its economic trade and investments is critical to achieving Xi Jinping’s China dream – “achieving the great rejuvenation of the Chinese nation”. Indeed, China’s 2015 Military Strategy Document states: “the Dream is to make the country strong. Making the Chinese military strong is part of the Chinese Dream. Without a strong military, a country can be neither safe nor strong.” China sees the global trends toward “multi-polarity and economic globalization intensifying” which it believes will increase “international competition for the redistribution of power, rights and interests”. China sees a strong military as a competitive advantage as it vies for influence in this changing global landscape.

China continues to emphasize its military modernization is defensive in nature. China states that it will strike militarily only if it has been attacked first. Overall, China tries to play a long game when working to achieve its political, economic and military objectives. For example, while it will quell unrest in Xinjiang by force when necessary, ideally China hopes to overcome Uyghur opposition to Chinese rule through economic development and continued cultural integration. Similarly, before the International Tribunal of the Law of the Sea issues a ruling on Sino-Phillippines territorial disputes in the South China Sea – despite China refusing to participate in the arbitration – China is trying to maximize its facts in the water through the building of islands on contested reefs. By playing this long game in its strategic, multifaceted way, China is working to create a position of power so advantageous that it can accomplish its goals without ever having to use force. That said, China says that a first strike against the country need be military. China has stated that political, economic and strategic attacks could justify Chinese military action even if it means that People’s Liberation Army (PLA) fires the first weapon.

Levels of Military Spending

China’s J-10 airforce jet

China’s J-10 airforce jet

According to the well-respected Stockholm International Peace Research Institute (SIPRI), China’s annual defense spending has grown from approximately $33 billion in 2000 to $130 billion in 2011 compared to the US’s $690 billion in 2011. As a percentage of total GDP, China’s annual military expenditure has remained fairly constant at 2.1% while the US has grown its military spending from 3% to 4.8% of GDP from 2000 to 2011. Applying these percentages to 2014 GDP figures, it is estimated that China spent approximately $217 billion on its military compared to the US’s $836 billion. At current trends, some project China to become the world’s largest military spender between 2025 and 2035.

In fact, SIPRI believes that China’s actual defense spending could be as much as 50% higher than Beijing states since China keeps many of its defense expenditures off book or accounts for them at below market costs.  Indeed, according to Transparency International, China has one of the least transparent military budgets in the world.  Items that may be omitted from its official defense numbers include military research and development, paramilitary expenses, weapons purchased from abroad, expenses for strategic and nuclear forces, subsidies given to state owned industries engaged in defense manufacturing, contributions from regional and local governments, spending on the military-relevant part of China’s space program and PLA-driven fund raising.

People’s Liberation Army (PLA)

PLA fighting the Nationalists during the Chinese Civil War

PLA fighting the Nationalists during the Chinese Civil War

The People’s Liberation Army (PLA) was officially founded on August 1st 1927, more than two decades before the establishment of the People’s Republic of China that it now defends. It was founded by the Chinese Communist Party (CCP) as they fought to win control of the country. The PLA is an umbrella organization overseeing the PLA’s Army (PLAA), the PLA Navy (PLAN), the PLA Air Force (PLAAF) and the PLA Second Artillery Force (PLASAF). The PLA is unorthodox in that does not actually answer to the State, but to the Chinese Communist Party itself.  Thus, whereas the President of the United States is always Commander-in-Chief of the military, it is theoretically possible – although unlikely as long as the Communists remain in power – for the President of the PRC to not command the military. This makes the Head of the Central Military Commission (CMC) both important and powerful. Currently, Xi Jinping is both President of China and Head of the CMC and there has not been a discrepancy between the two posts since Jiang Zemin held onto the post of Head of the CMC for a year after handing the presidency over Hu Jintao. Chinese 2015 Military Strategy Document reaffirms the Chinese Communist Party’s absolute control of the military, “China’s armed forces will unswervingly adhere to the principle of the Communist Party of China’s absolute leadership” and “will work to build themselves into the People’s military that follows the CCP’s commands.”

Chinese Military Goals and Strategies

Map of China and its Neighbors

Map of China and its Neighbors

China believes that increased military power will give it the respect and power commensurate with its growing economic and political clout, will deter rivals from threatening its sovereign territory and national interests, and will allow it to influence international affairs in its favor. In the short term, China considers that its most immediate military threats are likely to occur along its periphery or in its near seas, and much of its recent military investment has been made with these threats in mind. Termed by China as “Local Wars under Conditions of Informatization” China sees any military conflict arising from these regional threats to be limited in scope and duration, and to be typified by the pursuit of political goals through relatively constrained use of rapid force. From a Chinese perspective, ideally these short conflicts will result in a quick return to the negotiating table with China in dominant position. In these “informatized” wars, China expects that the effective use of advanced computer systems, information technology and communication networks to provide China with key operational advantages.

Informatization for China has many facets. Of highest priority is its Computer Network Defense (CND) which it monitors vigilantly even in peacetime. In the event of war, China intends to quickly establish information operations (IO) dominance including controlling the electromagnetic spectrum which would allow it to suppress or deceive enemy electronic equipment. China’s electromagnetic warfare (EW) strategies focus on controlling radar, radio, optical, infrared, and microwave frequencies as well as disrupting adversarial computer and information systems. If necessary, China will use IO warfare preemptively, particularly when confronting information-dependent adversaries such as United States.

As part of this strategy, China foresees calling on millions of civilian Chinese programmers to work with the Chinese military to disrupt enemy technologies. The Chinese military also envisions that Chinese civilians will provide logistical and other support during war. This strategy of mobilizing all Chinese citizens in the case of conflict was reaffirmed in China’s 2015 Military Strategy Document “bring into full play the concept of the People’s war, and persist in employing it as an ace weapon to triumph over the enemy”.

China views improving its anti-access and area denial (A2/AD) capabilities as integral to its Local Wars strategy. A2/AD capabilities are intended to thwart third party intervention – particularly by the United States – into its territory or what it considers to be its spheres of influence which increasingly include the water and land within the South China, Yellow and East China Seas. These capabilities will also be key to preventing the US and other allies coming to Taiwan’s assistance if it moves toward independence.

Other military objectives include an improved ability to protect it economic shipping lanes and its rapidly growing number of citizens working abroad, to offer humanitarian assistance during times of natural and other disasters, and to project greater military authority in the Asia Pacific region and in regions further afield.

Cyberwarefare

Map of China and its Neighbors

Map of China and its Neighbors

Cyberwarfare is a major aspect of China’s informatization strategy. Since 2008, all major Chinese military exercises have had significant cyber information operations components which are both offensive and defensive in nature. Additionally, China runs an on-going cyber warfare program to steal intellectual property, trade secrets and technology from defense contractors, government agencies and research institutions valued at billions of dollars annually. The US government in particular has estimated that 90% of cyberespionage against the United States originates in China.

In 2013, the US computer security firm Mandiant noted that Chinese hackers breached US energy and other critical infrastructure, leaving in place software tools that could be activated to destroy infrastructure components. Mandiant also detailed methodical data theft from at least 141 US organizations over seven years; Mandiant tracked this theft back to a Chinese military unit code named 61398 which is staffed by a large cohort of proficient English speakers with advanced computer security and networking skills. Most of the Chinese targets were US companies operating in aerospace, satellites and telecommunications, public administration, information technology and scientific research fields or in industries identified as strategically important under its Five Year Plans. Unit 61398 also attacked a dozen smaller US local, state and federal government agencies as well as international governmental agencies. On average, the hackers operating within breached computer system for about a year stealing pricing documents, negotiation strategies, manufacturing processes, clinical trial results, technology blueprints and other proprietary information.

China is also the leading suspect in a June 5, 2015 hacking of the US Office of Personnel Management in which over 20 million employees, retirees, contractors and job applicants had their personal data compromised.

Space

Launch of China’s Long March Rocket

Launch of China’s Long March Rocket

China considers the ability to utilize space and to deny adversaries access to space as key to effectively implementing its Local Wars, A2/AD and other military strategies. To this effect, China is procuring a range of technologies to advance China’s space and counter space capabilities. China has developed and continues to develop imaging and remote sensing satellites with dual military and commercial missions, and currently has approximately 100 satellites in orbit. China controls satellites programmed in communications, navigation, Earth resources, weather, intelligence, surveillance and reconnaissance. Even the more commercially oriented satellites can assist the military by delivering situational awareness of foreign forces, critical infrastructure, and political targets. China also has demonstrated direct ascent kinetic kill anti-satellite capability to low Earth orbit. In 2007, for instance, China shot down a defunct weather satellite. Developing dual purpose satellites through commercial platforms has enabled China to access foreign technology through commercial means which it then uses to advance its military defense systems.

China believes that having high proficiency in counter space activities is critical to its being able to establish dominance in informatized warfare as satellites are significant to the communications, navigation and reconnaissance on modern day battlefields. By being able to take out enemy satellites, China aims to “blind and deafen its enemies” and to impede their ability to effectively use their precision guided weapons. As part of this effort, China is investing in a multidimensional program to advance its ability to limit or prevent the use of hostile space-based assets by developing jammers and directed energy weapons for direct ascent anti-satellite weapons used against China. Technologies advanced under China’s manned and lunar programs as well as technologies developed to detect and track space debris have significantly improved China’s ability to track and identify satellites, a prerequisite for ascent anti-satellite weapons attack. China is also continuing its development of the Long March 5 rocket, a next-generation heavy lift launch system designed to carry a load of up to 25,000 kg to low Earth orbits and 14,000 kg to geostationary transfer orbit. The first Long March 5 rocket is expected to be tested in 2016.

As part of China’s space effort, China is developing an independent human spaceflight program, and has a stated goal to construct a 60 ton space station. China’s growing space capabilities provide it with advanced skills which improve all aspects of conventional and nuclear targeting, ground air sea operations, precision conventional strike capacity and missile defense.

The PLA Army (PLAA) and the Arunachal Pradesh and Aksai Chin Disputes

Map of Arunachal Pradesh and Aksai Chin

Map of Arunachal Pradesh and Aksai Chin

Owing to its 9000 mile temperate coastline with many good natural harbors, China is both a land and sea power. For millennia, however, China’s greatest military threat came from the land, particularly from the northern steppes with its fierce Mongol hordes. The large size of the PLAA compared to China’s other service branches reflects this historic land orientation. The PLAA has approximately 70% of total PLA servicemen under its command or 1.6 million ground force personnel, roughly 400,000 of whom are based in the three Chinese Military Regions opposite Taiwan. This personnel is organized into 18 Armies, with 15 infantry division and 16 brigades. The PLAA has an estimated 7000 and 8000 artillery pieces.

Since the 1980s, China has gradually decreased the size of its army while concurrently developing modern capabilities and systems.  In particular, the PLAA is investing in heavy armor, long-range strike artillery, increased-range air defense weapons, and attack and transport helicopters. Its battle tanks, armored infantry fighting vehicles, armored personnel carriers, self-propelled artillery, and air defense weaponry have all enjoyed significant upgrades in the last decades. Today, for instance, approximately 45% of its armored infantry fighting vehicle and armored personnel carriers are modern, 31% of its main battle tanks are third-generation, and 15% of all the artillery is self-propelled compared with 0%, 0.1%, and 9% respectively in 2000.

The PLAA has focused on its armored fleet to improve its ability to move forces quickly within China and to its borders. In the Arunachal Pradesh and Aksai Chin areas, for instance, China is currently in dispute with India over ten separate territories at the Western End of the Tibetan Plateau, although several of the pieces of land are tiny. The two most significant areas of dispute are the 60,000 km² Arunachal Pradesh located in what India and most of the rest of the world consider to be the Indian state of Arunachal Pradesh, and the 37,000 km² Chinese administered Aksai Chin located to the west of Nepal, but claimed by India to be part of Kashmir. China and India have skirmished over these territories in 1962, 1967 and 1987. In 2009, China tried to prevent a $2.9 billion loan to India from the Asian Development Bank arguing that part of the funds would be employed to develop water projects in Arunachal Pradesh.

As well as aiding in border defense, improved military transport allows China to effectively quell domestic unrest particularly in Tibet and Xinjiang, and to have the army assist during natural disasters as it did in the aftermath of the 2008 Sichuan earthquake.

People’s Liberation Army’s Navy (PLAN)

Chinese Naval Ship

Chinese Naval Ship

Since 1990, PLAN has undergone significant modernization and expansion. As China reaffirmed in its 2015 Military Strategy Document, its “traditional mentality that land outweighs the sea must be abandoned, and great importance has to be placed on managing the seas and oceans and protecting maritime rights and interests.” Going forward, it can be expected that China will project hard power abroad primarily by means of its navy and its missile systems.

Today China has the largest naval force in Asia. In 2013, PLAN employed an estimated 255,000 sailors, soldiers, pilots and logistical personnel. Its fleet includes approximately 65 submarines, one aircraft carrier, 14 guided missile destroyers, 62 frigates, 211 patrol and coastal combatants, 238 amphibious boats and 205 logistics and support ships broken into three fleets: North, East and South fleets. PLAN also has an array of increasingly sophisticated aircraft from bombers and fighters to helicopters and transport aircraft. Over the next decades, China’s navy will continue to grow in both numbers and technological capability. Additionally, more of its fleet and fleet technology will be Chinese-built. For instance, the first Chinese-built aircraft carrier is slated to go to sea near 2020. Its current aircraft carrier, the Liaoning, is a refurbished vessel purchased from Ukraine in 1998.

Similarly, China is stepping up the production of its submarines, one of PLAN’s core strengths. Indeed, some predict that China’s submarine force could grow larger than that of the US within 15 years. As part of this submarine expansion program, China is upgrading missile systems and quieting technologies. It JIN-class sub, for instance, now carries ballistic missiles with an estimated range of more than 4000 nautical miles, giving China its first credible sea-based nuclear deterrent. Future submarines will have guided missile attack competence, giving China a submarine-based land-attack capability. Since 1990, China has brought to water six new classes of indigenously built destroyers and four new classes of frigates. These new ships have more up-to-date hull designs, propulsion systems, sensors, weapons and electronics.

China is also rapidly expanding its small combatants such as its JIANGDAO-class corvettes – the first six of which entered service in 2012; China is expected to build 20 to 30 corvettes in total. In 2004, China also introduced its Houbei-class wave-piercing, stealth catamaran missile patrol boats. Both these boats improve China’s operational ability in coastal and near waters. Being able to successfully engage in high intensity conflicts within the South China, East China and Yellow Seas remains China’s highest priority. As part of this effort, China is developing unmanned underwater vehicles and is continuing to upgrade its inventory of an estimated 50,000 naval mines.

Working in conjunction with PLAN, China operates other paramilitary maritime law enforcement agencies including the China Marine Surveillance, The Fisheries Law Enforcement, the China Coast Guard, the Maritime Safety Administration, and the Customs Anti-Smuggling Bureau.

People’s Liberation Army’s Naval Strategy and the Nine First and Second Island Chains

Map of First and Second Island Chains

Map of First and Second Island Chains

In 1982, the architect of China’s modern naval strategy, Chinese Admiral Liu Huaqing, set as a goal for China to control the first island chain by 2010, the second island 2020, and for China to curtail US naval dominance in the Pacific and Indian Oceans between 2020 and 2040. An analysis of current Chinese military expansion, rhetoric and activities reveals that China is making strong efforts to implement this maritime strategy. Specifically, China is stepping up its efforts to exert control within the first island chain. The first island chain is defined as the chain of islands extending out from the East Asian continental mainland coast. In its broadest definition, the first island chain encompasses the Bering, Okhotsk, Japan, Yellow, East China and South China Seas including the Aleutian and Kuril Islands, parts of the Japanese Archipelago, the Ryukyu Islands, Taiwan, the northern Philippines and Borneo ending at the Malay Peninsula.

By demarcating the first and second island chains, PLAN hopes to engage foreign navies in waters as far as possible from China in order to defend its territory and its territorial waters. Other naval military goals include traditional missions such as protecting and evacuating Chinese nationals in foreign countries, providing humanitarian assistance and disaster relief, protecting sea trade from terrorism, maritime piracy and foreign interdiction, prohibiting foreign surveillance and reconnaissance activities near its coast and conducting independent and joint naval sea exercises. China is also using PLAN as a force to discourage Taiwan independence and to defend what it considers to be its land, fish, oil and gas rights in the East and South China Seas.

China also wants to regulate military activities in its exclusive economic zone (EEZ). An EEZ is the sea zone extending 200 nautical miles from a nation’s coast over which it has special rights regarding the exploration and use of marine resources. While the US and most other nations do not regard it as unlawful to be active in foreign EEZs, China maintains that it is unlawful for a foreign navy to penetrate China’s EEZ despite its activities to the contrary. Indeed on several occasions in 2001, 2002 and twice in 2009, Chinese aircraft confronted US Naval ships as they conducted ocean surveillance operations in the South China Sea. China is also creating coastal economic belts and marine economic zones within the first island chain area and is engaging in marine research and development.

The second island chain is a series of island groups that is generally defined to run north to south from the Kuril Islands, through the Japanese archipelago, the Bonin Islands, the Marianas Islands and Palou to the Indonesian archipelago. Over time, China hopes to extend its first island goals into this larger geographic sphere. China’s assertion into the second island chain is made difficult due to the strong presence of the US and its allies including Japan and South Korea who not only have their own significant military forces, but also provide air, naval, logistic and supply bases to the US Additionally, the US Navy dominates in the La Perouse, Tsugaru and Tsushima Straits, allowing it to move quickly to the Korean peninsula and to defend Guam, its main air and naval base in the Western Pacific.

To date, China’s sea experience beyond the second island chain has centered on its counter-piracy mission in the Gulf of Aden where it keeps an on-going, three ship naval presence to defend Chinese mercantile ships from pirate attacks. This is China’s first sustained naval operation outside of Asia. China has also begun to engage in some naval activities in the EEZs of other nations, particularly around Guam and Hawaii. China is also making long-distance deployments a more constant part of its naval training cycle. In 2012, for instance, it sent naval tasks groups beyond the first island chain seven times. Limited logistical support hampers China’s ability to operate its navy more widely. In the coming years, China will work with its allies to create welcoming logistical ports in the Indian Ocean and farther afield. An example would be its assistance in helping Pakistan to construct the deep water port Gwadar. China would also like to develop the capability to project power across the globe for sustained, high-intensity operations similar to those that the United Kingdom engaged in when retaking the Falkland Islands in early 1980. China would also like to displace US influence in littoral and more distant waters.

The Nine Dashed Line and China’s Territorial Disputes within the South China Sea

China’s Nine-Dashed Line

China’s Nine-Dashed Line

Within the first island chain, China has drawn the nine-dashed line by which it asserts that the majority of the South China Sea falls within its traditional maritime boundary line despite the boundary being more than a thousand miles from China’s mainland in several instances. Since November 2012, China has added a map with this line into all its passports in order to reinforce the validity of its nine-dashed claim, and makes increasing reference to the area in its government documents. Not only are islands, reefs and banks within the nine dashed line contested by many neighbouring countries, but there are also competing claims on the area’s fishing, oil and gas resources.  Moreover, the South China Sea is a vital shipping lane for North East Asia. 80% of oil shipped to Japan, South Korea and Taiwan travels through South China Sea waters.

Within the East and South China Seas, China claims sovereignty to many islands also claimed by its neighbours. For instance, the Paracel Islands in the South China Sea are also claimed by Vietnam. The Spratly Islands, wholly claimed by China, are partly claimed by Malaysia, the Philippines, Brunei, and Vietnam, with Indonesia also claiming maritime rights in the area without actually staking a claim to any territory. Additionally, there are disputes with the over the Macclesfield Bank, and the Philippines and Taiwan over the Scarborough Shoal. The Macclesfield Bank, also known as the Zhongsha Qundao, is a completely submerged chain of reefs that does not qualify as territory under international law since it cannot be inhabited by human beings. The Scarborough Shoal, known in Chinese as the Nanyan Dao, is a group of small islets or rocks and thus subject to international jurisdiction. One motivation for China to claim these islands is that it will allow it to expand its EEZ throughout the area.

Disputed Territory in the East China Sea within the First Island Chain

Map of the Senkaku and Diaoyu Islands

Map of the Senkaku and Diaoyu Islands

In the East China Sea, the Diaoyu/Senkaku Islands are also claimed by Japan and Taiwan. At stake in these contested areas vast amounts of natural gas and oil beneath the sea beds as well as rich fishing resources. The East China Sea alone, for instance, is believed to hold approximately 7 trillion ft.³ of natural gas and up to 100 billion barrels of oil. Japan has suggested that the East China Sea be divided into separate EEZ with a line equidistant from each country allowing each to share the offshore oil and gas deposits. Instead, China claims an extended continental shelf reaching almost to Okinawa, giving it effectively exclusive rights to almost all the East China Sea oil and gas. In an effort to create a precedent for its claim and in part to intimidate, China has increased its naval, paramilitary and its joint naval/air force training activities in the sea/air area surrounding Japan.

PLA Air Force (PLAAF)

Chinese Airforce Jet

Chinese Airforce Jet

The PLAAF is in control of China’s territorial air security. It currently commands 398,000 officers and men divided between its seven military area commands in Shenyang, Beijing, Lanzhou, Jinan, Nanjing, Guangzhou and Chengdu. The PLAAF is composed of aviation, ground air defense, radar, airborne and electronic countermeasures arms. As of 2013, it commands approximately 1700 Fighters, 600 Bombers/Attack and 475 transport aircraft. While China increasingly flies modern fourth-generation and early fifth generation aircraft, about 68% of Chinese air fleet are still second and third generation aircraft or upgraded models of these aircraft.

That said, in 2013 China was considered to have over 500 modern fourth generation aircraft, outnumbering most air forces in the Asia-Pacific region. China’s fourth-generation fighters include the J-10, J-11, Su-27, Su-30, JH-7, J-15, J-20 and J-31 aircraft. China is also developing its fifth generation fighter force, slated to take flight around 2020. These new fighters will have significant maneuverability, stealth, internal weapons bays, modern avionics and sensors that offer better situational awareness for network-centric combat theaters, radars with high-level targeting capabilities and protection against electronic countermeasures, and integrated electronic warfare systems with advanced communication and GPS navigation functions.

As it modernizes, the PLAAF is emphasizing the development of new generation aircraft which will be effective in its Local Wars strategy and which can support the other PLA branches along the entire periphery of China and increasingly in the East, Yellow and South China Seas. China is also upgrading it H-6 bomber fleet to achieve greater range and to be armed with long-range cruise missiles. China is also developing a large aircraft likely to be called the Y-20 which will work in conjunction with its smaller fleet of strategic airlift aircraft.

China’s commercial and military aviation industries work together to advance China’s overall aeronautics standards, and share technology and systems. China’s military aviation has benefited from business partnerships with Western aviation and aerospace firms where technology shared for commercial purposes has then been employed to improve China’s military aircraft.

China is also building a state-of-the-art national integrated air defense system.  The air defense system is multidimensional, employing weapon systems, radar and C4ISR- Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance – platforms to counter multiple types of aircraft at various ranges and altitudes. A further goal of the air defense system is to protect China from precision strike ballistic and cruise missiles, particularly those fired from long distances. China is also upgrading its early warning, command and communication networks, and it is improving its long distance airstrike capabilities.

Drones

Chinese Drone

Chinese Drone

China is also developing unmanned aerial vehicles or drones which currently seem to be largely founded upon reverse engineering of foreign technologies. Research indicates that China plans to build as many as 40,000 land- and sea-based unmanned systems between 2014 in 2023. By way of comparison, the Pentagon only operates approximately 7000 aerial drones. In 2013 alone, the Chinese unveiled four drone models – the Xianglong, Yilong, Sky Saber, and Lijian.  The Pentagon believes that the Yilong, Sky Saber, and Lijian are all precision-strike weapons, and the Lijian drone has some stealth capability.  To date, most of China’s drone fleet has been employed in surveillance of China’s domestic population. For instance, China has been flying drones in Xinjiang in order to counter unrest in the province.

In June 2015, China released pictures of its new Divine Eagle, one of the world’s largest twin fuselage drones. Influenced by the Russian designs – there’s speculation that China stole critical design features from Russia – the Divine Eagle is a high-altitude, long-endurance multi-mission platform with both long-range surveillance as well as strike capabilities with some stealth capability. It is reported to carry multiple Active Electronically Scanned Array radars as well as Airborne Moving Target Indicators that are designed to track airborne targets such as enemy fighters and cruise missiles. This large drone platform is ultimately expected to act as an effective satellites to aid in the targeting of missiles and other tactical platforms well beyond the first island chain. When fully operational, it will be harder for the United States and its allies to operate undetected close to Chinese shores.

China has also been progressing its ability to electronically jam US drone flights, especially those flying over the South and East China Seas which are conducting surveillance on China’s island construction and other activities in disputed waters and territories.

PLA Missile Forces – the Second Artillery Force (PLASAF)

Map of range of Chinese Missiles

Map of range of Chinese Missiles

China’s Second Artillery Force (PLASAF) controls China’s nuclear and conventional ballistic missiles. The PLASAF runs missile bases, training bases, specialized support units, academic and research institutions. It has approximately 100,000 men under its command. China has one of the largest, most diverse and rapidly growing missile development programs in the world. It is currently estimated that the PLASAF has command over approximately 1000-2000 short-range ballistic missiles, 50-75 intercontinental ballistic missiles, 75-100 medium range ballistic missiles, 5-20 intermediate range ballistic missiles, 200-500 ground launched cruise missiles. In 2015, it was also confirmed that China now has nuclear missile technology with multiple independently-targetable re-entry vehicles (MIRV) – or the capability to place multiple warheads on a single missile and deliver the individual warheads to separate targets.

The development of China’s missile force has been impressively quick. Even just ten years back, China had a very limited ability to attack targets within or beyond the first island chain. China has modernized its missile force under a strategy of dual deterrence and dual operations. The basic idea behind dual deterrence and dual operations is that both conventional and nuclear missile capabilities will most effectively deter China’s adversaries from starting a war and defend China during wartime. Today, the SAF has the ability to credibly deter adversaries at intercontinental ranges; its DF-3, B-6 and LACM missiles, for instance, can strike targets 3300 km away. It has been a priority for China to extend its strike warfare further from its borders. Other objectives of the PLASAF program include effecting A2/AD operations, and deterring any move by Taiwan toward independence. Indeed, China has an estimated 1100 short range ballistic missiles currently targeted at Taiwan.

China is also developing a missile defense system involving the use of kinetic energy intercept at exo-atmospheric altitudes as well as intercepts of ballistic missiles and other aerospace vehicles within the upper atmosphere. China has already demonstrated an ability to intercept ballistic missiles at midcourse using ground-based missiles. To protect its missile systems, China has developed a 5000 km long network to mitigate the risk that its missile network could be materially weakened by a preemptive strike. For each missile launcher, China also has a large inventory of reserve missiles to ensure its ability to engage in sustained conflict if China were to come under attack.

Nuclear Weapons

An early Chinese nuclear bomb

An early Chinese nuclear bomb

China launched its nuclear weapons program in 1955 and detonated its first nuclear bomb in 1964. China is in a unique geo-strategic situation in that it shares land borders with four nuclear powers – Russia, North Korea, India and Pakistan – and faces the consideration that of the other four nuclear powers, three – the US, France and the UK – all have the ability to reach China with their nuclear weapons. China therefore believes that the maintenance of a nuclear arsenal is of existential importance. It also believes that its risk of being attacked by nuclear weapons declines significantly if an adversary’s initial nuclear strike does not eliminate China’s ability to retaliate. China therefore values secrecy over transparency in regards to its nuclear program.

It is estimated that China has approximately 130-195 deployed nuclear-capable weapons ready to be deployed on a variety of short- and long-range ballistic land- and sub-based missiles systems, although some US experts believe that China is hiding a much larger nuclear arsenal. Improving the range and numbers of its submarine-launched nuclear arsenal is a priority. In total, China’s has a nuclear inventory of approximately 250- 300 nuclear weapons. Additionally, it is also believed that China has a stockpile of about 16 tons of highly enriched uranium and 2 tons of plutonium. China also operates reprocessing spent plutonium fuel plants. These facilities isolate plutonium that is created from the reactor from spent fuel. China also runs an experimental fast breeder reactor and has been is considering purchasing two further fast reactors from Russia. If so compelled, China may be able to use plutonium created in these facilities for military use.

China has conducted 45 nuclear tests. In the 1990s, China accelerated the pace of its nuclear testing in order to complete a series of tests on smaller warhead designs before becoming a signatory of the 1996 Comprehensive Nuclear Test Ban Treaty created to prevent all nuclear explosions in all environments for both military and civilian purposes. China is also a signatory to the 1970 Treaty on the Non-Proliferation of Nuclear Weapons designed to stop the spread of nuclear weapons and weapons technology. In 2002, China ratified the International Atomic Energy Agency’s (IAEA) Additional Protocol IAEA which allows the IAEA to conduct extended inspections of nuclear facilities to verify records maintained by State authorities on the whereabouts of nuclear material under their control, to check IAEA-installed instruments and surveillance equipment, and to confirm physical inventories of nuclear material. China also has a “no first use” policy and a policy to not use nuclear weapons against non-nuclear states.

China’s Reserve Forces, Militia and Paramilitary Forces

Ministry of State Security

Ministry of State Security

In addition to the PLA’s armed forces, China also has approximately 510,000 military Reserve Forces, and an estimated 8 million Militia Members. Reserve officers are recruited from China’s pools of retired servicemen, civil officials, cadre of the people’s armed forces department, cadre of militia and civilian technicians. The Reserve Forces are designed to buttress regular PLA units during times of conflict in areas such as logistics and information warfare. The PLA Militia Forces are under the command of local military district governments, and are dedicated to logistics and technical support, air defense, internal security and stability, counterterrorism, disaster relief and emergency rescue. Each year, approximately 90,000 militia guard the country’s bridges, tunnels and railway, 200,000 join in military-police-civilian defense patrols, 900,000 in emergency response, rescue and relief operation following major natural disasters, and nearly 2,000,000 help to maintain social order in rural and urban areas. Increasingly the militia is being organized into specialized technical units including anti-aircraft artillery, ground artillery, missile, communication, engineering, anti-chemical, reconnaissance and information units. Other units are being developed to serve separately the Navy, Air Force and Second Artillery Force. The Militia is trained to help during natural and other emergencies and to maintain domestic stability. Most Militia hold regular jobs as well as being Militia members.

China’s other security and paramilitary forces include the Ministry of State Security which engages in foreign and domestic intelligence and counter-intelligence collection, and the Ministry of Public Security which is responsible for internal security and oversees the 1.9 million police personnel which in turn provide domestic patrol, traffic control, detective investigations, anti-riot and anti-terrorism services. China’s 660,000 strong People’s Armed Police Force acts as an internal security force, operates as a rapid response force for public emergencies, guards critical infrastructure and resources including gold mines, hydroelectric projects and transportation facilities, combats terrorism and supports national economic development. The People’s Armed Police Force is divided between the Internal Security Forces and the Border Defense Force including the Coast Guard, the China Marine Survey Agency, the Maritime Safety Administration and Fisheries Enforcement.

Upgrading all PLA force

Training Chinese troops

Training Chinese troops

As it reduces the overall troop numbers, China is increasingly recruiting personnel with higher levels of education. The PLA gives bonuses of up to $3500 to college graduates who volunteer for the Armed Forces and tuition allowances to college student deferring university education for PLA service. In 2009, for instance, the PLA recruited 100,000 college graduates. The PLA also grants civilians with particular technical skills NCO rank when they join up. It also supports veterans seeking advanced degrees and provides them with advanced employment opportunities and exemptions from postgraduate entrance exams.  China’s 2015 Military Strategy Document China is also placing more emphasis on training it forces in military theory- “to bring it into place a system of advanced military theory commensurate with the requirements of future wars.”

As part of its training, the 2015 Military Strategy Document reaffirms that all forces in the PLA “always treat ideological and political building as the first priority” so that the PLA will carry forward “the Core Socialist Values, cultivate the Core Values of Contemporary Revolutionary Service Personnel” and will uphold “the Communist Party of China absolute leadership over the military” and “the Armed Forces will resolutely follow the commands of the CPC Central committee at all times and under all conditions.”

Military Alliances and Cooperation

Summit of the Shanghai Cooperation Organization

Summit of the Shanghai Cooperation Organization

China’s 2015 Military Strategy Document states that it is China’s objective to “actively expanded military and security cooperation, deepen its military relations with major powers, neighboring countries and other developing countries, and promote the establishment of the regional framework for security and cooperation.” China participates in a myriad of military alliances, multilateral dialogue and cooperation mechanism such as the Shanghai Cooperation Organization (SCO), ASEAN Defense Ministers Meeting plus, ASEAN Regional Forum, Shangri-La Dialogue, Jakarta International Defense Dialogue, in the Western Pacific Naval Symposium.

Arguably China’s most important current military relationship is with Russia. The US rebalance to Asia and Russia’s involvement in Crimea and Ukraine – sanctioned by the West -have led to an improved relationship between China and Russia. President Xi Jinping’s made his first official state visit to Moscow in 2013 while Putin made his first foreign trip to China after re-assuming the Russian presidency in 2012.  Concurrently, the two countries signed agreements on cooperation in military exchanges, technology, energy and trade. China and Russia also ratified the 2013-2016 implementation guidelines of the China-Russia Treaty of Good Neighborliness and Friendly Cooperation. Additionally, in July 2013, Russia and China’s Navies staged their largest ever joint naval drill, the Joint Sea – 2013 exercises, and the two countries are also conducting anti-terrorism drills together. Bilateral trade between the two countries is expected to reach $100 billion by 2015 and $200 billion by 2020, driven in part by a 2013 $270 billion deal in which Russia will double its oil exports to China.

China is a member of the Shanghai Cooperation Organization (SCO) comprised of China, Russia, Kazakhstan, Uzbekistan, Tajikistan, and Kyrgyzstan. The key objective of the SCO is enhanced regional security focused on combating the “three evils” of terrorism, extremism and separatism; in the case of separatism, the SCO cooperates to ensure that “color revolutions” do not threaten the stability of the region. Annual joint practice operations in various fields of conflict have increased to include a total of more than 5000 participants from all six member states. The majority of these participants come from the China and Russia; closer military and strategic ties between these two states is one of the most significant outcomes of the SCO’s development. In 2015, for instance, China and Russia conducted joint naval exercises in the Mediterranean.

The promotion of closer economic ties is also an objective of the SCO.  China has proposed, for instance, that the Russian led Eurasian Economic Union (EEU) – a trading blocking comprised of Armenia, Belarus, Kazakhstan and Russia – connect with China’s rapidly developing Silk Road Economic Belt – a series of economic initiatives that follow the Old Silk Roads across Eurasia and South Asia. China sees closer economic ties including everything from the increased trade of oil to the expansion of transportation, infrastructure and cultural ties across the region.

Importantly, the SCO is expanding its members to include two of its three observers – India and Pakistan; the third observer Iran is not currently eligible due to international sanctions, although this may change if the Iranian nuclear deal is ratified. Pakistan believes membership in the SCO will provide it with enhanced tools to combat extremism within its borders, will enhance its international prestige, will potentially help improve its relations with India and may help it resolve its dispute with India over Kashmir.  India sees the SCO as a mechanism to improve its relations with Pakistan as well as Russia, China and the countries in Central Asia. From China’s perspective, expanding SCO membership increases the prestige of an organization in which it has a leading position.

Since 2001, when China first became involved in UN backed peacekeeping operations (PKOs), it has rapidly increased its level of commitment. At the beginning of 2012, China had more than 1800 troops involved in PKOs, slightly down from a high of 2100 in 2008, but still more than any other permanent member of the UN Security Council. In 2014, China had over 3000 Chinese soldiers serving with the UN.

Future Trends

Chinese soldiers

Chinese soldiers

China’s 2015 Military Strategy Document sees the world becoming increasingly multi-polar and globally interconnected with “historic changes in the balance of power, global governance structure, Asia-Pacific geostrategic landscape.” It sees increased international competition “in the economic, scientific and technological and military fields” and “for the redistribution of power, rights and interests”. Against this changing landscape, it is China’s goal to achieve “the great rejuvenation of the Chinese nation … by 2049 when the People’s Republic of China marks its centenary”. China sees its military buildup as key to allowing China to benefit from this shifting landscape and as key to reclaiming its positioning as a global world leader.

Given this, it can be expected that China’s military build-up will continue apace. Indeed, it is China’s goal to develop a world-class military in all branches over the coming decades. Thus, as its economic growth rate natural slows from historic blistering rates, it is possible that China’s military spending as a percentage of GDP may increase above its 2% level.

In terms of emphasis, China will continue to prioritize space and other technologies that will give it an edge in “informatized” warfare; China views technology as key to offsetting its deficits in military strength and experience. Continued naval and missile build-up will be prioritize; it sees these arms as being particularly critical to diminishing US military hegemony. Specifically, its paramilitary naval forces are expected to increase by 25% over the next decade; China sees its paramilitary as a way to assert its near seas claims in way that is less confrontational than if the same actions were taken by its navy.  China will also prioritize the development of air force and drone stealth technology as part of its A2/AD strategy. China will also invest heavily in underground facilities to safeguard all branches of its military.

Such upgrades on technology will continue to reduce the need for raw manpower – in line with most modern militaries around the world. To this end, Xi Jinping announced a further reduction in troop numbers of 300,000 during his speech in China’s large military parade on September 3rd 2015. Though significant, this will still leave the PLA as the largest military force in the world.

China will continue to use non-military tools to achieve its objectives.  These include everything from increasing its international media presence to pushing ahead with its build-up of land masses on atolls in the South China Sea to continuing its massive lending, investment and aid programs.

Going forward, China will also place increased emphasis on the quality of its military training with more emphasis being placed on training in difficult weather, terrain and electromagnetic conditions. China will also continue to improve troop skills with its new technologies and weaponry. China will also engage in more joint training between its military branches. Prior to 2000, joint training across branches was very infrequent. China will also continue to participate in joint training organizations with its allies.

Overtime, China will also increasingly develop its own indigenous military equipment and weapons systems so that it can limit its dependence on foreign weapons systems, particularly those of Russia. It will also work to expand its global port and base access so that it can project its forces farther from its shores.

As China develops indigenous weapons, it can be expected that its military exports will continue to grow. From 2009 to 2013, Chinese arms exports totaled approximately $14 billion. To date, these weapons have been less sophisticated than Western and Russian exports. Pakistan is China’s largest arms customer; the two countries also co-develop weapons system such as the JF-17 fighter aircraft and the F-22P frigate. China uses its weapons sales as part of a multi-pronged strategy to promote trade, access natural resources and expand its global influence. From its customers point of view, Chinese arms come with fewer political strings attached which appeals to those who might otherwise have little access to Western weaponry.

China can also be expected to more aggressively assert its claims over contested territory and resources in its near seas, actions which come in conflict with its assertion of a peaceful rise. Interfering with resupply missions to the Philippine outpost on the Thomas Shoal and the deployment of oil rigs to what Vietnam considers its EEZ are recent examples of this greater assertion.

Zhang Xun with the warlord Puyi 1917 (zhangxun) http://visualisingchina.net/#hpc-gr02-067

Modern Chinese History I: The Republic of China 1911-1925


Introduction

The Qing Imperial Monarchy was ultimately toppled by a decentralized revolution. Once it had been overthrown, it proved hard to find a new governmental structure that was satisfactory to all the regional economic and political interests which had worked to depose the Manchus. All agreed that China should be unified, that foreign imperialism must be halted and that China should reclaim control over its economic assets. However, revolutionaries wanted to achieve these goals through the wholesale restructure of government and society while conservatives wanted a new political and societal structure that preserved the influence they had acquired during the Qing Dynasty.

Delegations during signing of the Treaty of Versailles

The first decade of the Republic of China passed without it being able to install an effective central government. As regional warlords became more powerful and as China became disillusioned with the West following the Versailles Treaty’s transfer of Germany’s concessions in China to Japan, many educated Chinese increasingly feared that their country would be sliced up.

In response, intellectuals renewed their search through every kind of political organizational theory, including Marxist Socialism, in the hope of finding the best governmental structure for China. The disadvantages of using Confucianism as the organizational basis of China’s social fabric were debated and Western scientific knowledge was sought in order to advance China’s modernization. Many began to argue for the use of vernacular Chinese in writing and education in order to improve the accessibility of information. By 1921, the Chinese Communist Party had been founded in Shanghai with 53 members. Its founding corresponded with a rise of urban labor activism and of a merchant class that was increasingly nationalistic. The immediate period after the 1911 Revolution also saw greater independence for China’s border regions.

Yuan Shikai, the Kuomintang, the Second Revolution, Failed Dynastic Restoration

General Yuan Shikai, President of the Republic of China

In 1911, the Qing Dynasty was deposed.  On 12th February 1912, the Republic of China was founded. For his help in overthrowing the dynasty, Sun Yat-sen agreed that Yuan Shikai would become the first president of the new Republic. Meanwhile, Sun Yat-sen and his followers founded the Kuomintang (KMT) or the Nationalist Party, also referred to as the Guomindang. The KMT was a loyal opposition party designed to compete in electoral politics with Yuan Shikai and his followers. During the first assembly elections held in December 1912, the KMT won approximately 43% of the vote. Yuan Shikai was not pleased with these electoral results, nor with the KMT’s constant criticism of his policies.

The KMT was particularly censorious of Yuan’s management of national finances. By 1913, ineffective taxation meant that the government was running an approximately 13 million yuan monthly deficit. National cash flow was further hampered by foreign control over many of China’s economic assets. The foreign-controlled Imperial Maritime Customs, for instance, directly deposited China’s custom revenue in foreign banks which was then used to pay the interest on China’s rapidly accumulating foreign debt. Even salt taxes were under foreign supervision. Yet, instead of addressing tax and revenue collection directly, Yuan organized an additional loan of £25 million from a five-power foreign banking consortium. Yuan felt the loan necessary to give him the resources he needed to defend his power. Sun Yat-sen and his followers argued that the loan would further increase foreign control over China’s economy.

Song Jiaoren

In 1913 Song Jiaoren, the KMT campaign manager and a potential-prime minister, was assassinated, probably on the orders of Yuan Shikai. The KMT responded to the murder by calling for Yuan Shikai’s resignation. When he refused, they launched what has been called the Second Revolution. Yuan Shikai crushed the revolt easily, forcing Sun Yat-sen to flee to Japan. Yuan’s quick victory against the KMT fuelled his already growing dreams of grandeur.   While Yuan supported a strong, modern, industrialized Chinese state, he now envisioned that this state would be ruled by a dynasty with himself as emperor.

Despite Yuan’s imperial ambitions, he launched many modern reforms designed to strengthen the country. Specifically, he strived to develop an independent judiciary believing that an effective, impartial court would be China’s best method to terminate foreign extraterritoriality. He also centralized the national currency and, in agriculture, he enhanced productivity through improved irrigation and more efficient distribution of agricultural products to regional markets. Significant progress was also made in eradicating opium use during this time. Yuan advocated free compulsory primary school education. He also partially reformed the penal system, improving sanitation, work facilities, and prisoner education.

Foreign powers observed changing events in China closely. Their main priority was to protect their Chinese investments. These totaled almost $788 million in 1912 and reached $1.61 billion by 1914. They also wished to safeguard their nationals in the event of any recurrence of a Boxer-like, anti-foreign outbreak.

South Manchuria Railway

To obtain foreign support for his imperial ambitions, Yuan signed agreements with Russia and Britain giving them special privileges in Outer Mongolia and Tibet respectively. Yuan also agreed to the bulk of Japan’s infamous Twenty-One Demands presented to China by the Japanese ambassador in January 1915. The Twenty-One Demands effectively allowed Japan to take significant jurisdiction over Shandong, South Manchuria, Eastern Mongolia and China’s coastline. It also gave Japan the right to extract revenue from railway and mining concessions and placed in joint Sino-Japanese administration the huge Han-Ye-Ping iron and coal works in central China. Yuan’s American advisor, Frank Goodwin, contended that China might be better suited to a constitutional monarchy than it was to a republic, and thus also did not object to Yuan’s move to assume imperial power.

Zhang Xun, Qing-loyalist who attempted to restore Emperor Puyi

With foreign support in place, Yuan’s monarchical movement went public. In December 1915, Yuan accepted “petitions” by provisional representatives which asked that he become emperor. His reign, to be called Hong Xian, or the Glorious Constitution, was to start on 1st January 1916. Yet he badly misread the Chinese public. The Chinese were particularly angry about Yuan’s signing of the humiliating Twenty-One Demands. On 23 December 1915, an ultimatum was delivered to Yuan to stand down or face civil war. Thwarted, Yuan Shikai died in June 1916 of kidney failure, leaving a power vacuum and no national consensus about how China should move forward politically.

Warlord General Zhang Xun, a zealous supporter of the Qing imperial family, led his army into Beijing in mid-June 1917 to restore the abdicated Qing Emperor Puyi, now a boy of 11. His efforts were foiled by rival generals, and once-again the emperor was deposed. Instead of being punished, it was decided that Puyi was to be given a modern Western education under European tutors. General Zhang’s failed insurrection destroyed the pretense that China’s central government had any significant power. Instead, power devolved to the provinces into the hands of warlords.

Warlordism 1916-1927

Chinese Warlord-era General Wu Peifu on Time Cover

During the Warlord Era, a nominal government continued to claim authority in Beijing, but its power was almost entirely restricted to the capital and to relations with foreigners. In actuality, the political structure of China was completely fragmented.  Generals and regional landlords vied with each other for power and formed constantly shifting alliances in a manner reminiscent of the Warring States Period.

The nature of the warlords was as varied as the provinces over which they ruled. Some were ruthless despots and thugs while others were educated and worked to instill in their men their own ideas of morality. Some subjugated whole provinces, financing their armies through local taxes gathered by their own officials. Others ruled only a few towns, raising money from theft. Some warlords supported the Republic, preferring that their territory be reintegrated into a valid constitutional state. A number choose to work with foreign powers, whether they were the British in Shanghai, the Japanese in Manchuria or the French in the southwest. Some grew opium in order to generate revenues.

World War I and the May 4th Movement

Japanese Troops in Manchuria

When World War I broke out, to strengthen its claims on Chinese territories, Japan entered into a series of secret treaties with Britain, Russia, the United States and the acting Chinese government. The February 1917 Anglo-Japanese agreement required Britain to support Japanese claims in Shandong, and agreed that Germany’s Pacific possessions north of the equator were to go to Japan while those in the south could be claimed by Britain. The February 1917 Russo-Japanese agreement acknowledged Japan’s Twenty-One Demands and Russia’s territorial gains in Outer Mongolia. The November 1917 American-Japanese Lansing-Ishii Agreement concluded that: “geographical propinquity created special relations between nations”. In other words the US recognized that Japan, by virtue of its geography, had a special position in China. Finally, in a September 1918 secret pact, the Beijing government gave Japan right to build two railways in Shandong and to station its troops there as it deemed necessary in exchange for ¥20 million.

Although there was no historical precedent of China engaging in global events far from its shores, China entered World War I on the side of the Allies in 1917. China believed that if it fought to defeat Germany, then it would be able to reclaim Germany’s Chinese concessions. While China could not offer the Allies combat troops, it could provide manpower which would free up French and British males to go to the front. By 1918, an estimated 96,000 Chinese were laboring in France Ultimately, 2000 Chinese workers died in France and a further 543 lost their lives at sea.

Chinese Labour Corps load sacks of oats at Boulogne during World War I

After World War I ended, the Chinese delegation went to the Versailles peace negotiations believing they would benefit from the principles of democracy and self-determination which Woodrow Wilson espoused. Specifically, they hoped to recover Shandong and to abolish the so-called ‘Unequal Treaties’, under which foreign powers maintained privileged statuses in China. Instead, they were informed that the peace conference would deal only with those problems arising from the conclusion of the war. Only Shandong, therefore, qualified to be discussed. Moreover, the secret treaties that Japan had concluded, including the secret pact with the acting Beijing’s government, meant that China’s claims to Shandong had been effectively forfeited.

Beijing students protesting the Treaty of Versailles on May 4, 1919

The inability of China to achieve any of their objectives, despite having fought with the Allies, humiliated and angered China. Its sting felt all the more sharp as it came on top of the disgrace of Japan’s Twenty-One Demands. In protest, on May 4th  1919, 3000 students from 13 universities began to peacefully march through Beijing. They handed out leaflets written in Chinese vernacular which explained how the loss of Shandong was equivalent to the end of China’s territorial integrity. They called on all Chinese to protest. The march turned violent at the house of Cao Rulin, the Minister of Communications. Cao had backed the pro-Japanese Anfu group and was considered by many of the protestors to be one of China’s worst traitors. Inside, although Cao was absent, the students found Zhang Zongxiang the Chinese ambassador to Japan. They severely beat Zhang and set Cao’s house on fire. Thirty-two students were arrested, but they were set free three days later.

Zhang Zongxiang

Further protests erupted throughout China. The student protests generated nation-wide sympathy. In Shanghai alone, as many as 60,000 workers staged some form of work stoppage in solidarity. These strikes marked a new development in Chinese history. Thereafter, protesters frequently made good use of strikes to fight injustice, despite the risks of unemployment, beatings and even death. The series of demonstrations, strikes and boycotts that followed became known as the May 4th Movement, and it is said by many to mark the beginning of modern Chinese nationalism. Today, May 4th continues to be marked as an important commemoration with the date carrying huge political significance. The immediate result of the students’ actions was that the Chinese delegation left France without signing the Versailles Treaty.

Intellectual Awakening

Yan Fu translated Darwin’s works into Chinese

The failure of the Republic, the rise of the warlords, the betrayal of Versailles and the increasing encroachment of imperial powers into Chinese territory heightened a Chinese fear present since the time of the Opium Wars:  that China was at risk of being dismembered. This fear caused Chinese intellectuals and leaders to search for tools and philosophies that would allow China to become a modern, unified nation free from imperialism. Many continued to try to adapt western philosophies and science to the Chinese situation.

In 1896, for instance, Yan Fu  translated into Chinese the writings of Huxley and Spencer which applied Darwin’s “survival of the fittest” theories to human society: just as animals struggle for survival, Huxley and Spencer argued that people – and eventually their societies – also struggle, with the weak becoming prey to the strong. To prevent extinction, Yan argued that China and the Han Chinese people must evolve new strength. Early twentieth century Chinese thinkers applied the idea of strength broadly. Indeed, in his 1917 essay, A Study of Physical Education, Mao Zedong criticized the Chinese’s traditional aversion to physical exercise, arguing that physical prowess strengthened a people’s determination as well as making them more effective combatants.

Confucianism and traditionalism were also attacked. With the exception of friend-friend, the remaining four relationships of Confucianism – ruler-ruled, father-son, elder brother-younger brother, and husband-wife – were hierarchical in nature. Many intellectuals argued that this rigid social structure prevented China from modernizing as it encouraged subservience and discouraged independent thinking. It also completely subjugated women. In a series of 1919 articles Mao advocated the importance of granting women greater rights, arguing that empowered women would allow China to face the world with the full strength of its 400 million people.

Young Mao Zedong in 1919 advocated women’s rights and physical exercise

Increasingly, these views were expressed in magazines and publications such as the New Tide, The Weekly Critic and The New Youth. These magazines helped expand the intellectual debate both geographically and throughout society.  Often their articles were written in a simple vernacular style that could be understood by those with little education.

Debate about China’s national language began soon after the Republic was founded. By 1913 it was agreed that Mandarin would be the national language. Pronunciation was standardized and phonetic symbols were introduced to represent this pronunciation. By 1917 intellectuals began to argue that this standardized Mandarin should be written in a vernacular which was closely aligned to spoken language as opposed to the difficult classical language of Confucian scholars.

Other Chinese intellectuals lost faith in the West after Versailles and found it difficult to accept the West as both teacher and oppressor. Intellectuals such as Li Dazhao and Chen Duxiu began studying Marxist socialism and the Bolshevik Revolution. Socialism was appealing because it offered a way to reject both the constraints of Chinese tradition and Western domination. It also represented a goal as yet unrealized in Western Europe and America. Its success in China would put China ideologically ahead of the capitalist states.

The Russian Revolution also brought home to many educated Chinese that the outside world was changing in radical ways. Seeing these changes caused many Chinese intellectuals to believe in China’s own ability for radical change. The intellectual and psychological appeal of Marxism was further strengthened in 1919 by the Soviet readiness to renounce the old Tsarist special rights and privileges in China. Even though the Soviets later backtracked from some aspects of their offer – specifically with regard to returning Chinese railways without compensation – the Chinese remained appreciative of their gesture, particularly in contrast to Western and Japanese imperialist policies.

Pictured in Red Square in 1919, Soviet revolutionary leaders inspired Chinese thinkers

Increasingly debates within China centered on the relative advantages of gradual social reforms versus rapid radical change. In contrast to radical thinkers advocating a complete overthrow of Chinese societal norms, pragmatists such as Hu Shu argued for steady change in Chinese society that would be driven by scientific and methodical solutions to specific practical problems. This pragmatic, evolutionary method was partially adapted by the KMT. Communists, on the other hand, agreed with thinkers such as John Dewey who visited China from 1919 to 1921. Dewey argued that China’s 1911 Revolution was failing because it was externally imposed and did not alter the ideas of life – governed by Confucianism – which really controlled society. Chinese communists interpreted this to mean that China required a complete overhaul of Chinese society and industry.

Yet, regardless of their approach, most Chinese thinkers of the era recognized the need to adapt foreign ideas creatively to the Chinese experience. This was especially true for the Marxists. Li Dazhao argued, for instance, that China was being subjugated by foreign imperialists that exploited the Chinese people just as capitalists exploited workers in more developed countries. In China, it was often the imperialists who owned the means of production and took the workers’ surplus value. Perhaps most critically, if Marxism was to be applied to China, somehow the central role Marxist theory gave to the urban proletariat in revolution would have to evolve. China was a country of peasants despite its growing number of urban workers.

As Li, and his colleagues grappled with how to adapt Marxism to China, he encouraged his students to work in the Chinese countryside around Peking. By the early 1920s, under Li’s guidance, Peking University students had founded the Mass Education Speech Corps and were traveling to villages. Those students learned first hand about the desperation and the poverty of the Chinese countryside. This poverty was often further aggravated by droughts and floods bringing famine and plague.

The Birth of  the Chinese Communist Party 1921 – Li Dazhao and Mao Zedong

Li Dazhao, one of China’s first Marxists

Increasingly, the National University in Beijing became a hotbed of radicalism. As early as 1918 Li Dazhao, then a librarian, had declared himself a Marxist. He founded the New Tide Society followed by the Marxist Research Society which eventually became the Society for the Study of Socialism in December 1919. By March 1920 the various Marxist groups in Beijing united to form the Beijing Society for the study of Marxism. Li’s library assistant was Mao Zedong. Born to a wealthy farmer in Shaoshan, Hunan, Mao took up a Chinese nationalist and anti-imperialist outlook early in life after having been profoundly influenced by events such as the May 4th Movement. He too was an early adopter of Marxism-Leninism.

In April 1920, Russian Gregory Voitinsky met with Li and other radical academics and students. In Shanghai he held meetings with Chen Duxiu, an extremist from the May 4th  generation. It was during these meetings that it was decided to create the Chinese Communist Party (CCP). The first secret Congress of the CCP took place on July 23, 1921 on the premises of a girls’ school in Shanghai, but was eventually relocated to a boat on the South Lake near Jiaxing in Zhejiang province for greater secrecy. 13 delegates attended representing the 53 members of the local Chinese communist groups in existence. Mao Zedong was said to be among these delegates, though this has been questioned by some academics. Early CCP objectives included the revolutionary overthrow of capitalism, the rule of the proletariat and an alliance with the Third International, the Comintern. Under the leadership of Vladimir Lenin, the Comintern’s goal was to foster world communist revolution. Additionally, the CCP planned to establish more labor unions, publish magazines and exploit other avenues to organize and educate the working class. During the Second Congress in July 1922, it was decided that the CCP would create a temporary alliance with the KMT led by Sun Yat-sen in order to advance its revolutionary objectives.

Li Dazhao meeting with Russian Voitinsky

However, while the early Congresses were able to agree overall objectives for the fledgling Communist Party, the means to achieve these objectives continued to be debated. In Shanghai, Chen subscribed to the general European Marxist view that industrial workers were the key to revolution. In Beijing, Li continued to argue that as the peasantry constituted more than 90% of the population and as agriculture was still the basis of the national economy, the peasants must lead the Chinese Communist revolution. This argument strongly influenced the thinking of Mao Zedong. After Li was executed on the orders of a Beijing-based warlord in 1927, it was Mao who carried on the push to make the peasant central to the Chinese Communist Revolution, putting his mentor’s ideas eventually into practice.

The Rise of the Chinese Workers Movement

Early railway car factory in northern China

At the same time that Marxist ideas were beginning to be seriously explored in China, China was seeing the emergence of a politically-conscious merchant class and urban labor force numbering between two and three million by 1919. Western and Japanese imperialism in the late 19th and early 20th centuries had spurred urbanization and industrialization in northeast China and the Treaty Ports. This industrialization was driven by the coupling of foreign capital with abundant, cheap labor. When the World War I erupted, Europeans powers recalled all nationals from China, allowing a new generation of Chinese entrepreneurs and managers to fill their void. This gave the new Chinese entrepreneurs invaluable business experience and allowed them to make large fortunes. Japan, too, competed to take advantage of the European absence.

Working conditions in these factories were often horrific. Conflict between workers and managers grew progressively more frequent.  Indeed, by the 1920s, there was already a history of trade labor unions and strikes as was seen during the May 4th protests. As CCP power grew, it would increasingly exploit this labor movement to its advantage.

Nanjing Road, Shanghai in the 1920s

A pinnacle of this labor protest occurred on May 30th 1925. The crisis started when Chinese workers, angry at being locked out of a Japanese-owned Shanghai textile mill during a strike, broke into the factory and damaged machinery. Japanese guards reacted by firing into the crowd, killing one worker. His death ignited public anger, student demonstrations, further strikes and arrests. On the 30th May thousands of workers and students gathered at the Nanjing Road Police Station, insisting on the release of six arrested Chinese students and protesting against foreign imperialism.  As the numbers of protesters increased and as they began to chant “kill the foreigners”, the commanding British inspector ordered the group to disband and then fired before the protestors could obey, killing 11 and wounding 20.

Chinese anger over the slaughter spread nationally. At least 28 other cities held rallies in solidarity with the May 30th  victims and a general strike was called in Shanghai. Foreign powers brought in troops to protect their international settlements. The tension from the May 30th incident was escalated in June when a major strike was launched in Hong Kong targeting the British. During a strike rally, British troops shot at protestors, killing 52 Chinese and wounding 100. Chinese fury boiled over and the strike in Hong Kong – which eventually lasted 16 months – was coupled by a boycott of British goods. Not until December, when the British police inspector and his lieutenants were fired and when an indemnity of 75,000 Chinese dollars was paid to the deceased families did public outrage quiet.

Mongolia, Tibet and Xinjiang

Map of the People’s Republic of Mongolia

Although Mongolia, Tibet and Xinjiang were explicitly stated in the provisional constitution of March 1912 to be included in the territory of the Republic of China, this was never realized in actuality. The Qing’s collapse allowed local political forces to make a bid for independence from China. This aspect of Chinese history is keenly contested as are the border regions themselves. The CCP argues that these territories have always remained under Chinese control, with the exception of Outer Mongolia which has been recognized as an independent country since 1945 (Inner Mongolia has remained as part of China). In contrast, many Mongols, Tibetans and Uyghurs believe that the degree of independence experienced in the years following the Qing’s fall set a precedent which should allow them to negotiate more independence now.

After the 1911 Revolution Inner Mongolia slipped into the hands of local warlords while Outer Mongolia sought help from Czarist Russia in their bid to create an independent state. Chinese control over Outer Mongolia had always been less direct than it had been in Inner Mongolia. After having defended their independence against the Chinese, Mongolia became a People’s Republic in 1924, closely tied economically and militarily to the USSR. Of all the frontier regions, Outer Mongolia was the only one to achieve independence from Chinese control, and this was because of its alliance with the Soviet Union.

Palace of the Old King of Tibet taken in 1905

By the mid-19th century Manchu and Chinese influence in Tibet was more symbolic than real. The Anglo-Chinese Convention of 1906 effectively repudiated Tibet’s efforts to remain independent by reaffirming China’s suzerainty over Tibet. When news of the 1911 Revolution reached Tibet, Tibetans rose against the Chinese, forcing the remaining Chinese out of the country. By January 1913 the exiled Dali Llama returned to Tibet and insisted that he was now Tibet’s sole spiritual and temporal authority. This separation lasted until 1951 when Chinese troops again invaded the region. This period of separation has been one factor fueling current aspirations for Tibetan independence.

Yang Zengxin, Chinese governor of Xinjiang 1911-1928

Xinjiang was formally annexed into the Chinese Empire as a province in 1884. Yang Zengxin became the governor of Xinjiang from 1911 until he was assassinated in 1928. Largely he retained the framework of civil administration that had been used by the Qing Imperial Court to rule its most distant subjects. He succeeded in keeping the region reasonably free from civil strife by isolating it from the turmoil of China proper. Yang’s replacement lacked his authority. Under his control, strains between the Chinese and the native Uyghur rose. In 1931 a local uprising against the Chinese authorities shifted power into the hands of the local warlords. Thereafter, Xinjiang was to remain separate from China and politically unstable throughout Chinese Republican era.

What happened next

Young Chiang Kai-shek

Despite having only 53 members in 1921, CCP membership consistently expanded through 1928 by giving voice to the plight of the working class and peasants. That said, during this time the KMT continued to enjoy greater prestige and numbers. Yet, despite their widely differing objectives, both the communists and the KMT agreed that China should be reunited under one government and that the foreign imperialism must end. With these objectives in mind, the two parties joined forces to retake the provinces from the warlords during the 1924 Northern Expedition.

Yet as communist power and membership grew during the Northern Campaign, KMT’s new leader, Chiang Kai-shek, felt increasingly threatened. In 1927 Chiang launched a coup against the communists in Shanghai. Driven out of the cities, the communists reorganized in rural areas. It was during this time that Mao Zedong, among others, began arguing that the Chinese peasants were to be the key to social change in China. Meanwhile, Chang Kai-shek’s KMT advanced northward. Under his leadership, China was finally re-taken from the warlords in 1928.

 

 

Whampao Military Academy inspection (wma)

Modern Chinese History II: Kuomintang and Communists – An Uneasy Alliance 1921-28

 

Introduction

Troops fighting during the Northern Expedition

Despite having only 53 members in 1921,  the Chinese Communist Party (CCP) membership consistently expanded through 1928 by giving voice to workers and peasants. That said, during this time Sun Yat-sen’s Kuomintang Party (KMT), also referred to as the Guomindang or Nationalist Party, continued to enjoy greater prestige and numbers. Despite their widely differing objectives and conflicting aims, both the fledging communists and the stronger KMT agreed that China must be reunited under one government and that foreign imperialism must end. With these common objectives in mind, the two parties joined forces to retake the fragmented provinces from the warlords during the 1924 Northern Expedition.

Yet as communist power and membership grew during the Northern Campaign, KMT’s new leader, Chiang Kai-shek, felt increasingly threatened. In 1927 Chiang launched a coup against the communists in Shanghai. From then forward, he became consumed with wiping out the communists often at the expense of defending China itself.

Driven out of the cities after the coup, the communists reorganized in rural areas. A series of devastating floods and droughts throughout the 1920s made the countryside ripe for communist influence, as did the harsh rural working conditions that most peasants experienced. It was during this time that Mao Zedong, among others, began arguing that the Chinese peasants were to be the key to social change in China. Meanwhile, Chang Kai-shek’s KMT advanced northward. Under his leadership, China was finally re-taken from the warlords in 1928.

Sun Yat-sen and the Rebirth of the KMT

Article in which Sun Yat-sen first put forward his Three People’s Principles

Sun Yat-sen had escaped to Japan after the failed 1913 Second Revolution. By 1918, Sun returned to Shanghai where he began to reorganize his revolutionary political movement on a national basis. Sun laid out a three-stage revolutionary plan for China: first, China would be conquered militarily; second, a period of political tutelage would ensue, overseen by a benign dictatorship whose job would be to prepare China for democracy; third, China would establish a constitutional government. In 1921 Sun Yat-sen launched a military expedition which was the forerunner to the 1924 Northern Expedition against the warlords. The military expedition failed during conflict with the warlords of the southern provinces of Guangxi and Guangdong. In 1923 Sun struck again and this time was able to re-establish his power in Guangzhou under a nationalist military government.

By 1922, Sun restructured his party in order to improve both unity and discipline. The new KMT Party – now called the Chinese Revolutionary Party – was structured on a political platform based on Sun’s “Three People’s Principles”- of national self-determination, people’s rights, and people’s livelihood. The revised organization also gave Sun control of the National Revolutionary Army (NRA).

The KMT, Soviet support and Chinese Communist Party Alliance

Early Chinese Communist Party leaders Mao Zedong, Zhu De, Zhou Enlai, Bo Gu

While Sun had been restructuring the KMT, he had also been watching the rise of the CCP which was rapidly developing close ties to labor and agrarian organizations. In the spring of 1921, the Dutch Comintern agent H. Maring met with Sun. Maring left impressed with Sun’s ideas of revolution and nationalism. Maring was soon arguing to the Soviet Comintern that the CCP should expand their influence initially through the KMT instead of trying to make a go of it completely independently. As reunifying China was a goal shared by both the CCP and the KMT, Maring argued that  the CCP should first join with the KMT to achieve reunification. The CCP could then proceed with its next objectives: the eradication of foreign imperialism, the organization of the urban proletariat for socialist revolution and the elimination of worker and peasant exploitation.

For his part, Sun was willing to accept the Communists for several reasons. Idealistically, he believed all Chinese, including Communists, should be given a chance to participate in his national revolution. Practically, he saw advantage in exploiting CCP labor and agrarian ties. He also thought accepting CCP members might give him access to Soviet aid; such assistance had not been forthcoming from the West. Furthermore, he realistically feared that independent growth of the CCP under Soviet aegis might undermine KMT authority. It might therefore be better to assimilate them within the KMT before they grew too strong.

Sun Yat-sen

Early CCP leadership only reluctantly agreed to the Soviet’s proposal. They feared KMT influence would corrupt their worker and peasant members. Eventually it was agreed that members of the CCP would join the KMT as individuals rather than as a group. This way they could also would retain their CCP membership. The CCP’s hidden plan was to eventually assume control of the KMT and then “squeeze out the rightists like lemons”.

In 1923 Sun sent his protégé, Chang Kai-shek, to Moscow to meet further with Soviet leaders. Chang Kai-shek was impressed both by the organization of the Soviet military and by the discipline of the Soviet Communist Party. Chiang encouraged Sun to employ some Soviet organizational methods to strengthen the effectiveness of the KMT. To this effect the Comintern agent Mikhail Borodin, was set to Guangzhou to advise the new KMT Central Executive Committee. While there, Borodin encouraged Sun to adopt a more radical agenda. He argued that workers and peasants would flock to the KMT if it promoted an eight hour workday, a fair minimum wage, and the redistribution of landholders’ holdings to the impoverished peasantry. Sun demurred as he felt that he could not risk alienating key industrial and financial allies by supporting such bold social initiatives.

Chiang Kai-shek

During January 1924 the first Congress of the reconstructed KMT was held. Sun’s stature and prestige were decisive factors in holding the CCP and KMT parties together, despite their often conflicting ambitions. Even today Sun remains revered in both parties.

USSR support for the new KMT was evidenced by a congratulatory telegram sent by the Soviet ambassador, Karakhan. Motivation underlying Soviet support was two-pronged. Not only did the USSR believe that the KMT would be useful to their goal of spreading revolution worldwide, but they also believed that building Chinese strength, regardless of the means, would help safeguard its borders.

In Asia Russia’s most significant threat was Japan, a staunchly anti-communist country. Japan had already routed Russia during the 1905 Russo-Japanese War. Japan was now becoming a dominant force in Manchuria, on Russia’s southern frontier. It was thus in Russia’s interest for China to be strong enough to balance against Japan’s rise. As the CCP had only 300 members in 1923, CCP’s alliance with the KMT would help Russia to more quickly expand its influence in China.

The Washington Conference

John Hay oversaw adoption of the 1905 Open Door Policy in China

These domestic political developments took place against the backdrop of two international conferences. The Washington Conference, held between November 1921 and February 1922, was attended by the nine powers which had interest in the Far East and the Pacific: the US, Italy, Great Britain, France, Japan, Belgium, the Netherlands, Portugal and China. A key American objective was to undercut the 1902 Anglo-Japanese Alliance. The Americans viewed the Alliance as contrary to their Open Door Policy which allowed all nations to have equal access to commercial and diplomatic relations, particularly with China. The Americans succeeded in getting the 1921 Four Power Treaty – signed by the United States, Britain, France and Japan – to replaced the Alliance. The new treaty stated that the four powers would resolve conflicts within their Pacific areas of influence by mutual agreement and not by force.

Sir Robert Hart, Inspector General, Chinese Maritime Customs 1863-1908

For their part, the Chinese delegation entered the Conference requesting participants to honor Chinese territorial integrity and political independence, to stop signing treaties between themselves which impacted on China, to respect China’s neutrality in future wars, to eliminate any foreign limitations imposed on its political, jurisdictional and administrative freedoms and to review foreign special rights and concessions in China. The proposal was sympathetically supported by the American and Europeans. In response the Nine Power Treaty was signed, which was to theoretically secure China’s territorial integrity and to restore Chinese sovereignty over parts of the eastern province of Shangdong.

Yet the Treaty lacked any enforcement provision, nor did it invalidate existing foreign privileges. To the ceaseless humiliation of the Chinese, foreigners continued to have significant control over Chinese Maritime Customs, the Salt Revenue and the Postal Service. The Chinese were also taxed without representation in the Shanghai International Settlement. Japan still controlled the Southern Manchurian Railway and used it to advance their objectives within Manchuria while the British dominated South China trade with Hong Kong.

That said, China concluded a 1922 treaty in which Japan agreed to return Jiaozhou and its surrounding region to China within six months, withdraw troops from the area and transfer the Qingdao-Jinan railway to China in exchange for 53 million gold marks. Great Britain also agreed to give up its British Weihai (also known as Weihaiwei) concession on the northern Shandong coast.

Congress of the Toilers of the Far East

The Congress of the Toilers of the Far East was held in Moscow in early 1922 as the USSR alternative to the Washington Conference from which it had been excluded. The Congress argued that the Four Power Treaty was just another means by which Western and Japanese imperialists planned to expand their power outside their own countries. It called for an indissoluble union of the workers of the Far East under the flag of the Communist International (Comintern). It was attended by representatives from China, Korea, Japan and Mongolia who all gave accounts of the conditions in their respective countries.

The First United Front 1923-1927 and the Huangpu (Whampo) Military Academy

Cadet dormitory, Whampoa Military Academy

The 1923-1927 First United Front marked the first period of cooperation between the CCP and the KMT. This included an interlude of preparation and training needed by both CCP and KMT members in order to ready them to launch what would be called the Northern Expedition, during which the CCP and KMT would fight together to retake China from the Chinese warlords.

Founded in 1924, the Whampo Military Academy was created to train the leadership of the United Revolutionary Army. Fresh from Moscow where he had been studying Soviet military methods and trying to attain obtain Soviet arms, Chiang Kai-shek was placed at the head of the new Academy. The Academy initially received 3000 applications and accepted 500, with a further 400 soon after.

Zhou Enlai in National Revolutionary Army uniform 1924

Selection criteria for admission were both physical and ideological. The cadets were to be given a thorough indoctrination in the goals of Chinese nationalism, KMT political philosophy and the Sun’s Three People’s Principles. The graduated officers were to form the nucleus of the National Revolutionary Army. Many of the KMT officers who trained at the Academy during this time became fiercely loyal to Chiang Kai-shek.

CCP members who were also KMT members were also eligible to apply. About 80 of the first 500 cohort were communists including Zhou Enlai who would eventually become the Premier of the People’s Republic of China under Mao Zedong. Indeed, just as it was for the KMT, the Academy proved to be an ideal platform to recruit and train future CCP elite.

Northern Expedition

Funeral of Sun Yat-sen

On March 12, 1925 Sun Yat-sen died from liver cancer. Chiang Kai-shek rushed into the vacuum, quickly working to take control of both the KMT and the NRA. In what has been called the Zhongshan Incident, Chiang seized the Zhongshan gunboat as it sailed into Guangzhou  on March 20th and arrested its CCP Captain. Chiang also arrested many CCP political leaders and their Russian communist advisors. He also disarmed the CCP-controlled Workers Guard Militia. He then took full control of the Whampo Military Academy and consolidated his own power in the KMT.

Going forward,Chiang issued a series of decrees designed to strengthen KMT leadership under his rule: no CCP members could head KMT or government bureaus; no CCP criticism of Sun’s Three People’s Principles would be tolerated; no KMT members could become members of the CCP; the Soviet Comintern was to communicate its orders to the KMT as well as the CCP; and names of CCP members were to be relayed to the KMT Executive Committee. He also made the KMT leadership swear an oath of loyalty to Sun’s Three People’s Principles, in effect cementing the Northern Expedition as a continuation of the vision of Sun Yat-sen.

Borodin and Chiang Kai-shek at the Whampoa Military Academy 1924

Russian representative Borodin encouraged the CCP to accept these terms because Lenin’s death in 1924 had initiated a power struggle between Stalin and Trotsky. Stalin could not afford to look bad because the CCP and his Soviet advisors had been evicted from the KMT. The strategic policies the two Russian rivals were advocating for the burgeoning Chinese revolution were central to each man’s jockeying as he fought for power within the Russian Soviet bureaucratic arena.

Having consolidated his power over the KMT, in 1924 Chiang Kai-shek pushed ahead with Sun’s Northern Expedition. The Northern Expedition’s aim was to retake China from the warlords and to unify the country under KMT leadership. The Northern Expedition was initially fought along three lines: a western route to the city of Changsha in Hunan; a middle route along the Gan River into Jiangxi; and an eastern route into Fujian. The NRA formed alliances with amenable warlords as they fought north, absorbing their militias when possible. Smaller groups of primarily CCP members worked ahead of the army, organizing peasant and urban worker strikes to create disruption and chaos in areas into which the NRA advanced. Thousands of laborers were also organized to move military supplies over the large areas where rail, road and river made mechanized shipment impossible.

Warlord coalitions 1925

The NRA met light resistance as it moved north. This was partially because northern warlords, despite their superior forces, were too preoccupied fighting themselves to coordinate an attack against the NRA. Growing peasant and workers movements also significantly aided the NRA’s advance, as too did the defection to their side of naval units which blocked enemy retreat along the eastern prong of the NRA’s attack. By mid-December 1926, the nationalists had conquered Guangdong, Hunan, Hubei, Jiangxi and Fujian, and had negotiated control over Guangxi and Guizhou. This gave them effective control over territory inhabited by over 170 million people.

On January 11, 1927 Chiang Kai-shek traveled from his Nanchang base to Wuhan to meet the Western NRA arm. Disagreement had broken out between different NRA factions about the best way to continue the northern advance. The troops most closely associated with Chiang Kai-shek had fought along the eastern seaboard of the country while the branch of the army making its base in Wuhan was more heavily influenced by the more leftward leaning commissars and politicians. Chiang wanted to drive to Nanjing – which symbolized the short-lived republican government under Sun Yat-sen – and Shanghai – the industrial and economic heartland of China. In contrast, the more left-leaning Wuhan-based KMT leaders agreed with Soviet agent Borodin that the NRA should march northward toward Manchuria to take Beijing. Ultimately, Chiang won the debate. Chiang not only controlled more troops than the Wuhan NRA arm, but Stalin also insisted that CCP leaders in China must continue to cooperate with Chiang and the KMT.

National Revolutionary Army troops, Northern Expedition

As the NRA progressed northward during the first phase of the Northern Expedition, the relationship between the Communist and non-Communist members of the KMT remained fraught. Conflicting KMT and CCP orders often led to friction between the two groups. Also, although the CCP and the KMT shared the short term goal of uniting the country, it was clear from the beginning that each group had its own agenda while pursuing this goal. Chiang continued to exploit communist organizational skills and local knowledge to foment unrest in advance of the NRA while remaining deeply suspicious of growing communist influence. Similarly, many members of the CCP were still discontented about allying with the KMT despite Comintern directives. That said, their alliance and the Northern Expedition provided the communists with an unparalleled opportunity to organize and recruit new members for both the party and its affiliated trade unions.

Indeed during this time, due in large part to communist efforts, an All China Federation of Trade Unions (ACFTU or Zhonghua Quanguo Zonggonghui) was formed which was to coordinate worker actions throughout China. ACFTU remains China’s sole legal trade union today and is the world’s largest with more than 130 million members. By late 1926 73 unions were listed under its umbrella. The ACFTU not only helped the NRA advance, but within NRA-controlled areas, new trade unions were often quickly formed under its umbrella and urban residents were radicalized. For instance, in advance of Chiang’s February 1927 march toward Shanghai, Shanghai labor leaders and ACFTU organizers called a general strike which brought Shanghai to a halt for two days. The strike was eventually disrupted by warlord forces that ultimately killed 20 strikers and arrested 300 strike leaders. Yet Shanghai worker morale remained high and a second major strike was planned for when Chiang Kai-shek marched into the city.

Shanghai at the time of the Northern Expedition

Shanghai factory owners and financiers, however, risked heavy losses if the waves of strikes continued. Some of these leaders had links to underground organizations such as the Green and Red Gangs. At the end of 1926 the head of the Shanghai Chamber of Commerce met with Chiang Kai-shek in Nanchang to offer the NRA the Chamber’s financial support. Chiang also met with Huang, the patriarch of the Qing Bang, (the Green Gang, a notorious criminal group) who reportedly offered his services to break up labor unions and attack insubordinate workers in return for freedom to expand his opium, prostitution, gambling and labor racketeering businesses. There is no record of Chiang Kai-shek’s response, but subsequent events suggest that Chiang had struck some sort of bargain.

Song Meiling

While in Nanjing, Chiang also met with Song Ailing, the oldest daughter of the late Shanghai tycoon Charlie Song, sister of Sun Yat-sen’s widow Song Qingling and wife of H.H. Hong. Both the Songs and the Hongs were Christian and thoroughly Westernized. Song Ailing told Chiang Kai-shek that he was at risk of being ousted by the left unless he secured the support of the Shanghai business world which her family could deliver. In return, she asked Chiang to appoint T.V. Soong and H.H. Hong as finance and prime ministers and to marry her youngest sister Song Meiling. Song Ailing was maneuvering her family into a position of significant influence over the KMT army and government. Chiang Kai-shek was keen as he found the idea of entering the Soong-Song-Sun circle alluring. One stumbling block to the plan, however, was that he was already married. Discarding his first wife, Chiang eventually married Song Meiling on December 31, 1927.

Foreigners in Shanghai, who had links with Chinese industrialists and financiers, were also getting nervous about worker agitation and the NRA advance. They feared both financial loss and for their own physical safety if fighting were to break out in the city. Increasingly, they amassed troops and police in Shanghai, and by the time Chiang Kai-shek entered the city, 42 foreign warships were at anchor in Shanghai’s port, backed by an additional 129 warships in other Chinese waters.

The Shanghai Coup also called the White Terror or the Shanghai Massacre

The NRA marched into Shanghai on the 22 March 22, 1927 without having to fire a shot. This lack of resistance was in large part due to another massive general strike and series of demonstrations that were called in support of the NRA and in support of the Workers’ Government that Shanghai workers believed would soon be established. Stalin told the CCP to cooperate with Chiang Kai-shek in Shanghai. Chiang Kai-shek issued strict orders to the labor unions, the communists and the NRA to leave foreigners and their property untouched. Once inside the city, Chiang Kai-shek issued reassuring statements to the foreign community. He also praised the unions for their contribution to the NRA’s success in taking Shanghai.

Roundup of Communists during the Shanghai Coup

Yet, at the same time, Chiang Kai-shek was making plans to purge the Communists from the KMT. Having taken Shanghai, he now felt that he was strong enough to decimate their movement and to abandon the United Front. Indeed, Chiang Kai-shek felt that if he failed to act at this juncture, he risked losing control over both the Northern Expedition and over the type of country China would become once it was fully unified.

On April 12, 1927 a bugle call from Chiang Kai-shek’s headquarters was sounded, followed by a loud siren emitted from a gunboat anchored in the river. This signaled the start of the Communist purge. Wearing blue clothes and white armbands, armed members of the Shanghai’s Green Gang attacked the offices of trade unions affiliated with the communists. Li Dazhao, China’s leading Marxist theorist, was executed during the purge along with hundreds of pro-labor and communist supporters. Zhou Enlai narrowly escaped. The ACFTU was paralyzed by unclear orders – including inadequate directions sent by Stalin – and thus put up a weak defense. When Shanghai workers and students held a rally protesting against Green Gang and the KMT’s action the following day, they were fired on by KMT forces.

Pro-Communist citizen executed during the Shanghai Coup

Although the ACFTU and the CCP organizations remained in existence after the purge, their links with the local community had been severed and their influence had been all but eliminated. The CCP alliance with the KMT nominally continued until 15 July when the CCP members of the KMT were ordered to renounce their Communist Party membership. At that point the Communist Party withdrew from the alliance.

In the wake of Chiang Kai-shek’s success, Trotsky faulted Stalin’s flawed leadership in China, arguing that he had contravened the fundamental Leninist principle that any alliance with bourgeois elements, no matter how temporary, was permitted only if the communists maintained organizational independence and freedom of action. To vindicate his China policy, Stalin issued an order encouraging the communists to raise a separate army and to transform Wuhan into a communist regime. The order was unrealistic. Instead, under widespread attack, the communists retreated from Wuhan. Borodin fled China for Russia via Mongolia in July 1927.

After the Shanghai Coup, Chiang Kai-shek resumed the Northern Expedition

Yet in an ironic twist that Stalin could well appreciate, in the months after the Shanghai coup, Chiang Kai-shek launched a reign of extortion against the financiers, industrialists and the wealthy of the city. The purpose of Chiang Kai-shek shake down was to raise the millions of yuan he needed to finance the rest of the Northern Expedition. Chiang Kai-shek demanded, for example, that the chairman of the Shanghai Chamber of Commerce provide him with a multi-million yuan loan. When he refused, Chiang Kai-shek confiscated his property and drove him into exile. Wealthy businessman were browbeaten into purchasing a combined total of 30 million yuan of short-term government bonds, with larger businesses being required to buy as many as 500,000 yuan or more.

Kidnapping was rife. Children of rich residents were arrested as counterrevolutionaries and released only upon receipt of donations to the KMT. Green Gang agents facilitated KMT extortion. Through KMT’s newly created Opium Suppression Bureau, for instance, the KMT and the Green Gang divided profits from the sale of the drug and from the registration of known addicts. The appointment in January 1928 of his new brother-in-law T.V. Soong to run the government finances finally freed Chiang Kai-shek to continue the Northern Expedition as T.V. Soong took responsibility for guaranteeing that Chiang Kai-shek would receive the approximately 1.6 million yuan he needed every five days in order to finance his expedition. Chiang resumed the Northern Expedition in February 1928. By January 1929, the greater part of China was united under KMT leadership.

Rural China in the 1920s

Women in rice fields 1920

For centuries, peasant uprisings had overthrown Chinese dynasties. Once again in the 20th century, it was eventually the peasants who would decide play an important role in determining who would rule China. Despite the expanding industrialization that China had been experiencing since the late 19th century and the growing urban movement, in 1928 approximately 75% of the roughly 450 million Chinese citizens tilled the soil. Life for the average Chinese peasant varied greatly, depending on the quality of soil that he worked and whether or not he owned the land. Land was more fertile and therefore life was better in the southern rice paddies than it was in the poorer soils of the west and north. Yet for all farmers, life was incredibly difficult. Almost all farming was done by hand and by beast. Produce that wasn’t consumed by the farmer was sold in village and regional markets along with handmade handicrafts, tools and processed foods.

Social and ritual life was hugely conservative and was based on both Confucian traditions and those of the local Buddhist or Daoist temples. Other societies or social organizations were organized between women, within villages or within regional areas. During the Warlord Era, some villages formed self-defense organizations such as the Red, White and Yellow Spears which were active mainly in the northern Chinese plains. Eventually, the CCP would try to recruit the Red Spears and other such secret societies as allies in their fight against the KMT.

Rural China also frequently suffered drought and flood. This was particularly true throughout the 1920s. In 1920 and 1921, for instance, a severe drought in northern China brought famine. The famine not only killed approximately half a half million people but it also destroyed the regional economy. Like many of the droughts that have plagued China even up to the present day, the effects of little rain were exacerbated by overpopulation and by soil erosion due to extensive logging and overgrazing of livestock. In 1923 further drought and flooding caused the deaths of an additional 100,000 people. In 1925 another devastating drought killed almost 3 million people in the Sichuan area. In 1926 the Yangtze and Gan rivers flooded. In From 1928 to 1930 drought and famine devastated the whole of northern China affecting more than 20 million people. This ruinous plague of drought and famine throughout the 1920s left much of rural China in crisis. Eventually, the communists were able to exploit this crisis by promising the Chinese peasant a better, more prosperous and fairer way of life.

Flooding in China was frequent during the 1920s

Early on, key Chinese Marxists theorists such as Li Dazhao and Peng Pai recognized the need to adapt Russian Marxism to Chinese reality. In other words, there could be no communist revolution without engaging the peasants as they represented the majority of the Chinese population. In the early 1920s, Peng Pai created a system of peasant associations in Guangdong province which campaigned against high rents, rural social injustice and landlord abuse, demonstrating to early CCP activists that an alliance between peasants and communists was possible. Mao Zedong, who had studied under Li Dazhao, travelled through his native Hunan in 1927 and his experiences there helped shape his belief that, for China, the peasants would be the key to the Communist communist revolution. From then on, he became a strong advocate of shifting Chinese Communist  strategy from a focus on organizing the urban worker to mobilizing the poor and discontent farmers.

What Happened Next

The period between 1927 and 1937 is often referred to as the Nanjing Decade. The new KMT Nanjing-based government was recognized by the international community, most of southern China, and a large part of northern China, although it did not control Manchuria nor did it have perfect control over many former warlords. Chiang Kai-shek tried to consolidate his power by eliminating warlord rivals. As a result, by 1929, civil strife once again broke out as warlords maneuvered to retain influence. Dealing with this power struggle meant that the much needed and long promised social reforms were slow in coming. For most Chinese life improved little. This created discontent that the Communists would eventually exploit.

Japanese invading Manchuria

The CCP in the meantime regrouped in rural southern Jiangxi. There they experimented with social policies that were to prove the forerunners of their ultimate governing practices. Repeated KMT attacks eventually forced the CCP on the epic retreat now known as the Long March.

As a backdrop to the KMT-CCP struggle was Japan’s increasing expansion into Manchuria and northern China. It was Chiang Kai-shek’s strategy to placate the Japanese while focusing on Communist eradication. However, rival KMT leaders finally forced Chiang to abandon war against the Communists and to fight growing Japanese aggression which culminated in Japan’s full-scale invasion of the China in 1937.

 

Woman with bound feet c1902 (boundfeet1902) http://visualisingchina.net/#hpc-ru01-057

Modern Chinese History III: The Nanjing Decade 1927-1937

Introduction

Chiang Kai-shek’s Presidential Palace in Nanjing

The period between 1927 and 1937 is often referred to as the Nanjing decade. The Kuomintang (KMT) established its new government in Nanjing after it had dispelled the Communists from the United Front and it had defeated the warlords to unite the country during the Northern Expedition. The new KMT government was recognized by the international community, most of southern China, and a large part of northern China, although it did not control Manchuria nor did it have perfect control over many of its former warlords.

Instead, Chiang Kai-shek had achieved national unification often by negotiating with these warlords– in effect allowing them semi-independent regional status – in return for their recognition of the new KMT government. Once in government, Chiang Kai-shek tried to consolidate his power by eliminating these warlord rivals where possible. As a result, by 1929, civil strife once again broke out as warlords maneuvered to retain their influence. Dealing with this power struggle meant that the much needed and long promised social reforms were slow in coming. For most Chinese life improved little. This created discontent that the communists would eventually exploit.

The establishment of the Chinese Soviet in Ruijin, November 7, 1931 with Mao Zedong, Zhu De

The Chinese Communist Party (CCP), forced out of the cities after the Shanghai Coup, retreated into the countryside. It was in these rural areas that the CCP began to develop their ideas for peasant mobilization, championed in large part by Mao Zedong. The communists most important rural base became the Jiangxi Soviet, headquartered in Ruijin in the south of Jiangxi province. There they experimented with governing and with the implementation of new social policies that were to prove the forerunners of practices they assumed once they won control of the country in 1949. Repeated KMT attacks finally forced the CCP from Jiangxi. This epic retreat of over 6,000 miles to Yan’an in the northern Chinese province of Shaanxi is now known as the Long March.

As a backdrop to the KMT-CCP struggle was Japan’s increasing expansion into Manchuria and northern China. It was Chiang Kai-shek’s strategy to placate the Japanese while focusing on communist eradication. However, rival KMT leaders finally went to the extreme measure of kidnapping Chiang until he agreed to abandon war against the communists. Instead, the kidnappers forced Chiang to join forces with the CCP in a Second United Front formed to fight growing Japanese aggression. This aggression  culminated in Japan’s full-scale invasion of China in 1937.

Division within the New KMT Leadership and Warlord Challenges

National Revolutionary Army Generals at a ceremony held to Sun Yat-sen to report completion of the Northern Expedition to Dr. Sun’s soul

The new Nanjing government of the KMT was to be based on the ideas of Sun Yat-sen and his Three People’s Principles: national self-determination, people’s rights, and people’s livelihood. Confronted with a need to integrate China into an international system based on nation-states, Sun’s principle of national self-determination was an effort to get the Chinese see themselves not just as a culture but as a state. During the dynastic era, what it meant to be Chinese had been defined not so much by race or by geographic area, but by an overall cultural cohesiveness. This Chinese culturalism was  based primarily on Confucianism, but also on Buddhist and Daoist teachings. This cultural heritage was imparted to the Chinese through the teachings of their families and through their rich recorded history and literature. It was also passed on through the arduous government examinations which meant that all the ruling elite all largely learned the same values. This cultural tradition underpinned the Chinese people’s self- understanding and also shaped its foreign policy until its increasingly difficult encounters with the western world beginning in the 1800’s.

Confucian values pervaded the Republic of China

Yet despite Sun’s, and later Chiang’s, efforts, during the first half of the twentieth century the majority of Chinese still considered their loyalties to be to their family, to their clan and to their patron-client relationships rather than to their nation. They were slow to look to the government for support and to feel obliged to defend it. Sun’s principle of People’s Rights – democracy – was linked to this idea of nationalism. If the first step of the 1911 Republican Revolution had been to overthrow the imperial governmental system, the next step would be to establish a government which would be seen by the Chinese as one of their own making to which they would then feel committed. Sun anticipated the establishment of this government as a multi-phased process. While the final government of the Republic of China would be based on a form of western constitutional democracy, Sun believed that the transition to constitutional rule would be preceded by a six-year tutelage period during which the gradual creation of local self-government would teach the Chinese people democratic values, habits and practices.

As a first step toward realizing this government, the KMT enacted the Organic Law of the National Government of the Republic of China on October 10, 1928. This law broke the government into five branches, known as Yuan: the Executive Yuan was to be the highest executive branch of the country. It would be led by a chairman and cabinet whose functions would include the direction of the central ministries, economic planning, general supervision of the military, relations with the provinces, and appointment of local government officials. The Legislative Yuan was to debate and vote on new legislation, budgets, and treaties. The Judicial Yuan was to run the court and supervise the legal system. The Examination Yuan – based on China’s Imperial examination system – was to supervise public service examinations which would qualify Chinese as civil servants. Finally the Control Yuan – based on China’s imperial censorate – would supervise the conduct of officials.  This five Yuan government system is still in use by Republic of China in Taiwan today.

Chiang Kai-shek’s Office in the Nanjing Presidential Palace

After passage of the law, Chiang Kai-shek was formally installed as Chairman of the new Nationalist Government as well as the chief of China’s armed forces. One of Chiang Kai-shek’s first acts as chairman was to establish the KMT Central Political Institute and cadre training schools, a main purpose of which was to create a new generation of cadets as fiercely loyal to Chiang Kai-shek as those that had graduated from the Whampoa Academy. The training philosophy was based on anti-communist, anti-imperialist nationalism combined with an emphasis on the Confucian virtues of order, harmony, discipline and hierarchy.

The Chinese people initially greeted their new Nanjing government with goodwill, but these favorable feelings were not to last. Sun’s prescribed period of “tutelage” largely freed Chiang from the need to demonstrate any effort toward creating a true democracy. Instead, Chiang quickly began excluding rivals from positions of authority within the new government. Chiang also soon ran into conflict with many former warlords. Chiang had achieved national unification during the Northern Expedition in part by negotiating with regional chieftains – in effect allowing them semi-independent regional status in return for recognition of the Nanjing government. In 1930, for instance, Chiang Kai-shek’s government directly controlled only 8% of the geographical area of China and 25% of its population. By as late as 1936, the KMT still governed primarily by alliance with provincial military governors whose cooperation was constantly subject to renegotiation. Many of these warlords still controlled large armies. In March 1929, the KMT called for the incorporation of these local militias into one national command under the control of Chiang Kai-shek.

Chiang Kai-shek wanted to consolidate all independent militia into the National Revolutionary Army

The KMT also made efforts to prevent the provinces from siphoning off tax and other financial receipts that it felt rightfully belonged to the central government. The warlords resisted these efforts to reduce their power and argued that Nanjing should reduce the size of its army before they demilitarized; Chiang Kai-shek countered that his army was to be the backbone of the new national army. Yet many of these warlords did not see Chiang’s claim to power to be any better than their own. Moreover, rival civilian and political groups were also concerned about his growing monopoly of military and political power.

By 1929, civil strife had again broken out in Guangxi, Hunan, Beijing, Manchuria and Guangdong. Instead of trying to deal with this strife by creating a more inclusive government in which these factional warlords would be brought in and given a voice, where he could, Chiang Kai-shek had rivals arrested. Many also objected to his policy of appeasing foreigners and his failure to counter increased Japanese aggression in Manchuria in order to direct scarce resources toward wiping out the regrouped Communists. Opposition parties and organizations such as the Nationalist Socialist Party, the People’s Front, The Workers’ and Peasants Party, The Chinese League for the Protection of Civil Rights, the National Salvation Association began forming. Although fundamentally powerless, they did undercut loyalty to Chiang’s government and impacted public opinion with their calls for a multi-party government, protection of civil rights, and the need for China to defend itself against Japanese and foreign expansion.

Warlord Long Yun and Generalissimo Chiang Kai-shek- managing warlord ambitions was a constant struggle for Chiang

Dealing with this internal strife meant that the much needed and long promised social reforms were slow in coming. For most, life in the countryside had remained unchanged since the time of the Qing Dynasty. Regional administrators were often corrupt and more concerned with protecting landlords than the peasants who mostly lived in poverty underneath them. Local officials collected taxes and rent even in times of flood, drought and famine. Infant mortality was high and life expectancy low. Many girls still had their feet bound and marriages were frequently arranged. Education was minimal where it existed at all.

The KMT recognized the need to address these problems by measures such as better crop diversification, fair land distribution, agricultural price support, greater availability of agricultural credit, and improved access to education. That said, funds were always short and the KMT was always distracted by foreign pressures and internal dissension. The harsh rural living conditions seemed all the more stark when compared with the growing opulence of the cities where modern medical care, new schools, electricity, better boat, road and air transport, cinemas and western clothes were growing increasingly prevalent.

Chiang Kai-shek oversaw the expansion of the rail network

Finances were also a problem. It suffered from consistent annual budget deficits. On the one hand, China succeeded in negotiating with foreign powers to obtain full tariff autonomy in 1928, increasing its custom revenues from 120 million yuan to 244 million yuan in 1929 and 385 million yuan in 1931. On the other hand, there was no income tax until 1936. Furthermore, land taxes went straight to the provincial governments. Additionally, the amount that foreign corporations could be taxed was limited while heavy taxes on Chinese entrepreneurs drove most near to bankruptcy, defeating their purpose. Foreign debt service was also heavy. Debt servicing represented 35% of the 1930-31 budget, for instance, forcing the KMT to borrow even more in order to meet its existing financial obligations.

These financial challenges were compounded by the severe 1931-1935 deflation triggered by the 1929 Depression which drove down the value of silver. The US government tried to shore up the silver market by purchasing silver in large quantities. In response, silver poured out of China and the country was depleted of currency. As a result, prices plunged, imports poured in, banks were drained of reserves and industrial firms faced bankruptcy due to lack of working capital.

That said, despite growing Japanese aggression, worldwide depression, internal strife and the Communist challenge, the KMT did achieve some real successes before full-scale war broke out with Japan in 1937. By 1937, China had in place most branches of basic industry including the ability to design, construct and operate its own railways. By 1937, improvements in agriculture virtually eliminated the need to import rice, wheat and cotton. Many modern banking methods were instituted and the foreign monopoly of foreign-exchange dealings was stopped. Due in large part to foreign philanthropy, western medical practices were introduced into China.

Japanese Expansion in China

Japanese experts inspect ‘railway sabotage’ on South Manchurian Railway, leading to the Mukden Incident

Japan’s conciliatory position toward China during the Washington Conference hardened in 1928. This was due in part to a fear that the unification of China might cause Manchuria to be re-integrated into the country, limiting its military and economic presence in the region. In 1928, Japan’s interests in Manchuria were protected by the Kwantung Army which operated on a semi-autonomous basis from the main Japanese military. It was the Kwantung Army’s objective to take Manchuria for Japan. Manchuria was considered by many Japanese soldiers, and indeed by many Japanese alike, as theirs by right given the tens of thousands of Japanese troops which had died in the area during the 1904-1905 Russo-Japanese War. Japanese military leadership also viewed Manchuria as a useful buffer zone between it and Russia.

Many Japanese also believed that Manchuria’s vast territory, fertile agricultural land and abundant natural resources could ease provide Japan with much needed mineral resources, create new business opportunities for Japanese industrialists, and help solve the high unemployment levels caused by the ill effects of overproduction and worldwide Depression. By 1931, Kwantung military leaders decided to take action. It believed that growing economic pressures at home would help sway domestic opinion in its favor. As approximately 75% of foreign investment in Manchuria was of Japanese origin, Japanese industrialists specifically favored Manchurian expansion, although they preferred peaceful annexation if possible. It also saw that the new KMT government was bogged down with internal strife while the international community was enmeshed in the Great Depression. Moreover, key Kwantung military leaders were due for routine transfer and they wanted to seize Manchuria before being shipped elsewhere.

Japanese Forces in Manchuria

A September 1931 bomb explosion on the Southern Manchurian Railway in Shenyang (often referred to by its Manchu name of Mukden) was staged by the Japanese military as a pretext for invasion. Meeting little Chinese resistance, the Kwantung Army overran Manchuria – an area larger than modern-day Turkey – in just five months. Chang Kai-shek sought help from the League of Nations (a forerunner of the UN) and other western powers, including the United States, but received no meaningful assistance. The League of Nations agreed only to dispatch a mission to investigate Japanese actions in Manchuria, which it did on December 10, 1931. Chiang also marshaled popular outrage and trade boycotts to undercut the Japanese position. In January 1932 the Japanese invaded Shanghai in order to avert attention from their Manchurian conquest. In this instance, the KMT did fight, but Shanghai eventually fell to Japanese forces after a month of intense battle, and the KMT was forced to retreat to Luoyang in central China. International mediation eventually forced the Japanese to evacuate Shanghai in May 1932.

Emperor Puyi

In order to legitimize their Manchurian annexation, on March 9th 1932 the Japanese installed the last Qing Emperor, Puyi, on the throne of its puppet Manchurian regime, which it called Manchukuo. The League of Nations mission spent six weeks in this new “Manchurian State”. Its eventual report sided with China. It determined that Japan had been an unprovoked aggressor, rejected Japan’s claim that Manchukuo was the result of the spontaneous uprising of the Manchu people and repudiated its argument that its military operations in Manchuria were in self- defense in response to the September 1931 bombing. Japan reacted to the report by withdrawing from the League of Nations while consolidating control of Manchuria through its puppet government.

Communist Insurrection – Disease of the Heart; Disease of the Skin

Russian agent Borodin in Nanchang at Stalin’s behest

While the Japanese army was busy invading Manchuria, Chiang Kai-shek remained preoccupied with eliminating the communists. He believed that ‘the Japanese were a disease of the skin,  while the communists were a disease of the heart’ meaning that skin disease – the Japanese – was not deadly, whereas heart disease – the communists – could prove fatal. In other words, Chiang was more concerned with the enemy within than the enemy without.

The Shanghai Coup and subsequent attacks had badly weakened the CCP, with party membership dropping from an estimated 58,000 to less than 10,000. CCP influence within cities and within the urban labor movement had also been significantly diminished.  Spurred on by Stalin, who was trying to save face after the Shanghai Coup, the remaining communists tried to achieve victory by launching a series of uprisings, all of which were failures. For instance, on August 1, 1927 in Nanchang, Jiangxi, the communists succeeded in taking the city in the name of the newly created Workers and Peasants Red Army for four days. Although the uprising was ultimately unsuccessful, it has since been mythologized by CCP historians as the Nanchang Uprising. It is also marked by  the CCP as the birth of the People’s Liberation Army, and August 1st is still celebrated as Military Day in China today.

1927 Autumn Harvest Riot participants

Mao Zedong also led an Autumn Harvest Uprising, briefly holding the town of Liling before being forced to retreat to Jinggangshan, a remote mountain area of the borders of Hunan and Jiangxi in October 1927. Just as it was during the Qing Dynasty, the safest places for fugitives in China in the 1920s and the 1930s were the border regions between provinces where different administrative zones met, making it more difficult for the KMT and its warlord allies to coordinate counterattacks. Mao learned from this failed insurgency that no uprising could be successful without the support of the peasant masses.

A third insurrection was launched in Guangzhou in December 1927. Worried about their waning influence in Guangzhou’s trade unions, CCP leaders fighting under Communist International representative Heinz Neumann seized control of the city. They immediately announced a revolutionary government intent on the nationalization of land, factories and bourgeois property. They lost the city in two days, with some union members actually fighting against the communists.

Retreat to Ruijin

Mao Zedong and Zhu De inspecting the Red Army 1931

In January 1929 the CCP faction led by Mao retreated from their Jinggangshan base to Ruijin, southern Jiangxi. From Ruijin, the CCP began to govern the surrounding region. While the Jiangxi Soviet was the CCP’s main base, as many as 15 smaller soviets or administrative committees were established in the area. These soviets operated hierarchically although communication between the different soviets was often difficult. The Jiangxi Soviet period enabled the CCP to experiment with governing. The policies developed at this time were to significantly impact CCP governing theories going forward.

The move to Ruijin also provided the communists with a greater flow of supplies, revenues and recruits. Indeed, between 1929 and 1930, the Red Army expanded from 2,000 to almost 70,000 soldiers. As the Communists regrouped in the countryside, influence over their policies by Russian Communist International waned. Partly this was due to the difficulty of communication caused by their remote location. Additionally, Soviet interest in the Chinese Communist movement also diminished generally once the CCP was left the cities.

Group photo taken after the 1931 founding Chinese soviet with Mao Zedong, Zhu De

During the spring 1930, Mao Zedong undertook a detailed survey of the Jiangxi county of Xunwu. He researched the variety of businesses prevalent in the county’s small towns and the income they generated. He tried to determine levels of exploitation in order to quantify class tensions more accurately. For instance, he spoke with peasants who had been forced to sell their children to pay their debts. He studied the plight of women. This research allowed the CCP to hone criteria that could be used as a basis for land redistribution. It also allowed the CCP to more effectively respond to the causes of peasant frustration including high and often arbitrary taxes, conscription without sufficient compensation and lost land due to public work projects. Ultimately, the CCP was able to turn the peasant’s economic discontent into class warfare.

This research also confirmed for Mao that agrarian revolution was the way forward for China. That said, at the November 1931 founding conference of the Jiangxi Soviet, this continued to be a minority opinion. At the conference, Mao Zedong was elected chairman of the Central Executive Council. Continuing differences of opinion between CCP leaders led to much infighting at this time. In the coming years, Mao was to prove effective at exploiting these disagreements to facilitate his ultimate rise to power.

Mao Zedong in Jiangxi

At the conference it was confirmed that two of the most significant social issues that the CCP confronted were the subjugation of women and the inequality of land ownership. The CCP encouraged greater freedom of marriage and divorce and began to give voice to the rights of women. This earned the party much popular support despite the conservative undertones of rural society. Its land policies were to prove even more well-liked. During the 1931-1932 Land Investigation Movement Mao oversaw the redistribution of rich peasants land to the poor, leaving the rich peasant as much land as he could farm himself.

Land held by the more numerous middle income farmers was left untouched. This allowed the CCP to maintain middle income farmer support and to prevent disruptions in food production. This land redistribution became the basis for the CCP’s broader rural class struggles, and was a key to the CCP’s rise to power in the 1940s. The CCP also declared war on Japan at this time. While this amounted to nothing more than a symbolic gesture, it boosted their popularity among the many Chinese who believed that the Japanese threat should be China’s first priority.

KMT Encirclement and Suppression of Communist Campaigns

While the CCP was experimenting with government and social policy, the KMT was stepping up pressure on the Jiangxi Soviet combining economic blockade with military attack. On November 1930, the KMT began a campaign of Encirclement and Suppression designed to surround and eliminate the communist bases. During one KMT attack, in what came to be known as the battle of Dongshao, the CCP captured KMT radio equipment which allowed them to listen into KMT’s news military transmissions, improving significantly their intelligence on KMT military plans and troops. This radio information was a key to enabling the Red Army to fend off the first KMT attack.

Chinese Red Army during the First Encirclement and Suppression Campaign

Chiang Kai-shek launched the second Encirclement and Suppression Campaign against the Communists at the end of February 1931. This time the Jiangxi Soviet defeated a 200,000 strong KMT force during major battles in May, expanding the territory under their control. Expanded radio capability became fundamental to Red Army success, allowing them not only to gather intelligence on KMT forces, but also to more effectively communicate between different Red Army factions. Growing communist sophistication in code-breaking enabled the CCP to continue to collect information even after the KMT finally realized that the communists were listening to their communications.  The success of the communists against the KMT was also the result of Mao’s guerilla campaign of “luring the enemy in deep”. In most battles against the KMT, the Red Army was significantly outnumbered and possessed no air cover and little artillery. Instead, the Red Army retreated, forcing the KMT into unfamiliar and hostile territory where the communists could launch ambushes on one division at a time.

The Third Encirclement and Suppression Campaign was scheduled to be launched in July 1931, but Japanese expansion into Manchuria forced Chiang Kai-shek to abort the military mission. The Fourth was launched in June 1932, but was again repulsed by November 1932. The Fifth Campaign, in October 1933, was led by Chiang Kai-shek himself. Not only did he commit significant troops to the battle, but at each point of advance he created blockhouses and roads which allowed him to reinforce taken ground. By April 1934, the central Jiangxi Soviet was completely surrounded. It was decided that the communists had no choice but to break through the encirclement at the weakest point in the southwest corner. This strategic withdrawal was to be the beginning of what has been mythologized in CCP history as the Long March.

The Long March and the Yan’an Communist Base

Map, the Long March

Between October 16th  1934  and October 20th  1935, the Chinese Workers and Peasants’ Red Army retreated 6000 miles through some of the toughest terrain in western China- including mountains, barren plateaus and lethal swamps. Throughout this time they were constantly harassed and attacked by KMT forces. Approximately 85,000 communists began the trek westward while most women, children and approximately 20,000 wounded communists were left behind. At the end, only about 8,000 of the original 85,000 remained living. Most perished at the hands of KMT forces and also because of illness and by the harsh conditions which prevailed throughout the retreat.

The march was not one single maneuver, but rather the withdrawal from Jiangxi of different Red Army units which often independently fought their way west and north. The CCP was quite divided at this time, with different factions not only arguing about different military strategies, but also disagreeing as to where new revolutionary base should be ultimately established. From separate marches, numbers eventually arriving to join Mao later rose to about 30,000 due to the arrival of other Communist units and the consolidation of local communist factions.

Mao Zedong on the Long March

In December 1936 the CCP finally established its headquarters in the province of Shaanxi, in Yan’an. This base had the advantage of both safeguarding the communists from the 1937 Japanese invasion of China and helping isolate it from further KMT attack. By this time Mao, was firmly established as the leader of the CCP, although division remained within the party. The CCP’s courage in the face of unimaginable hardship and the communists ultimate victory despite their decimated ranks played an important role in the process of legitimizing the CCP rule.

Mao Zedong 1935

The period has since been portrayed romantically in fiction, drama, film and in museum exhibits. Many of the most important leaders of the People’s Republic of China founded in 1949 were survivors of the Long March. The March has become one of the most celebrated periods of the CCP’s history and is now an integral part of the national myth that underpins Chinese perceptions of themselves as a people and as a nation.

The Zunyi Conference

During the Long March, several crucial party meetings took place One of the most important of these occurred in the town of Zunyi in northern Guizhou in January 1935. It was attended by 18 key Communist leaders, including the Comintern representative Otto Braun. They discussed the reasons for their defeat in the Jiangxi region, concluding that the CCP should have pursued a more offensive mobile, guerilla war as Mao had been arguing. The vindication of his military policies was an important step in his rise toward control of the Communist Party. At the conference, he was appointed as a full member of the ruling Standing Committee of the Politburo. He was also appointed chief assistant to Zhou Enlai for military planning, from whom he would gradually assume full military leadership.

KMT Struggles and Responses

Cavalry parade of the Manchukuo Imperial Army

Despite growing Japanese aggression in Manchuria in northern China, Chiang Kai-shek and the Nationalist government continued to prioritize eradication of the communists over fighting the Japanese. This policy created great internal conflict within the KMT and its warlord allies particularly those most vulnerable to Japanese expansion in the north. It also motivated Chinese student nationalism. Chiang tried to quell student discontent by increasing the number of compulsory subjects and examinations at university, hoping to keep the students so busy they would be unable to protest. Those students that did protest were dealt with harshly.

But early 1934 Chiang Kai-shek also began developing a new unifying ideology, based on Sun Yat-sen doctrines as well as on some central tenets of Confucianism, particularly those relating to the formation of a loyal and moral human character. A key objective of this ‘New Life Movement’ was to create within the Chinese citizens an instinct for unified behavior which would make them willing to sacrifice for the nation at all times. The movement succeeded mostly in attacking antisocial behavior such as spitting, urinating in public and casual sex. Women in particular were harassed if they behaved or dressed in an immodest manner. They were urged to cultivate traditional virtues such as chastity and to focus on life inside the home and family.

Nanjing’s University, scene of student protests

At this time, Chiang Kai-shek also encouraged the formation of the Blueshirts – an organization run by Whampoa cadets, so named because they wore shirts of course blue cotton – designed to bring patriotic resolve to the military and civil leadership of China. Fiercely loyal to Chiang Kai-shek, the Blueshirts committed themselves to moral rectitude, eschewing gambling, whoring and gluttony of food and drink. They found much of value in Europe’s rising Fascism, admiring particularly Italy’s Mussolini. They ultimately were transformed into an elite Secret Service arm employed to investigate subversive forces within society, assassinate political rivals and dissidents, infiltrate labor organizations and gather general intelligence.

The Xi’an Kidnapping and the Second United Front

Zhang Xueliang

In December 1936 Chiang Kai-shek traveled to the Shaanxi provincial capital of Xi’an to discuss plans to launch a Sixth Encirclement and Suppression Campaign, which he hoped would finally bring an end to CCP resistance. At this meeting Zhang Xueliang, a northern warlord serving the KMT, took the lead in trying to convince Chiang to fight the Japanese instead of the communists. However, Chiang could not be diverted from his determination to wipe out the communists once and for all. On December 9th 1936 – the one-year anniversary of a student protest that had been crushed by Chiang – 10,000 students marched in Xi’an. They called for an end to China’s civil war and for a unified resistance to Japan who had launched a full-scale invasion of the northern province of Suiyuan (now a part of Inner Mongolia) in late October and November 1936.

Chiang Kai-shek ordered Zhang Xueliang to put an end to the student demonstrations or he would command his troops to fire. However, instead of forcing the students to disperse, Zhang agreed to argue their case with Chiang. Furious, Chiang told Zhang to choose between that KMT and the students while at the same time issuing orders to launch the Sixth Encirclement Campaign. At 4:30am on the morning of the 12th December – the day that the mobilization orders were to be issued – troops from Zhang Xueliang’s Northeastern Army Division arrived at Chiang Kai-shek’s villa. Alerted only moments before the troops’ arrival, he escaped to a nearby cave but was easily tracked and kidnapped. Zhang Xueliang and his followers held him for a week, presenting to him a list of eight demands which essentially called for the end of civil war and for a united armed resistance against the Japanese.

Photo of the .

KMT members captured during the Xi’an Incident

Song Meiling took a lead in the effort to secure her husband’s release during the intense negotiations that followed. Zhou Enlai – who had served under Chiang at the Whampoa Military Academy – also bargained for Chiang Kai-shek’s freedom. Zhou said that if Chang would fight the Japanese, the CCP would join the KMT in a Second United Front. A telegram from Stalin had urged the communists to support such an alliance. The rise of Nazi Germany and Fascist Italy combined with Japan’s growing militarism caused the Comintern to urge fledging national communist parties in all countries to form partnerships with leftists and anti-fascist groups to fight against these avowed enemies of Bolshevism and Marxism.

In the case of China, a second alliance with the KMT would have the added benefit of protecting Russia’s flank from Japanese aggression. Stalin also argued in the telegram that Zhang Xueliang lacked the authority to lead the KMT effort. Having agreed to join with China and to fight the Japanese, Chiang Kai-shek returned with Zhang Xueliang to Nanjing where they were met by an ecstatic crowd of 400,000 Chinese citizens. At Nanjing, Zhang Xueliang was arrested for insubordination and placed under house arrest after his sentence of 10 years imprisonment was commuted.

What Happened Next

Japanese soldiers in Nanjing

In 1937 Japan launched a full scale invasion of China. By 1938 Japan had control of China’s Eastern Seaboard while the KMT retreated to the Western city of Chongqing after fighting horrific battles such as that for Nanjing. Yet, despite China’s huge military disadvantages, the Chinese turned what the Japanese military had assumed would be a three month campaign into a war of attrition lasting until 1945. The war pinned down 1.2 million of Japan’s 2.3 million overseas troops in the process.

The CCP benefitted from the Sino-Japanese War by expanding its territory, its army and its party membership. From their Yan’an Base, the communists waged a guerilla war which not only had some success against the Japanese, but also boosted their standing in the eyes of the Chinese people. It was during this time that the CCP developed and put into practice many of the social policies that were to form the crux of the CCP’s ruling philosophy once it assumed power in 1949.

The 1937-1945 Sino-Japanese war ended abruptly in 1945 after the Americans dropped the atomic bombs on Japan. Despite its terrible toll, the war had real benefits for China: elevating it to Great Power status, winning it a place on the UN Security Council and ending the imperialists’ hated Policy of Extraterritoriality and the Unequal Treaties that had plagued China since the 19th century.

 

 

China, Rare Earths and Technological Edge

Introduction

By Jurii (http://images-of-elements.com/praseodymium.php) [CC-BY-3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons

Praseodymium, one of the light rare earth elements

A sign at the entrance of China’s Baotou, Inner Mongolia Pioneering Rare Earth Hi-Tech Zone quotes Deng Xiaoping’s 1992 claim: “There is oil in the Middle East, but there is rare earth in China.” The rare earth elements (REE) are a group of 17 chemically similar metallic elements occurring in the Earth’s crust that are becoming increasingly integral to the production of products ranging from smart phones and LED light bulbs to wind turbines and cruise missiles. Since the 1980s, REE mining and processing has increasingly moved to China. Due to factors such as cheaper labor and less stringent environmental regulations, China has been able to produce the elements at two-thirds the cost of non-Chinese producers. As a result, it now produces over 90% of the world’s REEs. China has also been moving from a supplier of unfinished REEs to a manufacturer of high-end REE products and it believes that mastering high-end REE technology will not only help ensure its safety given REE’s many defense applications, but could also allow it to leapfrog the US and other countries in the production, for instance, of green technologies.

China’s monopoly of REEs came to a head in 2008 when it began restricting the amount of unfinished REEs that it exported while increasing REE export taxes and removing REE VAT rebates. International concern was further increased in 2010 when China was believed to have implemented an unofficial REE export embargo against Japan for two months and the US and the EU for two weeks. A 2012 WTO complaint filed against China by the US, the EU and Japan claimed that the effect of these policies has meant that non-Chinese producers of REE products pay 31% more for their REEs than their Chinese competitors. The US, the EU and Japan also say that Chinese practices are placing pressure on foreign manufacturers to relocate their operations to China in order to minimize the impacts of rising costs and shrinking supplies, as China does not restrict or tax the export of REEs in manufactured products. China counters that its policies are necessary to improve the real environmental degradation that its lax standards have caused and to conserve its finite REE resources.

Rare Earth Elements and the History of their Development

The REEs are a group of 17 chemically similar metallic elements including the 15 lanthanides as well as scandium and yttrium. Scandium and yttrium are grouped with the rare earths as they share similar chemical and physical properties. Despite their name, the REEs– with the exception of the radioactive promethium which is currently synthesized in labs – are quite abundant in the Earth’s crust, although their crustal abundance varies significantly from place to place. The “rare” earth name comes instead from the rarity of the minerals from which they were originally derived. It also comes from the fact that the elements are rarely found in concentrations that are viable to mine.

The REEs are broadly divided into light rare earth elements (LREE) – lanthanum, cerium, praseodymium, neodymium, and samarium (atomic numbers 57-62 on the periodic table)  and heavy rare earth elements (HREE) – gadolinium,  promethium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium (atomic numbers 64-71). Scandium (atomic number 21) and yttrium (atomic number 39) are usually grouped with the LREEs. This division is somewhat random; sometimes the REEs are divided between light, middle and heavy. LREEs are more abundant than HREEs.

Although approximately 200 minerals are known to contain REEs, most REEs are mined from the minerals bastnaesite, monazite and xenotime. While these minerals usually contain the full range of the elements, either LREEs or HREEs tend to dominate one mineral or the other. For instance, bastnaesite, the most commercially productive source for REEs, tends to house a high percentage of LREEs and a small percentage of HREEs. Monazite, the second most common mineral used as a rare earth ore, also contains more LREEs than HREEs, although it typically has a higher concentration of HREEs than bastnaesite.  Xenotime, the third most important rare earth element ore, holds the highest ratios of HREEs. HREEs can also be found concentrated in some soils, absorbed in the form of ions. Bastnaesite, monazite and xenotime all contain traces of the radioactive elements thorium, although the amount varies between the minerals and between ore deposits. The presence of the radioactive element makes REE mining and waste management more difficult.

The first discovery of rare earth materials was made in the late 1800s in Sweden. Given that rare earths occur together and share similar chemical properties, it was a further 150 years until all the rare earth elements were isolated and identified. The last rare earth element to be discovered was the radioactive promethium which was found as a result of nuclear fission research carried out during World War II. In nature, promethium can only be found in trace amounts as it is highly unstable and has a half-life of 17.7 years.

Production of Rare Earth Elements

The periodic table

Until 1948, the majority of rare earths were produced in India and Brazil, followed by South Africa in the 1950s, and the Mountain Pass Mine in California from the 1960s to the 1980s. Since the 1980s, REE mining and processing, and the production of many REE products has moved to China. Between 1990 and 2000, for instance, China increased its REE production from 16,000 to 73,000 metric tons while non-Chinese producers saw their output decline from 44,000 tons to 16,000 tons. In 2009, China produced 129,000 tons while the output from all other countries dropped to 3,000 tons.

China now dominates the REE industry because it can produce REEs and REE products less expensively and with more purity than its competition. Its low cost production is the result of many factors including inexpensive labor, lower environmental standards and a REE industry which has historically been poorly regulated. It is estimated that China’s lower environmental standards have enabled it to produce rare earths at roughly a third the price of its international competitors. China has also made significant investments in REE mining and processing techniques which are now paying off in greater efficiencies. China also mines the majority of their REE as a by-product of their iron ore and other mineral mining, which also reduces their cost basis.

Where Global Rare Earth Resources are Found

The U.S. Geographical Society estimated that in 2008 China held approximately 57.7% of the world REE reserve, the Commonwealth of Independent States (which includes Russia and many former members of the Soviet Union) 13.6%, the US 9.1%, Australia 3.8%, Brazil 0.05%, India 0.84%, Malaysia 0.02% and other countries 14.9%. Additionally, the British journal Nature Geoscience reported scientists led by Yasuhiro Kato of the University of Tokyo, have found huge deposits of REEs in sea mud at 78 locations in international waters east and west of Hawaii, and east of Tahiti in French Polynesia. Japanese scientists have also identified REEs off island of Minamitorishima, an isolated Japanese coral atoll in the northwestern Pacific Ocean.

In China, REEs have been found in 21 of China’s provinces and Autonomous Regions: Fujian, Gansu, Guangdong, Guangxi, Guizhou, Hainan, Henan, Hubei, Hunan, Jiangxi, Jilin, Liaoning, Inner Mongolia, Qinghai, Shaanxi, Shandong, Shanxi, Sichuan, Xinjiang, Yunnan and Zhejiang. In general, China’s REE reserves are distributed in a light north, heavy south pattern. An estimated 75% to 90% of China’s REE output is in LREEs; 50% to -60% of its LREEs comes from its Banyan Obo mine in Inner Mongolia, and another 25% to 30% comes from mines in Sichuan Province. China’s remaining output is HREEs sourced primarily from its ion-adsorption clays located in the provinces of Fujian, Guangdong, Hunan and Jiangxi.Southern China’s ion-adsorption clays are currently one of the most important concentrations of heavy HREEs in the world. Importantly, these clays have extremely low levels of radioactive elements.

Mining and Processing of Rare Earth Elements

Most REEs are mined either by digging in open pits or in underground mines. The ore is then crushed, heated and treated with various chemicals in order to separate first the bastnaesite, monazite and xenotime, and then to separate the REE from the bastnaesite, monazite and xenotime. In order to ensure a high market value, REE needs to be of high purity. This is a difficult process because REEs share such similar chemical properties. Each REE has its own unique extraction steps and refinement processes, and often these elements need to be reprocessed in order to achieve the ideal purity. Once separated, the REEs are in the form of oxides which are then made into metals. It takes an average of 10 days to go from mining to the production of rare earth oxides. China currently leads the world in REE separation processing technology.  Chinese companies can produce REEs of 99.9999% purity compared with French companies at 99.99% purity and Japanese at 99.9% purity.

Outside of China, companies in the US, France, Russia and Japan can complete some of the refining steps, but only China has the industrial capacity to complete the entire REE refinement process for all the elements. Mining companies such as US Molycorp and Australian Lynas which extract REEs outside of China currently find it necessary for technological and economical  reasons to ship their minerals to China for processing despite their respective efforts to move further down the REE processing chain.

Separating REE from bastnaesite, monazite and xenotime is more difficult than separating REE from the ion-adsorption soils. In Southern China, most of its REEs are found in clay deposits. Not only is it easier to separate REEs from the clay compared with the hard minerals, but it is also usually easier to access the clays in the first place. The ion-adsorption clays are near the crust’s surface, and generally require little drilling or blasting to remove. China’s Jiangxi South Rare Earth Hi-Tech Company has reduced the costs of the clay processing further by pioneering in-situ mining. This method involves drilling holes directly in the clay deposits, pumping in ammonium sulphate or salt-based solutions which remove 90% of the REE from the clay and then collecting the resulting liquid from pipes drilled in at lower levels. The liquid is then pumped into tanks where it is treated with further chemicals, filtered and roasted to produce rare earth oxides.

Uses of Rare Earths Elements

Rare earths are essential in the production of X-ray machines

REEs are essential to many products that are fundamental to our modern life. REEs can be found in products as diverse as TVs, plasma screen technologies, microwave filters, ear phones, self-cleaning ovens, flint lighters and computer memories. Because REEs are extremely effective in absorbing ultraviolet light, REEs are used in glass bottles, sunglasses, and camera lenses. Because they allow for the development of powerful permanent magnets – which differ from electrical magnets in that they produce their own magnetic field – REEs create improved magnetic performance in smaller sizes. They are, thus, important in miniaturization technology, and are a key reason why laptops, cell phones and smart pads are becoming increasingly lighter and smaller.

Permanent neodymium-iron-boron magnets are also fundamental to many green technologies, especially wind turbines. Their superior magnetic strength means that they increase the amount of electricity that a wind turbine can produce. REE magnets also have the advantage that they retain more magnetism when heated. These qualities make them ideally suited for the production of hybrid cars. The Toyota Prius, for instance, contains 1 kg of neodymium in each of its electric motors. REE magnets also improve the energy efficiency of many appliances and cooling systems. REE magnets have been shown to reduce the power consumption of air conditioning systems by as much as 50%, and have led to the development of more environmentally friendly refrigeration methods. Energy efficient lighting such as the fluorescent lamp and LEDs are also big users of REEs.

REEs are also employed in other green technology applications. For instance, REEs are essential to the automotive catalytic converter whose job it is to convert pollutants in engine exhaust gases into non-toxic compounds. They also used in oil refineries to process heavy crude oil into lighter gas, jet fuel and petrol. They are also proving essential to the development of solid oxide fuel cells – a low-pollution technology which electrochemically generates electricity at high efficiencies – and other fuel cells which are being developed as power generators for zero emissions electric vehicles.

Besides, the green technology industry, REEs are also found in a wide range of industrial applications. For instance, REEs are employed in many aspects of nuclear energy production because of their ability to absorb neutrons while remaining stable at high temperatures. They are also found in ceramics, glass coloring and in the colors displayed on TV, computer and hand-held screens. They help paint pigment deflect ultraviolet light which makes them less likely to fade. Most finished glass products, such as mirrors, have been shined by REE concentrates and oxides. REEs are also a critical component in the creation of super-alloys or super-metals which are a class of heat resistant alloys used in the aerospace and power industries, particularly in gas turbine engines. REEs are also elemental to the technology that allows for the solid state storage of hydrogen.

REEs are also found in many medical technologies including x-rays and PET scan detectors. REEs not only improve the performance of MRI machines, but they also enable the physical internal scanning space of the machines to be wider, which serves to reduce feelings of claustrophobia for sick patients. Medical lasers produced with REEs are used in the cosmetic industry to remove pigmentation and scarring on skin, as well as in many other surgical procedures. There are also increasingly used in dentistry to remove tooth decay.

REES are crucial for the defense industry. They can be found in disk drive motors installed in aircraft, tanks, and command and control centers, and in radar systems and in reactive armor. They are key to the production of precision guided munitions, helping to guide the direction of the missile once it is launched. They are fundamental to lasers employed in enemy mine detection equipment, underwater mines and other countermeasure weapons systems. REEs are also found in components used in military communication networks including satellite, radar and sonar. They are also used in optical equipment and speakers.

In 2011, the US Geological Society estimated that the global use of rare earths broke down as follows: catalysts 47%, metallurgical applications and alloys 24%, glass polishing and ceramics 15%, permanent magnets 9%, computer monitors 19%, radar, television and x-ray machines 5%.

Environmental Consequences of Rare Earth Mining

The manufacture of REEs poses significant environmental hazards because of the large amounts of chemicals used in processing and because the processing waste often contains toxic gases and traces of the radioactive thorium. In northern China’s Bayan Obo  (Baiyun Ebo) mine in Inner Mongolia, for instance, REEs are mined and then transported 120km south to Baotou to be processed. Dozens of new factories have been built around Baotou’s processing facilities in what has been called Baotou’s Pioneering Rare Earth Hi-Tech Development Zone. A coal-fuelled power station supplies electricity to Baotou’s large and growing industrial complex.

The Yellow River

The Chinese Society of Rare Earths estimated that for every ton of rare earth oxide it produces in Baotou, China generates up to 12,000m³ of waste gas containing dust concentrates, sulfur dioxide, hydrochloric acid and sulfuric acid, and about 2000 tons of mine tailings. Tailings are the ground materials left over once the REEs have been removed from the ore. In northern China, these tailings contain traces of radioactive thorium. In addition, it is estimated that all factories and processing facilities in the Rare Earth Hi-Tech Development Zone create approximately 10 million tons of all types of waste water every year.  Much of this waste water along with an estimated 7-8 million annual tons of mine tailings are dumped into what has grown into an approximately 11km² waste impoundment lake without being effectively treated. A 2006 Chinese report undertaken by local authorities found that the level of thorium in soil near the lake was 36 times higher than in the soil in other areas of Baotou. From the lake, the chemical and radioactive waste has seeped into the ground water. The waste has also found its way into the Yellow River which passes to the south of Baotou before continuing another 1300 miles to the Yellow Sea. The Yellow River is subsequently used as a water supply for a large concentration of China’s population, including the residents of Beijing and Tianjin.

Around Baotou, most fish in the Yellow River have died. Agriculture has also been severely affected as lake wastewater has contaminated irrigation water supplies and the soil. Local farmers say that since the 1980s, fruit trees have either yielded no fruit or that the fruit they do grow is small and foul-smelling. Vegetable plants have stopped producing and many livestock in the area have become ill and died.

Residents inhaling the vapors and drinking the contaminated water have noticed higher incidents of diabetes, osteoporosis, respiratory diseases, leukemia and other cancers, skin and eye irritations, irritation to the gastrointestinal tract, black lung disease and kidney damage.

China’s southern REE mining and processing operations have also caused significant environmental degradation. The in-situ extraction method, which was hoped to be less environmentally damaging, has also resulted in reduced or eliminated crop yields and in fish dying in the rivers in the areas around which it is being mined. One issue in the south has been the extensive presence of illegal mines which are particularly prone to releasing toxic waste into the general water supply.

Until recently, China has never had firm pollutant discharge standards for the rare earth industry. Additionally, it poorly enforces the regulations that do exist. This lack of stringent environmental regulation and enforcement has meant that China’s REE industry produces REEs at roughly a third the price of its international competitors. While some Chinese REE companies have tried to improve their mining processes to make them more environmentally friendly, many have chosen to keep their environmental costs to a minimum in order to maintain a competitive edge in the market. In addition, as the government owns the land on which the factories lie, companies have little incentive to protect it. Additionally, China’s still-developing legal structure means that people and companies cannot easily be held accountable through the country’s judicial system. In Western countries, if employees or residents become ill due to unsafe production methods, those responsible would likely face due process which could result imprisonment and fines. This is not the case in China, unless victims have the support of the government. Yet the government often has a stake in the REE production process which acts as an incentive for the REE processing to continue untouched.

Characteristics of China’s Rare Earth Industry before Government Reform

Fluorescent light bulbs require rare earths

Starting in 2000, China’s government began to re-evaluate its REE strategy in the light of its rapid development, the poor profitability of its rare-earth producers and the rapidly growing demand for REEs worldwide. While its achievements in the REE field since 1978 are undeniable, the government has become increasingly concerned about a number of issues. These issues were outlined in Situation and Policies of China’s Rare Earth Industry published by the Information Office of the State Council of the People’s Republic of China in June 2012 and included: severe ecological damage to the environment, excessive exploitation of REE resources, poor profitability of the REE industry causing what it considered to be a severe divergence between the price and the value of REEs, and the illegal mining and sale of REEs.

While the environmental degradation that has been caused by China’s REE production is quite widely known, part of the purpose of the China’s REE report was to inform on the other challenges that China faces in managing its REE resources. Specifically, China found that 50 years of aggressive mining of its REE resources have significantly reduced its reserves. In Baotou, for instance, the report stated that only about one third of the original volume of REE resources was left in its principal mines. In its ion-adsorption clays, the reserve extraction ratio – the remaining supplies of REE in years – has declined from 50 years of remaining resources 20 years ago to 15 years of REE resources today.

While China publishes the country’s REE data yearly, these reports are not available to foreign researchers. Independently verifying the PRC’s calculation of its reserve levels has thus been difficult. For instance,

s China’s Situation and Policies of China’s Rare Earth Industry paper calculated that China holds 23% of the world’s reserves, while the 2008 US Geological study calculated that China held 58% and a 2011 British Geological Survey Rare Earth Elements paper calculated that China held 44%. That said, there can be no doubt that China has seen a rapid depletion of REE reserves in the last three decades.

China has also expressed concern about the poor profitability of the REE industry. Historically, the Chinese REE industry has been characterized by numerous, relatively small-scale enterprises, particularly in the south, which often engage in cutthroat competition. This has often meant that REE producers have often struggled to maintain profitability. Yet, as many local governments have relied on REE producers to provide employment and revenue, they have continued to encourage local production even it means exceeding national production targets. As a result, China feels that it REE resources have been sold at prices which do not reflect their real value or take into account environmental costs. To support this argument, China cites the fact that between 2000 and 2010 the price of rare earth products increased by 2150%, while the prices of gold, copper and iron all increased by in excess of 4300%.

China’s REE has also been plagued by illegal mining and smuggling. The report states, that from 2006 to 2008, statistics collected from foreign customs offices were 35%, 59% and 36% higher than the volumes that China officially exported over this time period. In 2008, it was estimated that approximately 29,000 tons of rare earth materials were smuggled out of the country, representing an estimated one-third of total REE exports. In 2014, it was estimated that illicit sales rose to 40% of all REE production or as much as 40,000 tons. Illicit REE materials are often hidden as steel composites, then reverse-engineered out when they reach the customer’s home country. It is believed that Japan is the largest importer of illicit REE materials, and may get as much as 20% of its REEs from China’s black market. Smuggling hurts China’s rare earth industry both by depressing prices, more quickly depleting REE resources and by increasing environmental damage as smugglers usually pay scant attention to pollution management.

Rapid Increase in Domestic Demand for REE Products

China has also seen a rapid increase in domestic demand for REEs, and it expects this demand to continue to increase in the future. In 2000, for instance, Chinese REE consumption was about 19,000 metric tons while non-Chinese usage was about 72,000 tons. By 2009 Chinese REE consumption had reached about 73,000 tons while other usage had declined to 59,000 tons. China uses more REEs today as its REE industry is moving higher up the manufacturing value chain. For instance, its 1987 production of products such as catalysts, magnets, phosphors, and polishing powder represented only about 1% of the total REE that it consumed. By 2008, the production of these products accounted for about 53% of the REEs used in China. Going forward, China expects its REE use in the new material technologies to grow faster than in its other traditional industrial sectors.

As an example, in July 2008, China had approximately 600 million mobile phone users; by November 2012 China’s Ministry of Industry and Information Technology estimated that China’s mobile phone owners had exceeded one billion. Similarly, in 1998, the United States, Europe and Japan produced 90% of the world’s permanent neodymium-iron-boron magnets; today China manufactures 76% of the world’s total. In 2009, China produced 12,000 gigawatts of wind power; by 2015, China aims to have 100 gigawatts of on-grid wind power generating capacity, and to be generating 190 billion kilowatt hours (kWh) of wind power annually.

China’s Reform of its Rare Earth Industry

As early as 1990, the Chinese government deemed REEs to be a strategic mineral critical to China’s long-term political, economic and military power and began restricting foreign investors from mining rare earth, or from participating in smelting and separating except in joint ventures  with Chinese firms. By 2000, Chinese scientists and military experts were calling for even greater controls over its REEs. In 2005, Xu Guangxian, China’s leading REE scientist, argued that at the current rate of extraction the Bayan Obo mine would be depleted in 35 years.

As a result, the Chinese government began to implement a number of initiatives designed to reform the industry. Laws regarding REE mining, production and waste management were reviewed, and efforts have since been made to improve enforcement. Additionally, in 2005, the government eliminated the value-added tax rebates for REEs, and taxes on the export of unimproved REEs were raised. The government also reduced the number of REE mining and processing licenses issued. In 2006, 47 domestic REE producers and 12 Sino-foreign rare Earth producers were licensed to export rare earth products from China. By 2011, that number had dropped to 22 domestic REE producers and 9 Chinese-foreign joint venture REE producers. It has also begun to stockpile REE materials with the goal of reaching reserves of 30,000 to 55,000 tons of rare earth concentrates.

Additionally, it created the 2009-2015 Plan for Developing the Rare Earth Industry, and established the Chinese Society of Rare Earths, consisting of 150 members whose aim is to develop a fully integrated REE sector. Part and parcel of this, it has divided the country into large REE districts: Jiangxi, Guangdong, Fujian, Hunan, and Guangxi in the South; Inner Mongolia and Shandong in the North; and Sichuan in the West. Between 2009 and 2015, the government expects Inner Mongolia and Sichuan to be primarily responsible for producing LREE with additional capacity coming from Shandong as needed. HREEs will be produced in Jiangxi, Guangdong and Fujian. Increased inspections by government officials will be carried out in order to ensure that facilities are not exceeding national quotas and that mining and manufacturing are meeting environmental regulations.

Since January 2014, China has pressed aggressively ahead with its efforts to consolidate the REE industry under six large state owned enterprises (SOE)including Inner Mongolia Baotou Iron and Steel Group, China Minmetals Corporaion, Aluminum Corporation of China (Chinalco), Guangdong Rare Earth Group, Xiamen Tungsten, and Ganzhou Rare Earth Group. These SOEs will control the industry by geographic region. An estimated 300 smaller, independent REE producers have been forced to shut down or  to merge  with  the SOEs. These SOEs will invest in all aspects of the rare earth industry chain. Currently, these six companies control 94% of China’s RE resources,  75% of its mines and  60% of the smelting and separating capacity. After consolidation, the six SOEs are expected to have complete control over these sectors. These  conglomerates will be supported by financial subsidies, tax breaks, and other form of government  investments, and will be encouraged  to expand their expertise  in areas such as REE recycling.

China continues to view the REE industry as of strategic importance to the country. Its goal is to have a significant market share of the entire REE supply chain from mining, smelting and separating to manufacture of high-end rare earth technologies. China’s dominance in the middle aspects of the REE supply chain – transforming mined materials into useful ingredients – enables China to draw in related domestic and multinational businesses that depend on the REE materials. This in turn increases China’s importance to supply chains in everything from mobile phones to wind turbines.

Since January 2014, Beijing has also stepped up its campaign against illegal mining. It has forced smaller, wildcat producers to close, and is now conducting helicopter searches in areas where illegal mines are purported to be operating. It is also going after the gangs who are running them as well as local government officials who turn a blind eye.

Beijing is also working to stamp out illegal production by larger, licensed companies which avoid production quotas by exporting RRE under ambiguous labels such as “iron alloy”.  New export license paperwork for the big six will be more onerous and exacting. Beijing is also trying to implement a RE supply chain trace-ability system.

Since July 2014, China has push ahead with its plans to grow  its domestic REE stockpiles.  China plans to use it stockpiles to ensure  adequate resource  supply  in the future, especially in light of growing domestic demand. It will also use it stockpiles as a mechanism  to support REE  pricing.

Export Quotas

Chinese ships loaded with rare earth minerals for export

The government also began to implement quotas on the amount of REEs that it allowed to leave the country. From the Chinese perspective, quotas felt appropriate as foreign countries, particularly the United States and Japan, were seen to be taking advantage of China’s cheap, environmentally-destructive REEs while maintaining strategic stockpiles in their own un-dug mines. Quotas would also help ensure that the Chinese had plenty of REEs for their domestic needs. Historically, separate export quotas have been set for domestic REE producers and for Sino-foreign joint venture REE producers. Between 2005 and 2007, the government authorized domestic REE producers to export 40,000 metric tons and Chinese-foreign joint ventures to export 16,000 metric tons. In 2008 and 2009, China reduced the domestic quota by 21.6% and 2.5% respectively while holding the Chinese-foreign joint venture quota steady. By 2010, China’s overall REE export quota was reduced an additional 37.1%, this time impacting both domestic and Sino-foreign joint venture producers alike.

The government’s new policies are specifically designed to restrain the export of unprocessed REEs, as no quotas have been placed on REEs exported in finished products. Part of the reason for this is that the government wants to encourage foreign REE manufacturers to relocate their production facilities to China, particularly to Baotou’s Pioneering Rare Earth Hi-Tech Development Zone.  It is estimated that approximately 50 foreign companies are already operating within Baotou’s industrial complex. From the Chinese perspective, this would allow them access to new technology and would generate jobs for its citizens. Non-Chinese consumers of REEs have criticized this policy saying that it is pressuring them to relocate to China in order to stay cost competitive. This in turn could put their proprietary REE technology at risk, and it would continue international dependence on China’s REE industry.

Chinese Suspension of Rare Earth Exports

On September 7th, 2010, a Chinese fishing trawler rammed a Japan Coast Guard vessel near to the Senkaku/Diaoyu disputed islands, known in Japan as the Senkaku Islands, and in China as the Diaoyu Islands. The islands are administered by Japan but are also claimed by China and Taiwan. The Japanese subsequently detained the captain, causing a major diplomatic dispute between the two countries.  Despite repeated demands by the Chinese government, the Japanese refused to release the captain, saying that instead his case would be handled by the Japanese courts. In retaliation, the Chinese canceled official ministerial Sino-Japanese meetings, and revoked an invitation for 1000 youths to attend the Shanghai World Expo. (Lin, 2010) Although denied by the Chinese government, on September 21st, it is widely believed that the Chinese also orchestrated an unofficial halt of REE exports to Japan by having its custom agencies prevent the export of REEs, though this has recently been questioned in academic studies, particularly in light of the fact that shipments to Europe and the US were also halted the following month, and given that the Japanese government had expressed grievances over the rare earths issue as early as August 18th. Beijing claimed instead that the export stoppage was a spontaneous, independent demonstration of support by Chinese REE exporters and custom agents. Regardless of its origin, the embargo has enabled China to exert political pressure on Japan. The unofficial nature of the embargo also made it more difficult to challenge in the World Trade Organization (WTO) which bans most unilateral export stoppages.  On September 24th, Japan released the Chinese captain, with the Chief Prosecutor citing “Japan’s national interests”.

By mid-October 2010, China was also blocking some shipments to the United States and Europe after the Obama administration opened an investigation into whether China was violating free-trade rules with its green energy policies including its restrictions on REEs. China resumed shipments to the U.S. and Europe at the end of October, but did not resume shipments to Japan until the November 24th. Part of its decision to resume shipments to Japan might have been due to the fact that many Chinese assembly factories, employing hundreds of workers, were running low on Japanese-made components when suppliers began to face shortages of some of the REEs needed in their manufacture.

Consolidating the Industry and Ending Illegal Mining and Smuggling

Since 2006, the government has stepped up its efforts to shut down illegal mines in the provinces of Guangdong, Jiangxi and Sichuan. Over the last two years, China has investigated and rectified 600 cases of illegal mining, has identified an additional hundred cases against which further action will be taken, and has closed 13 mines and 76 processing facilities. Similarly, in 2011, China launched a campaign to crack down on REE smuggling, retrieving 769 tons of smuggled REE metals and prosecuting 23 criminal suspects in eight cases.

China has also been urging its REE producers to merge together. Ultimately, the government envisions that the REE industry will be eventually controlled by a few, state owned enterprises. Surviving Chinese producers have seen advantages to this consolidation strategy as it has helped to reduce unnecessary competition and increase profitability. For instance, Dingnan Dahua New Materials Co., Ganxian Hongjin Rare Earths Co. Ltd, Minmetals Nonferrous Metals Co. Ltd have all joined together to form Minmetals Ganzhou Rare Earth Co. Ltd to process REEs in Ganshou, Jiangxi Province. Their operations are expected to slowly subsume the majority of the production of the 88 smaller REE producers that have historically been operating in the area.

Improving Environmental Regulation

Rare earths are crucial for wind turbines

China also plans to implement stricter environmental standards. The Ministry of Environmental Protection has now set discharge standards for six types of atmospheric pollutants and for 14 different types of water pollutants. China will aim for its new REE facilities to be built to ISO 9000 and ISO 14000 certificate standard. It may also force its dirty mining and processing facilities to halt operations until they are also able to secure the ISO accreditation. The ISO 9000 and ISO 14000 are internationally recognized accreditations that look at how a product is produced rather than the product itself. The ISO 14000 standards help organizations establish procedures that minimize negative effects to the environment. If China enforces its tougher environmental standards, it is estimated that it could add between $145 and $220 to the production costs of every ton of REE products. These higher costs would significantly erode China’s cost advantage in the industry.

Additionally, China intends to increase the recycling rate of both REEs in discarded electronic products as well as recycling an estimated 12.6 million tons of REE oxides that had been deposited in its Baotou tailings pond. Currently there are no cost-effective ways to recycle rare earth elements from old equipment such as computers, electric motors and cell phones. Similarly, technology to extract residue REEs in tailings ponds is also in need of further development. China is also working on technology that will reduce the amount of REEs that are flushed into tailings ponds in the first place.

China’s Rare Earth Industry Research and Investment

As China considers its REE industry to be of critical strategic importance, it is heavily investing in REE research and development. It hopes breakthroughs in REE technology will help ensure its national security, and could enable China to leap-frog the West to lead in the development of many new advanced technologies such as those found in the rapidly emerging environmental sector. Indeed, in 1999 President Jiang Zemin noted that if China could master REE technology, its REE resource advantage could then help lead China to economic superiority.

Much of China’s REE investment has been funneled through the State Key Laboratory of Rare Earth Materials Chemistry and Applications, affiliated with Peking University in Beijing, and the State Key Laboratory of Rare Earth Resource Utilization, affiliated with the Changchun Institute of Applied Chemistry which is run under the direction of the Chinese Academy of Sciences. Between the two labs, there are approximately 70 faculty members, 35 professors and 75 graduate students dedicated to REE research. Additionally, China also conducts REE research through the Baotou Research Institute in the General Research Institute for Nonferrous Metals. Each of these institutions run complementary but independent research into the efficient and environmentally friendly mining and processing of REEs, the development of technology employing REE materials, the recycling of REEs from already existing products and the reclamation of REE materials in its extensive waste ponds.

China is not only investing in REE domestically, it is also purchasing stakes in rare earths natural resources abroad. For instance, China has purchased a 25% date in Arafura Resources Ltd, an Australian Rare Earth developer.

World Response to the Reform of China’s Rare Earth Industry – WTO filing

In March 2012, the United States, European Union, and Japan filed a complaint with the WTO against China’s REE trade practices in response to export restrictions, restrictions in export licensing, higher export taxes, and the withdrawal of the 16% refund of value-added tax on exports of unimproved REEs. They argued that the effect of these policies has been that non-Chinese producers of REE products pay 31% more for their REE materials than their Chinese competitors.  The US, EU and Japan are also challenging aspects of the allocation and administration of export quotas, export licenses and the manipulation of export prices. They contend that Beijing aims to satisfy domestic REE demand first, and to control the international price of REEs abroad. They also say that Chinese practices are placing pressure on foreign manufacturers to relocate their operations to China in order to minimize the impacts of rising costs and shrinking supplies. It is expected that the complaint will take between one and three years to resolve.

WTO ruled against China's REE export restrictions

WTO ruled against China’s REE export restrictions

China has countered that its policies are intended to improve the environmental standards of its REE mining and processing facilities as well as to promote the long-term economic sustainability of its REE resources. It has rejected a call for the establishment of a WTO panel. China has also countered that foreign suppliers have not complained of China dumping low-cost REEs as they previously had with China’s export of low-priced steel and textiles.

The US, EU and Japan feel that a WTO ruling made in January 2012 supports their case. In that ruling, the WTO decided that price and quantity controls primarily targeting foreign entities were not a reasonable implementation of a resource conservation policy. It also stated that trade restriction measures for the purpose of environmental protection can only be applied in conjunction with restraints on domestic production or consumption.

In June 2014 the WTO ruled against China and in August 2014 China lost its appeal. The WTO stated that China’s efforts conserve its limited REE resources and to protect its environment by restricting foreign access to REE tungsten and molybdenum through export duties, export quotas, minimum export pricing requirements and additional requirements and procedures constitute a breach of WTO rules. Instead the WTO found that the China’s REE restrictions were designed to achieve industrial policy goals rather than REE resource conservation or environmental protection. The WTO ruled this because no measures were put in place to restrict domestic access to REE supplies. Instead the export restrictions gave domestic companies preferential access to REEs at prices below that available to foreign customers.

World Response to the Reform of China’s Rare Earth Industry – Developing New Rare Earth Sources

Car production could be affected by rare earth shortages

Many governments and companies around the world are also beginning to develop new REE sources, now feasible given the higher REE prices which have resulted from increased REE demand and China’s export restrictions. The Australian company Lynas Corporation, for instance, has invested in an $800 million processing plant located on Malaysia’s East Coast. Once fully operational, Lynas’s Malaysian processing plant is slated to become one of the largest REE processing plants in the world. Yet, the opening of the plant has been plagued by protests from Malaysian activists who worry about its environmental implications. The plant is located on reclaimed swampland just 12 miles from Kuantan, a city of 600,000 people. A particular worry is that the plant’s toxic wastewater, containing chemicals and low levels of thorium, will seep into the groundwater, and that its storage ponds could become vulnerable to the monsoons that inundate the swampy coastline each autumn. Currently, Mitsubishi Chemical is investing $100 million to clean up its Bukit Merah REE processing site which it was forced to close in 1992 when local residents began complaining of leukemia and other ailments tied to thorium contamination. This environmental contamination has caused Malaysian activists to demand greater environmental regulation for all future RE processing facilities located on its soil.

In California, near Death Valley, Molycorp Minerals has invested $781 million in the modernization and expansion of its RE mining and manufacturing facilities that were shuttered in 2002 when it was unable to produce REEs at prices which could compete with Chinese producers. Molycorp aims for its newly refurbished Mount Pass facility to be one of the most technologically advanced, energy efficient and environmentally friendly REE processing operations in the world. By the end of 2013, Molycorp expects Mountain Pass to be producing 40,000 metric tons of REEs annually. As the US currently consumes between 15,000 and 18,000 metric tons of rare earth oxides each year, this would mean that the US would turn into an exporter of REE products in the near future.

Mines are also under consideration in Canada, Australia, South Africa, Greenland, Mongolia, Vietnam and India. In 2009, Japan signed a contract with Vietnam to invest in a rare earth mine that will produce solely for Japanese vehicle manufacturers. The problem is even if these new mines and accompanying processing plants were given the go-ahead, it could still take between 3 and 10 years, not to mention hundreds of millions of dollars, before these new projects would become fully operational. Others are investing more heavily in the manufacturing of high-end REE products outside of China. Japan’s Hitachi Metals Company, for instance, is investing in a permanent magnet factory in China Grove, North Carolina instead of locating it in China as it had originally envisioned.

A concern for those investing in new REE mining and processing locations is that China could increase production again driving down REE prices just as their projects come on line, once again making non-Chinese mining and processing facilities uneconomical. Ironically, a WTO judgment in favor of the US, the EU and Japan could have this effect by forcing them to withdraw export restrictions which would once again flood the market with Chinese REE product. To protect against this, some non-Chinese scientists and industrialists have called for their governments to provide federal support in the form of loan guarantees and other assistance. Others argue that the rapidly growing demand for REEs should help maintain prices, even in the event of a significant increase in Chinese REE production.

World Response to the Reform of China’s Rare Earth Industry – Other Initiatives

International consumers of China’s REEs are also taking other steps to become independent from Chinese supplies. As a short term stop-gap, countries such as Japan and South Korea already have strategic stockpiles of rare earth metals. Countries are also increasing research into REE substitutes and REE recycling.

Trends for the Future

Rare earth mining is certain to be an important part of China’s future economy

China’s REE industry continues to grow at a strong clip. According to the Industrial Minerals Company of Australia, China’s REE annual output is forecasted to rise from 105,000 tons in 2011 to approximately 130,000 tons by 2016.

China considers the development of REE technologies a national priority. To support this objective, it will continue to invest heavily in research and development in all aspects of REE production from improved mining efficiency to the development of cutting-edge REE technologies.  It will also continue to invest in technologies that will allow it to reclaim REEs from its tailing ponds and to recycle REEs from discarded electronic products.

China should be able to have substantially greater influence over REE’s supply and the pricing. To some extent this will offset its inability to control supply and price by export quotas and by other trade restrictions now ruled to be illegal by the WTO. China will also continue to build domestic stockpiles.

The financial and academic resources China is investing in basic REE research are unparalleled anywhere in the world. Similarly, no other country has identified the manufacturing of REE technologies as a national objective and is pursuing it as single-mindedly. Given China’s significant level of naturally occurring REE reserves, its destination as a low-cost manufacturing base, and its heavy research and investment in all aspects of the REE sector, it can be expected that China will continue to rapidly consolidate its already strong foothold in the manufacture of many of the REE technologies. It is likely it will dominate the production of many of these technologies in the future.

Rising REE prices and aggressive Chinese REE policies have caused non-Chinese REE miners and manufacturers to seek alternative REE sources and alternative locations to produce their REE components. Over the next 10 years, it can be expected that new REE mining and processing sources will come on line, allowing international competitors to claw back some unfinished REE market share. In particular, US Molycorp and Australian Lynas both have brought REE mines on stream. Similarly, international REE producers, wary of the Chinese subsuming their technology, will continue to seek alternative, cost-effective places to manufacture. That said, they will struggle to compete against China’s advantages.

Sino-Japanese Relations: In the Shadow of History

An Overview

There can be no doubt that China and Japan are the giants of East Asia, both in economic and political terms. The bilateral relationship is, therefore, of great importance to both the region and the wider world. Despite a mainly cordial relationship over two thousand years of known interaction, Sino-Japanese relations have been complex and difficult for over a century. After a brutal invasion and occupation of the Chinese mainland during its expansive war of the 1930s and 1940s, Japan was defeated and found itself firmly in the anti-Communist bloc during the Cold War. A thaw in the 1970s, driven by the Chinese split with the Soviets led to the normalization of diplomatic relations but the Chinese and Japanese never truly reconciled this history. As a result, the question of history remains one of the biggest thorns in the side of the Sino-Japanese relationship. Compounding this emotional problem is a series of territorial disputes in the East China Sea, most notably around the Diaoyu (in Chinese) or Senkaku (in Japanese) islands. There are also ground for optimism; China has been Japan’s largest trading partner since 2007 and the two countries have worked together to promote regional cooperation and low level institutionalization. Nevertheless, the difficult shared history casts a constant shadow over the relationship.

The Historical Relationship

China’s relationship with Japan has a long and complex history, with interaction between the two cultures stretching back over at least two millennia. There can be no doubt that much of Japanese culture has its roots in that which it borrowed from the Chinese. This is most notable in the written form of Japanese, which uses both Chinese characters and two other scripts that are derived from written Chinese (though the oral language is entirely distinct from Mandarin). The other major similarity lies in philosophy and religion; the adoption of Confucianism and Buddhism, both of which were learned through interaction with the Chinese over many centuries, is still clearly evident in modern Japan. This adoption of aspects of Chinese culture took place across several of China’s dynastic periods, during which interaction was predominantly cordial with the Japanese paying tribute to the Chinese emperors without ever really becoming a “vassal state” in the way that many other areas of East Asia did during this time.

The relatively cordial interaction was brought to an end during the Edo period in Japan (1603-1868) during which it effectively closed itself to dealings with other states. The end of this period coincided with several of China’s military defeats to Western powers, including the Opium Wars, which led to various parts of China becoming “concessions”, effectively miniature colonies within China. These defeats were part of the long decline of China’s final dynasty, the Qing, and Japan, like several Western powers, sought to take advantage of the chaos and confusion that ensued. After the first Sino-Japanese War of 1894-5, which had initially been fought over control of Korea, China was forced to sign the Treaty of Shimonoseki, under the terms of which Japan occupied Taiwan and the Penghu Islands. This defeat is considered by many Chinese to have been a huge psychological blow to the nation. After millennia of perceived Chinese superiority in the region, just a few short decades had seen China’s military humiliation at the hands of various “barbarians” from outside of East Asia and now at the hands of the Japanese, over whom the Chinese had always considered themselves to be both culturally and militarily superior.

However, by far the most significant conflict between the two powers, both in terms of the shutterstock_2646972 resizednumber of deaths and the continuing impact on the bilateral relationship, was the invasion of China by Japan that occurred in the 1930s. After first colonising Manchuria, in the Northeast of China, Japanese forces went on to occupy almost half of Chinese territory, committing widespread atrocities along the way. The most notorious of these atrocities was the Nanjing Massacre, a six-week orgy of violence and destruction during which as many as 300,000 Chinese, many of them civilians, were killed. Almost as notorious was the work of Unit 731, a Japanese research unit that conducted chemical testing on live Chinese prisoners of war. The occupation, including the colonisation of Manchuria, lasted a total of fourteen years, only coming to an end with Japan’s defeat in 1945.

With the dawning of the Cold War era, the PRC and Japan did not normalise relations until 1972, following Richard Nixon’s visit to Beijing. During the negotiations to establish mutual diplomatic recognition the Chinese agreed to forgo any war reparations or compensation from Japan for its wartime atrocities. For the remainder of the 1970s the two enjoyed a warm relationship, culminating in the signing of the Treaty of Peace and Friendship in 1978 and, following China’s decision to embark on market reform, the initiation of a series of low-interest loans (frequently referred to as “Yen loans”) from Japan to China to fund development of industry and infrastructure. While never explicitly acknowledged as such by either party, these were widely considered to be in lieu of war reparations.

The “History Issue”

Despite the apparent thaw in relations it is widely acknowledged that the reconciliation between China and Japan was only ever at a superficial level. This is evidenced by the CHEN WS / Shutterstock.comrecurrence of what has come to be termed “the history issue” in the relationship. Though the countries normalized relations in 1972, the history issue did not rear its head until the early 1980s. An apparent revision of Japan’s history textbooks in the early 1980s, which seemed to downplay Japan’s invasion of China, sparked an angry response from China at both the societal and political levels. Though it transpired that this was a misunderstanding caused by reporting errors in the Japanese media, the damage had been done and this issue recurs each time Japan’s Education Ministry approves a set of history textbooks, normally every four years. In 2001 and 2005, this issue caused widespread anger in China when a book was approved that apparently downplayed the Nanjing Massacre and referred to the invasion of China has merely an “advance”. What is rarely understood in China is that the textbooks in question are produced by the Japanese Society for History Textbook Reform, a very narrowly focused right wing group that attracts little support in the wider Japanese society, and that they only appear on a list of books approved to be used, rather than being the set text. As a result, only a handful of Japanese schools have adopted these books with a reported 0.03% of Junior High School students actually studying them, a figure that would have been much lower were it not for the campaign group issuing free copies to schools for disabled students. Nevertheless, the approval sparked angry demonstrations across China with protest marches attracting in excess of ten thousand in several different cities and violent attacks on Japanese business interests and the Japanese Embassy in Beijing. Though some reports at the time suggested that the Chinese government played a role in organizing and inspiring these protests, later research showed this not to be the only driving force behind the outpouring.
shutterstock_87269803Another particularly sensitive matter is Yasukuni Shrine, a highly controversial Shinto shrine in Tokyo that honors all of Japan’s war dead. Under Shinto beliefs it is believed to be the resting place for the kami (loosely translated as souls) of all those who have died fighting for the Emperor of Japan since the shrine’s inception in the 1860s. This includes Class A war criminals that were convicted after Japan’s occupation of China of war crimes. Most notorious among these is Hideki Tojo, the wartime prime minister. After the Class A war criminals were enshrined in 1978 in a secret ceremony that was revealed a year later, the Emperor refused to visit the shrine again until his death a decade later. His successor has continued the policy of staying away in order not to offend Japan’s neighboring states. However, there have been several high profile visitors that have caused consternation in China (and other East Asian countries, most notable South Korea). In the early 1980s, it was commonplace for Prime Minister Nakasone to visit, until he did so on August 15th 1985, the fortieth anniversary of Japan’s surrender. In response to opposition in China, the General Secretary of the CCP, Hu Yaobang, personally requested that Nakasone stop these visits. Though two other prime ministers visited the shrine in the following 15 years, the issue was largely put to rest until Prime Minister Koizumi returned to the shrine in August 2001. He fulfilled his pledge to visit the shrine once a year while he was in office at great cost to the Sino-Japanese relationship at the highest political level and also at the societal level; bilateral summits were suspended and his actions created the impression among many Chinese that Japan had not fully repented for its previous wrongs and even a fear that it might return to its militaristic past. By the end of Koizumi’s tenure in 2006 the political relationship between the two powers had almost completely broken down and on several occasions popular Chinese anger spilled over into protest and even violence against Japanese in China. Subsequent prime ministers elected not to visit the shrine, allowing the political relationship to thaw once more, but this period serves to highlight that the issue of history is never far from the surface of Sino-Japanese relations. In fact, during the three years that the Democratic Party of Japan (DPJ) led the country from 2009 to 2012, the issue took a back seat in the relationship. However, it has begun to rear its head once more since the LDP (Koizumi’s party, and the overwhelmingly dominant force in Japanese politics since the end of the US occupation) regained power. In December 2013 Shinzo Abe, now in his second stint as prime minister, visited the shrine on the first anniversary of his return to the post. The act was greeted with anger from across the region but most notable in China and South Korea (with whom Japan has also had a difficult relationship in recent years). Abe has since refrained from visiting the shrine, though he has repeatedly sent offerings under his own name. Objections from the US that have become public since his December 2013 visit might provide an incentive for him not to return in person but even if it is a one-off it has put the shrine issue firmly back on the agenda of Sino-Japanese tension. To mark the 70th anniversary of Japan’s defeat in World War II, Abe made a significant and closely observed speech, repeating aspects of previous apologies but insisting that future generations should not be “condemned” to repeatedly apologize for actions in which they had no part. This was a clear indication that he wanted to move Japan away a position that he – and his supporters – consider to have been overly deferential to China in this area for too long. Such a shift does not go down well in China and this was underscored by Xi Jinping’s speech at its own commemorations of the 70th anniversary a few weeks later.

Slips of the tongue from Japanese politicians (that are not always unintentional) often cause anger and resentment in China as well. In his first period in office immediately succeeding Koizumi, Shinzo Abe managed to offend both China and South Korea by claiming that the issue of ‘comfort women’ – a euphemism for the thousands of women forced into sex slavery at the hands of the Japanese military during their occupation of East Asia – had been exaggerated, earning himself a telling off even from the US. More recently, the mayor of Nagoya declared that he did not believe that the Nanjing Massacre happened. This was particularly insensitive as he made the claim when welcoming a delegation from Nagoya’s sister city: Nanjing. It is this level of insensitivity – displayed by only a minority of Japanese but often by those who make themselves most well heard – that continues to cause frustration, bemusement and resentment among the Chinese. Even more recently, similar views have been expressed by one of the governors of NHK, Japan’s national broadcaster.

Territorial Disputes

The other major issue that threatens the stability of the bilateral relationship from time to time is the dispute over sovereignty of the Diaoyu Isalnds (known as Senkaku in Japanese). These uninhabited islands are currently administered by Japan, but are claimed by both countries (and also by Taiwan). It is widely believed that significant levels of resources, including oil and gas, may lie underneath the islands, as well as within the maritime EEZ that would accompany recognition of the sovereignty of the islands. Complicating the issue is China’s exploitation of the Chunxiao gas field; although there is no dispute over the sovereignty of the gas field itself, it is within four kilometres of what Japan considers to be its EEZ and it argues that China may siphon resources from its side. China disputes that this is likely and, in any case, does not accept Japan’s demarcation of its EEZ as it is based on Japanese sovereignty of the islands.

Attempts to resolve the dispute have been largely unsuccessful; during the negotiations for the Treaty of Peace and Friendship it was determined that the matter should be shelved and left for future generations to resolve. However, nationalist activists on both sides have sought to push forward their respective country’s claims to the islands, often leading to heightened diplomatic tensions between the two. One of the most serious incidents in recent times occurred in September 2010 when a Chinese fishing boat collided with a Japan Coast Guard ship that was patrolling the area. The captain and crew of the boat were all arrested and imprisoned in Japan, leading to a major diplomatic dispute between the two countries, with both governments accusing the other of violating sovereignty. The captain was eventually released without charge after Japanese prosecutors determined that action against him would harm Japan’s national interests, though a video was leaked to the media that showed the captain, apparently under the influence of alcohol, intentionally ramming his boat into the Japanese ship. The strength of China’s reaction shocked many in Japan as several Japanese businesspeople were arrested on fairly dubious grounds and exports of rare earths to Japan were apparently halted, though Beijing insisted that the issues were unconnected.

shutterstock_103396334In 2012 Shintaro Ishihara, then the mayor of Tokyo and a right wing firebrand who had long campaigned for a tougher policy towards China, launch a campaign to nationalize the islands. The three largest islands had been in private ownership since Japan integrated them into its territory at the end of the eighteenth century. The family that held the rights to them had been keen to sell them on but was not willing to do so if there could be any threat to Japan’s sovereignty claims. As a result, Ishihara launched a bid to raise enough funds to buy the islands and vowed to take them under the umbrella of the Tokyo government. His plans also included the building of a harbor on the largest island, a move that would unquestionably have inflamed tensions with China and possibly have provoked a military response. When Ishihara’s campaign achieved its goal of raising sufficient funds, the national government decided it had no option but to move on the issue. The then-Prime Minister Yoshihiko Noda announced that the national government would purchase the islands and quickly struck an agreement with the family that owned them. This move was, without doubt, driven by a desire to lessen the tension with China as Ishihara’s plan was deemed highly provocative. Under the national government’s ownership no development of the islands would occur and the status quo would effectively be maintained. Noda clearly hoped that this move would be recognized by the Chinese and the response would be proportionate.

However, the nationalization of the islands proved to be a particularly hot topic in China and the response from Chinese society was the most serious that has been seen in any international issue in living memory. A series of scathing diplomatic attacks from the government served as a backdrop to widespread anti-Japanese protests across China. In total, 85 cities on the mainland witnessed large protests with many of these becoming violent. Japanese businesses and citizens were harassed, with even the ambassador’s car coming under attack in Beijing. Calls for boycotts of Japanese produce – a common response from nationalistic Chinese whenever a dispute with Japan occurs – appeared to have a greater effect than ever; in one bizarre demonstration of support for this idea a man set fire to his own Honda car in the middle of a Shanghai street. The economic relationship was demonstrably affected, with Japanese firms temporarily closing factories in China and laying off tens of thousands of workers. Sino-Japanese trade had previously been thought to be almost immune to the repeated spats between the two countries, but annual trade dropped by 4% in 2012. Two-way tourism figures fared even worse, with Chinese visitors to Japan down 33% in October 2012 compared with the previous year while the numbers of Japanese visitors to China fell by two thirds in the second half of 2012.

Since the nationalization China has stepped up “surveillance” of the areas surrounding the islands. Where once an unwritten agreement not to enter Japan’s de facto contiguous zone around the islands had kept the prospect of conflict to a bare minimum, China has since regularly flouted this norm. Though the incursions are frequently “Marine Surveillance” vessels rather than military ships, the possibility of conflict has been raised to its highest level since the two countries normalized relations in 1972. This was brought into sharp focus in December 2012 when a Chinese “Maritime Surveillance” plane entered the airspace of the islands, leading to the Japanese scrambling jets in response. A further escalation of the dispute in January 2013 occurred when the Japanese claimed that a Chinese PLAN frigate (a navy warship) had locked its radar onto a Japanese ship in the waters, suggesting that the first shots were about to be fired. Though China subsequently denied the incident the fact that such ships are now in frequent and close contact has significantly raised the possibility of a miscalculation that might trigger actual armed conflict between the two powers. The seriousness of the situation was heightened by a declaration from Hilary Clinton in January 2013 that the US’ joint security treaty with Japan covers the islands, thus obliging it to defend Japan if attacked by China. This raises the possibility of direct conflict between China and the US for the first time since the Korean War and is a stark reminder to all involved of the gravity of the situation. This was again brought into sharp focus in April 2013 when Prime Minister Abe issued a warning that Japan would respond with force to any attempt by China to land on the islands. Though this is would clearly be a war that would benefit nobody, it remains an unpalatable possibility.

In October 2013 China declared an Air Defense Identification Zone (ADIZ) above the East China Sea, including directly above the islands. This requires aircraft entering the zone – which is separate from China’s territorial airspace – to identify themselves to the Chinese authorities, log a flight path and retain open communications for the duration of the period of time in the zone. Although the zone is not unique – several of China’s neighbors have similar zones, including Japan – the sudden declaration and the more stringent requirements imposed by China have made this a controversial move that is clearly linked to the islands dispute. Aircraft from both Japan and the US have so far ignored the rules without serious consequence but the potential for miscalculation has clearly been raised even further by this development.

The islands issue has calmed somewhat in recent months but remains a potential flashpoint between the two countries. Certainly no resolution of the issue appears imminent and it has clearly played a role in Japan’s moves to reinterpret its Constitution in order to allow its military to play a role in collective self defense, a move that has caused a great deal of unease in a number of countries in the region, not least in China and South Korea.

The Taiwan Issue

When Japan defeated the Qing in the First Sino-Japanese War of 1894-5, one of its major prizes was the ceding of the island of TaiwanTaiwan has not been ruled by Beijing since then, despite its continued claims of sovereignty. Though the Japanese were expelled after their defeat in 1945, its role and position within the Taiwan issue remains a cause of consternation for the Chinese. In particular Japan’s continued hosting of US forces on Okinawa, an island that is of clear strategic importance should the US ever seek to defend Taiwan in a conflict with China, causes friction with Beijing, though it should be noted that it is even more controversial in Okinawa itself where local people have long campaigned for the complete withdrawal of US forces.

Though Japan is firmly committed to the ‘one China’ policy that all countries with which Beijing has diplomatic ties must affirm, it continues to have close ties with the island. These ties are particularly evident in the field of business and Japan is Taiwan’s second largest trading partner with bilateral trade topping $70 billion in 2011. Japan also continues to have a close cultural relationship with the island, with Japanese pop music and television programs particularly popular. This successful ‘soft power’ irks the Chinese who see a continued threat to their claims of sovereignty from a power that has not only demonstrated a willingness to colonize in the past, but which also has a motivation for preventing or delaying the process of the ‘reunification’ of Taiwan and the mainland.

Bilateral Trade


Bilateral trade is the biggest area for optimism in the relationship, and it has been argued that the main factor in preventing open conflict from erupting has been the level of trade between the two. Japan has consistently been one of China’s biggest trading partners since early in the reform era, and has also been a source of significant inward FDI. In 2007 China became Japan’s biggest trading partner and, though Japan’s significance to China has declined relative to other major partners, the two remain closely interlinked. In 2010, bilateral trade reached $300 billion. Such interdependence was forged from a high level of complementarity between the two economies – China was in a position to provide plenty of cheap labor in return for investment and technological transfer at a time that Japanese firms found the need to expand and outsource away from Japan – in combination with a geographic proximity that allows relatively quick transport of both people and goods. In June 2012 direct trading between the RMB and the Yen began, bypassing the US dollar for the first time and making bilateral trade even easier. The trading relationship has remained robust through some of the most heated political disputes, and the relationship during the early 2000s, characterized by political spats over the history issue and popular anti-Japanese protests in China, came to be referred to as “zhengleng jingre” (cold politics, hot economics), though it could also be argued that such problems do impact on bilateral trade that could have been even more spectacular against the backdrop of smoother political ties. Notably, when China chose the partners for its high speed rail network it felt compelled to shun Japanese firms in response to domestic pressure from nationalists angered at Japan’s perceived continued provocations over the history issue. As a result, China’s network of high speed train network was put together by a combination of firms from France, Germany, Canada and China, among others. This represented a negative outcome for both sides, with the Japanese unable to cash in on Chinese investment in its infrastructure that has totaled $300 billion by 2012 and is expected to continue to rise as the network is expanded, while the Chinese ended up with a system that fell short of its original expectations and may have contributed to the fatal train crash in Wenzhou in 2011.

East Asian Regionalization

In recent years there has been some limited progress toward regional integration and institutionalization in East Asia. In some areas this has actually been a source of competition for influence between China and Japan such as in the development of ASEAN +1 and ASEAN +3, whereby the two countries have sought to engage with Southeast Asian countries in order to further their own interests rather than to develop frameworks for dealing directly with each other. However, the two countries’ involvement in the six-party talks over the North Korean nuclear issue that also included both of the Koreas, Russia, and the US, was a first step in the creation of a significant regional forum. Though not formally related to the six-party process which has now stalled, China and Japan, along with South Korea, now hold annual three-way summits, hosted on a rotational basis, that have begun to foster a much greater sense of understanding and cooperation between the three powers. While it is significant that South Korea is involved in this, it is the engagement of China and Japan that has the greatest potential for positive impact on the region going forward. However, the islands dispute between China and Japan (as well as another territorial dispute between Japan and South Korea) the erupted again in 2012 has stalled the process. The 2013 summit was indefinitely postponed and although never formally abandoned, there has not been a summit since 2012.

Future Trends

The Sino-Japanese relationship is, arguably, the most important bilateral relationship in shutterstock_3155944East Asia. Many tensions remain, particularly over the history issue and the Diaoyu/Senkaku dispute. While the former of these problems has appeared to have been handled sensibly on both sides since the resignation of Koizumi, it remains a deeply-rooted issue that retains the potential to be the cause of significant mistrust and ill-feeling, something that was potently demonstrated by Abe’s visit to Yasukuni Shrine in 2013. That mistrust of Japan’s apparent moves towards normalization of its military forces is played out in the arena of this historical ill-feeling underlines how important the interpretation of history is in the bilateral relationship, even when considering contemporary issues. The territorial dispute appears equally unlikely to be wholly resolved any time soon, with the positions of both countries entrenched and apparently irreconcilable. The trawler incident in 2010 demonstrated how easily this issue can come to the fore and become a major stumbling block in improving Sino-Japanese relations. Furthermore, the nationalization and subsequent flare-up of tensions from 2012 onwards has shown how dangerous this issue is. However, both sides have ordinarily demonstrated the political resolve to prevent either of these two issues from spilling over into open conflict, and a return to military warfare seems highly unlikely, even if it is no longer entirely unthinkable. The strength of the economic relationship, while declining in relative importance to China, continues to grow and remains both a motivation for, as well as a method of, mitigating the undoubted tensions that do exist between the two powers.

China’s Island Disputes – A lot at Stake

Introduction

By 中国海监总队/China Marine Surveillance (中国海监总队/China Marine Surveillance) [Public domain], via Wikimedia Commons

A Chinese surveillance ship and a Japan Coast Guard vessel at close quarters

Among the numerous causes of friction between China and its neighbors, the continued failure to resolve a series of territorial disputes remains one of the most pressing. Threatening to destabilize the entire region, the disputed islands bring China into potential conflict with Vietnam, the Philippines, Malaysia and, most worryingly for regional security, Japan. Though virtually all of the islands are uninhabited and largely uninhabitable, they carry with them issues of military strategic importance as well as access to a potential wealth of natural resources. China formerly had land-based territorial disputes with each of the fourteen countries with which it shares a border but has worked hard to resolve these in a peaceful and frequently generous manner, accepting less than 50% of the disputed area in most cases. The only exceptions to this were with Russia, in which each side settled for precisely half of the disputed territory, and India, with whom several disputes are outstanding, complicated by the Tibet issue. The contrast with the maritime disputes could not be starker with almost no progress towards resolution in any of the disputes since the foundation of the PRC in 1949 and with the Chinese position seemingly utterly intransigent. Indeed, developments in recent years have seen a more assertive Chinese position causing serious friction and concern for regional stability. This seemingly belligerent stubbornness is rooted in a complex web of motivations that includes strategic considerations, access to natural resources and fish stocks, the psychological importance of national unification and territorial integrity, and a genuine sense of historical ownership.

Diaoyu/Senkaku Islands

Senkaku islands location map (senkaku) http://commons.wikimedia.org/wiki/File:Topographic15deg_N20E120.png Author: jackopoid

Map showing the location of the disputed islands

Perhaps China’s most talked about maritime dispute – certainly in recent times – is in the East China Sea, where it contends with Japan for the sovereignty of what it calls the Diaoyu islands, known to the Japanese as the Senkaku islands. The islands have occasionally been referred to in English as the Pinnacle Islands, but as this is a translation of the Japanese name it is normally not used unless expressing an opinion that the islands are Japanese territory. The rocky, uninhabited islands are located approximately 80 miles northeast of Taiwan and 250 miles west of Okinawa, an island over which there is no dispute and Japan’s most southerly prefecture.  The five islands in the group have a total combined area of just 2.7 square miles and do not have any infrastructure built on them. The dispute is complicated somewhat by Taiwan’s involvement, as it also claims the islands. However, this is not a challenge to China’s position as it considers the islands to be a part of the province of Taiwan, which is internationally recognized to be a part of China.

History

The islands are known to have been used by Chinese fishermen during the Ming Dynasty as shelter during storms, but were never permanently inhabited and their use by the Chinese appears to have come to an end at some time during the Qing Dynasty. Japanese historians argue that the islands were historically a part of the Ryukyu Kingdom, a small chain of islands that included Okinawa which operated as a relatively independent state until the late eighteenth century. However, there is evidence that shows the Ryukyu Kingdom itself acknowledged the islands to be a part of the Chinese realm, though this is disputed by some. By the time the Ryukyus were annexed by Japan in 1879 there was no mention of the Senkakus. The islands were re-discovered by a Japanese businessman named Koga in 1884, after which the Japanese surveyed the islands over a ten year period, before fully incorporating them into Japanese administration in 1895.

Respective Positions

The Chinese position on the sovereignty of the islands has two bases: a historical claim; and a geographical claim. The historical claim refers to the first established use of the islands as outlined above. From this perspective, since the islands were first discovered and then used on a frequent basis by the Chinese as early as the 14th century, there can be no dispute as to the original sovereignty of the islands. Given their geographical location it is entirely logical that they would be a part of the province of Taiwan. However, this province was ceded to Japan in 1895 after the First Sino-Japanese War ended with the Treaty of Shimonoseki that awarded Taiwan to the Japanese “in perpetuity”. Taiwan remained a colony of Japan until its defeat in the Second World War in August 1945, at which point the Potsdam and Cairo Declarations – both accepted by Japan as conditions of its surrender – decreed that Japan should return Taiwan to Chinese sovereignty. As the Diaoyu Islands are considered to have historically been part of Taiwan, they should be included in this. The second basis of China’s claim is somewhat tenuous in international law and refers to the nature of the East Asian continental shelf. China claims that the shelf is part of Chinese territory and extends out into the East China Sea, incorporating the Diaoyu Islands. Though it is true that the continental shelf is exceptional in its extension, it is worth noting that such a claim has never been used by any other country in the world, and there is little to suggest that it has any basis in law.

The Japanese position on the islands is based on a claim of “continuous occupation or administration”. From the Japanese perspective the uninhabited and entirely undeveloped islands were rediscovered in 1884 by Koga, and an appropriate survey conducted over the following decade. They were then incorporated into Okinawa Prefecture as sovereign Japanese territory. After Japan’s surrender in August 1945, the islands remained under the administration of the occupying US forces, who maintained control of Okinawa until 1972, a fully twenty years after handing back control of the Japanese mainland. For the Japanese, the Senkaku Islands were restored to Japanese sovereignty at this point and had not been separated from Okinawa Prefecture at any time since 1895.

Though China never acknowledged Japanese claims over the islands, it never challenged US administration of them during the almost three decades following the end of the war, though this is complicated by the presence on Taiwan of US allies the Kuomintang (Guomindang, KMT). However, it is notable that serious diplomatic noises surrounding the sovereignty issue only emerged after a UN report was released in 1968 suggesting that significant reserves of oil and gas may lie under the water surrounding the islands. Despite these noises, when the PRC and Japan normalized relations in 1972 the matter was shelved, as it was in 1978 during negotiations over the Treaty of Peace and Friendship, with Deng Xiaoping confidently declaring that “the next generation will be wiser”. Since then, no significant negotiation has taken place over the issue, with the Japanese exercising de facto control of the islands through regular patrols by the Japanese Coast Guard.

Modern Day Controversies

By Wuyouyuan (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

A Chinese poster showing the islands with superimposed Chinese flags signifying sovereignty

In response to Chinese claims over the islands, the Japan Youth Federation – a right wing group nationalist group with links to serious organized crime that seeks to promote a positive Japanese national identity and downplay Japan’s wartime atrocities – landed on the largest of the islands and erected a lighthouse, the first structure ever built on the islands. This was done without the consent of the Japanese government and China strongly objected to it as a provocation. The lighthouse has continued to be a source of controversy as members of the group have returned to the island periodically to conduct “maintenance”, frequently at times of increased tension over the issue. At the same time as building the lighthouse the group sought to address the problem of the islands being uninhabited, by leaving two (Japanese) goats behind. This symbolic gesture has had unintended but serious consequences for the island’s ecosystem; the single pair of goats, without any natural predators, has bred to a total in excess of 300, devastating the vegetation and bringing the Senkaku mole – an evolutionary distinct mammal found only on the island – to the brink of extinction.

A diplomatic spat between China and Japan was sparked in 1996 when the Japan Youth Federation returned to the islands to conduct maintenance on its lighthouse. However, what is notable about the controversy – which occurred in the wake of the Taiwan Strait Crisis that appeared to bring the region to the brink of military conflict – is that it was not publicized in China until it had been resolved. The People’s Daily – the most widely circulated newspaper in China that also functions as the CCP’s mouthpiece – did not report on the issue, even in pieces that criticized Japan over other issues. There was a clear desire in China not to provoke the public over the issue, and the matter was dealt with relatively swiftly at the diplomatic level.

The issue continued to be one of several sources of tension between China and Japan throughout the rest of the 1990s and into the 2000s, without sparking serious incident. It remained a matter of dispute that was brought up during virtually every bilateral meeting and no solution has ever appeared close but neither side had sought to change the status quo. There were minor sources of irritation, including the arrest of a Chinese fisherman near the islands in 2004, but he was swiftly released without charge by the Japanese who sought to play down the significance of the incident.

However, in 2010, the matter returned to centre stage in Sino-Japanese tension. In September of that year a Chinese fishing boat was spotted in what Japan considers to be its waters. A patrolling Japan Coast Guard (JCG) ship ordered it to leave the waters immediately, but the fishing boat instead changed course to head directly towards the Japanese ship. Though the Chinese side later disputed this version of events a video taken from the JCG vessel that was later leaked by a disgruntled employee clearly showed that the fishing boat intentionally rammed into the Japanese boat twice. At this point the entire crew was arrested, sparking a major diplomatic dispute between the two countries.

Though the rest crew was released almost immediately, the captain of the boat was detained for a total of 17 days, on possible charges under Japanese law. The Chinese response was vociferous, both at the governmental and societal levels, with strongly worded diplomatic protests and apparently spontaneous street demonstrations against Japan. There were reports that China had suspended exports of rare earths to Japan in response, though academic analysis has later disputed this version of events. A group of Japanese businessmen were also arrested in the aftermath of the boat captain’s detention, on seemingly spurious charges that appeared to be a tit-for-tat retaliation. The diplomatic standoff finally came to an end when Japan apparently blinked first, with the Chief Prosecutor announcing the release of the captain without charge on the grounds of “Japan’s national interests”, something that caused a debate over the legality of his actions within Japan. While this brought an end to this chapter of the dispute, it served to bring the islands to the forefront of Sino-Japanese tensions.

Japanese Nationalization

In 2012 a campaign Shintaro Ishihara, then the mayor of Tokyo and a right wing firebrand who had long campaigned for a tougher policy towards China, launch a campaign to nationalize the islands. The three largest islands had been in private ownership since Japan integrated them into its territory at the end of the eighteenth century. The family that held the rights to them had been keen to sell them on but was not willing to do so if there could be any threat to Japan’s sovereignty claims. As a result, Ishihara launched a bid to raise enough funds to buy the islands and vowed to take them under the umbrella of the Tokyo government. His plans also included the building of a harbor on the largest island, a move that would unquestionably have inflamed tensions with China and possibly have provoked a military response. When Ishihara’s campaign achieved its goal of raising sufficient funds, the national government decided it had no option but to move on the issue. The then-Prime Minister Yoshihiko Noda announced that the national government would purchase the islands and quickly struck an agreement with the family that owned them. This move was, without doubt, driven by a desire to lessen the tension with China as Ishihara’s plan was deemed highly provocative. Under the national government’s ownership no development of the islands would occur and the status quo would effectively be maintained. Noda clearly hoped that this move would be recognized by the Chinese and the response would be proportionate.

By 中国海监总队/China Marine Surveillance (中国海监总队/China Marine Surveillance) [Public domain], via Wikimedia Commons

Anti-Japan protest in Beijing in 2012

However, the nationalization of the islands proved to be a particularly hot topic in China and the response from Chinese society was the most serious that has been seen in any international issue in living memory. A series of scathing diplomatic attacks from the government served as a backdrop to widespread anti-Japanese protests across China. In total, 85 cities on the mainland witnessed large protests with many of these becoming violent. Japanese businesses and citizens were harassed, with even the ambassador’s car coming under attack in Beijing. Calls for boycotts of Japanese produce – a common response from nationalistic Chinese whenever a dispute with Japan occurs – appeared to have a greater effect than ever; in one bizarre demonstration of support for this idea a man set fire to his own Honda car in the middle of a Shanghai street. The economic relationship was demonstrably affected, with Japanese firms temporarily closing factories in China and laying off tens of thousands of workers. Sino-Japanese trade had previously been thought to be almost immune to the repeated spats between the two countries, but annual trade dropped by 4% in 2012. Two-way tourism figures fared even worse, with Chinese visitors to Japan down 33% in October 2012 compared with the previous year while the numbers of Japanese visitors to China fell by two thirds in the second half of 2012.

Since the nationalization China has stepped up “surveillance” of the areas surrounding the islands. Where once an unwritten agreement not to enter Japan’s de facto contiguous zone around the islands had kept the prospect of conflict to a bare minimum, China has since regularly flouted this norm. Though the incursions are frequently “Marine Surveillance” vessels rather than military ships, the possibility of conflict has been raised to its highest level since the two countries normalized relations in 1972. This was brought into sharp focus in December 2012 when a Chinese “Maritime Surveillance” plane entered the airspace of the islands, leading to the Japanese scrambling jets in response. A further escalation of the dispute in January 2013 occurred when the Japanese claimed that a Chinese PLAN frigate (a navy warship) had locked its radar onto a Japanese ship in the waters, suggesting that the first shots were about to be fired. Though China subsequently denied the incident the fact that such ships are now in frequent and close contact has significantly raised the possibility of a miscalculation that might trigger actual armed conflict between the two powers. The seriousness of the situation is heightened by a declaration from Hilary Clinton in January 2013 that the US’ joint security treaty with Japan covers the islands, thus obliging it to defend Japan if attacked by China. This raises the possibility of direct conflict between China and the US for the first time since the Korean War and is a stark reminder to all involved of the gravity of the situation.

In October 2013 China declared an Air Defense Identification Zone (ADIZ) above the East China Sea, including directly above the islands. This requires aircraft entering the zone – which is separate from China’s territorial airspace – to identify themselves to the Chinese authorities, log a flight path and retain open communications for the duration of the period of time in the zone. Although the zone is not unique – several of China’s neighbors have similar zones, including Japan – the sudden declaration and the more stringent requirements imposed by China have made this a controversial move that is clearly linked to the islands dispute. Aircraft from both Japan and the US have so far ignored the rules without serious consequence but the potential for miscalculation has clearly been raised even further by this development.

South China Sea Disputes

In addition to China’s dispute with Japan in the East China Sea, it has competing claims with several countries of Southeast Asia for islands and maritime rights. China’s famous “nine dashed line” details its claim to virtually every single island and rock in the South China Sea, stretching to within 50 miles of the mainlands of Malaysia and the Philippines despite being more than a thousand miles from China’s mainland in several instances. There are two main groups of islands within this vast area of sea claimed by the PRC: the Paracel Islands, which is disputed with Vietnam; and the Spratly Islands, which are wholly claimed by China, and partly claimed by each of Malaysia, the Philippines, Brunei, and Vietnam, with Indonesia also claiming maritime rights in the area without actually staking a claim to any territory. Additionally, there are disputes with the Philippines over Scarborough Shoal and Macclesfield Bank. As with the East China Sea, each of the disputes is complicated by matching claims from Taiwan which are based on the same justifications as the PRC.

The Paracels

The location of the disputed and uninhabited Paracels and Spratlys

Known as Xisha Qundao (West Sand Islands) in Chinese and Hoàng Sa (Yellow Sand) in Vietnamese, the Paracel Islands are located approximately 200 miles south of Hainan Island (China’s most southerly province) and a similar distance east of central Vietnam. The group is made up of more than 30 islands, islets, reefs and sandbanks. Their significance lies mostly in access to significant fishing stocks, though it is thought that oil and gas deposits may also be present.

From a Vietnamese perspective, the islands have been sovereign territory since the 15th century, when harvesting of sea produce was conducted on the islands. This claim is supported by some historical evidence in the form of records kept by several of the Vietnamese dynasties that detail continues use of the islands throughout the following centuries. The islands were claimed by France in the mid-19th century after the colonization of Indochina, and this claim met with no objection from China, though it is reasonable to consider that China was in something of a situation of turmoil itself at this time facing the prospect of colonization itself for the first time in its history. The French reasserted their claim to the islands in 1930, this time meeting with resistance from what was then the Republic of China. The islands were annexed by Japan in 1939 as its military rolled across East Asia. Following Japan’s defeat in 1945, the status of the islands was left ambiguous by the post-War treaties, until Japan itself completed an agreement with Vietnam for the return of sovereignty over the islands 1952. Though this was complicated further by the partition of Vietnam two years later, the present-day reunified Vietnam considers this treaty to be valid and still in force, demonstrating its continued sovereignty over the islands.

China’s claims actually predate those of Vietnam, with record from the Song Dynasty suggesting that some Chinese habitation of the islands occurred during this time. The islands were also included in maps produced during later dynasties, including the Yuan and the Ming. Though the use of the islands appears to have subsided during the Qing Dynasty, no Chinese government ever renounced the claims and the Republic of China formally objected to the French colonial government of Indochina building a weather station on the largest of the islands in 1932. Additional evidence of China’s claim, perversely, comes from the Japanese invasion during the Second Sino-Japanese War, during which the Japanese foreign ministry demanded that France desist from activities on the islands on the basis that they were part of the administrative prefecture of Hainan Island, then under Japanese occupation. After Japan’s defeat, China considers sovereignty to have been returned to it under the terms of Japan’s surrender.

In 1974, while North Vietnam and South Vietnam were still engaged in war with each other for control of the two countries, the south fought a battle with China for the Paracel Islands. The battle was sparked by attempts from the South Vietnamese navy to expel Chinese fishing vessels from the surrounding waters, leading China to take military action in support of its fishing rights. After a brief naval battle and aerial bombardment, the Chinese forces launched an amphibious assault on several of the islands that it had not previously occupied, securing a decisive victory that established a permanent military presence on the islands. The battle lasted only a couple of days and Vietnamese casualties were relatively small, with around 50 deaths and a similar number of injuries, but the result was highly significant in the dispute over the islands as it established Chinese de facto control of the archipelago. A recurrence of military activity in 1988 left a further 70 Vietnamese dead, though this incident is frequently dismissed as nothing more than a ‘skirmish’.

The dispute remains unresolved has been at the root of sporadic incidences of diplomatic difficulties between the two countries, usually sparked by disagreements over fishing rights. These spats have become more commonplace since China established a symbolic administrative region that incorporated the Paracels in 2007. In 2010 China announced plans to develop tourism to the islands in a move that the Vietnamese condemned as a “serious violation” of its sovereignty. A potentially serious flashpoint occurred in June 2011 when a Vietnamese oil survey ship was apparently rammed by a Chinese patrol vessel in waters close to Vietnam, seemingly outside of what even China considers to be its waters. Chinese military vessels have also detained Vietnamese fishermen on numerous occasions in recent years. For example, in March 2012 a total of 21 fishermen were arrested by Chinese patrol boats, after a fleet of around 100 Vietnamese boats entered what China considers to be its waters surrounding the islands. Though they were released a few weeks later the reaction sparked angry and violent protest against China in Vietnam, notably in the capital, Hanoi. Though both governments have sought to develop friendlier ties in many other areas of their relationship in recent years, the islands dispute remains a constant thorn in bilateral ties and a conduit for ugly nationalist sentiment in both countries.

In May 2014 China moved an oil rig from a part of the sea that was undisputed into an area that Vietnam considers to be its territorial waters. This sparked an angry response from both state and society in Vietnam with violent anti-Chinese protests breaking out across the country, resulting in several serious injuries to Chinese workers and the evacuation of hundreds of foreign workers (including many non-Chinese caught up in the protests). Though no direct military confrontation has followed, the dispute has taken Sino-Vietnamese relations to their lowest point for decades.

The Spratlys

The Spratly Islands are a group of around 750 islands, islets, reefs and sand banks, totaling a little over one square mile of actually land but spread out across in excess of 100,000 square miles of the South China Sea. They are largely uninhabited but several countries have succeeded in establishing military presences on some of the islands in their respective claims. Thus, 45 of the islands are home to military forces from China, Taiwan, Vietnam, the Philippines, and Malaysia. Brunei also claims one island but has not established a military presence on it. China refers to the islands as Nansha Qundao (South Sand Islands), and considers them to be part of the same symbolic administrative region as the Paracels. It is the only country (except for Taiwan, whose own claims overlap the PRC’s for historical reasons) to claim the entire archipelago, which includes islands that are within 50 miles of the mainlands of Malaysia and the Philippines but more than 1000 miles from China’s own mainland. The economic value of the island is questionable at best, with initial surveys suggesting that oil and gas may be present but in unknown quantities. However, from a strategic perspective, as well as for reasons of national pride and for access to fishing stocks, the islands retain a high level of importance to all parties in the dispute.

As with the Paracels, China’s claims rests on historical usage of the islands during dynastic times, stretching back to the Yuan Dynasty, while Vietnamese claims are also rooted in their own historical use and supported by the French colonization of the area that purported to include the archipelago in its empire. Claims from Malaysia, the Philippines and Brunei are more geographical than historical, with each citing the proximity of uninhabited and undeveloped islands to their own undisputed sovereign territory as justification for their claims. The dispute is complicated by the lack of native populations and the previous colonization of several of the competing countries in the claims.

The dispute has remained unresolved and, particularly in recent years, has led to heightened tension with potential for military conflict in the region. Indeed, in May 2011 it was reported that vessels from the Chinese navy (PLAN) had fired upon several Vietnamese ships in the region, including two oil survey ships and at least one fishing boat. The incident contributed to a serious deterioration of ties between the two nations during that time and sparked further angry anti-China protests in major Vietnamese cities. Around the same time the Philippines government began to express concerns about China’s increased activity around the islands and openly warned the visiting Chinese Defense Minister, Liang Guanglie, that his country “risked sparking an arms race” in the region if it did not seek to ease tensions swiftly.

Scarborough Shoal and Macclesfield Bank

Macclesfield Bank: a tiny, uninhabitable ridge in the South China Sea

Outside of the Paracels and the Spratlys, the South China Sea is also home to Scarborough Shoal and Macclesfield Bank which are disputed between China and the Philippines. Both are significant for strategic reasons and for the implications that any acknowledged sovereignty claim might have on other disputes in the Spratly Islands.

Macclesfield Bank, known as Zhongsha Qundao (Central Sand Islands) is a completely submerged chain of reefs that does not qualify as territory under international law since it cannot be inhabited by human beings. Nevertheless, both the PRC and Taiwan claim it to be part of Chinese territory. The position of the Philippines government is less clear; in 2012 it objected to Chinese activity in the area but has never lodged a formal claim to sovereignty. In any case, since the atoll is entirely submerged it is not clear how such a claim would be made and what effect it could have.

Scarborough Shoal, known in Chinese as Nanyan Dao (South Cave Island) is actually a group of small islets or rocks, all uninhabited. Its sovereignty is disputed between China and the Philippine (as well as Taiwan) in the same way that the Spratly Islands are, though are considered geographically separate. Claims from all sides are somewhat patchy in their historical evidence, particularly as there is no evidence of inhabitation on any of the rocks at any point in history. Nevertheless, it remains a sore point in bilateral relations as both China and the Philippines seek access to fishing stocks and potentially other natural resources.

The dispute came to international attention in 2012 when eight Chinese fishing boats were apprehended by a Filipino naval vessel which accused the crews of illegally catching sharks and taking coral. China sent in two “Marine Surveillance” ships to block the Filipinos from taking further action and a standoff ensued, leading to heightened diplomatic tensions between the two countries and tit-for-tat protests in major cities. Strong winds ultimately led to the Philippines having to temporarily withdraw its presence, after which Chinese surveillance ships set up a naval blockade, preventing any further access to the shoal. Though no direct conflict occurred, the situation is ongoing with the blockade remaining in place to the chagrin of the Philippines.

Trends

It is quite clear that an expansion of China’s naval capabilities achieved through its rapid military modernization has allowed it to become more assertive in its various maritime disputes with its neighbors. It represents a significant departure from the policy that was pursued with regard to the various land disputes that China previously had with all of its neighbors, during which it sought to resolve them rapidly and generously, gaining much appreciation in doing so. This change of stance over the maritime disputes has had several implications for the region as a whole as well as for China itself.

Firstly, it has led to a worsening in bilateral ties with several of China’s neighbors. The most serious of these is the ongoing dispute with Japan that has taken Sino-Japanese relations to arguably their lowest point since the Second Sino-Japanese War. This has inflamed nationalist tensions on both side and had an impact on the economic relationship as well as threatening military conflict. The room for compromise on this issue is severely limited for both sides and it will remain a significant source of tension between the two regional powers. Similarly, the relationships with Vietnam and the Philippines have suffered and both of these countries have witnessed anti-China protests in recent years as a result of the maritime disputes.

Secondly, China’s adversaries in the region have sought to strengthen their ties with the US in order to further protect themselves against what they see as a more assertive China. This will provide a challenge for China as it has previously sought to mitigate US power in the region. What China believes to be US attempts to encircle it and limit Chinese growth can only be served by its neighbors developing closer ties with the US and this may, ultimately, be the most significant cost to China of its policy shift. Hilary Clinton’s declaration in September 2012 that the maintaining freedom of navigation in the South China Sea is a matter of “national interest” to the US was a stark illustration to China that its change in stance over the area has consequences in this regard.

Thirdly, Chinese ‘soft power’ in Southeast Asia has suffered greatly because of its stance over the South China Sea. Having previously worked hard to project an image of a responsible power in the region, such damage has quickly undone decades of policies aimed at convincing China’s neighbors that its rise would be peaceful and not threatening. It is not clear how this can be rectified if it continues with the same pattern of hard-line policies in this area.

Finally, despite these costs to China’s international position and various bilateral relationships, its strategic position has been strengthened in various parts of the South and East China Seas. It now controls, or has access to, several positions that previously it did not. From a purely traditional military point of view, this can be viewed as a success and a gain in the balance of power in the region. Whether this will compensate adequately for the increased attention that the US will now pay to the region, the damaged bilateral relationships, and China’s deteriorating image in the region, remains to be seen.

History Articles

China and Southeast Asia: Waking up the Neighbors

Introduction

shutterstock_15960148 resizedIf China is to be the world’s next superpower, then Southeast Asia is its ‘backyard’, just as Central Asia was to Russia during its superpower era, and Central America is to the US. It is a diverse region made up of countries of various sizes, political systems, and levels of development, with annual GDP per capita ranging from a little over $1,000 (Myanmar and Laos) to $50,000 (Singapore). China competes for influence in this area both with its main regional rivals – Japan and India – as well as its main global competitor – the US. China’s successes in gaining trust and deepening economic ties with Southeast Asia have been hampered by a complex shared history that both facilitates cultural commonality, and fosters mistrust of the intentions of a powerful, hegemonic China. The relationship is also challenged by historically-rooted territorial disputes that occasionally flare up, threatening peace in the region.

In recent years, China has made many efforts to gain Southeast Asia’s trust, and to shutterstock_93345997 resizedprogress its economic and political ties with the region. A key form of engagement with the countries of Southeast Asia has been through the Association of Southeast Asian Nations (ASEAN). Founded in 1967, ASEAN consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam (the geographical term ‘Southeast Asia’ is generally considered to include these countries as well as Timor L’Este, which has held tentative discussions about joining the group). ASEAN states its main purpose as being “to accelerate economic growth, social progress, and cultural development in the region” as well as “to promote regional peace and stability”. Although it has worked towards the development of a cultural Southeast Asian identity in recent years, most would agree that its greatest achievements have been in the field of economic cooperation and regional stability. While Indonesia is the giant of the group, it has been careful not to dominate the organization. ASEAN prides itself on conducting its business through the ‘ASEAN way’, which involves building consensus among all members and maintaining a commitment to mutual non-interference. ASEAN gives the less powerful countries the benefit of collective bargaining, which serves to balance to some extent the relationship of these countries with China. Settling issues of mutual interest within the ASEAN framework has eased many tensions between member countries and has promoted overall cooperation within the region. Despite real successes with China, ASEAN itself has not been a silver bullet and many difficult issues remain between China and the region. In addition to ASEAN, engagement between the countries of Southeast Asia and China has also been facilitated through the large Chinese emigrant populations in most of the Southeast Asia countries, many of whom maintain strong business and cultural ties with their ancestral home.

Historical Context

 

Throughout much of China’s dynastic history it maintained regional hegemony in East Asia (East Asia refers to the territory of what today is Southeast Asia, China, the two Koreas, and Japan) by instigating a ‘tributary system’. Regional East Asian rulers would seek the patronage of the Chinese emperor of the day in order both to legitimize their own rule and to ensure that peace was maintained with their powerful neighbor. This system had a profound effect on many parts of Southeast Asia, particularly the areas that are now Vietnam, Cambodia, and Laos, where the cultural influence of China is palpable. This is evidenced, for example, by the presence of Chinese characters on many older buildings although they are no longer used in the writing systems in these countries and by the pervasion of Confucian values in the respective societies. Equally important as the political ties was the trade between China and many of the countries of Southeast Asia. Chinese merchants, following trade routes, gradually immigrated to various Southeast Asian countries, where they settled and assimilated. Thus, every single country in Southeast Asia now has significant Chinese communities, many of whom maintain strong cultural links to their ancestral home. This is especially noticeable in Singapore, Malaysia, and Indonesia but can be observed across the region.

The legacies of this history are complex. The cultural links that have been created between many parts of Southeast Asia and China, both in terms of shared norms and values and because of the ethnic Chinese still living in these countries (referred to in Chinese as huaqiao, which literally means ‘Chinese bridges’), provide a huge opportunity for China to extend its influence throughout the region. In recent years, China has sought to exploit this both through economic integration and by the development of ‘soft power’. For example, China has promoted the study of Chinese language and culture by bestowing scholarships for poorer students to come to China to study. While this program to promote the teaching of Chinese culture and language is worldwide, China has concentrated its main focus on Southeast Asia. Specifically, a large proportion of the recipients are huaqiao. This awarding of scholarships to ethnic Chinese has been controversial, reminding some in the region of a Mao-era tendency to interfere in countries with large ethnic Chinese communities on the premise that these populations remained, in effect, part of the Chinese nation. Such interference was a source of serious friction with both Indonesia and Malaysia in the 1950s and 1960s. Another legacy of this shared and complex history is the issue of territory. Although China has now resolved virtually all of its outstanding land border disputes (only those with India and Bhutan remain), it still has numerous disputes with several countries in Southeast Asia over sovereignty of islands in the South China Sea.

A particularly significant event in China’s relations with the region occurred in 1979 when Deng Xiaoping gave the order for the PLA to invade Vietnam. The invasion was in response to the Vietnamese occupation of Cambodia after defeating the Khmer Rouge, a Chinese ally, as well as a reaction to internal Vietnamese policies that discriminated against ethnic Chinese and had resulted in a flood of refugees into China. Deng announced, during a trip to America, that China would “teach Vietnam a lesson”. The war was brief but bloody, lasting only three weeks but resulting in the deaths of tens of thousands. Some Western academics have put Chinese casualties as high as 20,000 though this figure is disputed by China, while Vietnam claims 10,000 civilians were killed (it gives no figures for military casualties but it is widely believed that these number in the region of 50,000). Chinese forces withdrew from all areas that had been briefly occupied, claiming success in their mission, but there is no question that they suffered much heavier losses than they had envisioned and that China’s reputation suffered tremendous harm as a result. The damage was both in terms of its perceived relative power, as well as to its image as a trustworthy and peaceful neighbor. Vietnamese perceptions of the war are of another successful repulsion of a foreign invasion, following soon on from the defeats of both the Americans and the French.

Territorial Disputes

The most serious political and security issue that exists between the nations of Southeast Asia and China is the continued failure to resolve to numerous territorial disputes. By far the most grave of the disputes is that of the Spratley Islands, which are situated in the South China Sea close to the Philippines and the northern coast of Malaysia. The PRC claims sovereignty over the entire archipelago of more than 30,000 largely uninhabited islands that constitute the Spratleys. However, Brunei, the Philippines, Vietnam, Malaysia, and Taiwan all claim some of this area. To complicate matters further, some of these claims are overlapping and so there is no unified Southeast Asian position from which to argue with China. In order to protect their claims, military installations from all the claimants, except for Brunei, are stationed within the archipelago, making the area one that is fraught with multilateral tensions. Although all countries are rhetorically committed to resolving the dispute peacefully, the presence of so many different militaries means that low-level conflict from time to time is almost inevitable. This is particularly true with regard to the two largest presences, China and Vietnam. For example, several Vietnamese fishing boats were captured in 2007 in an area that is claimed by both countries. In May 2011, there were reports that Chinese patrol boats had escorted a Chinese fishing boat when it rammed a Vietnamese survey ship in the area. The other major dispute is over the Paracel Islands, a chain of around 30 islets roughly equidistant from China’s Hainan Island and the east coast of Viet Nam. This dispute is largely a bilateral one, between China and Viet Nam, although Taiwan also has a claim. The islands were occupied by both Chinese and Vietnamese forces until battle in 1974 which resulted in control over the entire archipelago being taken by the PRC. Viet Nam, however, has never renounced its claim to the islands and sporadic incidents involving fishing boats in the area have continued. Two other disputes, both with the Philippines, persist over two small groups of islets and this spilled over in early 2012 when Chinese patrol boats prevented Philippines police patrols from boarding Chinese fishing boats in the region. A stand-off between the two nations ensued that escalated tensions in the region, leading to anti-Chinese protests in Manila. Though the situation appeared to be resolved in June 2012, the withdrawal of all concerned may have had more to do with the coming typhoons than any diplomatic breakthrough. Certainly this issue has not yet gone away for good.

2014 brought another serious outbreak, but this time with Vietnam. In May 2014 China moved an oil rig from a part of the sea that was undisputed into an area that Vietnam considers to be its territorial waters. This sparked an angry response from both state and society in Vietnam with violent anti-Chinese protests breaking out across the country, resulting in several serious injuries to Chinese workers and the evacuation of hundreds of foreign workers (including many non-Chinese caught up in the protests). Though no direct military confrontation has followed, the dispute has taken Sino-Vietnamese relations to their lowest point for decades.

shutterstock_42598996The importance of the disputed islands is threefold. Firstly, the islands are of strategic importance militarily to China as its strives to increase its naval projection, especially given their ideal location close to some of the world’s busiest shipping lanes. Secondly, it is widely believed (though not conclusively proven) that significant resources of gas and oil lie within the EEZs (Exclusive Economic Zones) that would accompany recognized sovereignty over the islands. Finally, the issue of territorial integrity is of critical importance to Chinese national identity and the legitimacy of the government, meaning that nationalists in the country would not tolerate acquiescence on any of the disputes. A combination of all three of these reasons has seen China become increasingly active in the area over recent years. This has not gone unnoticed in those countries that also claim the islands and Southeast Asian states have responded by seeking the protection of other powers, most notably through closer ties with the US. In 2010, US Secretary of State Hillary Clinton declared that the South China Sea was of “national interest” to the US, sparking an angry response from China. In the same year, cities across Vietnam saw large scale anti-China demonstrations that evidenced the damage done to China’s soft power initiative in the region. China is now facing a choice of maintaining an inflexible stance about the islands, risking further harm to its hopes of regional leadership and even potential conflict with the US, or backing away, risking upsetting its domestic audience. It is a tough balancing act and is complicated by the competing policy-makers within China. A successful charm offensive launched by the Chinese around the turn of the millennium to woo its Southeast Asian neighbors and convince them of the benign intent behind China’s rise has been wholeheartedly undermined by what appears to a bullying and militaristic tendency with regard to the territorial disputes, the key issue in China’s relations with the friends it sought. A more coherent policy towards these countries would be beneficial for all concerned.

ASEAN

The ten-member Association of Southeast Asian Nations (ASEAN) has developed into one of the most successful regional organizations in the world, arguably second only to the EU in terms of its coherence, levels of cooperation and weight in the international arena. Formed in 1967, ironically as a foil against the spread of communism in Asia, its five founding members were Indonesia, Malaysia, the Philippines, Singapore and Thailand. Its success in terms of promoting economic cooperation and development among its members led to applications from other states to join. The end of the Cold War allowed for even those states against which the alliance had originally been aimed to become full members and the organization now incorporates the whole of Southeast Asia, with the exception of Timor L’Este. While China is not a member, it, uniquely in East Asia, recognized from an early stage both the importance of the institution and the need for its own engagement with it. Specifically, China spotted a double opportunity with regard to Southeast Asia, and ASEAN proved to be the vehicle through which it could exploit it. The two aspects of the opportunity that China seeks to exploit are: the development of economic growth and integration; and the promotion of its ‘soft power’ in a region it considers to be its own ‘backyard’.

The creation of ASEAN+1 (which includes China) and ASEAN+3 (which includes China, South Korea and Japan) shows how China has stolen a march on its East Asian rivals in shutterstock_112693318 resizedgaining leverage with the Southeast Asian states. That there is a forum which is basically dedicated to China-ASEAN relations, in which other states have no part, as well as a forum dedicated to ASEAN-East Asia relations, in which China still has a key role, shows how it has positioned itself as a key player in this process of ASEAN-centered regionalization. Despite interest from both Japan and South Korea in increasing trade ties with Southeast Asia, it was China that managed to secure a Free Trade Agreement with ASEAN, which came into force on January 1st 2010. Theoretically, this created the largest free trade area in the world by population (1.9 billion people), though it ranks third in terms of actual volumes of trade. There are also many more exemptions than one might ordinarily expect in such an agreement. Each country lists dozens of areas where tariffs may continue, and four ASEAN countries (Laos, Vietnam, Cambodia, and Myanmar) are completely exempt until 2015. It should also be noted that a similar, though less extensive, agreement between ASEAN and India came into force on the same day. Nevertheless, the establishment of the agreement represents a public relations coup for China and the economic benefits for all involved should not be underestimated. By December 2010, China-ASEAN trade reportedly increased by almost 40% and two-way FDI topped $10 billion, with two thirds of that figure flowing into China. The slated 2015 opening of high-speed rail links between mainland Southeast Asia and China, linking the southwest of China with Laos and part of China’s enormous and ambitious high speed rail network project, should increase integration even further.

China has also involved itself in the ASEAN Regional Forum (ARF) that is designed to promote security dialogues and confidence building between states around the Asia Pacific region. The forum involves 27 members, including all ASEAN members, China, Japanthe USthe EU and every other major actor in the region – excluding, at China’s behest, Taiwan. It is through this forum that China has sought to ease the fears of its smaller neighbors over its own rise and expansion of power, particularly with regard to its military expansion and the previously mentioned maritime territorial disputes. Generally, China balks at being pinned down by any broad-spectrum ASEAN-China negotiations, preferring instead to deal bilaterally to solve issues between countries. Nevertheless, it has agreed in principle to a ‘Declaration on the Conduct of Parties’ which would commit all signatories to peaceful resolution of these disputes. While this is not yet signed and sealed, China’s agreement has helped ease some tensions with its Southeast Asian neighbors.

Water

shutterstock_11779609 resizedThe Mekong, a major river that runs through Myanmar, Laos, Cambodia and Vietnam, has its source in China, making relations with it of potentially critical importance to these nations. China considers developing large-scale hydropower to be critical to meeting its future energy needs and thus its national security. The Chinese government has thus worked to keep these resources under its control, and has been unwilling to sign any comprehensive water sharing agreement with downstream riparian nations or to join any river basin associations such as the Mekong River Commission, which was established in 1995 “to promote and coordinate sustainable management and development of water and related resources for the countries’ mutual benefit and the people’s well-being.” It is also one of only three countries that voted against the 1997 UN Convention on the Law of Non-Navigational Water Courses which lays down rules on the shared resources of international watercourses. Additionally, China has been reticent to share information on water levels and flows with its downstream neighbors once its dams are operational. China is now impounding water for the large reservoir behind the Xiaowan dam on the upper Mekong, for instance, which some believe exacerbated 2010 drought conditions downstream. Only after the drought became severe, and China came under significant pressure from the Mekong River Commission, did it start to provide information on daily water flows from its dam cascade.

China has tried to offset complaints and the potential creation of anti-Chinese alliances by its downstream neighbors by using trade and development incentives – developing the Southeast Asian electricity grid and building sewage and road infrastructure in Cambodia for example – to weaken their ability to challenge China’s dam-building activities. It also engages in a public discourse that not only advocates the importance of hydro-power to its national security, but emphasizes exclusively the benefits of the dams without considering how they will disrupt downstream ecosystems and water access. Specifically, it talks about flood control, reduction of Chinese CO2 emissions, and the benefits of improved navigation and water flow during the dry season. In many cases, it is also helping to fund and construct dams downriver in places such as Vietnam, Laos, Myanmar and Cambodia. Their own independent construction of dams with Chinese financing has weakened downstream riparian neighbors’ ability to protest the ecological destruction that China’s upstream dams are causing.

Future Trends

China’s relationship with Southeast Asia is one of its key foreign policy priorities. If it is to establish itself as a global power then it must first be a genuine regional leader. It can only achieve this through engagement with the ASEAN countries at both the economic and political levels. It has shown a clear understanding of the importance of this through its engagement with the ASEAN institutions in which it was ahead of the competition, specifically Japan and South Korea. It can be expected that China will continue to increase its ties with ASEAN in the future.

The increased economic integration with the region has been facilitated both by this willingness to become involved in ASEAN’s structures and also by the myriad cultural ties that bind China to Southeast Asia. It seems likely that both of these factors will continue to contribute a close relationship and this, on the face of it, appears to be a positive development in China’s quest for acceptance as a regional leader and, therefore, a global power.

However, the continuing territorial disputes represent a major threat to China’s goal of shutterstock_78574054 resizedattaining regional leadership. China’s national interests will likely dictate that its claims over the islands continue to be non-negotiable; driven by both strategic concerns and the demands of domestic nationalists it would be virtually unthinkable for China to acquiesce on any of its claims now. One unwelcome side-effect of this from China’s perspective is that the developments have driven several Southeast Asian countries to renew and strengthen their ties with the US. Notable among these have been Vietnam and the Philippines. Such close ties are clearly not in the interests of China’s own national security, nor its ambition to be the regional hegemon. While the recent moves within the ASEAN framework to establish formalized dialogue on the issue are welcome and positive, the prospect of a compromised resolution seems remote and, particularly in the case of the islands, China continues to insist that each individual dispute be resolved bilaterally. With China continuing to expand its naval projection-capabilities in the area, the prospect of increased hostility is very real. Indeed, China’s increased tendency to flex its muscles in this area over the last few years has undone much of the good work it had done in promoting a positive image of itself in the Southeast Asian countries. This schizophrenic policy toward the region may do further harm in the long run as smaller countries seek the protection of a larger and more predictable ally in the form of the United States, a result that would be counter to all of China’s perceived interests. This risk of hostility will continue to cast a shadow over relations between China and the Southeast Asian region.

Sino-Indian Relations: Realists and Rivals

Introduction

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The two most populous nations in the world, China and India share a disputed border, are both on the rise economically and politically, and both possess fearsome nuclear arsenals. Their rapidly changing economic and diplomatic positions have put not only their relationships in the wider world in flux, but they have also created a shifting engagement with each other. While China and India’s ever-closer economic ties have created a degree of optimism that their developing relationship will be harmonious and productive, territorial disputes, competition for spheres of influence within South Asia, and increasing friction over water rights will continue to significantly challenge their relationship.

Historical Ties

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Throughout ancient times, the link between India and China has been limited; theHimalaya formed a formidable natural barrier between the two civilizations. The most significant Indian contribution to Chinese culture was the transmission of Buddhism into China during China’s Age of Division 220-618 CE. Although the exact time and manner of Buddhism’s spread to China is still debated, it is likely that it made its way to China over the Silk Road, following merchants engaging in trade between the empires. Chinese scholars and monks also travelled to India to study Buddhism and to translate its scriptures. The most famous of these monks was Xuanzang, whose travels to and seventeen year stay in India were fictionally immortalized in the Chinese story, “Journey to the West”, considered one of the four great classics of Chinese literature.

In the modern era, with India colonized by the British, exports of opium to the Chinese mainland eventually led to the two Opium Wars of 1839-1842 and 1856-1860 between Britain and the Qing Dynasty of the time, though the involvement of what we now think of as India was incredibly limited, as it was a colony of Britain at the time. The post-Second World War period was a time of dramatic change for both countries. India was granted its independence from Britain in August 1947. The process of India’s independence was complicated by its separation from Pakistan which the British enacted immediately before granting independence to both nations as separate entities. Violence followed between the two new countries. Indeed, more than six decades after their separation, India and Pakistan remain at odds on many issues. Similarly, in China, violence ensued until the People’s Republic of China was founded in 1949 as Chiang Kai-shek’s Nationalists, and Mao Zedong’s Communists fought for control of the country. This meant that two giant new nations, both with extensive territories and massive populations, both recovering from differing forms of colonialism and struggling to find their place in the new world order, were created within a very short space of time. Despite their very long histories as civilizations, China and India are thus relatively new nation states. Their early dealings with each other have reflected their struggles to adjust to their relatively new country status and their efforts to find their place in the post WWII international order.

One early contribution that the Sino-Indian bilateral relationship made to wider international relations was the 1954 agreement in which was stated the “five principles of peaceful coexistence”. These principles were agreed as part of a treaty relating to Indian trade with Tibet, over which China had regained suzerainty. The five principles became both the founding principles of the Non-Aligned Movement (NAM) – a grouping of countries that sought to distance themselves from the Cold War by refusing to align with either superpower – and the cornerstone of China’s foreign policy, at least rhetorically. The five principles were: mutual respect for territorial integrity and national sovereignty; mutual non-aggression; mutual non-interference in the other’s internal affairs; equality and mutual benefit; and peaceful coexistence. At the heart of these principles is the agreement not to infringe the sovereignty of another country. Yet, despite their mutual commitment to these principles, within just a few years China and India were at war with each other.

The 1962 Border War

Following the 1959 Tibetan uprising – which was repressed by the Chinese military and resulted in the Dalai Lama’s fleeing into exile in India – there were several skirmishes between Chinese and Indian troops along the border. The border had never been successfully demarcated between the nations of China and India. An agreement reached in 1913 over the border between British India and Tibet – at the time conducting affairs as a pseudo-independent nation following the breakup of the Qing Dynasty – has been consistently rejected by the PRC, despite the apparent presence of Chinese representatives at the negotiations. China refuses to acknowledge any agreement made with the Tibetan authorities as it declines to recognize that Tibet had any level of suzerainty in this period of history. Interestingly, China’s refusal to recognize this agreement has some validity as it was, in fact, in breach of the Anglo-Russian Entente. Signed in 1907, but annulled in 1922, it stated that all dealings with Tibet must be conducted through the Chinese authorities in Beijing.

In October 1962 China invaded Aksai Chin and Arunchal Pradesh, the two largest portions of disputed territory over which it claimed sovereignty, but which were occupied by the Indians at the time. The simultaneous invasions were over a thousand of miles apart. The war lasted precisely one month, with the Chinese winning a military victory and successfully occupying much of the disputed areas. However, once military superiority had been established, a ceasefire was called and the Chinese unilaterally withdrew from all the territory they had gained in the offensive. While China’s real reasons for unilaterally withdrawing and ending hostilities are still debated, it is likely that a key reason for their retreat was the prospect of US involvement in the conflict, which raised concerns in China of an unwanted and unnecessary war with the superpower. Premier Zhou Enlai insisted that the withdrawal was a signal of good faith and that China had always wished to resolve the dispute peacefully.

The casualties in the war were relatively small, with an estimated 2000 Indians and more than 700 Chinese troops thought to have been killed. However, the consequences for the relationship and the region as a whole were extensive. While the Chinese succeeded in demonstrating their military superiority over their Indian rivals, the invasion harmed their international image and fed the belief in the West that China was a belligerent power intent on using aggressive means to expand its territory and influence. The lesson learned by India was that its military was woefully underprepared and wholly inadequate for purposes of self-defense. It therefore set about wholesale modernization of its military capabilities.

Territorial Issues

 

Territorial disputes are probably the greatest issue of difficulty between China and India. The disputes involve ten separate portions of territory, though several of these are tiny. There are two particularly significant areas: the more than 60,000 square km – around three quarters – of what India, and most other countries in the world, consider to be the state of Arunachal Pradesh; and the 37,000 square km Chinese-administered Aksai Chin, to the west of Nepal. It was these two areas over which the 1962 war was fought. At the time the Arunachal Pradesh was sparsely populated, but is now home to around one million Indian citizens. Since the 1962 war there have been many skirmishes along the disputed area, most notably in 1967 and 1987.

Given the size of the larger territories under dispute, it is politically difficult for either country to concede the territory to the other. This is especially true in the case of Arunachal Pradesh, which would be tantamount to the the Indian government effectively giving away the majority of an established Indian state. The other major disputed area, Aksai Chin, is considered by India to be a part of Kashmir and therefore complicates the matter further, given that India is already contesting Kashmir with Pakistan. Certainly, no solution to the current impasse appears imminent and the failure of the two great powers to resolve this remains a constant thorn in the side of diplomatic relations of the two. With that noted there has been some limited success in reaching agreement over the Indian state of Sikkim; initially claimed by both India and China but effectively operating as an independent state, Sikkim voted to join the Indian Federation in 1975. China originally refused to recognize this and continued to display Sikkim as a separate state on maps produced in the PRC. In 2004, it finally accepted it as an Indian state, although it did so with little fanfare.

As with most territorial disputes around the world the problem is exacerbated by nationalists on either side, who are prone to react to even the slightest provocation. Though nationalist responses in China are not as prominent as those that are directed against Japan or the US from time to time, India has emerged as a target for outpourings of nationalist sentiment, particularly over the issue of the disputed territory. Simon Shen, an academic who specializes in Chinese online nationalism, has identified that China’s online nationalists have turned their attention to India in recent years and use the government’s reaction to any perceived provocation as something of a litmus test. India also has its share of hotheaded protesters who make themselves heard whenever China acts in ways considered to infringe on India’s sovereignty over these areas.

Tibet

For historical, religious, cultural and geographical reasons, India continues to play a role in the Tibet issue. Homeland to the Tibetan people, and located on the high plateau of the north-eastern Himalaya, Tibet was unified in the 7th century, but then fractured into various territories which have since been controlled at various times by Tibetans, theDaniel J. Rao / Shutterstock.com Mongols and the Chinese. Tibet has been part of the People’s Republic of China since 1951, though full control by Beijing was only established following a military advance into the region in 1959. While China’s sovereignty over Tibet is accepted by the international community, its continued rule there remains controversial with the Dalai Lama continuing to campaign internationally for the Tibetan people to be allowed greater autonomy. Though China insists that the Tibet issue is a purely domestic matter in which no other country must interfere, India is inescapably intertwined in the problem. This is, primarily due to the fact that when the PLA rolled into Tibet in 1959, the Dalai Lama fled to India where he was given asylum, and allowed to establish the Tibetan “government in exile” – in the northern Indian town of Dharamsala. There have certainly been times since 1959 when the Indian government has wished it could bring an end to its own involvement in order to ease its strained relationship with China over this issue, but the Dalai Lama’s successful international promotion of the Tibetan cause has made this an impossibility, at least while he remains alive. For its part, China continues to raise this matter with Indian leaders, particularly whenever Tibetan refugees flee across the border to seek asylum there.

Competition for Water Resources

Tibet is also relevant to Sino-Indian relations as it is the source of the Brahmaputra River which provides significant water and power resources for Bangladesh and India. To take advantage of Tibet’s vast hydro power, China is planning a series of dams on the various transnational rivers that originate there. One of its proposed mega-dam projects is on the Brahmaputra, where it does a big U-turn in the world’s deepest canyon before entering India, close to one of the borders disputed by the two countries. This bend on the Brahmaputra is considered to be one of the world’s largest concentrations of river energy on earth. This mega-dam at the Brahmaputra is just one of what is estimated to be as many 28 dams on the Brahmaputra that are either planned, completed or under discussion by China. While China denies it, some Indian scientists also fear that China might also be planning to divert 200 billion cubic meters of water a year from the Brahmaputra to the Yellow River and other Chinese rivers.

China’s damming of the Brahmaputra puts control of a key source of Indian water into Chinese hands. More than 185 million people in north-eastern India and Bangladesh depend on the Brahmaputra. In the Indian state of Assam, 80 per cent agriculture relies on water from the river. Damming also affects a river’s ecosystem, altering silt and nutrient flows that risk impacting India’s downstream fertility and fisheries. Additionally, India derives significant power from its own hydroelectric projects on the river and its tributaries. The efficacy of these dams could be affected if China significantly alters the river’s flow volumes

Competition for Influence

As large and now rising nations, China and India have competed for and will continue to compete for influence in Asia and abroad. One keen area of competition is in Nepal and Myanmar. There is a difference in motive for the two of these countries. Nepal is considered to be a buffer state between the two powers, so that influence and access within Nepal is a strategic priority for both China and India. In any potential conflict between the two countries, Nepal would have clear tactical importance. Myanmar, on the other hand, is important to both countries as a source of natural resources, particularly natural gas. To seek influence in Nepal and Myanmar, China and India provide both countries with badly needed infrastructural investment; both Nepal and Myanmar have some of the worst infrastructure in the world. China in particular has been focused on building crucial road links throughout Nepal and into China, boosting trade and enhancing ties between the two countries.

While Nepal and Myanmar are important considerations, the relationship with Pakistan is potentially explosive. China has been Pakistan’s long term ally, while Pakistan remains India’s greatest foe, a consequence of the fact that most Indians opposed Pakistan’s separation from India before independence. During the Sino-Indian 1962 border war, Pakistan saw an opportunity to develop a strategic relationship with a large neighbor that would help to balance against what it perceived as the threat of Indian invasion. For its part, China sees its relationship with Pakistan as a way to offset what it believes to be a US strategy to contain China, which the US employs by forming strategic partnerships with significant powers surrounding China, revolving around the axis of Japan, Australia and India. There is unquestionably some truth in this analysis of US intentions, and India’s position within this alliance system is very important. The continuance of friendly relations with Pakistan is one way China works to counter this US strategy, though this has been complicated over recent years by the US-Pakistan alliance that formed in the wake of the 9/11 attacks. China’s engagement with Pakistan involves it in India’s most prickly international issue, Kashmir, which in turn causes further friction with India at both the government and the societal levels.

China and India are also now beginning to come into direct competition for influence and access to resources in Africa. China’s engagement with Africa has increased significantly in the last two decades as it looks to Africa both as a source of raw materials and as a market for its goods. India’s foray into Africa is still in its early stages, but it is already clear that both countries are pursuing differing strategies within the region. India’s investment strategy has been led by the private sector, where China’s incursion into Africa has been led by large SOEs and government ODA seeking access to Africa’s raw materials such as its oil and timber. Indian multinational companies are seeking to penetrate African markets by exploiting the comparative advantage of a significant Indian diaspora on the continent, as well as the ability of its nationals to speak English. That said, as competition for the continent increases, India’s government seems increasingly willing to engage to secure its competitive position. In 2011 for instance, Manmohan Singh, India’s Prime Minister, announced a three year aid package to Africa worth $5 billion. While significant, it is still dwarfed by Chinese aid that currently tops $20 billion per annum. As the China and India continue their rapid development, this competition for access to Africa’s resources and markets is likely to increase in the future though, for now at least, China appears better placed to take advantage.

Bilateral Trade

Though bilateral trade is not as large as one might expect given the sizes of the two nations, it offers one of the best chances to promote a cooperative coexistence between the two Asian giants. China is already India’s largest trading partner and in 2011 bilateral trade topped $74 billion, though this fell back slightly in 2012 to $66 billion. The 2012 reduction in trade was driven almost entirely by a 20% drop in Indian exports to China, with the trade deficit now $29 billion. Total bilateral trade is projected to reach $100 billion by 2015 with potential for even faster growth after that.

China does not offer India economic complementarity in the way that it does to some ofjbor / Shutterstock.com its richer neighbors to the east, such as Japan and South Korea. India, whose population is expected to surpass China’s within two decades, also competes to be a hub for low-cost manufacture out-sourcing. However, India provides China with raw materials; ore and slag, for instance, account for more than a quarter of all Indian exports to China. India also exports $1.5 billion dollars of cotton to China annually, providing a crucial source of supply to China’s critical textile industry, which is the world’s largest and responsible for a quarter of all Chinese exports. In contrast, Chinese exports to India are predominantly in manufactured goods, in particular electrical machinery which represents around a third of total Chinese exports to India. The fact that India exports raw materials to China and China returns finished goods reflects a slightly imbalanced relationship; indeed, India ran a trade deficit of around $20 billion with China in 2010. Nevertheless, deeper economic ties with China remain in India’s long term interests. Overall, India is developing its own economy in different ways to China. Specifically, India has focused on information technology and services. China’s rapidly growing IT market, which already boasts the greatest number of internet users in the world, offers opportunity for India’s leading IT firms. For instance, Infosys Technologies, an Indian IT firm, set up a Chinese subsidiary as far back as 2004. While its Chinese subsidiary still derives the majority of its income from outside of China, the Chinese domestic market now accounts for one third of its profits; this is projected to grow in the coming years. By 2014, Infosys predicts its Chinese subsidiary will employ 10,000 people, triple what it does today. The Tata Group, through Tata Consultancy Services (TCS), has also established a significant presence in China. It exports IT services to the Chinese banking sector, with Bank of China among its most notable clients. Its workforce in China is expected to quadruple over the next three years, taking the total number of its employees to over 5000. Following in TCS’ wake is India’s Wipro Technologies which has plans to center its Asian operations in China’s western city of Chengdu, in order to focus on growing its Asian market, and to diversify away from the US and Europe. India’s other great success story in China has been Mahindra & Mahindra, a manufacturer of tractors. Mahindra & Mahindra has established two joint venture tractor manufacturing companies in China which, combined, account for more than 30,000 employees and produce more than 30,000 tractors each year, many of which are exported to Europe or India. Indian IT firms are also seeking Chinese investment. By June 2009, the total Chinese investment in IT in India reached almost $30 billion. Much of this came from the Chinese giant Huawei.

Like many foreign companies working in China, Indian firms have also complained of barriers to their entering and expanding within the Chinese market. These barriers are increasingly being raised at the highest political levels. Complaints from the Indian side are met with calls from China for a bilateral Free Trade Agreement (FTA). Although India has been reluctant to agree to this until its trade deficit with China has been tackled, such an agreement, if signed, would represent the largest free trade area in the world measured in size of populace.

The BRICS Nations

Another area of promising cooperation between China and India is their involvement with the BRICS nations – Brazil, Russia, India, China and South Africa. The name originally came from an economist working for Goldman Sachs, who coined the term ‘BRIC’ in 2001 (South Africa was not included in either the original thesis or the initial gatherings of the countries) when writing about the shift in global power balances from the large developed western countries to the large developing ones. Initially not a formal structure, the four BRIC countries sought to capitalize on the success of the term by launching annual summits in 2009, where the countries meet to discuss their positions in the global order and to call for greater equity within it. South Africa was invited to join at the end of 2010 and attended its first summit in 2011. Both Brazil and India seek to exploit the status of the alliance in order to promote their aspirations for permanent membership of the UNSC, though declarations from the BRICS summits do not go as far as to directly call for this. Questions have been raised about the continued relevance of the grouping with varying degrees of economic growth; in 2012, only India and China surpassed GDP growth of 5% with South Africa as low as 2.8%.

Future Trends

Of the potentially disruptive issues that remain in the Sino-Indian bilateral relationship, the territorial dispute is probably the thorniest. There is seemingly some room for maneuver on China’s part in the disagreement over Arunachal Pradesh; certainly it seems impossible that the Chinese would try to make good their claims on an area that is widely recognized internationally as Indian territory and which is populated by more than one million Indian citizens. However, other disputes seem more intractable, particularly where Kashmir comes into the equation. Acts of insensitivity on either side are likely to continue to provoke minor spats, but the prospect of armed conflict between the two is highly remote. Indeed, informal talks on this very issue were held in Beijing in December 2012, though without any significant movement. The last formal negotiation on the matter took place in January of the same year.

The Tibet issue seems likely to continue to be an irritant as long as the Dalai Lama survives. It is probably China’s own calculation on this issue as a whole, not just with India, that the Dalai Lama’s death will help to remove Tibet from the intense international focus that it has been under for the last few decades. From India’s perspective, the trouble the Dalai Lama has caused has likely overwhelmed any soft power that it may have accrued as a result of it providing the Tibetan leader with asylum. There is probably understanding at the highest political level in the bilateral relationship that there is little that can be done in the short term over this issue.

China’s water disputes with its neighbors will likely be a growing problem, particularly given the unprecedented level of its dam building. Tension over water rights with India will be no exception. What is unclear is what its downstream neighbors can do about China’s hydro ambitions. It will likely be an increasing source of acrimony between China and India, especially as India plays catch-up to China’s water projects. India might voice these concerns more vocally on the world stage. It might also gain influence and leverage with other countries that are similarly vulnerable to China’s hydro ambitions to place economic and other pressures against the country.

It is in the economic ties that the greatest reasons for optimism lie. The different directions that the two economies have taken in their development mean that the potential for bilateral growth is significant. For both countries economic development is key and will continue to be so. They share much in common in terms of the continued need to raise large sections of their population out of poverty, a problem that is particularly pronounced in India. The incentive to stay focused on trade rather than to get tied down by territorial disputes or regional competition should remain at the forefront of the minds of policymakers on both sides of the Himalaya.

The election of Narendra Modi as India’s new prime minister in 2014 brought some new-found optimism given his pragmatic approach to international relations and prioritisation of economic cooperation. Modi was already popular in elite circles in China thanks to his careful diplomacy when serving as a regional leader in Gujurat, during which time he made numerous trips to Beijing. Nevertheless, the many thorny issues in the relationship cannot simply be washed away and the presence of Tibet’s prime minister-in-exile at Modi’s swearing in ceremony indicated that he would not simply roll over and acquiesce to all of Beijing’s demands.