Sanction Hong Kong, For Its Own Sake

Journal of Political Risk, Vol. 7, No. 10, October 2018 

Silhouette of man standing on top of mountain with reflection of urban cityscape. Source: Getty Images.

By Ho-fung Hung, Ph.D.

The decision of the Hong Kong government to expel Financial Times Asia editor Victor Mallet from Hong Kong has already provoked widespread concern about freedom of speech and autonomy of Hong Kong in the international community. Mr. Mallet broke no law, and the Hong Kong government’s decision is obviously based on his role as moderator of an August 14 talk by pro-independence activist Andy Chan at the Foreign Correspondents Club. This unprecedented expulsion of a foreign journalist takes Hong Kong a big step closer to the status quo in mainland China.

The UK Foreign Office, US Consulate in Hong Kong, European Union, and American Chamber of Commerce in Hong Kong, all issued statements criticizing the decision of the Hong Kong government. In particular, AmCham president Tara Joseph pertinently links the case to the concern about Hong Kong’s continuous viability as a financial center, saying that, “The rejection of a renewal of work visa for FT correspondent Victor Mallet sends a worrying signal. Without a free press, capital markets cannot properly function, and business and trade cannot be reliably conducted.”

Beijing has long said that Hong Kong is no longer important to China economically, because China’s GDP has been roaring ahead over the last two decades since Hong Kong’s sovereignty handover. But in fact, Hong Kong’s special status as an autonomous economy separate from mainland China is still serving China very well.

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Remove Duterte And Modernize The Armed Forces Philippines

Journal of Political Risk, Vol. 7, No. 10, October 2018 

By an Anonymous Filipino

Troops pledge their allegiance to the Philippine government and constitution during a prayer rally in Camp Aguinaldo, Quezon City suburban Manila on May 3, 2010. Photo: Jay Directo/AFP/Getty Images.

This is a critical time for the Philippines, in terms of economics, politics, and national defense. Immediately at the start of President Rodrigo Duterte’s term the congress was already submissive to him. There were just a few dissenting Senators. But Duterte is taking them down one by one, especially the opposition stalwarts. Senator Leila de Lima was accused of a sham case, conspiracy to commit illegal drug trading (1), and is now in prison. Senator Antonio Trillanes is having his amnesty revoked [2]. Duterte is under criminal investigation, breaking the Constitution, running the Philippines into the ground, and gradually giving our sovereignty away to China. The Armed Forces of the Philippines (AFP) is slowly losing its allies and competitive edge against China, the Philippines’ biggest threat. Duterte should immediately be removed, and the AFP should seek the help from its traditional allies to quickly modernize.

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How to Block China at the WTO: Use GATT Articles XX-XXI

Journal of Political Risk, Vol. 7, No. 9, September 2018 

By William R. Hawkins

The People’s Liberation Army (PLA) Liaoning aircraft carrier, bottom, sails past a container ship in Hong Kong, China, on Friday, July 7, 2017. Photographer: Justin Chin/Bloomberg via Getty Images.

The Ministry of Commerce of the People’s Republic of China (PRC) has announced it will file a complaint with the World Trade Organization (WTO) against the U.S. imposition of 25% tariffs on $16 billion worth of Chinese goods in August. This was the second tranche of tariffs imposed by President Donald Trump as the result of the U.S. Trade Representative’s (USTR) “findings of its exhaustive Section 301 investigation that found China’s acts, policies and practices related to technology transfer, intellectual property and innovation are unreasonable and discriminatory and burden U.S. commerce.” This second tranche brought the total of Chinese imports subject to higher duties to $50 billion, as announced in June. Beijing’s response was given by the state-owned People’s Daily: “By launching the complaint under the WTO dispute settlement mechanism, China is to safeguard free trade and multilateral mechanisms as well as its legitimate rights and interests.”

The USTR report on China’s use of government regulations to force joint ventures (which give majority control to Chinese “partners” of American firms); mandate technology transfers, facilitate “the systematic investment in, and acquisition of, U.S. companies and assets to generate large-scale technology transfer…[and] support cyber intrusions into U.S. commercial computer networks” is not a description of free trade.

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China’s Military Visits Endanger Philippine Sovereignty and Democratic Alliances

Journal of Political Risk, Vol. 7, No. 7, July 2018 

By Anders Corr, Ph.D.

JIANGANAN SHIPYARD, SHANGHAI, CHINA-JANUARY 4, 2012: This December 25, 2012, image shows a probable PLAN Type 052D (DDGHM) destroyer tied up alongside the Yuan Wang 5 (YW-5) space tracking ship, which is docked in the shipyard’s construction basin. The YW-5 is similar to the YW-3 in size and function, including military applications. DigitalGlobe via Getty Images

On the night of July 16, four days after the second anniversary of the July 12 Permanent Court of Arbitration win by the Philippines against China in the Hague, a Chinese missile tracking ship with 远望 Yuan Wang 3 (YW-3) emblazoned on the side, eased up to Sasa Wharf in Davao, Philippines. Davao is the home turf of President Rodrigo Duterte, now in Malacañang Palace, and the ship was likely visiting at his personal invitation. The Chinese characters for Yuan Wang (远望) mean “gazing into the distance”, and are sometimes translated as “long view”.

Last month, two People’s Liberation Army Air Force (PLAAF) Ilyushin-76 (IL-76) military cargo planes visited Davao. They were called a “personal favor” by President Duterte to China, and surprised the Philippine military. The visits were not covered by treaty.

Only the U.S. and Australia have visiting forces agreements that allow, and legally constrain, U.S. and Australian military presence. China has no such public constraints, and for that reason as well as others detailed below, poses a risk to Philippine sovereignty. Last year, Davao also hosted a People’s Liberation Army Navy (PLAN) guided missile destroyer, guided missile frigate, and replenishment ship.

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China’s Targeting of Overseas Chinese for Intelligence, Influence and Drug Trafficking

Journal of Political Risk, Vol. 7, No. 7, July 2018 

By Anders Corr, Ph.D.

Davao City Vice Mayor Paolo Duterte (L), son of Philippine President Rodrigo Duterte, and the president’s son-in-law, Manases Carpio (R), take an oath as they attend a senate hearing in Manila on September 7, 2017.
Paolo Duterte and the president’s son-in-law, Manases Carpio, appeared before the inquiry to deny as “baseless” and “hearsay” allegations linking them to large-scale illegal drugs smuggling. NOEL CELIS/AFP/Getty Images

On June 12, Philippine protesters staged coordinated protests against China in Los Angeles, San Francisco, and Vancouver. Protest organizer Ago Pedalizo said, “Duterte’s government pursues the ‘sell, sell, sell’ approach to sovereignty as a trade-off to all kickbacks he’ll get from the ‘build, build, build’ economic push of China.” His protest group, Filipino American Human Rights Advocates (FAHRA), charged that “Duterte is beholden to the $15-billion loan with monstrous interest rate and China’s investments in Boracay and Marawi, at the expense of Philippine sovereignty. This is not to mention that China remains to be the premier supplier of illegal drugs to the country through traders that include the son, Paolo Duterte, with his P6 billion shabu [methamphetamine] shipment to Davao.” 

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Alleged Corruption in Mongolia’s Resource Extraction Sector

Journal of Political Risk, Vol. 7, No. 7, July 2018 

By Enkhzul Tsatsral

Dump trucks operate in an open pit at the Oyu Tolgoi copper-gold mine, jointly owned by Rio Tinto Group’s Turquoise Hill Resources Ltd. unit and state-owned Erdenes Oyu Tolgoi LLC, in Khanbogd, the South Gobi desert, Mongolia, on Saturday, July 23, 2016. Mongolia exported 817,000 tons of copper concentrate in the first half of the year compared with 663,800 tons a year earlier, an increase of 23.1 percent. Photographer: Taylor Weidman/Bloomberg

The year is 2008 and Ulaanbaatar, the capital city of Mongolia, still resembles a gritty Soviet satellite state with its deteriorating apartment blocks and a statue of Lenin standing bold. Fast-forward a mere four years later and the apartment blocks have deteriorated further while a dazzling 25-story hotel overlooks the shadow of the recently removed statue. Today, with a plethora of Western companies ranging from luxury brands such as Rolex to the familiar Pizza Hut sprouting all over the city, you will be forgiven for mistaking Ulaanbaatar as one of the Four Asian Tigers. Unlike the Four Asian Tigers, which flourished predominately through industrialisation, however, Mongolia’s rapid ‘development’ is mainly attributed to the country’s colossal mineral wealth.

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Tackling the South China Sea Together: British and French Navies Chart a Course

Journal of Political Risk, Vol. 7, No. 6, June 2018 

By Peter M. Solomon

At a September 2015, joint press conference at the White House, China’s President Xi Jinping stood beside U.S. President Barack Obama and said, “China does not intend to pursue militarization” with respect to “construction activities that China are undertaking” on the Spratly Islands in the South China Sea.[1] Since then, China has established several offensive capabilities in the region, including surface-to-air and anti-ship missile systems on three features in the Spratly Islands and the ability to deploy strategic bombers from the Paracel Islands.[2]  In comparison to the United States, which has been a consistent critic of China’s reclamation and militarization and has embarked on numerous freedom of maritime navigation exercises in the region, the European Union (EU) has historically been reserved in its comments regarding China’s activities in the South China Sea. Instead, the EU has limited itself to general comments about the importance of maintaining freedom of the seas and resolving disputes peacefully. While these statements are not without importance, the lack of a more critical, unified EU approach to China’s destabilizing activities has left missing a crucial voice. The tides could soon turn.

Embed from Getty Images

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Trade Strategy is a Proper Part of National Security

Journal of Political Risk, Vol. 7, No. 6, June 2018 

By William R. Hawkins

Chinese-chartered merchant ship Cosco Shipping Panama crosses the new Cocoli Locks during the inauguration of the Panama Canal expansion in Panama City on June 26, 2016. A giant Chinese-chartered freighter nudged its way into the expanded Panama Canal on Sunday to mark the completion of nearly a decade of work forecast to boost global trade. Photo: JOHAN ORDONEZ/AFP/Getty Images.

On June 4, the Koch brothers (Charles and David) announced the launch of a “multi-year, multimillion-dollar” campaign against the tariffs and trade restrictions imposed by the Trump administration; especially those levied on China. The billionaire brothers are regularly called “conservatives” because they make large campaign donations to Republican candidates. But they are not conservatives; they are libertarians, a very different breed of cat. And their donations to the GOP are meant to sway the party in their ideological direction, not merely support it. The liberal media tries to tarnish conservatism by placing libertarians on “the Right” even though this is not their intellectual origin. This is done to further the left-wing narrative that “conservatives” are self-interested, greedy individuals who are enemies of organized society and the common good. This is true for libertarians, who doubt the very legitimacy of the nation-state or the “higher” norms of society. Too often they define right and wrong on the basis of whether it turns a profit.

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Hearts and Minds in Afghanistan

Journal of Political Risk, Vol. 6, No. 5, May 2018

By Heath B. Hansen

I opened my eyes. It was still dark, but I could see the night was ending and another day in some village in Afghanistan was beginning. The smell of dip-spit and cigarette smoke betrayed the fact that the platoon was awake and breaking down the patrol base. “Get the f*** up, Hansen,” was the greeting from my team leader. “Get your s*** on the humvee, we’re leaving in a few mikes.” “Roger, Sergeant,” I replied. It was May 31 2005, and time to win over more hearts and minds in the War on Terror.

A cropped photo of Jason Pegg’s bloodied arm following his and the author’s hearts and minds campaign in an Afghan village on May 31, 2005. Source: Facebook.

We listened to the convoy brief. The platoon would be heading to another village, in the middle of nowhere, to help villagers that probably had no idea why Americans were in their country and couldn’t care less about ‘democracy.’ The typical information was passed down about the scope and purpose of the mission followed by the monotone, repetitive, “Keep your heads on a swivel” and, “Make sure we have full, three-sixty security at all times. Remember your battle drills.”

The platoon set out. One by one, the humvees departed the patrol base and entered the dirt road into the village; the mission had officially begun. As we embarked, I noticed not a single villager was outside their mud-hut. Not a single person was in the fields. Not a single child was running alongside our vehicles, screaming, “You give me chocolate,” or “Amereekan, give me one dollar!” Of the dozens and dozens of villagers we had treated the day before during our MEDCAP [Medical Civic Action Program] operation, not a single one was outside to bid us farewell.

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The Price Of Paramount Power: Xi Jinping’s Ascension Could Make China A Much Riskier Place To Do Business

Journal of Political Risk, Vol. 6, No. 3, March 2018

By Richard Hornik

One of the peculiar pathologies of western businessmen active in China is an almost religious reverence for its lack of due process, enthralled by the combination of free(ish) markets and political stability proffered by China’s Market-Leninism (a term coined by Nicholas Kristoff). What they miss, however, is the price that must be paid for such short-term control, and during the course of Chinese history that price has proven to be very high.

The latest convert to this envy for authoritarian efficiency is Tesla’s Elon Musk who has spoken and written extensively about China’s ability to conceive, approve and build enormous infrastructure projects in a matter of a few years – or less[1].  No zoning rules, environmental regulations, cost-benefit analyses — much less property rights — can stand in the way of the gleaming high-speed rail lines, shiny new airports, massive harbors and 12-lane highways and bridges that have covered the Middle Kingdom in the past two decades. Likewise with housing developments and mega industrial installations like petrochemical plants, steel mills and refineries.

The fact that many of these projects made little or no economic sense and often created enormous capital, environmental and human costs for decades to come does little to take the shine off the power to command society and the economy to do the bidding of a brilliant meritocracy. Japan went on a similar splurge in the last three decades of the 20th century, also directed by brilliant technocrats, ending in two decades of economic stagnation, but at least Japan had its flawed democracy to serve as a break and a safety valve, something missing from authoritarian regimes.

A vendor (R) takes a nap next to posters showing the late Chinese chairman Mao Zedong (C) and Chinese President Xi Jinping (L) at a market in Beijing on May 15, 2016. Fifty years after the Cultural Revolution spread bloodshed and turmoil across China, the Communist-ruled country is driving firmly down the capitalist road, but Mao Zedong’s legacy remains — like the embalmed leader himself — far from buried. Credit: AFP / NICOLAS ASFOURI / Getty Images

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