Bolen C – Page 333

Fractured opposition handing Taiwan’s election to DPP

On: November 21, 2023

In: Asia

Taiwan’s two largest opposition parties were unable to form an alliance over the weekend due to competing interpretations of public opinion polls, casting a new cloud of uncertainty over January’s crucial presidential election.

The opposition camp is perceived to be more friendly toward mainland China while the ruling, nationalistic Democratic Progressive Party is seen as more antagonistic toward Beijing.

With the push of former Taiwanese president Ma Ying-jeou, Kuomintang (KMT)’s Hou Yu-ih and Taiwan People’s Party (TPP)’s Ko Wen-je agreed on November 15 to join political hands and allow opinion polls to determine who should lead their joint election campaign.

The ticket would be either a “Ko-Hou team”, meaning Ko would lead in the campaign, or alternatively a “Hou-Ko team.”

On November 18, the Ko-Hou team beat the Hou-Ko team in five out of the six polls conducted by media firms as well as the two parties. However, Ko had previously agreed to a special arrangement that has complicated the result.

He had said he would be willing to be the vice presidential candidate, rather than president, if the Ko-Hou team could not secure a 3% premium in ratings over the Hou-Ko team, with the assumption of a “plus or minus 1.5%” statistical error in the polls. He accepted the arrangement as he wanted to contribute to the formation of an opposition alliance.

Under that special statistical arrangement, the Ko-Hou team and the Hou-Ko team could be interpreted to have won three polls each, allowing Ko not to concede defeat.

But the KMT insisted that there is a “plus or minus 3%” statistical error in each poll and thus Ko can only claim victory in polls in which the Ko-Hou team has a 6% premium in ratings over the Hou-Ko team. This rule means the Hou-Ko team won five out of the six polls.

Ko said on November 18 that there is still enough time to do one more round of polls before the end of the nomination period, which will end at 5 pm on November 24. On November 19, he said he would continue his original plan to represent the TPP to run in the presidential election.

KMT chairman Eric Chu said his party remains open to the idea of establishing an alliance with the TPP but Ko must make a decision by November 22.

3% statistical error

Former KMT lawmaker Tsai Yuen-cheng said it’s embarrassing that his party had tried to distort the definition of “3% premium” when most people, including KMT legislator Fai Hung-tai, who reportedly has a PhD in statistics, knew that a 3% statistical error could only mean “plus or minus 1.5%.”

He said now a Hou-Ko team is ruined while the KMT can by now only choose to form a Ko-Hou team. He noted some polls showed that DPP presidential candidate Lai Ching-te, Ko and Hou are on course to win 6 million, 4.5 million and 3.5 million votes respectively, handing the election to the DPP, if the opposition camp cannot agree to form an alliance.

He suggested if Hou does not accept the junior position on a united opposition ticket, the KMT may not survive over the next four years.

Some Taiwanese commentators said the KMT-TPP’s fundamental conflict is rooted in past Legislative Yuan elections.

They said some of Ko’s supporters feel it is unfair that he serve as Hou’s deputy as he is slightly more popular in polls. They said the KMT and TPP also have conflicts over the negotiation of legislative seats.

Adding to the intrigue, Ko held a one-hour meeting with Foxconn founder Terry Gou, who has gathered more than 900,000 signatures from public nominees to run in the election, at the latter’s home on Sunday evening. Gou must receive at least 300,000 signatures from voters to be nominated as he lacks any political party’s support.

Huang Shih-hsiu, a spokesperson of Gou’s campaign office, said Monday that the Taiwanese tech entrepreneur is open to discussions about forming a Gou-Ko team or a Ko-Gou team. Huang said a team could be formed “whenever Ko nods his head.”

Public polls showed that a Ko-Gou team would not likely beat the DPP’s Lai-led ticket. But a KMT-TPP alliance could win about 44-45% of the vote to beat the DPP, which is currently running at around 36-38%.

Beijing is now closely monitoring whether the so-called blue and white camps, which represent the KMT and the TPP, respectively, can form an alliance.

Independence ticket

Lai said Monday that Hsiao Bi-khim, who had just resigned from her position as Taiwanese Representative to the United States on the same day, would be his vice president candidate.

Hsiao was born in Japan in 1971. Her late father was a Taiwanese pastor and her mother is an American. In 2002, Hsiao served as a member of the Legislative Yuan from 2002 to 2008 and from 2012 to 2020. She then became the Taiwanese representative to the US from 2020 to 2023.

Taiwanese Foreign Minister Joseph Wu on Monday praised Hsiao as an excellent diplomat while her contributions to the self-governing island were well-recognized by the public.

Mao Ning, a Chinese Foreign Ministry spokesperson, declined to comment on Lai’s pick of Hsiao as vice president because it is not a foreign affairs-related issue.

Chu Fenglian, a spokesperson of China’s Taiwan Affairs Office (TAO), said last week that both Hsiao and Lai are promoters of “Taiwan independence” and that they won’t help to improve cross-strait relations.

In the past, Lai and Hsiao said they wanted to maintain the “status quo” in the Taiwan Straits, meaning Taiwan would continue to self-govern.

They asserted Taiwan should be allowed to join international organizations such as the World Health Organization, strengthen its defenses and sign trade deals with other nations.

Read: Beijing ploy helps instead of hurting Gou campaign

Follow Jeff Pao on Twitter at @jeffpao3

Challenges for a resilient Commonwealth

By: Bolen C

On: November 21, 2023

In: Asia

The Commonwealth of Nations is one of the oldest political organizations in the world. Founded in 1926 as part of the Balfour Declaration, it predates the United Nations and North Atlantic Treaty Organizati0n.

About 2.5 billion individuals, constituting nearly one-third of the global population, reside within the 56 member countries of the Commonwealth. A significant portion, accounting for one-third, of young people aged 15 to 29 find their home in Commonwealth nations.

As the most populous member, India contributes ahout half of the Commonwealth population. Following closely in terms of population size are Pakistan, Nigeria and Bangladesh, with the United Kingdom ranking fifth.

In an era marked by unprecedented global challenges marked by natural disasters, and geopolitical conflicts, the imperative for nations to cultivate socioeconomic resilience has become paramount.

Throughout the Commonwealth, unstable employment and living conditions result from extreme poverty and widespread unemployment. Additionally, risks from climate change and international and intra-national migration create situations of increasing complexity and vulnerability.

Thirty-two member states fall under the definition of a “small state”; these states are on the front lines of the effects of climate change, and they have insufficient human and financial resources to adapt.

Uneven development

Countries such as the United Kingdom, Canada and Australia show significant progress in overall socioeconomic development. However, within the Commonwealth, one-third of its population, around 2 billion people, live on less than US$1 per day, and 64% live on less than $2 per day. This number was worsened by the Covid-19 pandemic.

Additionally, the Commonwealth accounts for more than 60% of global HIV infections, and four of the 10 most affected countries are Commonwealth members.

On the public health and sanitation front, about 60% of the Commonwealth needs access to essential medications or appropriate sanitation. Social inequality is dismally prevalent, where women account for more than 70% of people living in poverty in the Commonwealth and face discrimination in many parts of the organization, ranging from unequal pay to abusive treatment.

The Commonwealth has a dedicated agenda that considers poverty alleviation and improving health-care outcomes as part of its development agendas. Despite these developmental caveats, the organization has shown significant progress in pulling 19% of all people out of extreme poverty in the previous two decades.

However, several countries only reduced relative poverty, indicating that population growth exceeds the rise of those living in extreme poverty.

The Covid pandemic, the turbulent geopolitical scenario, and domestic disputes in the Northeast African countries have decelerated societal and economic progress in the Commonwealth. These states are also more likely to suffer the brunt of social injustices, including discrimination and poverty among marginalized communities and violence against women and girls, all of which have been exacerbated by the pandemic.

According to the latest GDP numbers from the International Monetary Fund, the UK is no longer the biggest economy in the Commonwealth, with India overtaking it for the first time in 2022.

Among the 54 member countries, divergences in GDP, as well as population vulnerabilities, are noticed. For instance, according to figures, 42 autonomous developing countries have less than 1.5 million population. Twenty-nine of these nations are members of the Commonwealth of Nations.

Similarly, GDP growth rates range slightly across large and small nations. However, several features make small nations’ growth rates more variable: more reliance on a single industry, lower trade diversification, heavy dependence on foreign aid, and a high level of import dependency.

The GDP variability of small states is substantially higher than large nations. This higher variability often implies more severe macroeconomic crises in the face of exogenous shocks such as the pandemic or volatility in the energy markets.

In conclusion, the Commonwealth faces numerous challenges in its quest to build resilient societies. Extreme poverty, inequality, climate change, and the impact of the Covid-19 pandemic are formidable obstacles.

However, member states can work together to overcome these challenges through collaboration among governments, civil societies, and communities, which is essential for mobilizing resources, knowledge and technologies toward achieving universal health care, economic prosperity, environmental sustainability, and social resilience.

The Commonwealth has the potential to leverage the strengths of its diverse member states and become a powerful force for positive change in the world. By prioritizing the needs of small nations and promoting inclusive and sustainable development, the Commonwealth can lead the way toward a more equitable and advanced global order.

Consumption in China: Is it really that bad?

By: Bolen C

On: November 21, 2023

In: Asia

“But your picture on my wall, it reminds me that it’s not so bad. It’s not so bad.”

– Yves V & Ilkay Secan

The jury is in on what ails China’s economy. It was only a matter of time. And the obvious solution – we are told – will be politically treacherous. The verdict is unanimous. China’s investment and export-led model has finally run its course.

Not only that but the model had been taken to such extremes that the rebalancing must be brutal. Proof is everywhere. The property sector is on its knees. Infrastructure debt has paralyzed local governments. Exports have peaked and are declining.

If only China could stop squeezing its long-suffering households, consumption could become an engine of if not growth then at least stability. But that would require empowering households.

And we all know inefficient SOEs and venal local governments will fight tooth and nail against the interest of households whose consumption was a paltry 38% of GDP in 2021. While profligate Americans consuming 68% of GDP may not be a proper comparison, frugal Japanese and Korean households consumed 54% and 48% of GDP, respectively, substantially more than their put upon Chinese neighbors.

Given the immense size of China’s economy, its imbalances have global implications, they say. Analysts have recently pointed out that while China’s economy is 18% of global GDP, it accounts for only 13% global consumption and a massive 32% of global investment. Through trade and capital flows, China is surely offshoring its extreme domestic imbalances to the world.

One perpetual bright spot is China’s insatiable appetite for luxury goods. According to Bloomberg, “Chinese consumers are expected to contribute 22-24% or worldwide luxury spending this year” far above China’s 13% contribution to overall global consumption. This is of course explained by a combination of China’s extreme inequality and odious taste.

A shopper at a supermarket in Hangzhou city in eastern China’s Zhejiang province, October 15, 2020. Photo: Asia Times Files / AFP / Stringer / Imaginechina

Or is it? China also accounts for over 30% of cars sold globally, over 20% of mobile phones, over 40% of televisions and 25% of furniture. Drill down in just about any consumer category, excluding firearms, and China will likely be consuming well over 20% of the global total.

China reported retail sales of RMB44 trillion, or US$6.9 trillion, in 2021, ahead of the US at $6.5 trillion. Household consumption in the US – which includes non-retail sales expenditures like rent, healthcare, tuition and insurance – was expectedly much higher at $15.9 trillion.

Strangely, household consumption in China came in at $6.8 trillion, below retail sales. Chinese households apparently go on shopping sprees and neglect to pay for housing, healthcare, tuition and insurance.

Granted, China’s definition of retail sales includes some “social purchases” by government and corporate entities and is not an apples-to-apples comparison to US retail sales. But the ratio versus household consumption is revealing.

Household consumption in the US is 245% of retail sales while a mere 98% in China. Realistically, how many cars, mobile phones and Louis Vuitton handbags could possibly be from “social purchasers.” And given China’s tradition of in-kind and non-financial compensation, much of social purchases will ultimately be enjoyed by households.

What we are dealing with is a legacy of China having never properly transitioned from its Soviet-era Material Product System (MPS) system of national accounts to the United Nations’ System of National Accounts (SNA) standard. MPS accounting is only concerned with material production. Services are considered costs of production and excluded by design.

In China’s first attempt at converting MPS to SNA in 1985, it tacked on a ludicrously low 13% to the MPS number and called it China’s services GDP. Over the years, the World Bank has twisted the arm of China’s National Bureau of Statistics for modest increases to China’s services GDP with limited success. The NBS fought tooth and nail to minimize these adjustments in order to maintain developing economy status for as long as possible.

What we conclude from all this is that on an apples-to-apples UN SNA basis, Chinese households are consuming much more than 38% of GDP. And investments are much less than 42% of GDP.

Most controversially, perhaps, we also conclude that China’s GDP is under-reported by an amount largely equal to household consumption outside of retail sales. If we had to ballpark it, we would say China’s household consumption is 50-55% of GDP, investment is 30-34% of GDP and total GDP needs to be grossed up by 25-40%.

Consumer spending in China has slowed. Photo: iStock — At the mall in China. Photo: Asia Times Files / iStock

This has many implications. One is that China’s economy is not nearly as unbalanced as conventional wisdom believes – it is merely a peer of its Asian neighbors Japan and Korea. It explains why the government only seems to give lip service to increasing demand while all policies somehow favor supply. It explains how China has avoided the dire consequences of running such an unbalanced economy for so long – mostly because it hasn’t been.

If the above is true, the medium-term policy implications suddenly become less clear. Stimulating household consumption shifts from a no-brainer to a judgment call. The imperative of reigning in investment suddenly becomes less absolute. China’s domestic imbalances may not be so severe and, as such, its effect on global imbalances more limited.

To be sure, investing 30-34% of GDP is on the high side and can easily get an economy in trouble and consuming 50-55% of GDP is on the low side and a little stimulus may be helpful. But compared to the historically lopsided economy that China has been officially reporting, policy prescriptions are far from obvious.

Han Feizi is a Beijing-based financial industry veteran.

Risking NATO’s future for its expansion to Ukraine

By: Bolen C

On: November 20, 2023

In: Asia

Barring some unforeseen contingency there will not be a war in Europe, beyond Ukraine, for some time to come.

That prediction, however, is based on NATO’s ability to deter a future Russian attack. NATO’s deterrent capability, in light of the Ukraine war, is open to increasing doubt.

If NATO is unable to restore confidence in its defenses, the organization will have to make deals with the Russians that will change Europe’s strategic map.

As things stand now, NATO is an expansionist alliance and not a defensive alliance as originally conceived.

The organization’s changed posture came about after the collapse of the Soviet Union. Policymakers decided to extend NATO coverage to the Baltic States and Eastern Europe, vastly expanding the NATO’security zone.

It was a gutsy decision, based on a greatly weakened and mostly impoverished Russia. Over nearly a decade, post-Soviet Russia stopped producing weapons and ammunition, its military leadership ossified and its plans for new weapons were put to the side because there wasn’t money to finance them.

One of Vladimir Putin’s accomplishments in his 17 years in power was to reverse the decline in Russia’s military. That has not been easy. Russia’s industry was far from modernized. However good they were at their main job, military leaders in the core group were not up to the task of managing factories run by the state.

The Russians were very slow to adapt. By the time of the second Nagorno-Karabakh war in 2020, it was clear that Russian-supplied hardware and tactics were inadequate and failed. The Armenians, who used mainly Russian equipment, saw their forces torn apart by Azerbaijan.

A key factor in the war was the introduction of armed and loitering drones that were used to destroy Armenian air defenses, command posts, and heavy equipment.

By the start of 2022, the Russias had not yet learned the lessons of 2020. Nor had they adapted their tactics on how to deal with smart weapons including anti tank missiles and MANPADs air defenses.

Russian drones first seen in the Ukraine War were primitive and poorly made. Russian armor was picked apart by Ukrainian soldiers, who ambushed hundreds of them as they traveled down roadways. Ukraine, with lots of Western support in the form of smart weapons and real-time intelligence, pushed the Russians back and inflicted serious defeats on them.

Bleeding Ukraine (and NATO)

But all that changed in late 2022 and early 2023 as the Russians adapted. Spurning World War II-style shock armor advances that were costly in equipment and manpower, Russia turned to an active defense system designed primarily by Russian general Sergei Surovikin.

Russia then turned to a new generation of attack drones, concentrated artillery, and aerial dropped mines to stop Ukraine’s army. Russia adopted the strategy of bleeding Ukraine, something Ukraine’s American and European advisors did not correctly calculate when they trained nine Ukrainian brigades to attack Russia’s defenses in the Zaphorize area.

Bleeding Ukraine has, at least so far, demonstrated that NATO’s military ideas are defective and out of date. Seen objectively, the huge losses of equipment and manpower by the Ukrainians are not sustainable in a NATO context. NATO lacks the trained armed forces and satisfactory equipment to withstand a modernized Russian army on the offensive.

One of the keys to the dilemma is artillery. NATO planners did not anticipate the level of ammunition needed in the new warfare paradigm seen in Ukraine. To support the fighting, Europe and the United States have supplied long-range artillery howitzer rounds, mainly 155mm, to Ukraine. These supplies are far below what is needed.

Both the Russians and NATO are experiencing shortages, but the NATO shortages are far more significant than Russia’s. Today even after shell supply has been ramped up, NATO won’t be able to produce more than 163,000 shells a month – while the Russians probably have the potential to manufacture over 350,000 monthly.

The US raided its stockpile of 155mm shells in Korea and Israel, both very dangerous moves. It left the US with nothing to defend South Korea if Kim Jong-un starts a conventional war on the peninsula. North Korea has loads of artillery and plenty of shells. South Korea does not have enough.

The decision to take 300,000 155 mm shells stockpiled in Israel and send them on to Ukraine likewise was a bad one as it left Israel with little more than its own war stocks. With the fighting in Gaza and in the north against Hezbollah, Israel urgently needed 155mm shells from the United States and that need significantly impacted supplies that had been set to go to Ukraine.

The Russians also felt some pinch and they turned to their friends in North Korea and Iran. Both manufacture 152mm (actually 152.4 mm) shells for Russian towed and self-propelled howitzers. The actual numbers being supplied are hard to come by. One report has it that North Korea already sent 500,000 and could end up sending up to two million shells to Russia.

There are reports that shells from North Korea and Iran are being stockpiled, either as a contingency or for a big offensive in Ukraine – or possibly even both.

2S19 Msta-S Russian 152mm Self-Propelled Howitzer

The Europeans are saying that they need to keep back ammunition from Ukraine because they have little or nothing left for their own defense. While some European companies, such as Rheinmetall, have stepped up production, it will take them years to produce the numbers needed. Rheinmetall has a new factory in Spain.

In the United States there are six ammunition plants, but the two most important are in Iowa and Pennsylvania.

These factories are getting billions from the US government to increase production. It is, however, hard to push them much harder because they use out-of-date manufacturing methods and find it hard to attract workers due to rough working conditions.

These US factories are over 80 years old. It takes about three days to produce one completed shell (not counting the time it takes to produce the propellant charges and fuses, which are manufactured elsewhere).

Iowa Ammunition Plant

The Iowa Army Ammunition Plant in Middletown, near Burlington, is the largest 155mm shell producer. The facility covers more than 19,000 acres ― nearly 30 square miles. It has more than 400 buildings and a total storage capacity of 1.6 million square feet. It is owned by the Army but operated by a private company called American Ordnance LLC. Today it employs 830 civilians and around 25 military (mainly supervisory). In the 1960s the same plant employed 13,000 workers.

A worker at the Iowa factory. Photo: DVIDS

The plant is not automated. However, it does use some robots to carry out some of the most dangerous tasks such as moving around red hot shell billets. Otherwise the factory is much the same as it was years ago.

Scranton Ammunition Plant

The other big factory is in Scranton, Pennsylvania. That factory – built for the Delaware, Lackawanna and Western Railroad just after 1900 – has produced large-caliber ammunition for the military going back to the Korean War. It has received $120 million to expand production, but won’t reach that goal until 2025 at the earliest. It is a government-owned-contractor-operated (GOCO) operation, like the Iowa plant.

The Scranton Ammunition Plant (SCAAP) was established in 1953 and was operated by the US Hoffman Machinery Corporation until 1963, when Chamberlain Manufacturing Corporation became the operating contractor. General Dynamics – Ordnance and Tactical Systems (GD-OTS) assumed operation of the facility from Chamberlain in 2006, and is the current operating contractor.

Like the Iowa Army Ammunition Plant, most of the production machinery is old.

While the Army has invested a great deal in ginning up the production of shells, it has not undertaken any real effort to update the manufacturing technology. Even DARPA (the Defense Advanced Research Project Agency) has not been receptive to introducing new technology to these installations.

US and NATO ammunition goal not enough for deterrence

The US Defense Department wants to ramp up 155mm shell production to 80,000 per month by 2028. European plans are less clear: the hope is to build between 20,000 to 55,000 per month “in future.”

The NATO production goal is based on the Ukraine war numbers. But in case of wider warfare in Europe, or fighting elsewhere (Korean peninsula, China, Taiwan, Israel), those numbers go out the window.

One of the amazing features of the US and its NATO allies supplying millions of tons of ammunition and hardware to Ukraine is that the allies paid almost no attention to contingencies and freely raided stockpiles that were put there for US and NATO national security defense needs.

What is true of 155mm ammunition is even more true of precision weapons whose supplies have been depleted. If it takes 3 days to manufacture a basic 155 mm shell; it takes two years or more to produce smart weapons.

The idea of expanding NATO to Ukraine may well have propelled the NATO partners into a far riskier future. Surely it has undermined NATO’s deterrence, something the Russians and Chinese clearly grasp.

Stephen Bryen, who served as staff director of the Near East Subcommittee of the
US Senate Foreign Relations Committee and as a deputy undersecretary of defense
for policy, currently is a senior fellow at the Center for Security Policy and the Yorktown Institute.

This article was originally published on his Weapons and Security Substack. It is republished with kind permission.

What’s behind China’s sonar pulse attack on Australia?

By: Bolen C

On: November 20, 2023

In: Asia

The incident last Tuesday (November 14) in which Australian sailors suffered minor injuries from sonar pulses from a Chinese destroyer couldn’t have come at a worse time for Anthony Albanese.

He’d just finished a very successful trip to Beijing. He was about to again meet President Xi Jinping at APEC in the United States late in the week. The incident was potentially serious in terms of unsettling a much-improved relationship.

The HMAS Toowoomba’s sailors had been undertaking the harmless task of unraveling fishing nets from around the ship’s propellers. The vessel was in international waters inside Japan’s exclusive economic zone on its way to a port. It had been supporting United Nations sanctions against North Korea.

The Chinese destroyer had been warned about the divers, but acted anyway.

There were two issues for Albanese: whether to raise the matter with Xi (assuming the President didn’t bring it up) and whether to indicate publicly he had done so.

We don’t know whether he raised it, because his office and ministerial colleagues won’t answer this question. There has been no opportunity to question him since his return at the weekend.

It seems obvious he should have discussed the matter with Xi. He has repeated endlessly that “we will disagree when we must” with China.

Not to canvass the incident would be a cop-out from this formula. It would carry the message that Australia, having established more positive relations with China – to the great benefit of our trade – was now unwilling to be forthright because it did not want to risk setting things back.

The Australian government was careful not to announce the incident until after Albanese was on his way home. The timing was diplomatic.

Then-Acting Prime Minister and Defense Minister Richard Marles said in a statement on Saturday the government had expressed “serious concerns” to the Chinese government, and described the Chinese vessel’s conduct as “unsafe and unprofessional.”

If Albanese did raise the incident, why not say so? Again, only to avoid offending the Chinese and that’s unacceptable.

The government points to Marles’s statement and claims that meant the matter was dealt with at the appropriate level.

This might be convincing if it hadn’t been for the fact Albanese was actually meeting Xi.

The silence is also being defended on the basis of this being a private meeting. This won’t wash either. When the PM and President met in Beijing Albanese gave a very detailed read-out of the encounter, even down to the jokes.

On Monday morning Albanese tweeted a picture showing he was back working with the team. Members of that team appearing in the media have been left intoning the unconvincing talking points.

Albanese should clarify whether he or not he talked about the incident – not just in the name of transparency but to demonstrate that the government’s China policy is as robust as he says. Not to mention that it would be of passing interest to know what the president said, if the matter was in fact one of the topics of their discussion.

The Prime Minister went on Sky on Monday afternoon to criticize the Chinese action but remained silent about whether it had been discussed in the Xi meeting.

He said the action by the Chinese ship was dangerous, unsafe and unprofessional, and one Australian sailor had been injured. It was a regrettable incident. He said this was one of those times when Australia disagreed with China; the event damaged the relationship.

Australia had raised its strong objections to China “very clearly, very directly, through all of the appropriate channels in all the forums that are available.”

But he declined to confirm or deny raising it with Xi, on the grounds he does not divulge private conversations that take place on the sidelines of a conference.

“We’ve raised it very clearly through all of the normal channels.”

“When I was in San Francisco, there was no bilateral meeting with President Xi where you give a readout […] I don’t talk about private meetings on the sidelines, discussions I have with any world leader. That’s how you keep communications open. But I can assure you that we raised these issues in the appropriate way and very clearly, unequivocally. And China – there’s no misunderstanding as to Australia’s view on this.”

Albanese said he always spoke up for Australia’s national interest. “I do so directly,” he said, stressing he did so respectfully, not talking about private conversations.

At a news conference while at APEC Albanese said of the meeting with Xi: “I reiterated to him that it was a very positive visit [to Beijing] that was well received in Australia. And I reiterated to him that the signal that the impediments to trade between our two nations were reducing and being removed, was received positively in Australia.”

Michelle Grattan is Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Marcos doubles down on his double game with China

By: Bolen C

On: November 20, 2023

In: Asia

MANILA – “I do not think anybody wants to go to war,” Philippine President Ferdinand Marcos Jr said following his meeting with Chinese paramount leader Xi Jinping on the sidelines of the Asia-Pacific Cooperation (APEC) summit in San Francisco last week.

“We really should view this as a work in progress. It’s a process,” Marcos Jr added, referring to the two sides’ intensifying maritime disputes in the South China Sea.

The seemingly cordial meeting saw the two leaders agree on the need to establish guardrails in their bilateral relations. Both sides also made their respective redlines clear, with the Filipino president realistically acknowledging that “the problems remain and it is something that we need to continue to communicate [on with our Chinese counterparts].”

With few signs yet of big-ticket investments from the West, Marcos Jr is also intent on reviving frayed economic ties with China, which has yet to implement multi-billion infrastructure pledges in the Southeast Asia nation.

In many ways, the Marcos-Xi meeting mirrored the pragmatic undertones of the much-covered summit between US President Joe Biden and his Chinese counterpart.

Tellingly, the Filipino president immediately visited the US naval facility in Hawaii after the APEC Summit. There, the two allies finalized new defense deals, including on intelligence sharing and maritime security cooperation.

By all indications, Marcos Jr seems intent on enhancing the Philippines’ bargaining position and overall deterrence capabilities vis-à-vis China, while keeping communication channels with Beijing intact.

By combining engagement and deterrence, the Filipino president hopes to reset his country’s terms of engagement with the Asian superpower.

“Let me say that I have waited a very long time to say, aloha!” declared Marcos before a cheering crowd at the Hawaii Convention Center. “The Filipinos and the Filipino-Americans in Hawaii hold a very special place in my heart for all the wonderful experiences that we had here with our Filipino compatriots,” he added, referring to his family’s years of exile in Hawaii following the fall of his father’s dictatorship in 1986.

The Filipino president’s main mission in Hawaii, however, was discussing ways to further expand military cooperation with the US Indo-Pacific Command (INDOPACOM), which is seeking access to strategically situated bases across the Philippines to keep China’s ambitions in check.

During a speech at the Daniel K Inouye Asia-Pacific Center for Security Studies (APCSS) in Honolulu, the de facto think tank of the INDOPACOM, Marcos Jr emphasized his country’s intensifying disputes with China.

US Defense Secretary Lloyd Austin (R) and Philippine President Ferdinand Marcos Jr (L) stride to a meeting at the Pentagon on May 3, 2023. Photo: US Defense Department / Jack Sanders

Marcos Jr said that the situation in the South China Sea “has become more dire” in recent months, with China inching “closer and closer” to dominating waters off the coast of the Philippines.

“Unfortunately, I cannot report that the situation is improving… The situation has become more dire than it was before,” lamented Marcos Jr, acknowledging the desperate conditions and growing fears of armed clashes in the disputed waters.

But the Filipino president stuck an uncompromising line, maintaining “The Philippines will not give a single square inch of our territory to any foreign power.”

Marcos Jr’s two-day visit culminated in a meeting with INDOPACOM chief John Aquilino, who visited EDCA bases in the Philippines earlier this year. The two reportedly discussed ways to further enhance maritime security cooperation through intelligence-sharing and greater interoperability.

With fears of a potential Chinese military intervention over the Second Thomas Shoal, the Filipino leader likely also discussed ways to jointly deter the Asian superpower. Manila has reiterated its commitment to resupply its marine detachment on the contested shoal and fortify the grounded BRP Sierra Madre vessel there.

Over the past decade, the US Pentagon has provided “over-the-horizon” operational support over the shoal by flying drones and sailing warships close to the contested area. But the Philippines and US are now reportedly seriously considering potential contingencies, including an armed conflict with Chinese maritime forces in the area.

The Philippines is also pursuing regular joint patrols with the US and other like-minded naval powers near the contested area. The US has repeatedly emphasized that it will come to the Philippines’ rescue should its troops, vessels and aircraft come under attack by a hostile third party in the South China Sea.

But the two allies are also discussing ways to more effectively counter China’s evolving “gray zone” strategy, namely the deployment of gigantic coast guard vessels and an armada of militia vessels to intimidate rival claimant states in the area.

The Philippines’ expanding security ties with the US may strengthen its hand in the South China Sea, but not without its own costs, not least a “short sharp war” with China in the disputed waters.

The economic costs are already mounting. Amid rising tensions in the South China Sea, Beijing has effectively frozen its investment pledges to the Philippines.

A Philippine flag flutters from BRP Sierra Madre, a dilapidated navy ship that has been aground since 1999 and is now a Philippine military detachment on the disputed Second Thomas Shoal, part of the Spratly Islands, in the South China Sea. Photo: Reuters/Erik De Castro — A Philippine flag flutters from BRP Sierra Madre, a dilapidated navy ship that has been aground since 1999 and is now a Philippine military detachment on the disputed Second Thomas Shoal, part of the Spratly Islands, in the South China Sea. Photo: Asia Times Files / Reuters / Erik De Castro

“We have three [big-ticket] projects that won’t be funded by the Chinese government anymore. We can’t wait forever and it seems like China isn’t that interested anymore,” complained Philippine Transportation Secretary Jaime Bautista last month at an investment summit.

Meanwhile, foreign direct investment (FDI) from traditional Western partners has also been falling in the Philippines. Meanwhile, there are growing indications that the Biden administration’s “Indo-Pacific Economic Framework” has hit a snag amid stiff bipartisan opposition at home.

In effect, the West has yet to offer the Philippines any major economic incentives amid Marcos Jr’s hard pivot away from China and back to traditional allies.

As a result, there is growing pressure on the Filipino leader to revive communication channels with Beijing in order to not only prevent an armed conflict in the South China Sea, but also reopen discussions on large-scale investment deals.

The Marcos Jr administration is intent on dealing with the Asian superpower from an enhanced geopolitical position amid deepening defense ties with the Pentagon. It remains to be seen, however, if Beijing is open to any meaningful compromise or engagement in response to Manila’s double act.

Follow Richard Javad Heydarian on X, formerly Twitter, at @Richeydarian

China not out of the woods despite green shoots

By: Bolen C

On: November 20, 2023

In: Asia

As China shows sparks of recovery, it’s best not to get too excited about the improving health of Asia’s biggest economy. That’s especially true if you’re Xi Jinping and Li Qiang.

The green shoots seen in October data on China’s retail sales and manufacturing are indeed a relief to global investors and Asian policymakers. The 7.6% year-on-year jump in sales and 4.6% rise in factory output suggest stimulus efforts by President Xi and Premier Li are gaining traction.

Yet weakness elsewhere remains a clear and present danger in the homestretch of 2023.

Hopes that Xi and Li have gotten a handle on China’s property crisis are belied by the 9.3% plunge in real estate investment last month.

The same goes for signs China slid back into deflation. The other big problem: intensifying global headwinds as growth in the US, Europe and Japan disappoints.

Japan’s economy, for example, shrank 2.1% year on year in the July-September quarter, much worse than the 0.6% contraction forecasters expected. Here, Japan shows the difficulty of straddling US and Chinese economies experiencing rough patches.

The US is buckling under the weight of 11 Federal Reserve rate hikes in less than 20 months. The coming US 2024 US election cycle, meantime, will add pressure on President Joe Biden to take an even harder line on China in the form of more trade sanctions and tech curbs.

In China’s case, it’s quite possible to make a credible half-glass-full argument.

Take auto sales. In October alone, passenger vehicle sales jumped 10.2% year on year. In part, this speaks to the industry’s success in rolling out sales promotions and savvy marketing of electric and hybrid vehicles.

Yet it fits with news that in the July-September period, China managed to grow 4.9%, faster than forecasts of a 4.5% pace.

The varying speeds at which the economy is moving is to be expected as China transitions to new growth engines, explains Liu Aihua, a spokesman for the National Bureau of Statistics. It’s all part of a years-long move away from smokestack-heavy industries toward innovation and sustainability.

“Effective” policy tweaks in the economy are bearing fruit, Liu says, describing China as undergoing “wave-like development” and “tortuous progress” toward increased efficiency and productivity.

Yet the move upmarket will not always be smooth. “At present,” Liu says, “the external pressure is still great, the constraints of insufficient domestic demand are still prominent, enterprises have many difficulties in production and operation, and hidden risks in some fields require much attention.”

One such risk is the yawning income gap between urban and rural consumers. The good news, Liu says, is that by some metrics household consumption contributed 83.2% to economic growth in the first 10 months of 2023, a 6% year-on-year increase.

China’s consumers spent more than anticipated in most recent quarter. Image: Facebook

It’s here, though, that the urban-rural wealth divide leaves China’s economy unbalanced. Months ago, when youth unemployment topped 20%, Beijing merely stopped publishing regular statistics on the unsettling measure.

The key to raising rural incomes is diversifying growth engines far more aggressively. No effort is more crucial than reducing the outsized role that the property sector plays in generating gross domestic product (GDP).

“Clearly, the property sector remains a weak spot for the economy, which requires further support in the foreseeable future,” says Hao Zhou, chief economist at Guotai Junan International.

In recent years, real estate-related sectors provided roughly a quarter of China’s GDP. This year, economists at UBS calculate that the share has fallen closer to 22%. Even so, the sector’s chronic weakness threatens to drag down parts of the economy now showing signs of hope.

“Retail sales in October were particularly strong, beating even our above-consensus estimates,” says economist Louise Loo at Oxford Economics. But “at this juncture, we are skeptical that the now-three consecutive months of strong retail sales data are pointing to a permanent upshift in consumers’ spending propensities.”

One important caveat: Year-to-date retail sales data showed low-value discretionary items emerging as an outperforming segment, “consistent with what we think is typical of weak economic recoveries – when the consumer’s willingness to spend rests on smaller-ticket items,” Loo adds.

For China going forward, Gita Gopinath, first deputy managing director of the International Monetary Fund, tells CNBC, “the pressure remains.”

She adds that “there remains a lot of stress in the market. There remains weakness in the market. This is not going to be over with quickly. It’s going to take some more time to transition back to a more sustainable size.”

In the short run, the mixed bag of Chinese data points to the need for more assertive stimulus jolts by the central government in Beijing.

The biggest worry is the “negative wealth effect” emanating from the property market, says economist Jacqueline Rong at BNP Paribas SA. For all the excitement about firmer retail sales trends, Rong notes, the two-year average growth in sales remains well below the 8% pace before Covid-19 lockdowns.

Many local governments also may lack the fiscal space needed to boost far-flung economic regions as property markets sour far and wide.

That explains why infrastructure spending fell 0.2% in October and suggests “the damage inflicted by the housing crash is too extensive to be countered by fiscally constrained local governments,” write economists at Societe Generale in a recent report. “The 1 trillion yuan (US$139 billion) already announced does not seem to be enough.”

Lisheng Wang, an economist at Goldman Sachs, adds that “given persistent growth headwinds from the property downturn, still-fragile confidence and lingering financial risks, we think a ‘policy put’ has been triggered in China and expect the central government to step up easing materially in the coming months.”

Though topline growth is beating the odds, China’s economy is “not out of the woods by any means,” says Stephen Innes, managing partner at SPI Asset Management.

He adds that “this growth suggests a modest improvement in the Chinese economy. However, there are ongoing calls for increased policy support to maintain consistent growth, as there are concerns about the sustainability of the recovery.”

There are concerns about the progress of reforms, too. For all the success Xi’s Communist Party has had in juicing GDP, officials have made little progress in building the robust safety nets needed to stabilize the economy. And to encourage households to save less and spend more.

Li Qiang and Xi Jinping face economic headwinds. Image: Twitter / Screengrab

Making consumption a bigger share of GDP is the key to allowing Beijing to throttle back on fiscal policy and local governments to rely less on leverage. It’s central to phasing out the gigantic shadow-banking system and letting the People’s Bank of China (PBOC) withdraw massive stimulus from the economy.

The need for a recalibration from over-investment to consumption was well-known even before Xi rose to power in 2012. So was the need to create broader safety nets across sectors.

But time and time again, the hard work of engineering took a backseat to short-term considerations. The tendency has been to pour more public works spending into new infrastructure and property. These investments in hardware come at the expense of the economic software needed to raise China’s competitiveness.

This happened after the 2008 global financial crisis. Delay was the response to the 2013 Fed “taper tantrum.” The same with the chaotic summer of 2015, when Shanghai stocks lost a third of their value in just three weeks.

The Covid-19 pandemic deadened Beijing’s reformist instincts. In fact, it was at the height of the pandemic that Xi began his clampdown on Big Tech, starting with Alibaba Group’s Jack Ma. The US Fed’s most aggressive tightening cycle since the mid-1990s hardly helped.

Yet since reopening from the Covid era, Xi’s government is finding that the consumption rebound isn’t what Beijing hoped.

From a policy standpoint, the months ahead will be quite a balancing act. Since he took over as premier in March, Li has prioritized deleveraging over excessive stimulus so as not to incentivize a return to bad lending behavior.

This includes guarding against a major plunge in the yuan that might increase the odds of property developers defaulting on offshore debt.

On Monday (November 20), the PBOC left benchmark lending rates unchanged at a monthly fixing. While many economists think China could do with more policy stimulus, the PBOC is holding the one-year loan prime rate at 3.45% and the five-year LPR at 4.20%.

“Policymakers may want more time to assess the impact of the recent repricing of existing mortgage contracts before they make further changes to the benchmark rate,” says Julian Evans-Pritchard, head of China economics at Capital Economics.

“The big picture though is that, with economic momentum weak and downward pressure on the renminbi reversing, we think rate reductions will come before long.”

Accelerating reforms is even more important to restoring confidence among mainland households and foreign investors alike. Today’s green shoots might prove fleeting without major upgrades that build economic muscle for the long run.

Follow William Pesek on X, formerly Twitter, at @WilliamPesek

China, Japan in fast and furious frigate-building race

By: Bolen C

On: November 20, 2023

In: Asia

Japan and China are upgrading and upsizing their naval fleets with affordable, general-purpose frigates amid territorial disputes, mutual missile threats and historical animosity.

This month, Japan launched its eighth Mogami-class frigate, the JS Yubetsu, marking a significant advance in the Japan Maritime Self-Defense Force’s (JMSDF) capabilities, The Warzone reported.

The Warzone report says that the Mogami-class frigates, built to serve as the JMSDF’s backbone, feature advanced electronic warfare and sensor suites, and are designed for operation by small crews, underscoring a broad structural shift toward more efficient naval operations.

The Warzone notes that the class is set to replace older Asagiri- and Abukuma-class vessels, with a total of 12 ships planned and the last scheduled for completion in 2027.

Mogami-class frigates have a standard displacement of approximately 3,900 tons and a total displacement of about 5,500 tons, with dimensions roughly similar to the Asagiri-class destroyers. They are powered by a Rolls-Royce MT30 gas turbine and two MAN diesel engines capable of exceeding 30 knots.

The Mogami-class also has a BAE Systems’ Mark 45 naval gun, remote weapon systems, Lockheed Martin’s Mk 41 vertical launching system for surface-to-air missiles and Raytheon’s SeaRAM system.

The Warzone says the frigates also feature advanced electronic warfare suites including the NOLQ-3E system, Mitsubishi Electric’s OPY-2 radar, various sonar systems for anti-submarine warfare (ASW) and can support a Mitsubishi SH-60L Sea Hawk helicopter and deploy different unmanned vehicles for minesweeping.

Most significantly, The Warzone notes that these ships are designed for operation by a crew of just 90, enabled by high levels of automation and an advanced Combat Information Center (CIC).

The report says that while the first two Mogami-class vessels were relatively cost-effective, Japan is already planning for 12 “new FFM” frigates, with enhanced air defense capabilities and larger dimensions, to be constructed from 2027 to 2036.

The developments underscore Japan’s commitment to maintaining a strong, technologically advanced naval presence in a challenging geopolitical landscape.

Indeed, the Mogami-class may be Japan’s answer to China’s next-generation Type 054B frigate, conceptualized as a general-purpose naval combatant.

A rendering of China’s Type 054B frigate. Image: Twitter

This August, The Warzone reported on the Type 054B frigate, which is larger and more capable than its predecessor, the Type 054A. The Warzone notes that the frigate is equipped with a 32-cell vertical launch system (VLS) at the bow, which might be a universal VLS used in other Chinese warships or a system similar to the one on the Type 054A.

It also features a 100mm main gun, replacing the 76mm gun of the Type 054A, although the exact model of this new gun is yet to be confirmed.

The report said that the Type 054B is armed with two close-in weapons systems (CIWS) for air defense: a H/PJ-11 11-barrel 30mm Gatling gun and an HQ-10 SAM launcher. Although it says that while anti-surface warfare capabilities are not confirmed, there’s speculation about an additional set of VLS cells or slanted anti-ship missile launchers.

It also says that the ship has Type 726 launchers for various defensive and offensive purposes such as flares, chaff, active decoys and anti-submarine rockets.

The WarZone report says that Type 054B is expected to host the Z-20F maritime helicopter, enhancing its ASW capabilities and that the frigate might operate vertical takeoff and landing (VTOL) drones in the future.

The Warzone states that the Type 54B’s sensor suite includes a primary radar, a double-sided rotating active electronically scanned array (AESA), a bow sonar and provisions for a variable-depth sonar (VDS) and a towed-array sonar (TAS).

It notes that stealth features have been incorporated into the design, resembling the French Aquitaine-class frigate regarding radar cross-section reduction.

These frigates are set to significantly impact Japan and China’s naval doctrines and fleet composition, as both naval powers are enlarging their fleets in response to rising threat perceptions from one another.

The Mogami class is designed to replace the obsolete Abukuma- and Asagiri-class destroyers, whose age, limited numbers, outdated technology, non-stealth design, and lack of helicopter facilities in the case of the Abukuma-class, may no longer be sufficient to meet Japan’s security needs.

The Mogami-class also marks a move toward greater cost-effectiveness.

In a September 2023 US Naval Institute article, Eric Wertheim notes that the first two ships cost significantly less than US$500 million each, with an estimated price tag of $375 million and $410 million per frigate.

That relatively low cost allows the Mogami class to be built in greater numbers than larger, more capable ships such as the Maya class destroyers, which cost $1.5 billion per ship and cannot be made in large numbers.

Moreover, in line with Japan’s more proactive defense policy, the Mogami class may eventually be offered for export.

In April 2021, Asia Times reported that Indonesia planned to purchase eight Mogami-class frigates, with plans for Japan to deliver four ships starting in 2023 or early 2024 and for the remaining four to be built at state-run PT PAL’s Surabaya shipyard.

A Japanese Mogami-class frigate in a file photo. Image: Facebook

While China already has the advantage of lower labor costs and formidable shipbuilding capability, the Type 054B represents a serious upgrade over the Type 054A with better blue water seakeeping, greater endurance and more upgrade potential.

The ship also has better sensors, networking and combat management suites, enabling it to field more capable munitions.

The Type 054B’s AESA means that active production and forthcoming PLA-N blue-water combatants will come with the technology as standard while its embarked Z-20F helicopter will allow the class to match the minimum ASW capabilities of PLA-N blue-water combatants.

Asia Times reported in February 2023 that the Type 054B was developed to improve the Type 054A’s escort capabilities, as the Type 054A’s diesel propulsion could not match the speed of China’s carrier battlegroups.

The Type 054B aims to address that shortcoming with its enhanced propulsion system. Apart from that, the ship’s primary roles are anticipated to be ASW, with secondary roles in anti-air warfare (AAW) and anti-surface warfare (ASUW).

India wasting its youthful demographics

By: Bolen C

On: November 20, 2023

In: Asia

India has recently become the world’s most populous country, with 68% of its population working-age individuals between the ages of 15 and 64.

This demographic structure – often referred to as a demographic dividend – has the potential to generate very high economic growth if India can create productive employment opportunities for its large working-age population.

But data from labor force surveys indicates that this is a big challenge for the economy at present. Some 45% of the workforce continues to toil on farms in the agricultural sector, while in the non-agricultural sector, 74% of workers are employed in low-paying informal work in microenterprises.

Indeed, among young people aged between 15 and 29 years, approximately 28% are engaged as “unpaid helpers in household enterprises.” And here too, the agriculture sector remains the principal source of employment, accounting for 36% of employed youth.

India will need a radical reorientation of its growth strategy if it is to address the challenge of productive job creation and harness its demographic dividend, making the growth process more employment-intensive.

The Indian experience shows that growth alone cannot be the principal instrument of job creation, as it is the sectoral composition of growth that determines the quantity and nature of employment opportunities created.

India’s idiosyncratic structural transformation from agriculture to services – leapfrogging the phase of manufacturing growth – has generated limited opportunities for well-paid employment for those at the lower end of the education and skills ladder.

This contrasts with China’s experience, with its rapid decline in the employment share of low-productivity agriculture and boom in labor-intensive manufacturing for export.

Between 1978 and 2010, the share of employment in Chinese agriculture declined from 70.5% to 36.7%. In India, the corresponding shares declined at a slower pace from 71.1% to 51.3% during the same period.

The sluggish pace of structural change continues to pose a challenge for the Indian economy. While high-end services, in particular IT and finance, will remain an important source of employment for the highly skilled and educated, generating productive employment for the relatively low-skilled will require making industrialization, in particular labor-intensive manufacturing, a central focus of a national growth strategy.

Such a strategy will not only generate employment, but also enhance the earnings of those at the bottom of the income distribution who have a high marginal propensity to consume. A boost in domestic demand can create a virtuous circle of consumption of manufacturing goods and industrial development, accelerating the growth of output and employment in the manufacturing and services sector.

India must embrace a two-pronged approach to achieve labor-using industrialization — 1), encouraging the entry of more formal firms into labor-intensive sectors and 2), raising the competitiveness and productivity of the many small and medium enterprises that dominate labor-intensive industries.

The former merits special attention as international firms look to the Indian market as a way to diversify their businesses and investments beyond China.

Apart from addressing infrastructural bottlenecks, regulatory impediments and India’s complex tariff structure, attracting global investments requires strengthening the fundamentals of the economy, in particular human capital.

Despite improvements over the years, India’s literacy rate is still only about 74% for the population aged above 15 years, compared with almost 97% and 95% for China and Indonesia respectively.

Data from the Annual Survey of Education Report conducted over the past 15 years show that learning outcomes leave much to be desired, often impeding the ability of young job seekers to attain the jobs they desire.

These challenges are exacerbated by technological developments which reshape labor markets not only by making some jobs obsolete and creating new ones but also by retooling existing jobs that require new skill combinations.

Against this backdrop, policymakers need to adapt education and skilling systems to ensure that Indian labor can meet the complex and evolving skills demanded by an ever-changing world of work.

Over and above all these factors, India will not be able to realize its demographic dividend unless it can bring more women into the labor force and productive employment. At present, India’s female labor force participation rate stands at 37%, with 64% of all employed females in the agriculture sector.

Bringing more women into gainful employment not only requires addressing regressive social and cultural norms but also investment in childcare service provision, health, education and technology, and infrastructure services that allow more time for market work.

While it is important to bring more women into the labor force, it is equally important to improve their access to decent, productive and well-paying employment opportunities. India must adopt a macro-policy framework that supports gender-equitable inclusive growth and more jobs for women.

Harnessing India’s demographic dividend requires correcting the imbalances in the country’s structural transformation, in particular the failure of the labor-intensive manufacturing sector to become an engine of job growth.

Labor should be recognized as more than a mere factor of production whose cost has to be pushed down, but as human capital that must be nurtured to realize the potential of India’s demographic sweet spot.

Radhicka Kapoor is Professor at the Indian Council for Research on International Economic Relations (ICRIER).

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

The next big tech war front: RISC-V

By: Bolen C

On: November 20, 2023

In: Asia

Alibaba’s share price dropped nearly 10% on November 17 on the news it has canceled the spin-off and initial public offering (IPO) of its cloud computing division, marking the latest market tremor to hit China’s sanctioned tech industry.

Alibaba said the cancellation was driven by the disruption caused by US bans on China’s access to advanced proprietary semiconductors made by Arm, Intel, AMD and Nvidia.

At the same time, US sanctions are accelerating China’s development of advanced chips using the RISC-V open standard design architecture, giving rise to US Congress calls to extend the China tech bans to RISC-V.

RISC-V is an open standard instruction set architecture based on Reduced Instruction Set Computer design principles. It is a free, non-proprietary platform for the development of integrated circuit (IC) processors.

As an alternative to Arm, Intel, AMD and Nvidia, RISC-V is spurring the interest of not only China but also the EU and smaller companies and chip designers.

A China RISC-V Alliance was established in 2018 to create a complete open-source computing ecosystem by 2030.

The RISC concept was conceived at the University of California, Berkeley, in 2010. The RISC-V Foundation was established in 2015 to support and manage the open-source technology, with the Institute of Computing Technologies of the Chinese Academy of Sciences as one of its founders.

Other founding members include Google, Qualcomm, Western Digital, Hitachi and Samsung while other Chinese members include Huawei, ZTE, Tencent and Alibaba Cloud. The association currently has more than 300 corporate, academic and other institutional members around the world.

In 2020, the Foundation was incorporated in Switzerland as the RISC-V International Association, moving out of the United States to avoid potential disruption caused by then-president Donald Trump’s anti-China trade policies.

On October 31, 2023, Alibaba Cloud announced a RISC-V controller chip for enterprise solid state drives (SSDs) at its annual Aspara technology conference in Hangzhou, where the company is headquartered.

Alibaba is banking on RISC-V. Image: Asia Times Files / Agencies

The device was developed by Alibaba’s wholly-owned IC design subsidiary T-Head. It will be used in Alibaba Cloud’s data centers for artificial intelligence (AI) training, big data analytics and other applications.

T-Head develops application-specific ICs for AI, cloud computing, industrial, financial, consumer electronics and other applications. It has also designed an internet of things (IoT) processor based on RISC-V.

Alibaba Cloud has announced the development of new data center servers with improved computational capabilities and energy efficiency. They should help it compete with Microsoft Azure, Amazon Web Services, Alphabet’s Google Cloud Platform and, in China, Tencent, Baidu and Huawei.

At the RISC-V Summit North America 2023 held in Santa Clara, California, on November 7 and 8, Alibaba’s director of AI-generated content (AIGC) David Chen presented what he claimed was the first successful deployment of a RISC-V server cluster in the cloud.

Cluster computing in cloud computing involves using multiple nodes or computers to form a single unit, enabling the system to handle heavier workloads than any computer could run.

Cluster computing can be used in various data-intensive applications ranging from machine learning to financial modeling to scientific simulations. First announced in October, the RISC-V cloud-based server cluster was achieved by T-Head and Sophgo in collaboration with Shandong University.

Sophgo is a developer of RISC-V processors and other open-source computing solutions headquartered in Beijing. The company has R&D centers in more than 10 Chinese cities targeting cloud computing, deep learning, data analytics, video, security, infrastructure and healthcare.

The RISC-V cloud server cluster utilizes processors designed by both T-Head and Sophgo and open-source Linux software. The Linux Foundation and the RISC-V Foundation have been collaborating since 2018.

“Each day, thousands of engineers around the world collaborate and contribute to advance RISC-V, the open-standard instruction set architecture that is defining the future of open computing,” the RISC-V organizers wrote in their introduction to the recent summit.

“The RISC-V community shares the technical investment and helps shape the architecture’s strategic future so everyone may create more rapidly, enjoy unprecedented design freedom, and substantially reduce the cost of innovation. Anyone, anywhere can benefit from these contributions,” the organizers said.

But not if US Congressman Mike Gallagher (R-Wisconsin) and his colleagues have their way.

US congressman Mike Gallagher wants to block China’s access to RISC-V. Image: Epoch Times Screengrab

On November 1, they sent a letter to US Commerce Secretary Gina Raimondo “to express our concerns about the national security risks posed by the People’s Republic of China’s (PRC) significant involvement in RISC-V and the organization’s semiconductor chip design architecture with the explicit purpose of undermining US export controls and leapfrogging our technological leadership in chip design.”

Gallagher is chairman of the Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party. The letter was also signed by Raja Krishnamoorthi (D-Illinois), ranking member of the Committee, Senator Marco Rubio (R-Florida) and 15 other members of Congress.

Secretary of State Antony Blinken, Secretary of Defense Lloyd Austin and Secretary of Energy Jennifer Granholm were copied on the letter. The letter declared that “Urgent action is needed to prevent US technology and technical know-how from contributing to the PRC’s utilization of this technology.”

Not only is China seeking to use RISC-V to achieve technological self-sufficiency, it aspires to become an “open-source power” and already accounts for half of all RISC-V chips sold worldwide, the letter said.

This could happen because “RISC-V allows the PRC to use open-source architecture to develop advanced chips without needing a license from the US government.”

The letter recommends that all US individuals or companies engaging with China on RISC-V or any other computer instruction set architecture must receive US government licenses, even though RISC-V International is headquartered in Switzerland

The signatories compiled a list of questions for Secretary Raimondo, for which they would like answers by December 1, 2023. The questions include:

What is the administration’s plan to prevent the PRC from achieving dominance in the RISC-V technology and leveraging that dominance at the expense of US national and economic security?

What are the potential national security risks posed by the expanding use of RISC-V technology? How do existing US government policies related to the use of open-source technologies in sensitive systems address these risks?

How is the administration working with US companies to address these potential security risks associated with these technologies?

How could the administration apply the authorities provided by the Executive Order 14017 on Securing America’s Supply Chains to address the risks posed by RISC-V to cyber security and US industry?

How would PRC dominance in RISC-V hardware affect the cybersecurity concerns related to internet of things and its application to critical infrastructure?

How the Biden administration responds will be a good indicator of how much, if at all, US-China tech tensions have eased since Biden and Chinese President Xi Jinping met in California at last week’s APEC summit.

The letter rightly points out that the intellectual property used to design ICs is currently dominated by Western companies such as Arm, Intel, AMD and Nvidia.

US-based RISC-V IP companies including SiFive, Andes, Qualcomm, Google and others have already been banned from selling their technology to Chinese companies on the Commerce Department’s Entity List without a license.

That, however, is not enough for Gallagher and his colleagues, who write that “the United States should build a robust ecosystem for open-source collaboration among the US and our allies while ensuring the PRC is unable to benefit from that work.”

To do that would require either competing with or expelling China from the RISC-V International organization. Some European politicians might agree with that, but the US politicians who signed the letter are either not aware of or have seemingly ignored the EU’s RISC-V policy.

In February, the European High Performance Computing Joint Undertaking (EuroHPC JU) announced plans to form a partnership with industry, research institutions, supercomputing centers and other organizations to develop a European high-performance computing (HPC) ecosystem based on RISC-V.

Its mission is to develop, deploy, extend and maintain world-leading supercomputing, quantum computing and related services and data infrastructure in Europe. This is to be supported by a secure supply chain with a wide range of applications contributing to the development of European science and industry.

The European Chips Act has identified RISC-V as one of the next-generation technologies in which Europe should invest to build and reinforce its capacity to innovate in the design, manufacturing and packaging of advanced, energy-efficient and secure integrated circuits, and turn them into marketable products ranging from micro-controllers to high-end chips used in data centers and supercomputers, the EuroHPC JU’s website says.

The EU sees a future in RISC-V technology. Image: Silicon Republic / Facebook

The technology should be linked to its use in industry in order to make sure that it addresses European market needs and “contributes to digital sovereignty beyond scientific HPC,” the website says.

“RISC-V technology is a credible energy-efficient alternative to the proprietary solutions for processors and accelerators across the computing continuum that are produced outside the EU.”

In other words, RISC-V is an alternative to Arm, Intel, AMD and Nvidia. Many US politicians view RISC-V as part of a new Cold War in the tech realm. The EU, like China, views it as a way to escape US dominance of advanced computing.

It remains to be seen whether the US will subvert open-source technology in what will likely amount to a futile attempt to protect and maintain its high-tech hegemony.

Follow this writer on Twitter: @ScottFo83517667

Bolen C (Page 333)

3% statistical error

Independence ticket

Uneven development

Bleeding Ukraine (and NATO)

Iowa Ammunition Plant

Scranton Ammunition Plant

US and NATO ammunition goal not enough for deterrence