Critical Nubian Observer Review of Financial Times "China is stealing a strategic march on the US"

Nubian Observer Critical Review of Dangerous Financial Times of London Viet Nam Commentary

 The Chinese file

The US, Mr. Pilling of the Financial Times of London argues, has three possible responses to Beijing’s challenge. It can withdraw from Asia (highly unlikely and unnecessary, even from Beijing’s perspective); it can seek to maintain its primacy; or it can compromise. The choice is between “containment” and “appeasement”, two words loaded with negative connotations. China is seeking to prove to its neighbours that containment cannot work and that the US cannot be relied upon to defend them. If it can do so, they and Washington will have to acknowledge that the status quo is untenable. It is a dangerous strategy. It is also a clever one.

Another possible response the Nubian Observer suggests knowingly Mr. Philling omits, that is to support the right of South China Sea countries to develop their energy and China’s right to buy its share on the world market like Japan, South Korea, and the United States and Western Europe countries.

China saw its aggregate volume of natural gas imported from overseas jump 25 percent year on year in 2013, approaching one-third of its apparent consumption, a new report has showed. The country imported 53 billion cubic meters of natural gas last year, 31.6 percent of its domestic gas output plus imported volume, according to a report released by an economic and technological academy under China National Petroleum Corporation, the country's state-owned oil giant. In 2013, local authorities more strongly promoted the use of natural gas to reduce dependency on coal, prompted by the needs for environmental protection and economic advances. The drive contributed to the country's surging imports of natural gas, noted the report. Despite the increased imports, it said, "there would have been a supply-demand gap of 22 billion cubic meters in 2013 in the case that all the needs for natural gas were satisfied."China's natural gas consumption increased 13.9 percent year on year in 2013. The total consumption accounted for 5.9 percent of consumed primary energy resources, up from 5.4 percent in 2012, making China the world's third-largest gas user. Japan paid $68.98 billion last year for LNG 87.49 million tonnes last year; the Ministry of Finance said in preliminary trade figures.

If China imported all its natural gas from Viet Nam, at world market prices, China would face a net capital transfer of payment over 40 billion dollar annually to Viet Nam. As the share of natural gas increase so would the capital transfers to Viet Nam. Along with Japan and South Korea, Viet Nam would develop a market share of over a 150 billion dollar annual natural gas income, while its develops its own advanced gas centric power grid. The economic ripple economic effects would be in the hundreds of billions both in Viet Nam and the region allowing Viet Nam and other Asian supply chain economies to uncouple from the Chinese slave labor economy. This emerging reality is not lust to Beijing, Mr.Philling or the Financial Times of London, just selectively omitted in their either /or analysis between “containment” and “appeasement. Is it stupid to think Beijing might feel so kind of way about funding the economic uncoupling of Viet Nam and other Asian economies for its control? The Soviet Union felt the same way about the uncoupling East Germany and Central Europe.

 Summary

It is strategically dangerous to think China is neither stupid nor clever; Beijing is struggling with the great pain of being a super power that must learn to act in terms of the energy matrix of Asia and world peace, not giving into its own nationalistic tendencies. We have to support it becoming what it purports to be a super power among peaceful countries and help it avoid the nationalistic mistakes young super powers Germany and Japan made during WII. China is a nuclear power between an energy rock and hard place, trying to find its way as it learns to deal with ruthlessness of oil multinationals like ExxonMobil and the Middle East.

China’s energy crisis is causing critical retardations of its industrial and export economies. China is losing high energy-centric computer manufacturing to other Asian and American economies because of its overwhelmed power grids. The days of cheap Chinese energy that fueled their slave labor economy are ending. China, like other industrial countries is force to adjust to the emerging energy nightmare. With 80 per cent of China’s energy flooding into manufacturing, China’s energy adjustment is harder than other advanced Asian countries.

China national energy crisis has created a distorted filter of strategic reality. Such is the case with Beijing perception of the emergence of Viet Nam in general and its energy sector in particularity. Taking the Ca Voi Xanh field by force will not address or solve China energy crisis, any more than the United States taking Mexico oil and gas fields in the Gulf of Mexico.

Another possible response is to support the right of South China Sea countries to develop their energy and China’s right to buy its share on the world market like Japan, South Korea, the United States and Western Europe countries.

Mr. Pilling and the Financial Times of London editorial board should show a little more respect for  the sitting President of the United States name Obama and the high value his place on Chinese life and his patience with Beijing leadership brinkmanship. As in the case of Great Britain war with Germany, if and when the red line is crossed, Beijing and the Chinese military will feel the full force and might of the American notion of worth for human life.

 The critical review

The Nubian Observer would ask Mr. Pilling is an attack on a UNS ship worth war or how about seizer of the ExxonMobil 8 trillion cf natural gas field of Ca Voi Xanh near by the Chinese naval worth a war. History says yes, Japan military planners viewed BP and Standard Oil of New Jersey Asian holdings were worth doing Pearl Harbor! German planners viewed Rumanian and Soviet oil in the same light. Why should Chinese military planners think any differently? It is strategically dangerous to think China is neither stupid nor clever, even in light of history’s examples.

The world can see by the 5,000 naval seamen Beijing is so willing offering up to Vietnamese missiles as human bait, what little value the PLN place on human worth. Elements within Beijing leadership are falling into the false matrix of a narrow energy driven foreign policy, like Germany and Japan leadership did in the late 1930’s. This false energy matrix is at the expense of the strategic reality of the emerging new world order that China is a key member.

It is strategically dangerous to think China is neither stupid nor clever; Beijing is struggling with the great pain of being a super power that must learn to act in terms of the general good of Asia and world peace, not giving into its own nationalistic tendencies. We have to support it becoming what it purports to be a super power among peaceful countries and help it avoid the nationalistic mistakes that a young super power Germany and Japan made during WII. China is a nuclear power between an energy rock and hard place, trying to find its way as it learns to deal with ruthlessness of oil multinationals and the Middle East and Russians.

China would be hard pressed to dictate the terms of any “joint development” it so often purports to seek with ExxonMobil and other major energy companies who control the critical technologies and infrastructure cards, particularly as the oil and gas discoveries move into deeper waters. Beijing attempt to impose its will on the situation before the typhoon season set itself up for a major high profile public failure or military solution.

The real asymmetric game move is that fact Viet Nam and ExxonMobil need only set back; handle their business of building a stronger deterrent and wait on the typhoon season and the face saving strategic retreat of the Chinese naval force until next drilling season.

May 28, 2014 In the Financial Times of London, David Pilling, in China is stealing a strategic march on the US frame the critical question of what is worth the United States going to war with China, but runs away from the real question on informed people’s minds, i.e. why is China is over focus on to the point of offering thousands of seamen as human bait in order to take ExxonMobil Viet Nam oil and gas field.

Mr. Pilling suggest “To preserve the status quo, the US needs to prevent every one of China’s moves, something it has been unable to do. China needs merely to pick a few small battles that it knows the US has no wish to fight. An air defence identification zone here. An oil rig there. Of course, Mr. Obama could draw a red line. But, as he found out in Syria, red lines can be tricky.”

Mr. Pilling said “Bit by bit, then, Beijing is creating new facts on the ground, or rather in the sea and in the air. With each new incident, it is throwing down the gauntlet. Is it worth fighting for a Vietnamese fishing boat? Thought not. The Nubian Observer would ask Mr. Pilling is an attack on a UNS ship worth war or how about seizer of the ExxonMobil 8 trillion cf natural gas field of Ca Voi Xanh near by the Chinese rig worth a war. Japan military planners though BP and Standard Oil of New Jersey Asian holding were worth doing Pearl Harbor!

“Is China being stupid? Or is it being really clever? That in a nutshell is the foreign policy debate over Beijing’s seemingly concerted effort to provoke its neighbours. The case that China is being stupid is easy to make. In recent weeks Beijing has picked simultaneous fights with Vietnam, the Philippines and Japan. It moved an oil rig near Chinese-controlled islands claimed by Hanoi, triggering anti-Chinese riots in Vietnam in which four people died. This week a Chinese fishing boat, part of a large flotilla around the rig, was accused of sinking a Vietnamese fishing boat”. Why does Mr. Pilling fear critical commentary about Chinese designs on the natural gas field of Ca Voi Xanh oil and gas field right near the Chinese rig? Mr. Pilling knowns the oil rig placement is about the ExxonMobil oil and gas field, not about islands. Why is this subject remains off limits in the Chinese or western press, particularly the leading financial journal in the world. Even the lowly Wall Street Journal provides depth analysis of the relationship of the two locations in the East Vietnamese Sea. Is this the Mr. Obama red line Beijing fears crossing for fear of provoking a real fight with a force that may defeat it?

Nowhere in Pilling 1,000 word political essay is there any mention of ExxonMobil oil and gas field or the planned 20 billion dollar gas fed power plants near Da Nang or the pipe line now within  range of the Chinese oil rig naval missile force. Just one of the ExxonMobil’s Viet Nam field locations are reported to have almost 8 trillion cf of natural gas or 12 years of Chinese natural gas consumption. ExxonMobil has made more new gas discoveries within the Ca Voi Xanh field and other places. Could the massive Chinese naval deployment be connected to the Ca Voi Xanh field? These questions appear too provocative for the Financial Times of London editorial board to allow Mr. Pilling to address in his analysis to inform its readership.

The world can see by the 5,000 naval seamen Beijing is so willing offering up to Vietnamese missiles as human bait, what little value the PLN place on human worth. Elements within Beijing leadership are falling into the false matrix of a narrow energy driven foreign policy, like Germany and Japan leadership did in the late 1930’s. This false energy matrix is at the expense of the strategic reality of the emerging new world order that China is a key member. Prof White wrote a book with the self-explanatory title The China Choice: Why We Should Share Power .

The US, Mr.Pilling argues, has three possible responses to Beijing’s challenge. It can withdraw from Asia (highly unlikely and unnecessary, even from Beijing’s perspective); it can seek to maintain its primacy; or it can compromise. The choice is between “containment” and “appeasement”, two words loaded with negative connotations.

Another possible response the Nubian Observer suggest is to support the right of South China Sea countries to develop their energy and China’s right to buy its share on the world market like Japan, South Korea, the United States and Western Europe countries.

China is seeking to prove to its neighbours that containment cannot work and that the US cannot be relied upon to defend them. If it can do so, they and Washington will have to acknowledge that the status quo is untenable. It is a dangerous strategy. It is also a clever one.

Professor White matrix is old cold war construct that has not application to emerging interpedently world order.  As the Apple Computer iPad and the global Internet clearly demonstrate, the nation/state matrix is a dangerous false reality. The global computer integrated supply chain is not a nation/state construct and places emphasis on worldwide participation in subcomponent manufacturing. Energy is a subcomponent of the same supply chain.

As stated above, China national energy crisis has created a distorted filter of strategic reality. Such is the case with Beijing perception of the emergence of Viet Nam in general and its energy sector in particularity. Taking the Ca Voi Xanh field by force will not address or solve China energy crisis, any more than the United States taking Mexico oil and gas fields in the Gulf of Mexico.

Mr. Pilling and the Financial Times of London editorial board should show a little more respect for  the sitting President of the United States name Obama and the high value his place on Chinese life and his patience with Beijing leadership brinkmanship. As in the case of Great Britain war with Germany, if and when the red line is crossed, Beijing and the Chinese military will feel the full force and might of American notion of worth for human life.

It is strategically dangerous to think China is neither stupid nor clever; Beijing is struggling with the great pain of being a super power that must learn to act in terms of the general good of Asia and world peace, not giving into its own nationalistic tendencies. We have to support it becoming what it purports to be a super power among peaceful countries and help it avoid the nationalistic mistakes young super power Germany and Japan made during WII. China is a nuclear power between an energy rock and hard place, trying to find its way as it learns to deal with ruthlessness of oil multinationals like ExxonMobil and the Middle East.

At this critical moment in Asian history, the Financial Times of London, purportedly the leading financial journal in the world would be better serve its readership by a critical essay on China’s energy crisis and the Ca Voi Xanh oil field, rather another shallow and dangerous commentary on the power politics of a war that should never happen. James Manicom analysis in The Energy Context behind China’s Drilling Rig in the South China Sea is a starting point of contexture understanding of the Ca Voi Xanh oil field development issue. According to The Energy Context behind China’s Drilling Rig in the South China Sea, “ In the current case, even if the Haiyang Shiyou 981 makes a significant discovery, the commercial viability of that discovery hinges on getting the product to market. These costs increase dramatically with distance and the technological challenges associated with laying pipelines in deep water. The nearest Chinese gas pipeline network is on Hainan island, and water depths would make accessing that network very costly. The most sensible market for the product is Vietnam, which would be loath to pay China for resources it views as its own. These conditions suggest that China’s intent, in addition to exercising its jurisdiction in claimed waters, is also intended to dictate the terms of the “joint development” it so often purports to seek.

The Nubian Observer suggest energy planners from Chinese, Vietnamese, Russian, Indian ExxonMobil and critical Middle East investors knew for many years lack of oil and gas infrastructure limited the Chinese leverage. Only a massive scale oil and gas field with a pipe line network scaled like the one currently moving gas from the Ca Voi Xanh gas field would provide the economics of scale to pipe oil and gas to southern China even if oil and gas was discovered. This infrastructure location and development reality is critical to the emergence of Viet Nam energy industry and the flow of foreign capital to the country. China would be hard pressed to dictate the terms of any “joint development” it so often purports to seek with ExxonMobil and other major energy companies controlling the critical technologies and infrastructure, particularly as the discoveries move into deeper waters. Beijing attempt to impose its will on the situation before the typhoon season set itself for a major high profile public failure or military solution.

The real asymmetric game move is that fact Viet Nam and ExxonMobil need only set back and wait on the typhoon season and the face saving strategic retreat of the Chinese naval force until next drilling season.

The Financial Times article Text

May 28, 2014 5:47 pm

China is stealing a strategic march on the US

By David Pilling

Bit by bit Beijing is creating new facts, and with each incident, it throws down the gauntlet

Is China being stupid? Or is it being really clever? That in a nutshell is the foreign policy debate over Beijing’s seemingly concerted effort to provoke its neighbours. The case that China is being stupid is easy to make. In recent weeks Beijing has picked simultaneous fights with Vietnam, the Philippines and Japan. It moved an oil rig near Chinese-controlled islands claimed by Hanoi, triggering anti-Chinese riots in Vietnam in which four people died. This week a Chinese fishing boat, part of a large flotilla around the rig, was accused of sinking a Vietnamese fishing boat.

Prodding at Manila’s maritime claims – whether by building artificial islands or seeking to control fishing grounds – has also turned the Philippines against China. After kicking the Americans out of the Subic Bay naval base in 1992, Manila has now asked them to come back. During President Barack Obama’s recent swing through Asia, it signed an agreement to allow US ships and aircraft to use its bases.

China has also antagonised Japan. By flooding disputed areas in the East China Sea with aircraft and boats, it is challenging Japan’s administrative control of the disputed Senkaku Islands, known as Diaoyu by Beijing. That has given Shinzo Abe, the rightwing prime minister, all the excuse he needs to press for a reinterpretation of Japan’s pacifist constitution. Mr Abe wants Japan to be able to fight in defence of its allies. Japan’s more assertive stance, far from troubling its neighbours, has been welcomed by many. Tokyo is supplying the Philippines with coastguard boats and has promised to do the same for Vietnam. In short, China appears to have scored an own goal by driving its neighbours into each other’s arms. All trace of China’s smile diplomacy has vanished.

Brad Glosserman of the Center for Strategic and International Studies finds it “inexplicable” that Beijing would stir up such trouble. Why would it do that, he asks in The National Interest magazine, when it faces so many potentially explosive economic and social problems at home? Mr Glosserman thinks Deng Xiaoping, who said China should “hide its brightness, nourish obscurity”, would be spinning in his grave. But Deng’s exhortation implied that China should bide its time, not that it should bury its ambition for all eternity.

Asean is divided between countries that have disputes with China and ones that do not

Hugh White, professor of strategic studies at Australian National University, has an alternative view. He argues that China’s manoeuvres should come as no surprise. After all, Xi Jinping, its increasingly assured president, has called for a “new model of great power relations”. That means it wants to be treated not as a US subordinate but as an equal, at least in the western Pacific. “These things are inherently zero-sum, so for China to have more power and influence, America must have less,” he writes in The Interpreter, a blog run by Australia’s Lowy Institute. To bring that about means undermining US authority by picking small, but winnable, fights.

This is not an immovable object and an unstoppable force. The game is asymmetric – as indeed are China’s military capabilities. (It cannot match US aircraft carriers but it may be able to sink them with missiles.) To preserve the status quo, the US needs to prevent every one of China’s moves, something it has been unable to do. China needs merely to pick a few small battles that it knows the US has no wish to fight. An air defence identification zone here. An oil rig there. Of course, Mr Obama could draw a red line. But, as he found out in Syria, red lines can be tricky.

Bit by bit, then, Beijing is creating new facts on the ground, or rather in the sea and in the air. With each new incident, it is throwing down the gauntlet. Is it worth fighting for a Vietnamese fishing boat? Thought not. How about a submerged Philippine reef? An uninhabited island? In the short term, such tactics may well prod neighbours to stick together or cling ever closer to US skirts. But if China is changing regional perceptions, and realities, that may not matter. There is talk, for example, of a more united stance by members of the Association of South East Asian Nations. For now it is just that. Talk. Asean is divided between countries that have disputes with China – the Philippines, Indonesia and Vietnam among them – and ones that do not, including Thailand and Cambodia. Concerted action looks a long way off.

Prof White wrote a book with the self-explanatory title The China Choice: Why We Should Share Power . The US, he argues, has three possible responses to Beijing’s challenge. It can withdraw from Asia (highly unlikely and unnecessary, even from Beijing’s perspective); it can seek to maintain its primacy; or it can compromise. The choice is between “containment” and “appeasement”, two words loaded with negative connotations.

China is seeking to prove to its neighbours that containment cannot work and that the US cannot be relied upon to defend them. If it can do so, they and Washington will have to acknowledge that the status quo is untenable. It is a dangerous strategy. It is also a clever one.