China compromises to push submarine engine sale to Thailand

Navy wants engine change assurances

Royal Thai Navy top brass hold a press briefing at the force’s headquarters in Bangkok in 2020 to defend the purchase of two more submarines worth a massive 22.5 billion baht from China. (Photo: Apichit Jinakul)
Royal Thai Navy top brass hold a press briefing at the force’s headquarters in Bangkok in 2020 to defend the purchase of two more submarines worth a massive 22.5 billion baht from China. (Photo: Apichit Jinakul)

Chinese authorities will accept three conditions regarding warranty, compensation and safety, if the Royal Thai Navy (RTN) chooses a Chinese-made engine as a substitute for a German-made one for a S26T Yuan-class submarine being assembled in China, Navy commander Adm Choengchai Chomchoengpaet says.

Speaking after a meeting with China’s navy chief and defence minister on Tuesday, Adm Choengchai said the Chinese navy has pledged to support the certification of the Chinese-made CHD620 engine built by China Shipbuilding & Offshore International Co (CSOC) as agreed last year.

The CSOC offered the CHD620 after Germany refused to sell its MTU 396 diesel engine to China as it is designated a military/defence item.

That said, the Thai navy came up with three conditions to determine whether it should continue or cancel the contract, he said.

The Chinese navy must certify the CHD620 engine with the Thai navy and assure its safety, as well as provide compensation for any construction delays while waiting for the engine.

Chinese authorities insisted its engine incorporates technology almost similar to the German-made model and has been fitted in many Chinese vessels and aircraft carriers.

If the CHD620 is modified, it can be compatible with Thai and Pakistani submarines or even Chinese submarines in the future, he said.

“They [Chinese authorities] guaranteed the safety of the engine,” said Adm Choengchai.

The navy also discussed with CSOC compensation details regarding the engine’s warranty as well as for any delay in the procurement process and changes to the value of parts. But further details could not be disclosed, he added.

Asked if it was possible the navy could receive a second-hand submarine as compensation, he said it needs to be discussed in further detail and must be approved first by the navy, which might accept the offer to use the CHD620.

The CHD620 engine must be certified by the Chinese navy by June, before further discussions, including compensation, warranty and maintenance, can proceed.

When asked about the length of time it will take to finish the submarine if the navy opts to use the CHD620, he said it may take about three years and four months.

However, the navy chief said the procurement of the second and third submarines may need to be postponed.

Responding to a question about a training programme for Thai sailors after obtaining the first submarine in 2025, he said the Chinese navy chief had pledged to support the training to ensure they can operate it as stipulated by the contract.

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Living on the frontlines of a US-China flashpoint

A view of a beach on Basco islandLindle Markwell/BBC

The largest ever military exercises between the United States and the Philippines are drawing to a close. They began just days after China’s military rehearsed a blockade of Taiwan – a display the US called disproportionate. With tensions high in the region, a handful of people on a few small islands find themselves caught between two superpowers.

Short presentational grey line

Life is fragile in Itbayat.

The steep limestone cliffs and rolling hills that make up this tiny island on the northern edge of the Philippines rise out of the Luzon Strait.

Even on a good day, strong waves on the azure seas toss around tiny fishing boats hoping to hook some of the islanders’ favourite flying fish.

Nearly 3,000 native Ivatans, fishermen and farmers, have survived here in the face of earthquakes, typhoons and drought. But now they face a new and different threat.

Their island home risks being caught in a conflict between the United States and China as the two militaries skirt ever closer to each other to gain the upper hand in the South China Sea.

At the heart of the issue is Taiwan. China’s claims over the self-governing island are growing louder even as the US’ commitment to defend it appears to be deepening.

And these islands – Itbayat and Basco – that make up the far-flung Philippine archipelago of Batanes are in the line of crossfire.

They appear as mere dots in the ocean that surrounds them. But their proximity to Taiwan – it’s just 156km (96 miles) from Itbayat – has made them both strategic allies and vulnerable foes.

Analysts often talk of rising tensions between the two superpowers, but what is it like to live in the biggest flashpoint between Beijing and Washington?

Map showing where Batanes Islands is located

Itbayat can often be cut off for weeks. It certainly looks impenetrable. Small ports are carved out of the cliffs and getting to a boat involves clambering down steep steps cut into the rock face.

The colour of the water hugging the land is a deep turquoise – and so clear you can watch small fish play amongst the coral. Itbayat feels untouched by man, other than the indigenous community who’ve made it their home.

Few here have televisions. A network of relayed messages from house to house, or through the church congregation is often more reliable than the patchy phone signal.

But they don’t need TV news or social media to tell them about the turbulent relationship between the US and China which threatens their shores.

It’s closer than it has ever been.

Who rules the waves?

Crouched down, eyes fixed through the viewfinders of their weapons and head to toe in camouflage are the members of the US Army’s 25th Infantry Division training on the island of Basco.

They are practising to defend the island from potential aggressors. The exercise is part of the largest combat drills ever held between the US and the Philippines.

Out at sea, the mission was controlled from the USS Miguel Keith, a naval ship, while V-22 Osprey aircraft hovered over the island, much to the amazement of locals who grabbed their mobile phones to film. The simulation even involved rocket launchers being shipped to the beaches using amphibious landing craft.

“The goal of our campaign in this region is to deter conflict from ever occurring,” says Major General Joseph Ryan, the commanding general of the 25th Infantry Division.

“We don’t want a war with the PRC [People’s Republic of China]. We do not want that, we do not desire that and we are not provoking that. A war with the PRC is good for nobody.”

But, he admits, the two forces are sending a message.

US soldiers arriving for drills

Courtesy US Military

“The message sent is we’re ready, we’re capable, we’re prepared. We’ve got a great partnership here. And we mean business.”

The two sides are certainly arming themselves; as is the whole of Asia.

China is still the region’s biggest spender on new military hardware, with this year’s defence budget the highest it’s ever been, around $224bn.

The US, in turn, has been keen to show off its capabilities, holding ever more military drills with allies throughout the region, including Japan, South Korea and Australia.

For Washington this is not just about a display of shiny new arms. It is also about shoring up alliances – the White House has been dispatching envoys more often than usual to Asia, hoping to stitch together a sturdy coalition to counter China. And that includes the Philippines, whose location is an asset.

Maps showing Philippine bases the US has access to

“The situation is heating up,” admitted Filipino President Ferdinand Marcos in a recent interview with a local radio station ahead of his visit to Washington this week.

He has decided to take a more assertive approach to China than his predecessor and that includes ordering more patrols by the Navy and the Coastguard.

Fishermen on the frontlines

But what would be largely uneventful patrols elsewhere have the potential to turn into a conflict in the South China Sea, where even fishing could ignite a geopolitical crisis.

Beijing claims sovereignty over almost the entire South China Sea – a strategic waterway through which trillions of dollars in trade passes annually – despite an international court ruling that the assertion has no legal basis.

“The Chinese fishermen used to harass us,” says 59-year-old Cyrus Malupa, as he casts a single wire line with a metal hook into the sea.

“But when we reported that to the government, it placed a military base on Mavulis Island to the north. Now we have Philippine Marines there on duty,” he adds.

In March, the Navy started a month-long mission on the uninhabited island, described it as the country’s “first line of defence” and raised the Filipino flag on its highest peak. A small but bold act of sovereignty.

For Cyrus and others who live in tiny boats for days in the hope of catching enough tuna to sell at the local market, the geopolitical dispute is personal. It’s about feeding their families.

Hundreds of Filipino fishermen have reported incidents of being driven away from their traditional fishing grounds in the South China Sea for more than a decade – particularly in the contested seas near the Spratly Islands.

“We don’t have that much catch because the poachers have more advanced technology,” Cyrus says as the tiny boat bounces over the white horses now forming on the water.

“Us locals use the old way of fishing like lines and smaller nets. But the poachers have more advanced technology so they can catch as much as they can.”

(L-R) Antonio Villa, Daniel De Guzman and Cyrus Malupa

Lindle Markwell/BBC

Manila has filed nearly 200 diplomatic protests against Beijing’s actions in the South China Sea – where Vietnam, Taiwan and Brunei also have overlapping territorial claims.

It’s natural to be worried because any conflict will affect our lives,” said 51-year-old Victor Gonzales.

“First, we are afraid for our lives and then there is the possible exodus of people coming here from Taiwan as we have limited resources.”

Like most on Itbayat, Victor farms when the sea is rough and goes out to fish when it is fair. Crops are raised by hand, with no help from machinery or fertilisers. Instead, farmers rotate sweet potato, rice, corn, garlic and onions. A single farm can feed around 25 families.

“We need to protect our resources because it’s how we live, and we don’t have any alternative. We want to have something to pass onto the next generation,” Victor says.

The concern runs deep enough that leaders of local governments in the Batanes islands announced to reporters last December that they would secure food supplies to prepare for a possible conflict.

Arms and allies

The restricted signs around the Camilo Osias naval base on the beaches of Santa Ana are hand-painted and difficult to make out – almost obscured by the dozens of green fishing boats moored along the sand. It’s Sunday and a few of the men who would usually be at sea are getting tipsy in the shade on a Filipino brand of gin.

A handful of water buffalo wallow in the shallows flicking off the birds that come to rest on their backs with their tails. Nearby, women are doing the weekly washing in huge tubs – the suds spilling over the sides.

Santa Ana is a sleepy town on the northern tip of the main island of Luzon. There is little activity around the tiny Filipino naval base which is so tucked away on a corner of the beach that you would barely know it was there – unless you spotted the “restricted” signs. Crucially it has an airstrip that will give the US access to the Taiwan Strait.

“It’s not really a base. I would say it is more like a Boy Scout camp,” exclaims Cagayan Governor Manuel Mamba.

Batanes Islands

Lindle Markwell/BBC

This is one of the four new bases in the Philippines that US troops can access as the two countries boost their military alliance. Two of the new locations are in the northern province of Cagayan and face Taiwan.

“This is not my call or the call of our people. It’s the call of our national leaders. We will abide by it. We may disagree with it, but really it’s all because we don’t want war,” says Mr Mamba.

“We are poor, and we have our local problems too. That is why any cause of uncertainty will be a bigger problem for all of us.”

Mr Mamba is worried that having two US bases in his province will make it a target. He had hoped to bring Chinese tourists to the region, or build a new international airport. Now he fears that Beijing may snub the Philippines when it needs their business more than ever.

“It is hard for us to choose between the two of them. Between a neighbour who has never been our enemy and an ally who has stood by us through so many difficulties. If they could be together, if only they could talk, if only there was middle ground for them to meet.”

Governor Mamba’s comments reflect a growing anxiety across parts of Asia. Will they be forced to choose between a long standing ally, the US, and their largest trade partner, China?

Back in Basco, in the capital of the tiny Philippine province of the Batanes islands, 21-year-old Ave Marie Garcia is helping travellers get flights to and from her home island of Itbayat.

She doesn’t keep an eye on the news – but she couldn’t fail to notice or hear about the latest military exercises.

Ave Marie Garcia

Lindle Markwell/BBC

“I don’t think the US is going to cause war with these military exercises. It’s just the US is trying to help the Philippine military to protect this island and to let the Chinese know that this region is protected,” she says as she jumps on her scooter to show us her favourite views and beaches.

Ave is one of 11 children and like many in the Philippines, her mother works abroad to send money back to the family.

Their ancestral home, a traditional stone cottage which has stood through the centuries, lies in ruins after an earthquake in 2019 – a reminder that life is fragile here.

Ave and her siblings were brought up by what she describes as her strict grandmother. But in Ave there are small signs of rebellion. Her long dark hair is dip-dyed blonde at the ends.

And yet, she is an Ivatan at heart. Her hope is to preserve her ancestors’ way of life, even if that means saying no to the United States. She believes there should be limits.

“I am worried about the future – for our future. I hope they won’t build structures here for the U.S military, I just want to leave it as it is. They are allowed to visit this place but they are not allowed to build something here that will cause anyone to invade us. For me it’s scary.”

The people here feel miles away from the politics and the bellicose rhetoric, and they try not to dwell on what could be, and enjoy what they have.

“An island life is a simple life,” Ave says. Each day, she and her family pray it will stay that way.

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Mitr Phol achieves global recognition for sustainability

Company ranks No.2 in S&P Global for the food industry

Buntoeng Vongkusolkit, Chairman of Mitr Phol Group, sits amid a crop of canes. The company prioritises the development of bio-based raw materials by ensuring the quality of its cane and sugar.
Buntoeng Vongkusolkit, Chairman of Mitr Phol Group, sits amid a crop of canes. The company prioritises the development of bio-based raw materials by ensuring the quality of its cane and sugar.

Mitr Phol Group, world’s second biggest sugar producer and a leader in sustainable development in the agro-industrial sector in Thailand, has been recently ranked second in the world for sustainable development in the food product industry in the latest Corporate Sustainability Assessment (CSA) by S&P Global.

The inclusion in the rankings for the fifth consecutive year testifies to the Group’s excellent work as it climbed from 17th in the first assessment year to second among 353 participating organisations this time around. This represents a push for Mitr Phol Group to achieve international sustainability standards, transparency, and to abide by the same standards as leading companies listed on the Stock Exchange of Thailand (SET) as well as global companies.

The latest world’s ranking testifies to Mitr Phol Group’s success over the past 66 years in creating an organisation with a focus on sustainable development that meets international standards and its gaining of international recognition — economically, socially and environmentally — while helping all its operations achieve a sustainable future.

“In doing business today, we must focus on developing sustainability for society, the environment and all related parties. To create organisational sustainability we must not only focus on increasing our business growth but we must also prioritise the benefits to all stakeholders,” according to Buntoeng Vongkusolkit, Chairman of Mitr Phol Group, referring to company’s stakeholders including sugarcane farmers, business partners, customers, communities, society and employees.

“Operating a sustainable business helps us build the competitiveness we need to deal with sudden changes, including helping society and environment,” noted the Chairman.

Mitr Phol Group has adhered to sustainable business principles for a long time.

The group has consistently embraced the emergence of digital technology and innovations, capitalising on both to help manage and create sustainable development throughout the business value chain, from upstream to downstream.

Agricultural sector … A new opportunity for a greener world

As the group is in the agro-industrial sector which involves a number of people and partners as well as communities and the environment, the company’s sustainable development drives truly aim to benefit all stakeholders.

The agricultural sector is the source of food security and can be extended to provide green energy and bio-based products that respond to industrial and consumer demands.

The manufacturing industry is taking a hard look at utilising bio-based raw materials over those derived from petroleum for its production processes to reduce the environmental effects.

“We see a chance of agricultural sector for playing a key role to build sustainability. Consequently, we prioritise the development of raw materials throughout the value chain and strive to ensure the quality of cane and sugar that can be used as bio-based raw materials,” said Mr Buntoeng.

“Recently, the company became the first in Thailand to be certified by Bonsucro EU-RED, demonstrating that its ethanol is produced in accordance with the sustainability requirements of the European Union,” he said.

Mitr Phol Group remains committed to creating sustainable development in accordance with the United Nations Sustainable Development Goals (SDGs) covering all three economic, social and environmental dimensions.

To achieve this, the group adopts global sustainability assessment criteria to the same standard as the Dow Jones Sustainability Indices (DJSI).

Under the latest assessment, Mitr Phol Group received higher scores across the board, including in economic aspects including supply chain management and ensuring transparency in business operations, the social aspects that focus on developing and taking care of the quality of life of stakeholders, and the environmental aspect whereby Mitr Phol Group aims to become a carbon neutral organisation by 2030 and to achieve net zero greenhouse gas emissions by 2050.

To achieve the net zero goal, the group has implemented six procedures — produce and use clean energy, expand to the bio-based products business, encourage cane farmers to harvest by cutting fresh canes instead of burning their crops, ensure wastewater and waste management, increase afforestation and to offset carbon credits.

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Army officer in violent same-sex case summonsed

An army lieutenant general accused of illicit drug use and assault while having sex with another man in Songkhla is being summonsed for questioning, police at Songkhla’s Sadao station say.

Investigators have interviewed the alleged victim, identified only as Nut, and decided initially to press an assault charge against the accused. A summons has been issued for the lieutenant general for questioning.

Police said the accused will also be questioned about drug use and whether other charges are pressed depends on the evidence.

The summons was issued after Nut and his lawyer, Arm Suwanraksa, filed a complaint against the lieutenant general at Sadao station on Tuesday.

The victim was examined at Songklanagarind Hospital on April 24 and discharged on Tuesday. He said he was prescribed antibiotic drugs for his injuries. He said he wanted the lieutenant general to take responsibility for hurting him and demanded the army conduct a thorough investigation and not treat the incident as a personal matter.

Mr Arm said police would have to review the evidence to determine if a drug charge would be pressed against the army officer.

The lieutenant general was transferred to an inactive post pending an investigation after the incident came to the media’s attention on Sunday.

Nut showed a video clip of the scene and bruises over his body, which he claimed were due to him being assaulted while having sex with a lieutenant general with the initial “Wor”.

According to media reports, both met via an LGBTQ+ dating app and agreed to meet at a hotel in Sadao district. The lieutenant general allegedly asked the victim to take crystal meth by directly injecting it into his veins, but he refused.

Afterwards, the officer allegedly used a sex toy with the victim and lashed him with a whip. The lieutenant general allegedly refused to take responsibility for hurting the victim and threatened the victim before the accused offered 2,000 baht to end the matter.

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Govt ramps up vaccine distribution

The Public Health Ministry is speeding up the distribution of basic vaccines, which include polio and measles, to children across Thailand after a recent study found the immunisation rate among Thai children has dropped to about 80%.

In comments to mark World Immunisation Week, the directors-general of the Department of Disease Control, Tares Krassanairawiwong, and the National Vaccine Institute, Nakhon Premsri, announced the plan to boost vaccination rates among Thai children and adolescents.

While the Public Health Ministry has distributed over 150 million doses of Covid-19 vaccines over the past three years, basic immunisation rates across the country have dropped, especially across the deep South. The campaign is designed to plug the gap.

In response, the ministry launched a campaign dubbed “The Big Catch-Up”, in which health authorities will offer DPT, pertussis, tetanus, hepatitis B, measles and human papilloma virus (HPV) shots to both children and adults.

The push will be jointly carried out by the public and private sectors, aided by the Department of Local Administration, sub-district health promotion hospitals and village health volunteers, Dr Nakhon said.

“If the national measles immunisation rate drops, the chance of measles returning will increase.

“We’ve eradicated polio, but the low rate of polio immunisation might allow a new outbreak,” Dr Nakhon said.

He said the recommended immunisation rate must be above 90%. At present, the rate is about 80%.

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Biden and South Korea’s Yoon sign new agreement on nuclear weapons

South Korean President Yoon Suk Yeol is in Washington to meet with US President Joe BidenGetty Images

US President Joe Biden and South Korean President Yoon Suk-yeol have reached a new deal that includes plans to deploy a US nuclear submarine in South Korea.

The agreement is an attempt by the US to show support for South Korea and to help deter attacks from its neighbour, North Korea.

In return, South Korea has agreed not to pursue a nuclear weapons programme.

The deal, called the Washington Declaration, will strengthen US-South Korea cooperation, Mr Biden said.

He spoke during a news conference on Wednesday alongside Mr Yoon, who is in Washington this week to talk about a host of issues, including the war in Ukraine, climate change, cyber cooperation and nuclear power.

Mr Yoon said the Washington Declaration – the centerpiece of this weeks’ state visit – marked an “unprecedented” step toenhance extended deterrence, a commitment from the US to deter attacks and protect US allies using its military power, including nuclear weapons.

The declaration comes amid rising concerns about nuclear threats from North Korea as the country carries out a record number of ballistic missile tests.

“It’s about strengthening deterrence in response to the DPRK’s [North Korea’s] escalatory behaviour,” Mr Biden said.

The new agreement is a result of negotiations that took place over the course of several months, senior administration officials told reporters this week.

Under the deal, the US will aim to take steps to “make its deterrence more visible through the regular deployment of strategic assets, including a US nuclear ballistic submarine visit to South Korea, which has not happened since the early 1980s”, officials told reporters this week.

The two sides will also develop a Nuclear Consultative Group to discuss nuclear and strategic planning issues.

Politicians in Seoul have long been pushing Washington to involve them more in planning for how and when to use nuclear weapons against North Korea.

As North Korea’s nuclear arsenal has grown in size and sophistication, South Koreans have grown wary of being kept in the dark over what would trigger Mr Biden to push the nuclear button on their behalf. A fear that Washington might abandon Seoul has led to calls for South Korea to develop its own nuclear weapons.

But in January, Mr Yoon alarmed policymakers in Washington when he became the first South Korean president to put this idea back on the table in decades.

It suddenly became clear to the US that reassuring words and gestures would no longer work, and if it was to dissuade South Korea from wanting to build its own bombs, it would have to offer something concrete.

Furthermore, Mr Yoon had made it clear that he expected to return home having made “tangible” progress.

This new Nuclear Consultative Group ticks the box, providing the increased involvement the South Korean government has been asking for, but the bigger question is whether it will quell the public’s anxieties.

It does not ink a total commitment from the US that it would use nuclear weapons to defend South Korea if North Korea were to attack. But plans for a nuclear-armed submarine to visit South Korea for the first time in four decades means the US is trying to show it takes its responsibility seriously.

In return, the US has demanded that South Korea remains a non-nuclear state and a faithful advocate of the non-proliferation of nuclear weapons. The US sees dissuading South Korea from going nuclear as essential, fearful that if it fails, other countries may follow in its footsteps.

But it is unclear how this commitment will be received by the influential, and increasingly vocal, group of academics, scientists, and members of South Korea’s ruling party, who have been pushing for Seoul to arm itself.

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More US firms looking elsewhere: AmCham China

More than a quarter of American firms are reprioritizing other countries over China as sentiment regarding Sino-US relations grows more pessimistic, says the American Chamber of Commerce in China (AmCham China).

About 27% of surveyed AmCham China members are considering countries other than China when making their investment decisions, mainly due to concerns about an uncertain policy environment in China, according to a survey conducted between April 18 and 20 and published in the 2023 American Business in China White Paper on Wednesday.

The figure was only 6% in a previous survey, which was conducted last November and published in the 2023 China Business Climate Survey Report (BCS) last month.

In the latest survey, about 87% of US firms expressed pessimism regarding the outlook for the relationship between the world’s two largest economies. The figure was 73% in the 2023 BCS report.

The proportion of respondents who are optimistic about Sino-US relations fell from 8% to 2% for the same period. The remaining 11% are neutral on the matter.

Colm Rafferty, Chairman of AmCham China, said the latest survey was conducted against a backdrop of a tense US-China bilateral relationship that continues to stoke uncertainty in business decision-making while China is no longer the primary investment destination it once was.

Rafferty said members reported a slightly more pessimistic financial outlook for 2023 compared with previous years.

In the White Paper, AmCham China says the refusal of China to speak out against Russia’s 2022 invasion of Ukraine has further exacerbated tensions with the US and other Western nations as well as several of its neighbors.

“The Chinese government has repeated Russian propaganda and disinformation about the war, opposed economic sanctions against Russia and abstained or sided with Russia in United Nations votes on the war in Ukraine,” it says. “These decisions have continually put China at odds with many the US and many Western nations, who have threatened sanctions should China offer military or financial aid to Russia.”

It says that without peaceful resolution, Beijing’s stance in the Ukrainian war will continue to raise concern among foreign companies invested in China.

US imports from Mexico, Vietnam, India and other “friend-shoring” venues depend on imports of Chinese components, according to an Asia Times study of international trade data.

James Crabtree, executive director of the Asia branch of the International Institute for Strategic Studies, says in a tweet that, because the West’s supply chains around the world will still need Chinese components, their fundamental vulnerability will remain.

Crabtree also says an economic decoupling between the West and China will leave Southeast Asian countries more economically dependent upon China.

Top business challenge

Sino-US political tensions increased after a Chinese “spy balloon” was seen in North American airspace in late January. The situation was worsened by the cancellation of US State Secretary Antony Blinken’s China trip, new sanctions against Chinese firms and a historic meeting between Taiwanese President Tsai Ing-wen and US House Speaker Kevin McCarthy in California on April 5.

AmCham China says rising tensions between the two powers remain a top business challenge cited by its members. It says three-quarters of companies are being directly impacted by the changing US-China relationship while 46% of members expect the relationship to deteriorate in 2023, up from 24% in 2022.

Besides, it says, 38% of member companies felt that foreign companies were treated unfairly as compared with domestic companies in China last year, compared with 33% that felt that way in 2021. These companies said regulatory enforcement topped the list of unfair treatment areas, with licensing and market access and government financial support/subsidies sharing second place.

Made in China. Cardboard boxes with text made in China and Chinese flag on a roller conveyor. Photo: 3d illustration

“Almost half of our members felt ‘less welcome’ in China, with greater than one-third of survey participants expressing unfair treatment towards foreign companies by government policies and subsequent enforcement actions,” it says. “Unfortunately, this has also led to the second year of an increase in uncertainty among our members regarding the Chinese government’s intentions to open up China’s market to foreign investment.”

According to the 2023 BCS report, 24% of respondents said last November that they were considering or already relocating or already relocating their manufacturing or sourcing outside of China while 74% said they were not considering it. After the Chinese government ended its zero-Covid policy in December, there were still 23% of respondents acknowledging in mid-April that they planned to leave China.

The 2022 BCS report said in March last year that only 14% of members wanted to leave China while 83% said they would stay. The Chinese Foreign Ministry’s spokesperson at the time, Zhao Lijian, said foreign investors had cast a vote of confidence in China’s development.

When the 2023 BCS report was released last month, the foreign ministry did not comment on it but waited to comment on the separate survey conducted by AmCham South China. The survey said more than 90% of the participating companies selected China as one of the most important investment destinations and 75% of the companies planned to reinvest in China in 2023

“China remains a popular destination for foreign investment because it has a huge market and full-fledged industrial and supply chain networks,” Mao Ning, a foreign ministry spokesperson, said on March 1. “No matter how the international landscape may change, we will not waver in our resolve to further open up at a high standard and our determination to share development opportunities with the rest of the world.”

China’s foreign direct investment (FDI) rose 4.9% to 408.45 billion yuan (US$59.2 billion) in the first quarter from a year ago, the Ministry of Commerce said on April 20. If denominated in US dollars, the year-on-year growth of the country’s FDI was only 0.5% in the first quarter, significantly down from 32% in the same period of last year.

US investment curbs

Next week, United States President Joe Biden will sign an executive order that will restrict US companies and funds from investing in China’s microchips, artificial intelligence, quantum computing, biotechnology and clean energy projects and firms.

The investment curbs will require US companies to notify the government of new investments in China’s high-technology sectors and prohibit some of these deals. Biden will try to announce them before the G7 Summit on May 19-21 and ask US allies for support.

AmCham China says several US export control rules are not effective as many items that require US dual-use export licenses may be exported readily from non-US countries without licenses.

“The US government should work with other governments to impose multilateral controls, instead of imposing unilateral US controls that are ineffective in achieving national security and foreign policy goals,” the chamber says. “Where controls remain unilateral, it should reconsider the effectiveness of such controls, and remove those controls that do not meet US policy goals.”

AmCham suggests that government and industry representatives from both countries can establish a vehicle to openly collaborate to address export control concerns and determine baselines that would enhance the ability of Chinese companies to procure US-controlled commodities and allow US and Chinese companies to develop technology together for the benefit of both countries.

Read: US investment curbs on tech firms infuriate China

Follow Jeff Pao on Twitter at @jeffpao3

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Singapore announces new property cooling measures, additional buyer’s stamp duty doubled to 60% for foreigners

8. For acquisitions made jointly by two or more parties of different profiles, the highest applicable ABSD rate will apply.

9. Married couples with at least one Singapore citizen spouse, who jointly purchase a second residential property, can continue to apply for a refund of ABSD, subject to conditions. These conditions include selling their first residential property within 6 months after (a) the date of purchase of the second residential property if this is a completed property, or (b) the issue date of the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) of the second residential property, whichever is earlier, if the second property is not completed at the time of purchase.

10. The ABSD currently does not affect those buying an HDB flat or executive condominium unit from housing developers with an upfront remission, if any of the joint acquirers/purchasers is a Singapore citizen. There will be no change to this policy.

11. The revised ABSD rates will apply to all residential properties acquired on or after Apr 27, 2023. There will be a transitional provision, where the ABSD rates on or before Apr 26, 2023 will apply for cases that meet all the conditions below:

a. The Option to Purchase (OTP) was granted by sellers to potential buyers on or before Apr 26, 2023;

b. This OTP is exercised on or before May 17, 2023, or within the OTP validity period, whichever is earlier; and

c. This OTP has not been varied on or after Apr 27, 2023.

12. Correspondingly, the Additional Conveyance Duties for Buyers (ACDB), which applies to qualifying acquisitions of equity interest in property holding entities (PHEs)6 will be raised from up to 46 per cent to up to 71 per cent.

Significant Increases in Housing Supply

13. The revisions to the ABSD rates to help moderate investment demand will complement our efforts to ramp up supply, to alleviate the tight housing market for both owner-occupation and rental.

14. We have increased the supply of private housing on the Confirmed List to 4,100 units for the 1H2023 Government Land Sales (GLS) programme, from 3,500 units for 2H2022. In 2022, we had injected a total of 6,300 units under the Confirmed List. For public housing, we have launched more than 23,000 flats in 2022 and will launch up to 23,000 flats in 2023. We are also prepared to launch up to 100,000 new flats in total between 2021 to 2025. We will continue to maintain a steady pipeline, to cater to growing housing demand. 

15. While COVID-19 had led to severe delays across private and public housing projects, we have made good progress to get back on track. With almost 40,000 public and private residential property completions in 2023, and near 100,000 units expected to be completed from 2023 to 2025, there will be significant housing supply coming onstream over the next few years.

16. The measures above have been calibrated to moderate housing demand while prioritising owner-occupation, and provide sufficient housing supply. The Government will continue to adjust our policies as necessary to ensure that they remain relevant, and promote a sustainable property market.

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Yoon in DC, time for a shift on the Korean Peninsula

South Korean President Yoon Suk Yeol is in Washington this week, and his trip comes at a time when the US, South Korea and North Korea are stuck in a vortex of escalation, counter-escalation. The security dilemma is alive and well on the Korean Peninsula. Is there a way out?

Daniel DePetris, writing for Pacific Forum, says that “The most dramatic shift would be recognition among the United States and its allies that denuclearization is infeasible.” Asia Times is republishing the piece below.

Relatedly, Biden and Yoon were expected to issue a separate statement on the US extended deterrence commitment to South Korea, which obviously occurs on the heels of a renewed debate about whether the ROK should have a nuclear deterrent of its own.

The Wall Street Journal Reports: “The US has agreed to give Seoul a greater voice in consultations on a potential American nuclear response to a North Korean attack in return for swearing off developing its own nuclear weapons, U.S. officials said.”

Here is the DePetris article:

North Korea conducted another intercontinental ballistic missile test on April 13, the second in less than a month. Unlike the case with previous launches, however, North Korean leader Kim Jong Un presided over what Pyongyang claimed was an ICBM powered by a solid-fueled engine.

This would represent another milestone in Pyongyang’s decades-long effort to field an operational missile capability despite being the subject of one of the most stringent UN Security Council sanctions regimes in existence.

A reliable North Korean solid-fueled ICBM would be of particular concern to the United States during a war-time contingency—solid-fueled missiles can be assembled rapidly, are easier to conceal compared to liquid-fueled variants, and can be prepared on-site, giving the United States far less time to locate and neutralize them before launch.

As expected, the United States, South Korea, and Japan condemned the latest test. Tokyo, which issued an emergency alert to residents on the island of Hokkaido, requested an emergency UN Security Council meeting.

The next day, Washington authorized two separate bilateral military drills with South Korea and Japan, including B-52 bombers and F-35 fighters. The drills were designed to send a message: more missile tests, particularly those with the capacity to reach targets on the continental United States, will result in more defensive measures by Washington and its East Asian allies in response.

Drills beget drills

None of these moves is especially surprising. The Biden administration is spending significant effort this year bolstering the credibility of US extended deterrence to its South Korean and Japanese allies.

In January, Defense Secretary Lloyd Austin and South Korean Minister of National Defense Lee Jong-sup engaged in a series of meetings in Seoul, during which Washington pledged to “enhance the implementation of US extended deterrence” through increased deployment of US strategic assets on and near the Korean Peninsula.

This came roughly two weeks after South Korean President Yoon Suk Yeol suggested it may be time for South Korea to build its own nuclear weapons, or at least request the return of US tactical nuclear warheads on South Korean soil. Yoon’s comments got the attention of US defense officials; in the ensuing months, a variety of US strategic combat systems have been rotated to the area.

In February, US and South Korean officials participated in tabletop exercises at the Pentagon with a specific focus on responding to a number of scenarios involving North Korean nuclear use. US B-1B Lancers joined exercises with South Korean forces at least four times this year. The USS Nimitz, a nuclear-powered aircraft carrier, docked in the South Korean port city of Busan in late March. In April, Washington and Seoul executed the largest military field exercises in five years.

Separate exercises occur as well, including trilateral anti-submarine warfare drills between US, South Korean, and Japanese naval forces. Similar exercises are now ongoing, with Washington, Seoul, and Tokyo regularizing them in the future to improve naval force inter-operability.

This has predictably elicited strong countermeasures from the North Koreans. The “security dilemma” – where “defensive” exercises are perceived by the adversary as a belligerent action – is very much alive on the Korean Peninsula. What Washington, Seoul, and Tokyo view as entirely justifiable, Pyongyang views as aggressive and thus deserving of retaliation.

Can the cycle of escalation be broken?

It is hard to see this cycle ending anytime soon. Ordinarily, such situations would be contained through diplomatic engagement, either between the parties themselves (oftentimes discreetly) or through a trusted intermediary. Unfortunately, there does not appear to be any diplomatic channel on the horizon.

The Biden administration has reached out to the Kim regime multiple times to jumpstart a new negotiation after talks failed during the Trump era. But Kim Jong Un rejected the overtures and is unlikely to green-light any serious negotiating effort as long as US policy centers on North Korea’s total and irreversible denuclearization.

South Korea, which acted as a facilitator of direct US-North Korea diplomacy during Moon Jae-in’s presidency, is no longer seen by the North Koreans as a credible interlocutor due to President Yoon’s hardline approach toward Pyongyang. (North Korea has even ignored daily military-to-military phone calls from the South for nearly two weeks.)

In an ideal world, China would exploit its considerable financial and political leverage over North Korea to aid Washington in bringing the Kim regime to the negotiating table. Yet, given the terrible state of US-China relations, Beijing has little incentive to help Washington on a foreign policy dispute that has confounded multiple US administrations for decades.

Additional economic pressure is unlikely to bring Kim to the table either. The UN Security Council has been deadlocked on the North Korean nuclear issue since 2017, with the United States and China arguing over who is at fault. Permanent members Russia and China use their veto power to block individual sanctions designations, and the prospect of a new UN Security Council sanctions resolution passing is too low to even theorize about.

Beijing and Moscow increasingly see sanctions as worsening the internal food and economic crisis in North Korea and should therefore be loosened or removed. The United States found out the hard way when it tabled a draft resolution in May 2022, only to walk away from the council chamber disappointed after the Russian and Chinese delegations cast a double veto.

Even if the North Koreans conducted another nuclear test, there is no guarantee the Security Council could conjure up the unanimity required to issue a statement condemning it.

With the UN paralyzed, the Biden administration has relied on unilateral sanctions designations ever since to penalize North Korea for everything from illicit financial practices and fuel smuggling to the development of weapons of mass destruction and human rights abuses. Even so, the North Koreans have proven by necessity to be highly meticulous sanctions evaders.

Washington, therefore, is left with a short list of options. Continuing to strengthen the sanctions regime is the most likely course of action, if only out of bureaucratic habit, yet by definition it is highly reactive to North Korean behavior and holds low probability of success.

Maintaining the current pace of US military deployments in East Asia will be welcomed by Seoul and Tokyo but also risks prompting more North Korean missile tests and military exercises—up to and including a seventh underground nuclear test.

Fostering a detente between the two Koreas is probably a dead-end as long as the Yoon administration’s hard line continues.

The North Korean nuclear issue is a low priority for the Biden administration. The United States is currently content with treading water and waiting for the Kim regime to accept its overtures.

Assuming Washington wants to solve or at least contain the problem, the time has come for a major policy shift. The most dramatic shift would be recognition among the United States and its allies that denuclearization is infeasible when North Korea already possesses dozens of nuclear warheads, will likely construct more, and is in the process of diversifying its delivery systems.

Avoiding a war through a mixture of deterrence, engagement, and practical diplomacy should now be the paramount US national security objective on the Korean Peninsula, not transforming North Korea into a non-nuclear state.

If the United States intends to maintain a consistently high pace of military exercises with South Korea, Washington should establish protocols to minimize confusion and mixed signaling with North Korea.

This will likely require direct communication between US and North Korean military officers and perhaps advanced, mutual notifications about the timing and location of various military and missile exercises to decrease misperceptions.

In addition, the United States, in coordination with China, should be willing to exchange basic information on nuclear safety and maintenance with North Korea. That the United States is highly unlikely to recognize North Korea as a legitimate nuclear-armed state does not obviate the need to ensure Pyongyang’s nuclear practices are up to standard.

The United States should also stop predicating US-North Korea engagement on the nuclear issue alone. Maintaining a cold peace on the Korean Peninsula involves discussions beyond the nuclear component, including, but not limited to, the disposition of conventional forces on both sides of the 150-mile Demilitarized Zone, de-escalation mechanisms between the two Koreas, and common rules of engagement along disputed boundaries like the Northern Limit Line.

Only when realistic, achievable goals are set can an effective strategy be formulated.

Daniel R. DePetris ([email protected]) is a fellow at Defense Priorities, a foreign policy think tank based in Washington, DC., a syndicated foreign affairs columnist at the Chicago Tribune and a foreign policy writer for Newsweek. Follow him on Twitter @DanDePetris.

This article was originally published by Pacific Forum. Asia Times is republishing it with permission. 

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