NEW SOUTH KOREAN PRESIDENT COMMITS TO OBAMA’S “PIVOT TO ASIA”

By Ben McGrath

South Korean President Park Geun-hye’s first trip abroad since coming to office in February, which consisted of a visit to Washington, has underscored a deepening strategic dilemma facing the South Korean ruling elite.

In the lead-up to her trip, the South Korean press speculated that she would announce a “North East Asia Peace and Cooperative Initiative” to manage and defuse the growing tensions between the US, Seoul’s long-standing imperialist patron, and China, now South Korea’s largest trading partner.

During her meeting with US President Barack Obama, however, Park made a public commitment to strengthen the US alliance in order to isolate and threaten North Korea, China’s ally. Obama used the meeting with Park to ensure South Korea would not deviate from the anti-Chinese “pivot” Washington has set, which is to function as the prime staging base in any war against Beijing.

When Park came to office, she raised concerns in Washington by promising to change Seoul’s unpopular hardline stance on foreign policy, particularly on North Korea, adopted by her conservative predecessor, Lee Myung-bak. A Congressional Research Service report prepared in April highlighted the closeness of the Obama and Lee administrations, stating: “Since late 2008, relations between the United States and South Korea have been arguably at their best state in decades, if not ever.”

Since coming to power, Park has proposed two paths for dealing with North Korea, one which calls for retaliation in the event of an attack and the other which calls for dialogue with the North in order to “build trust”.

This shift in emphasis is unacceptable to Washington, even as Park’s government has continued the close military cooperation with the US, including holding large-scale joint military exercises involving US nuclear capable bombers in April, aimed against North Korea.

Washington’s concerns were compounded when Park proposed a “Northeast Asia Peace and Cooperative Initiative”, or “Seoul Process” that would include the two Koreas, the United States, as well as China and Japan and address what Park is calling the “Asian Paradox”.

According to Park, that paradox is “the disconnect between growing economic interdependence on the one hand, and backward political, security cooperation on the other.” She called for “grand reconciliation” between China, Japan and South Korea, paving the way for a vast “free trade zone” between three of the largest economies in Asia. This caused concerns in Washington, which opposes multilateral international organizations in Asia that include major powers but exclude the US.

A major shift appeared to take place following her meeting with Obama last Tuesday, in which she promised her initiative would “reinforce President Obama’s strategy of rebalancing towards the Asia-Pacific.” Following the summit, a declaration marking the sixtieth anniversary of the United States-Republic of Korea Alliance was issued, calling the alliance “a linchpin of peace and stability in the Asia-Pacific.”

Rather than bringing “peace and stability” to the region, the alliance has been utilized by Washington to further its economic and geopolitical ambitions, most recently in ratcheting up tensions with North Korea, risking the outbreak of a devastating war on the Korean Peninsula. Obama continued this line of bellicose rhetoric in a press conference, declaring that the United States was fully prepared to act “with a full range of capabilities available, including the deterrents provided by our conventional and nuclear forces.”

The true target of these remarks is not North Korea, but China. In threatening North Korea, the US starkly presented the Pyongyang regime with two choices: fall in line with Washington’s encirclement of China or face potential nuclear annihilation.

Both Obama and Park held up Burma as an example, with Obama stating, “We discussed that Pyongyang should take notice of events in countries like Burma, which, as it reforms, is seeing more trade and investment and diplomatic ties with the world, including the United States and South Korea.”

While Burma continues to be ruled by an oppressive military junta, what has changed is that Burma has begun to withdraw from China’s orbit and open up to the West. Washington would have no qualms of keeping the Stalinist Workers Party in Pyongyang to discipline the North Korean masses, if it kept in line with Washington’s geo-strategic interests.

While Obama declared that Park’s “trust building process” was completely compatible with Washington’s interests, differences remain.

Tensions between South Korea and Japan, two key US allies, remained unresolved and are a major irritant for Washington. Without naming the Japanese government of Prime Minister Shinzo Abe, Park made a thinly veiled attack on Tokyo before the US Congress: “For where there is failure to acknowledge honestly what happened yesterday, there can be no tomorrow.”

Abe has repeatedly offended South Korea by denying the crimes of Japanese militarism in World War II and by seeking to revise Japan’s pacifist constitution, as US backing for a more aggressive Japanese role to contain China encouraged chauvinist forces in Japan. This policy, however, has caused tensions not only between China and Japan, but also fears and concerns within the South Korean ruling elite over the revival of Japanese militarism. (See: “South Korea protests against Japanese shrine visits”)

While neither Obama nor Park spoke publicly on the growing disputes between South Korea and Japan, Obama stated, “For our part, we’ll continue to coordinate closely with South Korea and with Japan.” Washington is clearly pressuring Seoul to do the same. Last year, the two US allies came close to signing a military intelligence agreement, before it was postponed at the last minute by Seoul.

Obama and Park also discussed the Atomic Energy Agreement between the two countries. Recently, it was agreed that it would be extended by two more years, giving the sides more time to negotiate a new deal. Seoul is seeking the right to enrich uranium, which it currently imports, as well as the right to reprocess spent fuel. While Seoul claims this would be only for peaceful purposes, uranium enrichment and reprocessing could also allow South Korea to build nuclear weapons. Calls from within Park’s Saenuri Party to develop its own nuclear weapons have been growing in recent months.

While public pretext is North Korea’s nuclear program, Seoul’s real concern is Japan’s moves towards nuclear armament. Seoul is sure to double its efforts in negotiating a favorable treaty following the recent announcement that Japan plans to open a huge reprocessing plant capable of producing enough weapons-grade plutonium for 2,000 nuclear bombs annually.

The dilemma facing the South Korean ruling elite has not been resolved by Park’s US visit, as Washington shows no sign of easing its aggressive “pivot to Asia” directed at containing China. Last weekend, just as North Korea appeared to remove two medium-range ballistic missiles from launching vehicles, tensions flared up again after the US sent a nuclear-powered aircraft carrier, the USS Nimitz, to Busan for a new round of joint military exercises.

CHINA CONDUCTS TEST OF NEW ANTI-SATELLITE MISSILE

Launch was disguised as a space-exploration rocket

China missile / AP

BY: Bill Gertz | Washington Free Beacon

China’s military on Monday conducted the first test of a new ground-launched anti-satellite missile that was fired into space and disguised as a space-exploration rocket, according to U.S. officials.

The test was carried out early Monday from the Xichang Space Launch center and was identified by officials as the new Dong Ning-2 ASAT missile.

The ASAT test comes a week after China protested the release of the Pentagon’s annual report on the Chinese military buildup that mentioned Beijing’s development of anti-satellite weapons.

The Free Beacon first disclosed the existence of the new missile in October and a missile researcher reported in January that a new ASAT missile was being readied for its first test.

Chinese Foreign Ministry spokesman Hong Lei was asked if China conducted an ASAT test during a briefing for reporters in Beijing on Tuesday. He did not deny that it was carried out.

“I am not aware of the development that you described,” he said. “China has consistently advocated the peaceful use of outer space and is opposed to militarizing and conducting an arms race in outer space.”

Pentagon spokeswoman Maj. Cathy Wilkinson said: “We don’t have a comment on it as we don’t discuss intelligence.”

A U.S. official familiar with intelligence reports said the DN-2, as a high earth-orbit attack missile, is a significant advance for China’s program of developing asymmetric warfare capabilities for use against the United States. Others include cyber-warfare capabilities and anti-ship ballistic missiles.

It could not be learned if the latest ASAT test involved an impact with a target satellite.

A second official said the Chinese apparently disguised the ASAT missile test as a space exploration experiment. The website of the National Space Science Center, part of the Chinese Academy of Sciences, reported Monday that a sounding rocket was used in a high-altitude scientific exploration test.

“This experiment used a high-altitude space-exploring rocket, Langmuir probe, high-energetic particle detectors, magnetometers and barium-powder release experimental apparatus and other payload of scientific exploration to test and measure the ionosphere, the high-energy particles and magnetic fields of the near-Earth space strength and structure,” the notice said.

China in 2007 conducted its first successful hit-to-kill ASAT test against a weather satellite in low-earth orbit. The impact left tens of thousands of pieces of debris in orbit that continue to threaten both manned and unmanned spacecraft.

Defense officials have said China’s ASAT weapons, including missile interceptors, lasers, and electronic jammers, are designed to disrupt satellite communications and navigation systems used extensively by the U.S. military in conducting joint warfare.

Defense Secretary Chuck Hagel stated in written answers to questions during his confirmation hearing in January that the United States would seek to avoid engaging in hostilities in space.

However, Hagel revealed that U.S. space policy calls for “the secretary of defense to develop capabilities, plans and options to deter, defend against, and, if necessary, defeat efforts to interfere with or attack U.S. or allied space systems.”

The statement was the clearest indication that the Pentagon is preparing to develop “counterspace” weapons in response to Chinese anti-satellite weapons.

“The chances are good this is indeed an ASAT test as it was launched from the Xichang Space Launch Center, the same launch site used for the January 2007 successful SC-19 ASAT interception of a Chinese weather satellite,” said Rick Fisher, a senior fellow at the International Assessment and Strategy Center. Xichang is located in southern Sichuan Province.

Fisher said Chinese Internet reports stated that the ASAT test of what U.S. official say was a DN-2 may have up to four stages and included one or two liquid-fueled upper stages to provide greater thrust as the missile closed in on a target.

“While there so far has been no report of a successful interception, even a very near miss would serve to validate this new [People’s Liberation Army] ASAT system,” Fisher said.

A validated DN-2 ASAT system would provide the Chinese military with the capability to “degrade or severely damage the U.S. Global Positioning Satellite (GPS) system,” he said.

“This is not merely a threat against some American military satellites, but a threat to a what has become a vital part of the global electronic infrastructure, affecting global commerce and financial flows, to your personal finances that contribute to personal freedom.”

Fisher said China has been “preaching” that other states should disarm while Beijing secretly builds space weaponry at the same time it has denied being engaged in the space arms buildup.

“In the face of such a threat, the United States simply has no choice but to pursue symmetric capabilities to deter Chinese attacks in space, but also to consider its own requirements for space superiority,” he said.

The major concern for Pentagon war planners is that China, with an arsenal of around two dozen anti-satellite missiles, could severely disrupt U.S. command-and-control systems, intelligence-gathering satellites, and navigation satellites used to guide precision guided missiles.

Security analyst Gregory Kulacki said in an online posting in January that the ASAT test was expected as early as that month.

“Given these high-level administration concerns and past Chinese practice, there seems to be a strong possibility China will conduct an ASAT test within the next few weeks,” Kulacki, a Chinese-language speaker with the Union of Concerned Scientists stated.

Defense officials disclosed to the Free Beacon that the DN-2 test was initially planned for last fall, but was delayed by the Chinese over concerns that the test would upset President Barack Obama’s reelection bid.

While details of the DN-2 are not known, U.S. officials said it is expected to be a high earth-orbit interceptor capable of destroying strategic navigation, communication, or intelligence satellites by ramming into them at high speeds.

The DN-2 is said to be capable of hitting targets in high-earth orbit between 12,000 and 22,236 miles above earth. Many military, intelligence, and commercial satellites orbit at that altitude.

A Pentagon-State Department report to Congress last year on export controls stated that in addition to ground-launched ASAT missiles, China is building high-technology kinetic and direct energy weapons for ASAT use.

HOW CHINA IS REVOLUTIONIZING WARFARE

BY JOHN ARQUILLA | Foreign Policy

As the Pentagon’s annual report to Congress, released last week, makes abundantly clear, China is on something of a long march in cyberspace. While most attention is being drawn to the report’s assertions about Chinese snooping into sensitive classified areas and theft of intellectual property from leading American firms — and others around the world — there is some intriguing analysis of Beijing’s broader aims as well. Indeed, the Pentagon sees a clear progression in Chinese strategic thought that, viewed as a whole, begins to elaborate what might be seen as an emerging military doctrine enabled by advanced information technologies. Just as the radio made skillful coordination of tanks and planes possible, introducing World War II-era blitzkrieg, so today the computer may be opening new vistas for cruise missiles, precision-guided munitions, and other smart weapons.

What’s coming from Beijing is, in a word, “bitskrieg.” The Pentagon report describes this as a three-phase process. First, there is a “focus on exfiltrating data” so as to gain vital information needed about military command and control systems as well as the points in our critical infrastructure that are vulnerable to disruption by means of cyberattack. It is believed that the Chinese have been engaging in this sort of intelligence gathering for many years — intrusions that Washington first openly acknowledged 10 years ago, giving them the code name “Titan Rain.” It has been raining steadily for the past decade.

With all these data in hand, the second step — per the Pentagon report — is to use the same intrusive means that mapped our defense information systems to disrupt them with worms, viruses, and an assortment of other attack tools. The goal at this point is to slow the U.S. military’s ability to respond to a burgeoning crisis or an ongoing conflict. Think of what might happen, say, on the Korean Peninsula, if our small contingent there — a little over 25,000 troops — were to lose its connectivity at the outset of a North Korean invasion by its million-man army. Without the ability to operate more nimbly than the attacker, these forces would be hard-pressed from the outset. Cyberattacks on mostly automated force-deployment and air-tasking systems could also slow the sending of reinforcements and greatly impede air interdiction operations. In the first Korean War, the Chinese intervened with massive numbers of troops. In the second one, they might only have to send electrons.

The real payoff for Beijing, though, is in what the Pentagon report describes as China’s envisioned third phase of cyber-operations. This is the point at which the information advantage — that is, the ability to coordinate one’s own field operations while the adversary’s have been completely disrupted — is translated into material results in battle. The Pentagon describes cyberattack at this point as amounting to a major “force multiplier.” Gaining such advantage means winning campaigns and battles with fewer casualties relative to those inflicted upon the enemy. In this respect, computer-driven “bitskrieg” could, it is thought, generate results like those attained by mechanized blitzkriegs — which also aimed at disrupting communications. In the Battle of France in 1940, for example, where the Germans had fewer troops and tanks, the Allies lost more than four times the number of soldiers as the Wehrmacht.

When my long-time research partner David Ronfeldt and I introduced our concept of cyberwar 20 years ago, the second and third phases of cyberattack that the Pentagon report describes are what we had in mind. In our view, striking at an enemy’s ability to maintain information flows, while keeping one’s own communications secure, would be the key to gaining a war-winning advantage in conflicts to come. But this would only hold true, we affirmed, if senior leaders recognized that cyberwar poses “broad issues of military organization and doctrine.”

The point being that technology alone doesn’t create or sustain the advantage. In the case of blitzkrieg it was concentrating tanks in panzer divisions and closely linking them with attack aircraft that made the difference. To succeed at cyberwar, it will be necessary both to scale down large units into small ones and “scale them out” across the battlespace rather than mass them together. In this fashion — spread out but completely linked and able to act as one — the sweeping maneuvers of blitzkrieg will be supplanted by the swarming attacks of bitskrieg, characterized by the ability to mount simultaneous strikes from many directions. The guiding organizational concept for this new approach flows closely from technologist David Weinberger’s thoughtful description of online networks: “small pieces, loosely joined.”

Thus should the Pentagon annual report to Congress be delved into more deeply — for the document reflects a clear awareness of, and takes a subtle, layered approach to thinking about, the Chinese cyber threat. One can only hope that the U.S. military analysis of Beijing’s looming capacity for bitskrieg is mirrored by introspective views and similarly nuanced considerations of American capacities for waging cyberwar. For the three phases described in the Pentagon report — so consistent with the original vision Ronfeldt and I described two decades ago — reflect the kind of conflict that is coming.

The militaries of most advanced countries think of cyberwar as a new form of strategic attack on power grids and such. The Chinese view differs, seeing this mode of conflict as much less about turning off the lights for a while in some other country and much more about defeating an opposing military grown dependent upon sustained, secure, and ubiquitous flows of information. Lights can always be turned back on. Soldiers’ lives lost amid the battlefield chaos caused by a bitskrieg can never be reclaimed. Thoughtful reading of the Pentagon report should affirm this — and appropriate action, along the lines of scaling down and “scaling out” our forces, and encouraging them to “swarm,” must follow.

HOW THE UNITED STATES ‘PIVOT’ TO ASIA LOOKS FROM BEIJING

BY HE YAFEI | Foreign Policy

BEIJING — This is a crucial moment for Sino-U.S. relations, as heated debates about the future of this relationship rage in both countries — debates characterized by downright pessimism, with only a sliver of optimism. Here in Beijing, we are asking: Is U.S. President Barack Obama’s policy toward China undermining the already flimsy strategic trust between the two countries? Is it possible for China and the United States to build a new type of great-power relationship, one that can help us avoid confrontation and conflict? Can China and the United States work together to play a leadership role in global governance to meet such urgent global challenges as nonproliferation and climate change?

Obama’s “pivot” to — or “rebalancing” toward — Asia and the Pacific, in both words and deeds, has aroused a great deal of suspicion in China. These suspicions deepen when the United States gets itself entangled in China’s dispute with Japan over the Diaoyu Islands and in the debates over maritime issues in the South China Sea. Should this ill-thought-out policy of rebalancing continue and the security environment worsen, an arms race would be inevitable. China, despite its intention to pursue a strategy of peaceful development, might be forced to revisit some aspects of its policy for the region. That is something China abhors. We understand that a peaceful and prosperous world starts with your neighborhood — just as a stable and good Sino-U.S. relationship also starts in our two countries’ neighborhood, the Asia-Pacific region.

From the Chinese perspective, the United States is the only power capable of creating a negative external environment for China. This is why China carefully scrutinizes what the Obama administration does and tries to understand what it will do. But we also understand that it is in China’s long-term interest — as well as that of the entire region — to develop and maintain stable, healthy relations with the United States. And we think that there are many common interests that should serve as a basis for a cooperative relationship.

It is clear to all that the world’s balance of power is shifting in favor of China and other emerging countries, though the United States maintains its strength in the economic, science-and-technology, military, and cultural fields. However, this “one up, other down” trend that has been accelerating since the 2008 financial crisis has intensified U.S. strategic uncertainty about China. We believe this is why the United States has been increasing its strategic hedging by deploying more and more of its military assets to the Western Pacific and by strengthening its military alliances with Japan, Australia, South Korea, and others in the region.

Clearly, a huge deficit of strategic trust lies at the bottom of all problems between China and the United States. Some scholars have hinted that U.S.-China trust is at its lowest since U.S. President Richard Nixon’s historic 1972 visit to China. But history is a mirror. And from a historical perspective China and the United States, despite their differences, have many things in common, and there is no reason for them to distrust each other. Granted, China has achieved spectacular economic growth over the past several decades, which has made its military modernization possible. But isn’t this a product of the globalization espoused by the United States? Isn’t it a fact that China’s growth has contributed hugely to world peace and prosperity?

During World War II, China and the United States were allies, and together with others, they built the international system in which we now interact. A recent example is the joint efforts by China and the United States in tackling the international financial crisis within the framework of the G-20. We cannot claim that this cooperation between the two countries prevented the world economy from collapsing, but it would not be too off the mark to say that without such cooperation, the world today would be a totally different place.

Now, a new type of relationship between China and the United States requires changing the outdated view of a rivalry among great powers for spheres of influence and the inevitability of a confrontation between existing and aspiring powers. This relationship instead calls for dialogue and cooperation to expand common interests and reduce suspicions and vicious competition. China and the United States must try their utmost to avoid strategic quagmire and rivalry during this period of historic convergence and join hands in building a community of nations bent on peaceful development through cooperation and coordination.

The importance of such a relationship cannot be overemphasized, for both China and the United States. It is a road that has never before been traversed. To embark on such a road fully demonstrates that China has a historic vision and worldview and is working with other countries for peace and prosperity. It also demonstrates that China has full confidence in its peaceful development concept and has the moral integrity to maintain healthy, stable relations with other great powers. The United States has nothing to fear or worry about, and everything to gain, from a strong, peace-loving, and prosperous China.

True, there are structural differences between China and the United States with regard to geopolitics, political systems, and ideology. The debate on China in the United States is nonstop. But there is always something missing in this debate. Trust will not just fall from the sky; it needs to be built with real actions by both sides. As Obama enters his second term and China has completed its transition of power, we believe that hope has emerged and momentum is gaining traction.

Former U.S. national security advisor Zbigniew Brzezinski recently noted that the United States has accepted the rise of Chinese power. Chinese President Xi Jinping has noted on many occasions that the China-U.S. relationship is one of the world’s most important and vibrant relationships with the greatest potential and that there is enough space in the vast Pacific for both China and the United States.

On many issues, the United States cannot divorce itself from China’s helping hand. With regard to the North Korean and Iranian nuclear problems, the Syrian crisis, and other difficult issues, there is a need for China to play an important or even a key role. The United States also needs China’s help in tackling global challenges such as counterterrorism, nonproliferation, poverty reduction, climate change, and energy security. Faced with a continuing weak economy, Obama sets his priorities on job creation and economic growth, and here again, China can help. On the other hand, there are still neoconservative voices in the United States claiming that the peaceful rise of China is impossible. They even predict that the United States and China will engage in tense security competition and that as the aspiring power tries to surpass the existing superpower, war between the two is inevitable. These voices should not be dismissed lightly, and the two countries should be on guard against such erroneous thinking.

It is therefore of great urgency and necessity that the Asia-Pacific region become a test field for China and the United States to explore the possibility of building a new type of great-power relationship for the 21st century. The two countries need first of all to have their officials and academics concretize the concept — to put flesh on its bones. There is no room for procrastination. The cost of possible future conflict is simply too high to contemplate.

There need to be new perspectives and new thinking to address both old and new tough issues in China-U.S. relations. China-U.S. relations are well beyond the bilateral, if only for their sheer size. Whatever policy one takes vis-à-vis the other, the implications are multilateral and worldwide, for better or worse.

Consider, for example, climate change and world trade. The global challenge of climate change is a top priority in the cooperation between China and the United States. Clean coal technology and renewable energy are only a few areas where the two countries have been discussing and collaborating in the context of the U.S.-China Strategic and Economic Dialogue. The global market potential for green energy, as U.S. Secretary of State John Kerry has said, could be in the range of $6 trillion. That is quite positive.

On the other hand, there are troubling signs that cooperation is not what it should be on trade and investment, where cooperation is even more important — bilateral annual trade already exceeds $500 billion, and more than 89 percent of U.S. businesses in China are reaping profits. Unfortunately, with the United States on one front pushing for the Trans-Pacific Partnership — now encompassing 12 countries, including Australia and Japan — and negotiating the Transatlantic Trade and Investment Partnership with the European Union on the other, it cannot but give China the impression that it is intentionally being left out. Or even worse, that it is being isolated in international trade and investment negotiations, not to speak of numerous instances of failure by Chinese companies trying to invest in the United States. Here I tend to agree with former U.S. Rep. David Dreier when he said in an April commentary in the Wall Street Journal that “China and the U.S. are destined to be the two most important powers of the 21st century,” that “the Trans-Pacific Partnership shouldn’t be about hedging,” and that “[i]t is in the interests of the U.S. that China be part of this partnership.”

So how can we improve things? We believe both countries need to rise above our bilateral relationship, that China-U.S. relations probably need to be “de-China-U.S.-ified.” Instead, they should focus more on global issues and on making global governance work as the world enters a new era of reform and rejuvenation.

Cyberattacks are a prime example of a problem that should be treated as a global governance issue and not just a bilateral one (despite the recent bilateral exchanges between China and the United States on the contentious subject of who is to blame). The fact is: Cyberattacks take place everywhere every day, and it is a mounting challenge for all countries, including China and the United States. In other words, China and the United States are both victims, and there is no point in accusing each other.

What China and the United States should do is shelve the dispute, defuse the resulting tension, and turn it into an opportunity for collaboration to curb cyberattacks and protect the safety and security of this new common frontier. Bilateral discussions are necessary, and mechanisms should be established immediately for quick, efficient communication and problem-solving, with focuses on fighting cyberspace crimes in commerce, trade, finance, and counterterrorism. There is also an urgent need for the United States to overcome its suspicions and hesitations and join China, Russia, and others to negotiate and formulate an international “code of conduct for information security” in the context of the U.N. International Telecommunication Union.

Xi and Obama have agreed to continue promoting a cooperative China-U.S. partnership in the years to come, with an emphasis on building a new type of great-power relationship between China and the United States. We’re all for letting the policy debates continue, but what is needed right now are actionable policies on both sides — a road map to make them happen. The light at the end of the tunnel is visible already.

THREE CHINESE SHIPS ENTER JAPANESE WATERS NEAR SENKAKUS

kyodonews.jp

Three Chinese maritime surveillance ships entered Japanese territorial waters on Monday near the Senkaku Islands, a Japanese-controlled islet group claimed by China, the Japan Coast Guard said.

The incident prompted Shinsuke Sugiyama, director general of the Japanese Foreign Ministry’s Asian and Oceanian Affairs Bureau, to telephone Han Zhiqiang, China’s minister to Japan, to lodge a protest, a ministry official said.

The three ships — Haijian 15, 50 and 66 — entered the territorial waters in the East China Sea around 9 a.m. in succession from north of Kuba Island in the Senkaku group, according to the 11th Regional Coast Guard Headquarters in Naha.

WORLD’S LARGEST STEELMAKER URGES EUROPE TO DECLARE TRADE WAR ON CHINA

by Tyler Durden | ZeroHedge

Currency wars are so pre-”QE eternity.” At least that is the opinion of Indian multi-billionaire Lakshmi Mittal, and owner of the world’s biggest steelmaker, who urged Europe to embrace protectionism and erect trade barriers to “protect” its manufacturers (benefiting one ArcelorMittal among others), while at the same time bashing austerity, saying “the futures of EU manufacturing depended on politicians in Brussels helping industry face what he said was unfair competition from China.” In other words, it’s time for Europe to escalate into full blown trade warfare with China. It is unclear if Mr. Mittal had any thoughts on how China would, in turn, escalate to this progression in trade warfare: whether with tariffs, subsidies, or outright dumping. What does appear quite clear is that the owner of ArcelorMittal, who on Friday posted a net loss of $345 million (down from a $92 million profit a year earlier) on Q1 sales plunging by 13%, whose stock is just off its 52 week lows, and who said he may close plants in Eastern Europe if the “economy continues to slump”, may have some ulterior motives in asking that Europe fight his war for him.

From the FT:

Mr Mittal suggested that Europe should embrace protectionist measures to stop Chinese products flooding the market with cheap goods.

The London-based entrepreneur said Brussels should consider applying higher tariffs on imports of Chinese-produced steel, similar to the ones to be imposed on solar panels made in China. He argued that Chinese producers of steel were over producing, lowering the price of the metal globally.

“There should be increased tariffs for imports, or there should be a surcharge on the steel coming to Europe from countries where environmental standards are very low,” he said.

His call came as EU policy makers adopt an increasingly muscular approach to what they see as unfair competition from Chinese producers across a range of sectors.

Also not surprising was his lashing out at the latest bogeyman for Europe’s economic doldrums: austerity, which has become the old world’s equivalent of Bush, whereby everything that is wrong, is blamed on Germany’s unwillingness to pursue “debt-reduction” policies through the layering of more debt, or in other words, to give the ECB carte blanche to follow in the Fed’s footsteps and engage in outright monetization (a topic extensively discussed previously, and one where Europe will be at an impasse at least until Merkel’s September reelection campaign is successful, or not).

“If Europe continues only with the austerity programme without spending money on growth for infrastructure, things will never improve,” Mr Mittal told the Financial Times. “We can clearly see that austerity is not helping economies to come out of recession.”

He added: “They [policy makers] have to save European manufacturing, whatever you may call it, what I want is actions to save the domestic manufacturing, including steel.”

At least now thanks to Lakshmi, Europe has a new bogeyman: evil, efficient Chinese steel plants which should be stigmatized due to “very low environmental standards.”

Just as not surprising, was the lack of macro economic “advice” geared at the US – after all there Mittal’s operations are still quite profitable:

ArcelorMittal executives say  the operating environment in the Americas is much healthier than in Europe. Louis Schorsch, who heads a large part of the American business, said that steel consumption in the United States was approaching levels last seen before the financial crisis. Demand from the auto industry, probably the company’s most important customer in the United States,  is ‘‘a good story’’ and housing is ‘‘a little better,’’ he said, while demand for drill pipe and other energy-related products is ‘‘a little bit off.’’

But in Europe it is a different story entirely:

Mr. Mittal said Friday that while the results were ‘‘still not satisfactory, at least I am starting to see the benefits of the actions we have taken’’ to reduce capacity.

Given the slump in demand in Europe, ‘‘we felt that this is not a cyclical but a structural change,’’ he said. ‘‘We needed to take action.’’

The closing  of operations in Europe, especially at Liège,  Belgium, and Florange,  France, has led to tension with governments and unions.

The French government last year threatened to nationalize the Florange site, but Mr. Mittal largely held firm on his plans to permanently close blast furnaces there. The company did say Friday that  it had begun a new production line at Florange for modern, lightweight automotive steel with the trademark Usibor.

Bottom line: Mittal’s advice to France – don’t target me, but instead make things much worse by re-escalating trade tensions and taking up the global currency wars at least one level. As for the long-term consequences of China getting actively involved in trade warfare, well – the stock market really only cares 1-2 quarters out. What happens in 2014, 2015 and so on, that’s someone else’s concern.

ArcelorMittal, which is based in Luxembourg, still looks as if it has a long way to go before it returns to the high profitability it enjoyed before the onset of the global financial crisis. The company reported net income of $10.4 billion in 2007.

 

‘‘There is a glut of steel supply globally,’’ said Jeff Largey, an analyst at Macquarie in London. ‘‘That is going to prevent a company like ArcelorMittal from making the type of profits it did in its heyday.’’

One wonders if Mittal will also demand protectionism to be enacted against Chinese miners next:

Even in mining, where Mr. Mittal is focusing most of his investment these days, the results were not stellar. Operating income of $286 million was down 19 percent compared with the previous year, although it was up 54 percent compared with the last quarter of 2012.

But ignore all that, and just blame China, which was a great friend and ally when it was helping the Indian’s materials empire achieve record profits, but which may be sacrificed at the altar of hollow punditry and macroeconomic myopia once things start turning sour for the bottom line.

PENTAGON ACCUSES CHINA OF CYBER ATTACKS AND ESPIONAGE

By John Chan | Global Research

In a marked escalation of Washington’s propaganda against China, the US Defence Department has the first time named the Chinese government and the People’s Liberation Army (PLA) as being responsible for major cyber attacks on Western corporations and the US government.

The 2013 annual Pentagon report on the Chinese military depicts China as an aggressor threatening global cyber security and regional stability in the Asia-Pacific. The purpose is to justify the ongoing American buildup of naval, air, space and cyberspace warfare capacities against China—all part of the Obama administration’s “pivot” to Asia.

The report declared: “The US government continued to be targeted for (cyber) instructions, some of which appear to be attributable directly to the Chinese government and military.” The paper claimed that China was using the information it gathered for the purposes of “building a picture of US defence networks, logistics, and related military capabilities that could be exploited during a crisis.”

The Pentagon further alleged that the Chinese government was engaged in massive espionage operations to obtain advanced US technology in order to support China’s military modernisation.

These accusations provoked angry reactions from Beijing. Chinese foreign ministry spokeswoman Hua Chungying said the Pentagon report “made irresponsible comments about China’s normal and justified defence buildup and hyped up the so-called China military threat.” She described the accusations of Chinese hacking activity as “groundless criticism and hype” that would “harm bilateral efforts at cooperation and dialogue.”

A People’s Daily commentary yesterday by Zhong Sheng—a pen name used by the Beijing leadership—said the real “hacking empire” was the United States, which was engaged in “espionage against not only against enemies but allies.” It said the US had a “cyber army” of 50,000 personnel, with 2,000 types of “cyber weapons.” Moreover, in 2011 Russia and China had proposed an “International Code of Conduct for Information Security” to the UN to prevent a “cyber arms race and war,” but the US alone had consistently opposed and blocked it.

A Global Times editorial yesterday advocated that China should respond in kind to the Pentagon accusations. “For instance, if the United States announced the formation of cyber war units, with stopping Chinese cyber attacks as the main justification, then China should pick a time to announce her own cyber war forces. The Americans should be let known that, it is they who had driven China to build a cyber army.”

The issue emerged three months ago, when the New York Times highlighted a study by a US computer security firm Mandiant, which named the PLA’s Unit 61398 as the largest source of theft of data from major US corporations and government departments in recent years. As it turned out, the firm provided no concrete evidence to support its claims. (See: “US uses hacking allegations to escalate threats against China”)

Nevertheless, President Barack Obama provocatively phoned Chinese President Xi Jinping immediately after Xi was officially inaugurated in March to demand that Beijing stop hacking. Obama’s national security adviser, Thomas Donilon, delivered a speech in the same month declaring that American companies were facing “cyber intrusions emanating from China on an unprecedented scale” and that “the international community cannot tolerate such activity from any country.”

While making unsubstantiated allegations against China, the Pentagon report passed over Washington’s cyber warfare preparations that will be aimed especially against China. In 2010, the White House inaugurated a separate Cyber Command. Obama allocated $13 billion for cyber warfare in fiscal 2014, even as his administration imposed savage cuts on essential social spending.

As in every military field, the US is seeking to maintain or achieve unrivalled supremacy. It is the US that has actually conducted cyber warfare, including during the 1999 bombing of Serbia, when it hacked into and disrupted Serbian air defence systems. In 2010, in a joint operation with Israel, the US implanted a Stuxnet virus to attack the industrial controllers inside gas centrifuges at Iran’s Natanz uranium enrichment plant.

Cyber warfare now occupies a central position in the US military doctrine. The Pentagon report pointed to the PLA’s increasing dependence on computer networks. It said China saw electronic warfare as a key to countering the US, including via jamming and anti-jamming, using radio, radar, optical, infrared and microwave frequencies, to “suppress or deceive enemy electronic equipment.” At the same time, the PLA command structure was now able to share real-time information, meaning it “no longer requires meetings for command decision-making.” Without directly spelling it out, the report implied that these military computer networks and electronic systems must be US cyber warfare targets.

Since the 1990s, Chinese military thinkers have written extensively about the centrality of cyber warfare as computer networks became essential economic and military infrastructure. However, China has developed such capacity primarily as part of an “asymmetrical” doctrine to disrupt any military action against China by a superior military force. As the Pentagon paper stated, China had placed an emphasis on “destroying, damaging and interfering with the enemy’s reconnaissance and communications satellites” as a component of China’s “information blockade” tactics.

The Pentagon report points to the stepping up of US preparations to attack a potential rival that could otherwise challenge aspects of US military supremacy in Asia-Pacific by the end of this decade. The report drew particular attention to new Chinese stealth fighters and nuclear submarines that could provide deterrents against nuclear attack.

A New York Times article in February revealed that a secret legal review drawn up by the Obama administration had concluded that the president “has the broad power to order a pre-emptive [cyber] strike if the United States detects credible evidence of a major digital attack looming from abroad.” In other words, in this sphere of warfare as in every other, the US imperialism is prepared to carry out criminal acts of aggressive to prosecute its interests. China is undoubtedly at the top of the list of targets.

These developments pose grave risks of war. As the Pentagon calculates that its military superiority over China could be eroded in the foreseeable future, the danger is that US imperialism will increasingly consider using its current overwhelming military advantage to confront Beijing. US propaganda that China represents a serious cyber threat forms part of the ideological justification for the war drive.

RED CHINA POWER

China expanding submarine, missile forces with advanced systems, Pentagon annual report says

Chinese fighter jets, September 2012 / AP

BY: Bill Gertz | Washington Free Beacon
May 6, 2013

China is building two new classes of missile submarines in addition to the eight nuclear missile submarines and six attack submarines being deployed as part of an arms buildup that analysts say appears to put Beijing on a war footing.

“In terms of China’s submarines, they’re investing heavily in a robust program for undersea warfare, developing submarines that are both conventional, diesel-electric powered, air- independent propulsion and nuclear-powered attack submarines,” David Helvey, deputy assistant defense secretary for East Asia, told reporters at a briefing on release of the Pentagon’s annual assessment of Chinese military power.

China has yet to conduct an underwater test firing of its submarine-launched missiles but is deploying new missile submarines and planning advanced versions.

“We see China investing considerably in capabilities for operations in this area,” he said.

The Pentagon’s latest annual report to Congress also includes new details of China’s deployment of an aircraft carrier-killing ballistic missile, two new stealth jet fighters, and a new road-mobile intercontinental ballistic missile in addition to three other new ICBMs.

The Chinese military is also developing cyber warfare capabilities that can be used in preemptive attacks, the 92-page report states.

Chinese missile forces, known as the Second Artillery Corps, are “developing and testing several new classes and variants of offensive missiles, forming additional missile units, upgrading older missile systems, and developing methods to counter ballistic missile defenses,” the report said.

Of particular concern to the Pentagon is the deployment near Taiwan of a precision-guided DF-21D anti-ship ballistic missile, according to the report.

“We’re concerned about the ability of China to develop missiles that can project its military power with precision at great distances from China—obviously something that can hold at risk large surface ships, including aircraft carriers, is something that we pay attention to, but we put it in the context of a number of China’s military developments, again, that we characterize as anti-access and area denial,” Helvey said.

However, Helvey noted that no single weapons system is the problem. Instead, he said, “it’s the integration and overlapping nature of these weapons system into a regime that can potentially impede or restrict free military operations in the Western Pacific.”

“So that’s something that we monitor and are concerned about.”

“The DF-21D is based on a variant of the DF-21 medium-range ballistic missile and gives the PLA the capability to attack large ships, including aircraft carriers, in the western Pacific Ocean,” the report said, noting that its range is greater than 932 miles and that it is armed with a high-technology maneuvering warhead.

Additionally, the report confirms, China is building a new road-mobile ICBM that is likely capable of being armed with a multiple independently targetable re-entry vehicle (MIRV).

The Free Beacon first reported Aug. 15 that the new missile, described by defense officials as the DF-41, was flight-tested and is expected to be equipped with MIRVs.

“The Second Artillery continues to modernize its nuclear forces by enhancing its silo-based intercontinental ballistic missiles (ICBMs) and adding more survivable mobile delivery systems,” the report said.

New road mobile missiles deployed in recent years include DF-31 and DF-31A mobile ICBMs and the JL-2 submarine-launched ballistic missile. The DF-31A has a range of about 7,000 miles.

“This administration is reluctant to just come out and say it, but this report makes clear that China is preparing for small-scale and then large-scale wars against the United States and its friends and allies,” said Richard Fisher, a China miltiary analyst with the International Assessment and Strategy Center.

“It is time to start signalling to China’s leadership the broader economic, political, as well as military costs of its current course before it believes it can confidently embark on surprise military campaigns.”

Beijing is also rapidly building new radar-evading stealth fighter-bombers known as the J-20 and J-31.

“Within two years of the January 2011 flight test of China’s first stealth fighter, which we call the J-20, China tested a second prototype, which is referred to as the J-31,” Helvey said. “The first J-31 flight test, in October 2012, highlights China’s continued ambition to produce advanced fifth-generation fighter aircraft.”

Helvey said the Pentagon does not expect either the J-20 or the J-31 “to achieve an effective operational capability before 2018.”

U.S. intelligence assessments from five years ago said China would not field a jet comparable to the U.S. Air Force F-22 stealth fighter before 2018. As a result, the Pentagon canceled production of the F-22 at 187 jets.

The first test flight of the J-20 took place two years ago and surprised the U.S. military. It was tested during the visit of then-Defense Secretary Robert Gates, who was criticized for canceling F-22 production.

China’s surface naval forces are also expanding rapidly with deployment of several new types of warships, including the first aircraft carrier, the Liaoning.

Helvey said the carrier conducted its first aircraft  launch and recovery operations in November with J-15 fighters.

“We anticipate that China will spend the next three to four years on training and integration before achieving an operationally effective aircraft carrier capability,” he said. “China will likely build several indigenous aircraft carriers over the next 15 years.”

Chinese cyber and space weapons capabilities continued to be developed. Helvey said those warfare capabilities are being closely watched.

For the first time, the report linked large-scale cyber attacks and intrusions of computer networks to the Chinese government and military.

“In addition, in 2012, numerous computer systems around the world, including those owned by the United States government, continued to be targeted for intrusions, some of which appear to be attributable directly to [People’s Republic of China] government and military organizations,” Helvey said.

Asked about Chinese economic espionage, Helvey declined to provide details but said, “We’re always mindful of the potential threats to the security of our defense technology and defense systems.”

The report also discusses China’s assertions of territorial and maritime claims that are upsetting stability in the region.

“In this report, we do highlight China’s increased assertiveness with respect to its maritime territorial claim,” Helvey said.

China is claiming most of the South China Sea as its territory and is disputing Japan’s claims to the Senkaku Islands. Both areas are said to have large deposits of undersea gas and oil to which energy-hungry states in the region seek access.

China’s government routinely protests the annual report, claiming it is part of a Pentagon campaign to hype the threat from China.

Helvey said the Chinese are aware of the report and were not consulted prior to its release on Monday.

“China’s leaders continue to see the modernization of its military as a central component of their strategy to advance China’s national development goals in the first two decades of the 21st century,” he said.

Fisher, the IASC military analyst, said the latest report is far more useful than the truncated 43-page report from 2012.

“The first ever report disclosure of development of the Type 096 SSBN raises the prospect of a new submarine launched missile that also may be multiple warhead capable,” Fisher said. “As the Administration presses for additional reductions in U.S. nuclear warhead levels and shows reluctance to fund U.S. nuclear arsenal modernization, it is doubly important that Congress be informed about the size and growth of China’s nuclear forces.”

Fisher said the report failed to address China’s transfer of strategic missile technology to North Korea, specifically the transporter-erector launchers for Pyongyang’s new KN-08 road-mobile intercontinental ballistic missile disclosed for the first time during a military parade in April 2012.

“A failure to chastise and sanction China’s action will only serve to undermine confidence in American security guarantees and increase interest by our allies in their own nuclear deterrents,” he said.

Former State Department intelligence official John Tkacik said the report’s most important revelations are on the Chinese navy and especially its submarine forces.

“Last year’s report disclosed that two Jin-class ballistic missile submarines were already operational, and now the 2013 report counts three, so I take the DIA bean-counters’ word for it, China is launching one new boomer each year,” Tkacik said.

Each of the missile submarines will be equipped with 12 JL-2 missile that likely will have multiple warheads. The new submarines mean the Chinese are adding at least 180 new nuclear warheads to their arsenal, a sharp increase from the U.S. intelligence estimate of 240 warheads, Tkacik said.

In addition to the new missile submarine planned as a following on to the Jin submarines, China is planning at least one more advanced Typ 096 missile submarine a year indefiniately, Tkacik added.

“The real news is the construction of a new special-purpose class of guided-missile submarine, the Type-095 SSGN,” he said. “A Chinese SSGN [cruise missile-firing submarine] is not only a new threat for the U.S. Navy to worry about, but it will deeply unsettle China’s neighbors in East and Southeast Asia.”

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PENTAGON LIFTS VEIL ON SEVEN NEW OBSCURE CHINESE WEAPONS

By David Axe | Wired

Two new models of stealthy jet fighter. A new(ish) aircraft carrier. Separate ballistic missiles for targeting orbital satellites and ships at sea. A host of cyberespionage tools. Everybody’s already heard about China’s main new weapon systems, developed and deployed in alternating fits of secrecy and pageantry over the past decade of the Middle Kingdom’s explosive economic and military growth.

But what about China’s other high-tech war gear — those air, sea, space and ground systems that round out Beijing’s fast-modernizing armed forces and underpin the ruling Chinese Communist Party’s expanding ability to influence, or even bully, its Asian neighbors? The latest installment (.pdf) of the Pentagon’s annual report on Chinese military developments, released today, highlights some of these lesser-known but still potentially world-changing weapons.

Photo: Xinhua

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Export drone

Unveiled in November at the Zhuhai air show in southern China following seven years of development, the Yi Long drone — Beijing’s $1-million answer to the more expensive U.S. Predator and Reaper — is likely meant for domestic use and export, according to the Pentagon’s China report.

“Chinese arms are less expensive than those offered by the top international arms suppliers, although they are also generally of lower quality and reliability,” the report notes. But Beijing’s intended buyers — the worst African and Middle Eastern autocracies, for the most part — usually don’t mind these drawbacks, as they’re often embargoed from buying better-quality arms from mainstream suppliers.

And that’s exactly why the world should worry about Yi Long and other export-optimized Chinese drones. They’re not the best systems in the world, but they’re highly likely to wind up in the hands of exactly the kind of people who can’t be trusted with them.

Knock-off attack copters

Since last year, the ground-warfare branch of the Chinese People’s Liberation Army has “benefited from increased production of new equipment, including the Z-10 and Z-19 attack helicopters,” according to the U.S. China report. Roughly analogue to the American Cobra gunship and Kiowa scout, respectively, the Z-10 and Z-19 could provide PLA ground troops their first reliable close air support — a major combat advantage.

But technically the Chinese shouldn’t possess at least one of the helicopters. While the Z-19 is a copy of a copy of a French design and just might be legal (Beijing did legally acquire the rights to Paris’ original blueprints), the Z-10 relies on engine controls illegally acquired from a Canadian subsidiary of American manufacturer Pratt & Whitney.

The company, which also builds engines for American stealth fighters, pleaded guilty to the unauthorized technology transfer last summer and paid a $75-million fine, the China report notes. But it’s too late to prevent Beijing from producing scores or even hundreds of Z-10s using the illicit hardware.

Photo: China Daily Forum

Digital command

For many decades the three-million-strong PLA — by far the world’s largest active army — banked on sheer mass over combat prowess, planning to overwhelm battlefield adversaries with waves of infantry and tanks instead of maneuvering for advantage.

That’s beginning to change. “To develop a new cadre of officers, the PLA is reforming its academies to cultivate junior officers proficient with and capable of leveraging technology in all warfighting functions,” the China report states. To this end, last year some Chinese army training exercises banned paper maps, forcing officers to use computerized systems for command and control — a practice that has long been commonplace in the U.S. military.

Photo: World Affairs Board

Space beacon

As Chinese forces become more high tech, they increasingly need access to space-based systems to plot their movements and guide their weapons. Last year the PLA launched six copies of its Beidou positioning satellite, Beijing’s answer to the American GPS spacecraft.

Beidou allows ground, air and sea forces to determine their location on Earth with a high degree of accuracy — but only within east Asia. Beidou is a geostationary constellation that, so far, only covers China and its immediate surroundings.

The six GPS-style spacecraft that Beijing placed in orbit last year “completed the regional network as well as the in-orbit validation phase for the global network,” according to the China report. In other words, Beidou could get a lot more expansive in coming years, laying the navigational foundation for Chinese military deployments all over the world.

Photo: Xinhua

Sea guardian

The sea, more than any other domain, is the focus of the PLA’s modernization. Last summer’s first test cruise of the refurbished Soviet aircraft carrier Lioaning symbolized Beijing’s determination to eventually dominate the western Pacific Ocean.

But at her debut, Liaoning was basically defenseless. Whereas American, French and Russian flattops sail alongside powerful escort ships bristling with radar-guided defensive missiles, Liaoning sailed alone. The PLA Navy lacks large, modern warships with the equivalent of the U.S. Navy’s Aegis radar and Standard missile.

That, however, is changing. Last year China launched the first of up to a dozen Type 052D destroyers, likely meant to equal U.S. warships’ ability to protect aircraft carriers. The new destroyer type includes what the China report describes as “the PLA Navy’s first multipurpose vertical launch system” for rapidly firing large numbers of missiles.

Photo: China Military Review

Arsenal sub

China is making huge progress with its undersea military capabilities, building several new nuclear- and diesel-powered submarines per year. China’s subs are still smaller, louder and less sophisticated than American models, but Beijing has signaled its clear intention to some day match the U.S. sub-for-sub.

That applies even to America’s most secretive submarine type, the Ohio-class guided missile subs, converted from nuclear ballistic missile carriers. Today these so-called “SSGNs” — in essence, undersea arsenals — pack 154 conventional cruise missiles plus special facilities for deploying commandos and drones.

Indications in the past year are that China wants a similar sub. “In the next decade, China will likely construct the Type 095 guided-missile attack submarine (SSGN), which may enable a submarine-based land-attack capability,” the China report warns. The new sub’s ability to strike land targets at long range from the sea would be a first for Beijing.

Photo: Military News

Near-shore defender

This spring, to great fanfare, the U.S. Navy deployed its first Littoral Combat Ship, a type of near-shore combatant, to Singapore, America’s newest Pacific outpost. China is countering with new coastal warships of its own.

In 2012 the PLA Navy launched “at least” six Type 056 shallow-water corvettes armed with guns and missiles — and might build up to 30 total, according to the report. The corvettes will “augment” China’s fleet of 60 brand-new, missile-armed Type 022 fast attack craft “for operations in littoral waters.”

The new near-shore combatants support a layered defensive strategy aimed at “engag[ing] adversary surface ships up to 1,000 nautical miles from China’s coast,” the report states. With its periphery secure, China can increasingly turn its military attention outward to the surrounding region … and to the rest of the world.

U.S. BLAMES CHINA’S MILITARY DIRECTLY FOR CYBERATTACKS

By DAVID E. SANGER | The New York Times
WASHINGTON — The Obama administration on Monday explicitly accused China’s military of mounting attacks on American government computer systems and defense contractors, saying one motive could be to map “military capabilities that could be exploited during a crisis.”

While some recent estimates have more than 90 percent of cyberespionage in the United States originating in China, the accusations relayed in the Pentagon’s annual report to Congress on Chinese military capabilities were remarkable in their directness. Until now the administration avoided directly accusing both the Chinese government and the People’s Liberation Army of using cyberweapons against the United States in a deliberate, government-developed strategy to steal intellectual property and gain strategic advantage.

“In 2012, numerous computer systems around the world, including those owned by the U.S. government, continued to be targeted for intrusions, some of which appear to be attributable directly to the Chinese government and military,” the nearly 100-page report said.

The report, released Monday, described China’s primary goal as stealing industrial technology, but said many intrusions also seemed aimed at obtaining insights into American policy makers’ thinking. It warned that the same information-gathering could easily be used for “building a picture of U.S. network defense networks, logistics, and related military capabilities that could be exploited during a crisis.”

It was unclear why the administration chose the Pentagon report to make assertions that it has long declined to make at the White House. A White House official declined to say at what level the report was cleared. A senior defense official said “this was a thoroughly coordinated report,” but did not elaborate.

On Tuesday,  a spokeswoman for the Chinese Ministry of Foreign Affairs,  Hua Chunying, criticized the report.

‘‘China has repeatedly said that we resolutely oppose all forms of hacker attacks,’’ she said. ‘‘We’re willing to carry out an even-tempered and constructive dialogue with the U.S. on the issue of Internet security. But we are firmly opposed to any groundless accusations and speculations, since they will only damage the cooperation efforts and atmosphere between the two sides to strengthen dialogue and cooperation.’’

Missing from the Pentagon report was any acknowledgment of the similar abilities being developed in the United States, where billions of dollars are spent each year on cyberdefense and constructing increasingly sophisticated cyberweapons. Recently the director of the National Security Agency, Gen. Keith Alexander, who is also commander of the military’s fast-growing Cyber Command, told Congress that he was creating more than a dozen offensive cyberunits, designed to mount attacks, when necessary, at foreign computer networks.

When the United States mounted its cyberattacks on Iran’s nuclear facilities early in President Obama’s first term, Mr. Obama expressed concern to aides that China and other states might use the American operations to justify their own intrusions.

But the Pentagon report describes something far more sophisticated: a China that has now leapt into the first ranks of offensive cybertechnologies. It is investing in electronic warfare capabilities in an effort to blind American satellites and other space assets, and hopes to use electronic and traditional weapons systems to gradually push the United States military presence into the mid-Pacific nearly 2,000 miles from China’s coast.

The report argues that China’s first aircraft carrier, the Liaoning, commissioned last September, is the first of several carriers the country plans to deploy over the next 15 years. It said the carrier would not reach “operational effectiveness” for three or four years, but is already set to operate in the East and South China Seas, the site of China’s territorial disputes with several neighbors, including Japan, Indonesia, the Philippines and Vietnam. The report notes a new carrier base under construction in Yuchi.

The report also detailed China’s progress in developing its stealth aircraft, first tested in January 2011.

Three months ago the Obama administration would not officially confirm reports in The New York Times, based in large part on a detailed study by the computer security firm Mandiant, that identified P.L.A. Unit 61398 near Shanghai as the likely source of many of the biggest thefts of data from American companies and some government institutions.

Until Monday, the strongest critique of China had come from Thomas E. Donilon, the president’s national security adviser, who said in a speech at the Asia Society in March  that American companies were increasingly concerned about “cyberintrusions emanating from China on an unprecedented scale,” and that “the international community cannot tolerate such activity from any country.” He stopped short of blaming the Chinese government for the espionage.

But government officials said the overall issue of cyberintrusions would move to the center of the United States-China relationship, and it was raised on recent trips to Beijing by Treasury Secretary Jacob J. Lew and the chairman of the Joint Chiefs of Staff, Gen. Martin E. Dempsey.

To bolster its case, the report argues that cyberweapons have become integral to Chinese military strategy. It cites two major public works of military doctrine, “Science of Strategy” and “Science of Campaigns,” saying they identify “information warfare (I.W.) as integral to achieving information superiority and an effective means for countering a stronger foe.” But it notes that neither document “identifies the specific criteria for employing a computer network attack against an adversary,” though they “advocate developing capabilities to compete in this medium.”

It is a critique the Chinese could easily level at the United States, where the Pentagon has declined to describe the conditions under which it would use offensive cyberweapons. The Iran operation was considered a covert action, run by intelligence agencies, though many techniques used to manipulate Iran’s computer controllers would be common to a military program.

The Pentagon report also explicitly states that China’s investments in the United States aim to bolster its own military technology. “China continues to leverage foreign investments, commercial joint ventures, academic exchanges, the experience of repatriated Chinese students and researchers, and state-sponsored industrial and technical espionage to increase the level of technologies and expertise available to support military research, development and acquisition.”

But the report does not address how the Obama administration should deal with that problem in an economically interconnected world where the United States encourages those investments, and its own in China, to create jobs and deepen the relationship between the world’s No. 1 and No. 2 economies. Some experts have argued that the threat from China has been exaggerated. They point out that the Chinese government — unlike, say, Iran or North Korea — has such deep investments in the United States that it cannot afford to mount a crippling cyberstrike on the country.

The report estimates that China’s defense budget is $135 billion to $215 billion, a large range attributable in part to the opaqueness of Chinese budgeting. While the figure is huge in Asia, the top estimate would still be less than a third of what the United States spends every year.

Some of the report’s most interesting elements examine the debate inside China over whether this is a moment for the country to bide its time, focusing on internal challenges, or to directly challenge the United States and other powers in the Pacific.

But it said that “proponents of a more active and assertive Chinese role on the world stage” — a group whose members it did not name — “have suggested that China would be better served by a firm stance in the face of U.S. or other regional pressure.”

This article has been revised to reflect the following correction:

Correction: May 7, 2013

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PENTAGON: CHINA’S CYBER SPYING TARGETS U.S. GOVERNMENT

by Staff Writers

Washington (AFP) China has engaged in widespread cyber espionage in a bid to extract information about the US government’s foreign policy and military plans, said a Pentagon report issued Monday.China kept up a steady campaign of hacking in 2012 that included attempts to target US government computer networks, which could provide Beijing a better insight into America’s policy deliberations and military capabilities, according to the Pentagon’s annual assessment of China’s military.

“China is using its computer network exploitation (CNE) capability to support intelligence collection against the US diplomatic, economic, and defense industrial base sectors that support US national defense programs,” said the report to Congress.

“In 2012, numerous computer systems around the world, including those owned by the US government, continued to be targeted for intrusions, some of which appear to be attributable directly to the Chinese government and military,” it said.

The report marked the most explicit statement yet from the United States that it believes China’s cyber spying is focused on the US government, as well as American corporations.

Though President Barack Obama’s administration has demanded China stop widespread cyber theft, officials have tended to focus their public comments on the hacking of private business networks and not US government agencies.

The information targeted by the cyber spying could possibly benefit China’s arms and technology sectors and policymakers interested in US leaders’ thinking on China-related issues, the report said.

The cyber spying also could assist Chinese military planners in “building a picture of US network defense networks, logistics, and related military capabilities that could be exploited during a crisis,” it said.

US officials have grown alarmed over what they call increasingly brazen hacking from China that has penetrated defense contractors including Lockheed Martin and a host of other organizations and agencies.

The digital espionage was part of a broader industrial espionage effort that seeks to secure military-related US and Western technology, allowing Beijing to scale back its reliance on foreign arms manufacturers, the report said.

Apart from describing the Chinese military’s focus on cyber warfare, the Pentagon report portrayed a steady build-up of Beijing’s armed forces, with investments in anti-ship missiles, space satellites, a new aircraft carrier and stealth fighter jets.

China in March announced a 10.7 percent increase in its annual defense spending, with a budget of $114 billion.

But the report estimated China’s total military spending for 2012 was much higher, between $135 billion and $215 billion.

Beijing, however, still spent more on “internal security” forces than on its military, it said.

Although China’s top strategic concern remained Taiwan, its “military modernization has begun to focus to an increasing extent on capabilities and mission sets that extend beyond immediate territorial concerns,” David Helvey, deputy assistant secretary of defense for East Asia, told reporters.

The report said much of China’s investment is concentrated on missiles and other weaponry to attack “military forces that might deploy or operate within the western Pacific,” where Beijing stakes territorial claim to an arc of disputed islands.

The Pentagon has been particularly concerned about the DF-21D anti-ship ballistic missile, as well as air defenses and other weapons that could hit destroyers or aircraft carriers from a long distance.

“Obviously, something that can hold at risk large surface ships, including aircraft carriers, is something we pay attention to,” Helvey said.

But the report stressed “positive momentum” in military relations between the United States and China, citing more high-level contacts and a joint counter-piracy exercise in the Gulf of Aden last year.

The 92-page report did not convey any shift in the US view of China’s military and was “even-handed” in its tone, said Andrew Scobell of the RAND Corporation think tank.

While US officials track China’s military build-up closely, the People’s Liberation Army is still often pre-occupied with domestic concerns and dissent, he said. “There’s a domestic drag on China’s military.”
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CHINA DENIES PENTAGON CYBER-ATTACK CLAIMS

China is behind a campaign of cyber-espionage aimed at extracting America’s top military secrets, a Pentagon report has said, publicly accusing Beijing for the first time of being behind a well-documented Chinese hacking threat.

By Peter Foster, agencies | telegraph.co.uk

As China seeks to rapidly upgrade and expands military — including a new aircraft carrier and stealth fighter — the 92-page Pentagon report raised “serious concerns” over China’s on-going efforts to steal the technologies it needs.

“In 2012 the US government, continued to be targeted for intrusions, some of which appear to be attributable directly to the Chinese government and military. These intrusions were focused on exfiltrating Information,” the report said.

“China is using its computer network exploitation (CNE) capability to support intelligence collection against the US diplomatic, economic, and defense industrial base sectors that support U.S. national defense programs,” it added.

China reacted angrily to the accusation yesterday, repeating its long-standing denials that the hacking emanating from the Chinese mainland is government-sponsored, and accusing the US of making reckless accusations that could damage Sino-US relations.

A Foreign-ministry spokesman said that Beijing had made “representations” to the US government over the report, which it described as “not conducive to mutual trust or cooperation.” Senior Col. Wang Xinjun, a People’s Liberation Army researcher, was quoted by the official Xinhua News Agency as saying the accusations were “irresponsible and harmful to the mutual trust between the sides.” “The Chinese government and armed forces have never sanctioned hacking activities,” added Col. Wang, who is based at the Academy of Military Sciences in Beijing, one of the PLA’s main think tanks. The military frequently uses such academics as proxy spokesmen.

The decision to turn up the diplomatic heat on Beijing over its use of cyber-espionage represents a change of tactics in Washington this year where diplomats say that for years they have made behind-the-scenes diplomatic representations to the China over the hacking issue.

“We either get flat denials or they shrug, as if to say all governments are involved in this kind of thing, so live with it,” was how one senior diplomatic characterised the usual Chinese response, adding there was a new determination to confront Beijing over the issue.

As well increasing public pressure, the Obama administration has signaled its determination to bolster the US’s own defences against cyber-spying and cyber-attack, asking Congress for a 21pc increase in Pentagon cyber security budgets this year.

The threat — and not just from China — was highlighted this week as a band of hackers, grouped under the hastag #OpUsa, promised widespread attacks yesterday on US government websites, in reprisal it said, for US foreign policy in Iraq, Afghanistan and Pakistan.

While China talks of “mutual trust”, the Pentagon report highlighted the US’s own long-standing concerns about China’s lack of transparency as it builds a military commensurate with its newfound status as an emerging superpower.

In March China announced a 10.7 percent increase in official military spending to $114 billion, although actual defending spending for 2012 is estimated to range between $135 billion and $215 billion — though still less than half the US defense spending of more than $500 billion.

“What concerns me is the extent to which China’s military modernization occurs in the absence of the type of openness and transparency that others are certainly asking of China,” said David Helvey, deputy assistant secretary of defense for East Asia, at a Pentagon briefing on the report.

Earlier this year Bloomberg reported that hackers linked to China’s military had compromised “most if not all” of the computers belonging to QinetiQ North America, which produces spy satellites.

That report followed the publication of research by Mandiant, an US cybersecurity contractor, which said it had traced attacks against 140 mostly American companies to a Chinese military unit in Shanghai.

The problem is not confined to the US, with another report this year alleging that the European Aeronautic Defense & Space Co. EADS and Germany’s largest steelmaker, ThyssenKrupp, had also been hacked by China.

CALIFORNIA GOVERNOR BROWN TRAVELS TO CHINA

By Julien Kiemle and Marc Wells

California’s governor, Jerry Brown, a Democrat, returned from a visit to China in April. During his weeklong visit, he was accompanied by a retinue of about 90 staff as well as representatives of California’s private business sector.

The group met with China’s elite in the Communist Party bureaucracy and business community, including such individuals as new premier Li Keqiang, the commerce minister, and the heads of automaker BYD Co.

Beginning in Beijing, the governor traveled in style on the country’s high-speed rail line between Shanghai, Nanjing, Guangzhou and Shenzhen, finishing with a brief stop in Hong Kong before coming back to California.

Upon leaving, he announced the founding of California’s first Overseas Trade Office in a decade, which will be staffed by the Bay Area Council business group.

The purpose of Brown’s trip abroad, a somewhat unconventional move for a state governor, is to attract Chinese capital to California.

After his meeting with the Chinese premier, Brown announced a $1.5 billion Chinese investment in Oakland. Later, he announced four smaller investments in various industries, totaling around $250 million.

Brown is particularly targeting state-owned enterprises and sovereign-wealth funds, which support the county’s handful of internationally competitive private firms.

“Instead of buying T-bills in Washington,” Brown said, “they should be investing in California.” The US has an enormous trade deficit with China, made possible by the Chinese purchases of US government debt. But as China’s public funds go from financing America’s sovereign debt to direct investments, it will be further exposed to the volatility of the international market.

Speaking in Beijing, Brown said that potentially $60 billion of investment might come to California in the next seven years from China. However, he has much bigger ambitions than that, as the Economist reports Brown reckoning that “Chinese investors have $400 billion-$500 billion burning a hole in their pockets.”

The $1.5 billion investment in Oakland relates to a “massive new Oakland waterfront housing project,” according to the Los Angeles Times. Brown said the project will create 3,100 housing units and 200,000 square feet of retail and commercial space, and will supposedly employ 10,000.

Given that the Chinese investors behind the project apparently find California a more profitable location than China itself, there is every reason to suspect that these new jobs will pay poverty wages.

Brown’s China trip is in line with President Obama’s “insourcing” of jobs back to the United States. According to this policy, the wages and living conditions of American workers are to be reduced to alignment with workers in China and elsewhere, in order to attract capital back into the US mainland.

The working class has some experience with the “insourcing” policy already. In Detroit, for example, the Obama administration’s restructuring of the auto industry resulted in wages for new hires being cut in half, to the poverty-level wage of $14 per hour. The results in other states and industries will be same: businesses will be restored to profitability by slashing workers’ wages and benefits to “competitive” levels.

In turn, the Chinese investments in California are part of a “going out” policy, which encourages profitable investment outside the country. If Chinese capital is considering large-scale investment in America, it can only be because surplus value can be extracted from American workers at a rate comparable to that of Chinese workers.

The American labor unions, subservient to the Democrats at every step, have for their part jumped at every opportunity to accommodate the Obama administration’s “insourcing” drive. In Detroit, the UAW partnered with management and the Obama administration in the destruction of wages and benefits to refound the auto industry on a “competitive” footing.

In California, the same line has been pursued by unions like the SEIU, the CTA and the AFSCME in the false name of “defending jobs.” The logic of this line is that American workers must compete with Chinese workers to see who can accept the lowest wages. These California unions supported—and continue to support—Brown and the Democratic Party while the latter work to destroy education, pensions, wages, jobs, and social services.

The American labor unions have been studying the “Chinese model” for years and preparing its implementation in the US. In 2011, Andy Stern, president of the SEIU from 1996 to 2010 and staunch Obama supporter, wrote an opinion column in the Wall Street Journal, the official mouthpiece of US capitalism, entitled “China’s superior economic model.”

“As painful and humbling as it may be, America needs to do what a once-dominant business or sports team would do when the tide turns: study the ingredients of its competitors’ success,” Stern wrote. “America needs to embrace a plan for growth and innovation, with a streamlined government as a partner with the private sector. Economic revolutions require institutions to change and maybe make history, because if they stick to the status quo they soon become history.”

What he is specifically referring to is the subordination of all public institutions to the supreme drive for profit, the “streamlining” (i.e., destruction) of all institutions that once existed to defend certain basic rights of workers, and the conscious replication of Chinese labor conditions in the US.

The corporate and financial aristocracy that rules America looks with drooling envy at the tiny wages Chinese workers are forced to accept (and the corresponding profits), and they look forward to the day when American workers can be forced to accept the same. This is what is behind all the discussion of the “Chinese model,” “competitiveness,” “profitability,” “streamlining,” “insourcing,” the unbearable “status quo,” and Brown’s well-publicized trip to China.

Among Brown’s entourage in China were representatives of many of the state’s largest corporations, such as Kaiser Permanente, the Wine Institute, Bank of America, Wells Fargo & Co., FedEx Corp., United Airlines, State Farm Insurance, HSBC, Siemens Corp., Deloitte, Five Point Communities and Lennar Urban. The same companies paid the bill for the trip.

In the aftermath of Brown’s trip to China, a “debate” has emerged, promoted by the liberal media and several of Brown’s political opponents, over which “special interests” are have undue influence over the governor. Framing the question in this way obfuscates the issue. The fundamental question is not who specifically foots the bill for the trip—a small write-off when all is said and done—but what class interests are represented. The composition of Brown’s entourage should make it clear: Brown’s program is ruthlessly pro-capital all down the line.

During his tour, Brown expressed in his inimitable style his frustration with the economic environment at home. “I want to be in the presence of people who get sh_t done,” he said.