China Response to Hacking Indictment Indicates Rash Leadership and Need to Expand NATO to Asia

Posted on May 20, 2014 by admin

Journal of Political Risk, Vol. 2, No. 5, May 2014.

Chinese and Russian joint naval exercise is photographed. One large ship is visible in the background with a smaller one in the foreground.

Chinese and Russian joint naval exercise. In 2013, Russia and China conducted similar exercises near Vladivostok. A Chinese fleet consisting of seven naval vessels participated in the “Joint Sea-2013” Sino-Russian joint naval drills scheduled for July 5 to 12. The eight-day maneuvers focus on joint maritime air defense, joint escorts and marine search and rescue operations. Source: Wikimedia Commons.

Anders Corr, Ph.D.
Publisher of the Journal of Political Risk

China is using a very blunt and escalatory instrument — threatening general deterioration in military relations — to respond to a limited issue of Chinese individuals stealing trade secrets. On May 20, the United States Justice Department indicted five People’s Liberation Army members for hacking United States commercial data. The remarkable speed with which China responded the following day, and at the highest level, suggests that commercial hacking is an officially-approved state policy on the part of China. The Chinese threat of reduced military cooperation and thereby deteriorating military relations is clumsy in that the Chinese would look better had they simply launched an investigation of the individuals — an investigation that they could later claim shows the indictment as baseless. The broad Chinese threat of deteriorating military relations invites an increase in US military attention to Asia — exactly what the Chinese should be trying to avoid. The clumsiness of the Chinese response to the indictments indicates a rash Chinese leadership prone to irrational military strategies, with consequent market volatility and political instability. The US and its Asian allies should respond with a measured forward deployment of military forces, and redoubled diplomatic energy towards greater alliance cooperation, including between Asian allies and NATO.

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Shale Gas Race: Political Risk in China, Argentina and Mexico

Posted on January 19, 2014 by admin

Journal of Political Risk, Vol. 2, No. 1, January 2014.

A global map showing shale gas basins, top reserve holders.

Global shale gas basins, top reserve holders. Source: Reuters, Catherine Trevethan.

Igor Faynzilbert, CFA
Financial Analyst

As the world continues to embrace cleaner and more efficient sources of energy over the next 25 years, natural gas stands to gain a large market share at the expense of less efficient and more pollutant coal and wood. The United States is currently the biggest winner from hydraulic fracturing and horizontal drilling that allow significantly increased production of shale gas. However, China, Argentina and Mexico are also potential gainers from these new technologies if they manage to overcome political and infrastructure challenges that have considerably slowed development of new gas fields. Continue reading →

Rise of Environmental NGOs in China: Official Ambivalence and Contested Messages

Posted on January 10, 2014 by admin

Journal of Political Risk, Vol. 1, No. 8, December 2013.

Figure 1 is a bar graph titled "Registered NGOs (Civil Organizations) in China 1988 to 2009." and shows an upward trend.

Figure 1. Registered NGOs (Civil Organizations) in China 1988 to 2009. Data source: Xu Ying and Zhao Litao, 2013.

Ruge Gao
Cornell University

With China’s impressive economic growth over the past few decades has come an environmental cost that reaches from the countryside to the capital.[1] While some Chinese economists believe the lack of environmental regulation encourages uninhibited growth, the Chinese State Environmental Protection Agency and State Statistics Bureau have produced statistics that indicate that environmental damages have decreased growth by three percent.[2] Triggered most prominently by the 1998 Yangtze River Floods, the number of Chinese environmental non-governmental organizations (ENGOs) began growing around 2000 and experienced explosive growth within the last decade. According to Chinese Ministry of Civil Affairs statistics,[3] in 2008 China had approximately 212,000 social groups, with 5,330 being of the environmental variety. Many Chinese ENGOs are in the public eye, but must simultaneously satisfy international donors and local government officials in order to survive. Continue reading →

Legal Services Reform in China: Limitations, Policy Perspectives, and Strategies for the Future

Posted on October 21, 2013 by admin

Journal of Political Risk, Vol. 1, No. 6, October 2013.

Julian Yang, Esq.
Lawyer

Précis: Mr. Julian Yang, a practicing lawyer and arbitrator in Beijing, China, describes problems with the Chinese legal system, including bias by courts, corruption, a culture of litigation, and lack of sufficient numbers of lawyers to satisfy market demand. He argues for legal services reform in China, including: 1) allowing foreign lawyers to address Chinese courts, 2) allowing foreign lawyers to practice commercial law, 3) increasing consultation of lawyers in contractual law to avoid litigation, 4) use of arbitration to decrease the quantity of litigation, 5) increasing the rights of Chinese lawyers, such as rights to gather evidence, and 6) increasing the rights of clients, for example the right to freely choose and meet with lawyers without police scrutiny. Mr. Yang argues that these reforms will increase the influence of China abroad, improve legal services in China, and provide a test as to whether greater political reform would be possible without loss of political stability.

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Chinese Political and Economic Influence in the Philippines: Implications for Alliances and the South China Sea Dispute

Posted on July 1, 2013 by admin

Journal of Political Risk, Vol. 1, No. 3, July 2013.

Figure 1 is titled "China and Philippines: Military Expenditure and Energy Use, 1989-2011" and shows a line graph with an upward trend and another set of plotted points showing an upward trend.

Figure 1: China and Philippines: Military Expenditure and Energy Use, 1989-2011. Shortly after most US forces left the Philippines in 1991-2, Chinese military expenditure and activity in the South China Sea increased dramatically. Data source: Correlates of War Project.

Anders S. Corr, Ph.D.
Publisher

Priscilla A. Tacujan, Ph.D.
Independent Consultant

The Philippine government is constitutionally required to craft an independent foreign policy, but it must accelerate cooperation with foreign powers to do so effectively. China’s growing militarization and energy consumption are fast out-pacing the meager military spending and energy consumption of the Philippines (See Figure 1). This makes China, more so than the Philippines, willing to risk military conflict over disputed energy resources, fishing areas, and transportation routes in the South China Sea.

Since the People Power Revolution of 1986, the Philippines has had a comparatively weak, and sometimes fractious, alliance with the United States, Japan and the Association of South-East Asian Nations (Asean). China, on the other hand, has increased its political influence in the Philippines over the last twenty-five years, through both economic means, and threatening military behavior. China would prefer prolonged bilateral negotiations with the Philippines, as with other small countries, while gradually encroaching on maritime territory. The minor concessions or royalty payments offered by China are in no way commensurate with the energy resources of the South China Sea (also known as the West Philippine Sea). The cheapest approach for China, though one costly in terms of reputation, has been to compromise individual Philippine politicians in exchange for turning a blind eye to encroachments. The belief of China is that such encroachments may cause minor discomfort in Chinese foreign affairs in the short-run, but will eventually be accepted and legitimized as fait accompli. Control over lucrative shipping, fishing, and energy fields will result.

The Philippines could extract far greater ownership rights and royalty payments on the international market by keeping Chinese corruption and military threats at bay. The latter strategy requires political fortitude and strengthened alliance cooperation with the United States, Japan, and Asean. The Philippines can become a leading partner in a developing Asian alliance system^[1] geared to contain China and safeguard an UNCLOS determination on the East and South China Seas, but to do this requires safeguards against Chinese influence in Philippine politics. Continue reading →