SOUTH CHINA SEA HOSTILITIES AND CHINA'S NEW ECONOMIC FRONT

SOUTH CHINA SEA WATCH: US angers China 

A major US military build-up – including nuclear weapons – is under way in Asia and the Pacific with the purpose of confronting China. John Pilger raises the alarm on an under-reported and dangerous provocation.

© US Navy

When I first went to Hiroshima in 1967, the shadow on the steps was still there. It was an almost perfect impression of a human being at ease: legs splayed, back bent, one hand by her side as she sat waiting for a bank to open. At a quarter past eight on the morning of 6 August, 1945, she and her silhouette were burned into the granite. I stared at the shadow for an hour or more, unforgettably. When I returned many years later, it was gone: taken away, ‘disappeared’, a political embarrassment.

I have spent two years making a documentary film, The Coming War on China, in which the evidence and witnesses warn that nuclear war is no longer a shadow, but a contingency. The greatest build-up of American-led military forces since the Second World War is well under way. They are on the western borders of Russia, and in Asia and the Pacific, confronting China.

The great danger this beckons is not news, or it is news buried and distorted: a drumbeat of propaganda that echoes the psychopathic campaign embedded in public consciousness during much of the 20th century.

Like the renewal of post-Soviet Russia, the rise of China as an economic power is declared an ‘existential threat’ to the divine right of the United States to rule and dominate human affairs.

To counter this, in 2011 President Obama announced a ‘pivot to Asia’, which meant that almost two-thirds of US naval forces would be transferred to Asia and the Pacific by 2020.

Today, more than 400 American military bases encircle China with missiles, bombers, warships and, above all, nuclear weapons. From Australia north through the Pacific to Japan, Korea and across Eurasia to Afghanistan and India, the bases form, says one US strategist, ‘the perfect noose’.

A study by the RAND Corporation – which, since Vietnam, has planned America’s wars – is entitled War with China: Thinking Through the Unthinkable. Commissioned by the US Army, the authors evoke the Cold War when RAND made notorious the catch cry of its chief strategist, Herman Kahn – ‘thinking the unthinkable’. Kahn’s book, On Thermonuclear War, elaborated a plan for a ‘winnable’ nuclear war against the Soviet Union.

Today, his apocalyptic view is shared by those holding real power in the US: the Pentagon militarists and their neoconservative collaborators in the executive, intelligence agencies and Congress. The current Secretary of Defense, Ashley Carter, a verbose provocateur, says US policy is to confront those ‘who see America’s dominance and want to take that away from us’.

Today, more than 400 American military bases encircle China with missiles, bombers, warships and nuclear weapons.Charles Gatward: The Coming War on China, Darmouth Films

'Punish' China

In Washington, I met Amitai Etzioni, distinguished professor of international affairs at George Washington University. The US, he writes, ‘is preparing for a war with China, a momentous decision that so far has failed to receive a thorough review from elected officials, namely the White House and Congress.’

This war would begin with a ‘blinding attack against Chinese anti-access facilities, including land and sea-based missile launchers… satellite and anti-satellite weapons’. The incalculable risk is that ‘deep inland strikes could be mistakenly perceived by the Chinese as pre-emptive attempts to take out its nuclear weapons, thus cornering them into “a terrible use-it-or-lose-it dilemma” [that would] lead to nuclear war.’

In 2015, the Pentagon released its Law of War Manual. ‘The United States,’ it says, ‘has not accepted a treaty rule that prohibits the use of nuclear weapons per se, and thus nuclear weapons are lawful weapons for the United States.’

In China, a strategist told me, ‘We are not your enemy, but if you [in the West] decide we are, we must prepare without delay.’ China’s military and arsenal are small compared to America’s. However, ‘for the first time,’ wrote Gregory Kulacki of the Union of Concerned Scientists, ‘China is discussing putting its nuclear missiles on high alert so that they can be launched quickly on warning of an attack… This would be a significant and dangerous change in Chinese policy… Indeed, the nuclear weapon policies of the United States are the most prominent external factor influencing Chinese advocates for raising the alert level of China’s nuclear forces.’

'I don't want it to be a fair fight. It it's a knife fight, I want to bring a gun'

Professor Ted Postol was scientific adviser to the head of US naval operations. An authority on nuclear weapons, he told me, ‘Everybody here wants to look like they’re tough. See, I got to be tough… I’m not afraid of doing anything military, I’m not afraid of threatening; I’m a hairy-chested gorilla. And we have gotten into a state, the United States has gotten into a situation where there’s a lot of sabre-rattling, and it’s really being orchestrated from the top.’

I said, ‘This seems incredibly dangerous.’

‘That’s an understatement.’

Andrew Krepinevich is a former Pentagon war planner and the influential author of war games against China. He wants to ‘punish’ China for extending its defences to the South China Sea. He advocates seeding the ocean with sea mines, sending in US special forces and enforcing a naval blockade. He told me, ‘Our first president, George Washington, said if you want peace, prepare for war.’

In 2015, in high secrecy, the US staged its biggest single military exercise since the Cold War. This was Talisman Sabre; an armada of ships and long-range bombers rehearsed an ‘Air-Sea Battle Concept for China’ – ASB – blocking sea lanes in the Straits of Malacca and cutting off China’s access to oil, gas and other raw materials from the Middle East and Africa.

It is such a provocation, and the fear of a US Navy blockade, that has seen China feverishly building strategic airstrips on disputed reefs and islets in the Spratly Islands in the South China Sea. Last July, the UN Permanent Court of Arbitration ruled against China’s claim of sovereignty over these islands. Although the action was brought by the Philippines, it was presented by leading American and British lawyers and can be traced to then US Secretary of State Hillary Clinton.

In 2010, Clinton flew to Manila. She demanded that America’s former colony reopen the US military bases closed down in the 1990s following a popular campaign against the violence they generated, especially against Filipino women. She declared China’s claim on the Spratly Islands – which lie more than 7,500 miles (12,000 kilometres) from the United States – a threat to US ‘national security’ and to ‘freedom of navigation’.

Handed millions of dollars in arms and military equipment, the then government of President Benigno Aquino broke off bilateral talks with China and signed a secretive Enhanced Defense Co-operation Agreement with the US. This established five rotating US bases and restored a hated colonial provision that American forces and contractors were immune from Philippine law.

Under the rubric of ‘information dominance’ – the jargon for media manipulation on which the Pentagon spends more than $4 billion – the Obama administration launched a propaganda campaign that cast China, the world’s greatest trading nation, as a threat to ‘freedom of navigation’.

CNN led the way, its ‘national security reporter’ reporting excitedly from on board a US Navy surveillance flight over the Spratlys. The BBC persuaded frightened Filipino pilots to fly a single-engine Cessna over the disputed islands ‘to see how the Chinese would react’. None of the news reports questioned why the Chinese were building airstrips off their own coastline, or why American military forces were massing on China’s doorstep.

The designated chief propagandist is Admiral Harry Harris, the US military commander in Asia and the Pacific. ‘My responsibilities,’ he told The New York Times, ‘cover Bollywood to Hollywood, from polar bears to penguins.’ Never was imperial domination described as pithily.

Malleable media and obsequious partners

Harris is one of a brace of Pentagon admirals and generals briefing selected, malleable journalists and broadcasters, with the aim of justifying a threat as specious as that with which George W Bush and Tony Blair justified the destruction of Iraq.

‘The China trade’

James Bradley is the author of the best-selling The China Mirage: The Hidden History of American Disaster in Asia (Little Brown, 2015). In these excerpts from his interview with John Pilger, he describes how modern America was built on the ‘China trade’.

James Bradley: For most of American history, it was illegal for someone like me to know a Chinese. The Chinese came to America to mine gold and build the railroads, and Americans decided we didn’t like competition. So in 1882 we had the Chinese Exclusion Acts, which kept the Chinese out of the United States for about 100 years. Just at the point we were putting up the Statue of Liberty saying we welcome everybody, we were erecting a wall saying: ‘We welcome everybody except those Chinese.’

John Pilger: And yet, for the American elite in the 19th century, China was a goldmine.

JB: A goldmine of drugs. Warren Delano, the grandfather of Franklin Delano Roosevelt, was the American opium king of China; he was the biggest American opium dealer, second only to the British. Much of the east coast [establishment] of the United States – Columbia, Harvard, Yale, Princeton – was born of drug money. The American industrial revolution was funded by huge pools of money – where did this come from? It came from illegal drugs in the biggest market in the world: China.

JP: So the grandfather of the most liberal president, Franklin Delano Roosevelt, was a drug runner?

JB: Yes. Franklin Delano Roosevelt never made much money in his life. He had public-service jobs that were very lowly paid, but he inherited a fortune from Warren Delano, his father. Now if you scratch anyone with the name Forbes, you’ll find opium money… such as John Forbes Kerry…

JP: That’s the present Secretary of State.

JB: Yes. His great-grandfather [Francis Blackwell Forbes] was an opium dealer. How big was opium money? Opium money built the first industrial city in the United States. It built the first five railroads. But it wasn’t talked about. It was called the China trade.

In Los Angeles in September, Harris declared he was ‘ready to confront a revanchist Russia and an assertive China… If we have to fight tonight, I don’t want it to be a fair fight. If it’s a knife fight, I want to bring a gun. If it’s a gun fight, I want to bring in the artillery… and all our partners with their artillery.’

These ‘partners’ include South Korea, an American colony in all but name and the launch pad for the Pentagon’s Terminal High Altitude Air Defense system, known as THAAD, ostensibly aimed at North Korea. As Professor Postol points out, it targets China.

In Sydney, Australia, Harris called on China to ‘tear down its Great Wall in the South China Sea’. The imagery was front-page news. Australia is America’s most obsequious ‘partner’; its political elite, military, intelligence agencies and the dominant Murdoch media are fully integrated into what is known as the ‘alliance’. Closing the Sydney Harbour Bridge for the motorcade of a visiting American government ‘dignitary’ is not uncommon. The war criminal Dick Cheney was afforded this honour.

Although China is Australia’s biggest trader, on which much of the national economy relies, ‘confronting China’ is the diktat from Washington. The few political dissenters in Canberra risk McCarthyite smears in the Murdoch press. ‘You in Australia are with us come what may,’ said one of the architects of the Vietnam War, McGeorge Bundy. One of the most important US bases is Pine Gap near Alice Springs. Founded by the CIA, it spies on China and all of Asia, and is a vital contributor to Washington’s murderous war by drone in the Middle East.

In October, Richard Marles, the defence spokesperson of the main Australian opposition party, the Labor Party, demanded that ‘operational decisions’ in provocative acts against China be left to military commanders in the South China Sea. In other words, a decision that could mean war with a nuclear power should not be taken by an elected leader or a parliament but by an admiral or a general.

This is the Pentagon line, a historic departure for any state calling itself a democracy. The ascendancy of the Pentagon in Washington – which Daniel Ellsberg has called a silent coup – is reflected in the record $5 trillion the United States has spent on aggressive wars since 9/11, according to a study by Brown University. The million dead in Iraq and the flight of 12 million refugees from at least four countries are the consequence.

‘I state clearly and with conviction,’ said Obama in 2009, ‘America’s commitment to seek the peace and security of a world without nuclear weapons.’ Under Obama, nuclear warhead spending has risen higher than under any president since the end of the Cold War. A mini nuclear weapon is planned. Known as the B61 Model 12, it will mean, says General James Cartwright, former vice-chair of the Joint Chiefs of Staff, that ‘going smaller [makes its use] more thinkable’.

Peaceful resistance

The Japanese island of Okinawa has 32 military installations, from which Korea, Vietnam, Cambodia, Afghanistan and Iraq have been attacked by the United States. Today, the principal target is China, with whom Okinawans have close cultural and trade ties.

In 1959 a US fighter plane crashed into Miyamori School, Okinawa, killing a number of children.

There are military aircraft constantly in the sky over Okinawa; they sometimes crash into homes and schools. People cannot sleep, teachers cannot teach. Wherever they go in their own country, they are fenced in and told to keep out.

A hugely popular Okinawan movement has been growing since a 12-year-old girl was gang-raped by US troops in 1995. It was one of hundreds of such crimes, many of them never prosecuted. Barely acknowledged in the wider world, the resistance in Okinawa is a vivid expression of how ordinary people can peacefully take on a military giant, and threaten to win.

Their campaign has elected Japan’s first anti-base governor, Takeshi Onaga, and presented an unfamiliar hurdle to the Tokyo government and the ultra-nationalist Prime Minister Shinzo Abe’s plans to repeal Japan’s ‘peace constitution’.

The resistance leaders include Fumiko Shimabukuro, aged 87, a survivor of the Second World War, when a quarter of Okinawans died in the American invasion. Fumiko and hundreds of others took refuge in beautiful Henoko Bay, which she is now fighting to save. The US wants to destroy the bay in order to extend runways for its bombers. As we gathered peacefully outside the US base, Camp Schwab, giant Sea Stallion helicopters hovered over us for no reason other than to intimidate.

Fumiko Shimabukuro (right), an Okinawa World War Two survivor, is now fighting to save a bay from US bombers. With her is Eiko Ginoza. Bruno Sorrentino and John Pilger

Across the East China Sea lies the Korean island of Jeju, a semi-tropical sanctuary and World Heritage Site declared ‘an island of world peace’. On this island of world peace has been built one of the most provocative military bases in the world, less than 400 miles (650 kilometres) from Shanghai. The fishing village of Gangjeong is dominated by a South Korean naval base purpose-built for US aircraft carriers, nuclear submarines and destroyers equipped with the Aegis missile system, aimed at China.

A people’s resistance to these war preparations has become a presence on Jeju for almost a decade. Every day, often twice a day, villagers, Catholic priests and supporters from all over the world stage a religious mass that blocks the gates of the base. In a country where political demonstrations are often banned, unlike powerful religions, the tactic has produced an inspiring spectacle.

The world is shifting east, but the astonishing vision of Eurasia from China is barely understood in the West

One of the leaders, Father Mun Jeong-hyeon, told me, ‘I sing four songs every day at the base, regardless of the weather. I sing in typhoons – no exception. To build this base, they destroyed the environment, and the life of the villagers, and we should be a witness to that. They want to rule the Pacific. They want to make China isolated in the world. They want to be emperor of the world.’

South Korean woodcarver and Catholic priest, Father Mun Jeong-hyeon, leads a daily protest against the building of a naval base that the US will use to target China. Bruno Sorrentino and John Pilger

I flew to Shanghai for the first time in more than a generation. When I was last in China, the loudest noise I remember was the tinkling of bicycle bells; Mao Zedong had recently died, and the cities seemed dark places, in which foreboding and expectation competed. Within a few years, Deng Xiaoping, the ‘man who changed China’, was the ‘paramount leader’. Nothing prepared me for the astonishing changes today.

I met Lijia Zhang, a Beijing journalist and typical of a new class of outspoken mavericks. Her best-selling book has the ironic title Socialism Is Great! She grew up during the chaotic and brutal Cultural Revolution and has lived in the US and Europe. ‘Many Americans imagine,’ she said, ‘that Chinese people live a miserable, repressed life with no freedom whatsoever. The [idea of] the yellow peril has never left them… They have no idea there are some 500 million people being lifted out of poverty, and some would say it’s 600 million.’

China today: a tourist snaps the bull of capitalism in front of Shanghai’s Bund hotel, bedecked with communist flags. Bruno Sorrentino and John Pilger

She described modern China as a ‘golden cage’. ‘Since the reforms started,’ she said, ‘and we’ve become so much better off, China has become one of the most unequal societies in the world. There are lots of protests now: typically, land being grabbed by officials for commercial development. But farmers are more aware of their rights; and young factory workers are demanding a better wage and conditions.’

The world is shifting east

China today presents perfect ironies, not least the house in Shanghai where Mao and his comrades secretly founded the Communist Party of China in 1921. Today, it stands in the heart of a very capitalist shopping district; you walk out of this communist shrine with your Little Red Book and your plastic bust of Mao into the embrace of Starbucks, Apple, Cartier, Prada.

Would Mao be shocked? I doubt it. Five years before his great revolution in 1949, he sent this secret message to Washington. ‘China must industrialize,’ he wrote. ‘This can only be done by free enterprise. Chinese and American interests fit together, economically and politically. America need not fear that we will not be co-operative. We cannot risk any conflict.’

A look at some recent key developments in the South China Sea, where China is pitted against smaller neighbors in territorial disputes over islands, coral reefs and lagoons in waters rich in fish and potential gas and oil reserves:

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EDITOR'S NOTE: This is a weekly look at the latest key developments in the South China Sea, home to several territorial conflicts that have raised tensions in the region.

All any nation needs to go to war is a good provocation, and China is no exception. With its sweeping territorial claims, island-building, militarization, patriotic fervor, and prickly rhetoric, Beijing is setting itself up to be repeatedly provoked in the South China Sea. It might even be counting on it.

UNCLOS territorial jurisdictions.(historicair/Wikipedia, CC-BY-3.0)

Consider the nation’s manmade, militarized island at Fiery Cross Reef in the Spratly archipelago. Though it didn’t even exist a few years ago, and for decades ships from other nations could routinely sail by it without disturbance, now Beijing feels provoked if anyone goes near it—and sends out warnings or makes aggressive gestures in response.

This week the USS William P. Lawrence, a guided missile destroyer from the US Navy,conducted a “freedom of navigation” operation near the island. It deliberately sailed within 12 nautical miles of Fiery Cross Reef. If the US recognized the reef as China’s territory to begin with—which it does not— that would be considered entering China’s territory.

The problem is China has claimed, outrageously, that nearly the entire sea is its own territory. Considering the fact that some $5 trillion in ship-borne trade passes through the strategic waterway every year, that’s a problem not just for the US, but any number of countries participating in the global economy. The US Navy’s operation was a reminder to China that the sea is open waters, despite any impromptu islands that might have been constructed of late.

China bases its sea claim on a “nine-dash line” that it drew on a map after World War 2. Never mind that the line conflicts with international norms and overlapping claims by nearby nations, including the Philippines, Vietnam, and Malaysia, nations whose coasts are much closer to the disputed sea than China’s.

Mind the nine-dash line.

Many observers feel it’s ridiculous to base real-world claims on such a map. Internet satire has ensued.

The problem is that China is actually serious, however surreal the claim may seem. From a military strategy point of view, at least, it’s easy to see why.

The strategic waterway is “one of the most important oil and natural gas transport choke points in the world,” geopolitical analyst Tim Daisswrote this week in Forbes. Passing through it each year, he noted, are almost 60% of Japan’s and Taiwan’s energy supplies, and 80% of China’s crude oil imports.

Were a conflict involving these or other nations to break out, control of the sea could give Beijing a distinct advantage in securing—or blocking—the energy needed to power a war machine. The most critical resourcethat Japan lacked in World War 2 was oil, a key history lesson surely not lost on China’s military strategists. (The sea is full of its own vast untapped reserves of oil and natural gas, too.)

To acquire the sea’s strategic advantage, though, China first needs to establish control over the waterway. That needs to be done step by step. The process might go something like this:

1. Make the sea claim.
2. Create outposts in the sea, and work toward turning them into military bases. At this stage, you might want to deny the military bit.
3. Express outrage if anyone goes near those outposts. Over time, establish a pattern of being repeatedly provoked, despite yourpatient warnings. Your outposts aren’t quite military bases yet anyway, so this is a good use of your time in the meantime.
4. As your outposts get closer to becoming real military bases, feel free to grow more strident in your responses to the “provocations.”
5. Once your military infrastructure is fully up to speed, you’re ready for war—you even have a track record of provocations to point to for justification! Of course you don’t have to start a conflict, but it’s nice to know you can at any time—and feel justified about it.

China isn’t just relying on its military. The country has a massive fishing fleet, and by far the world’s largest fish industry. For years Beijing has been paying fishing boats to operate near its disputed outposts in the sea, even if they don’t catch much in the area. It certainly helps appearances.

The fishing fleet needs to expand outward because through over-fishing it has nearly depleted the fishing stock near China’s own shores. So it increasingly needs to fish in the exclusive economic zones of other nations, as it is doing. By establishing outposts and more control over the sea, China’s military can better support the fleet’s forays into distant or contested waters.

Those fishing forays often involve confrontations with foreign coastguards or navies. (Hey, more potential provocations!) With other nations responding by beefing up their maritime forces and monitoring technologies—networked nano-satellites, in the case of Indonesia—more such confrontations can be expected in the future.

Beijing has also whipped up patriotic feelings in the Chinese population about the sea being the nation’s birthright. A warship recently took a song-and-dance troupe on a tour of various disputed outposts in the sea. It started at Fiery Cross Reef, where celebrity singer Song Zuyinggave a stirring rendition of a song called “Ode to the South Sea Defenders.”

State media coverage of the event included an interview with a navy officer from the audience telling CCTV after the performance, “We’ll definitely not lose at our hands an inch of the territories our ancestors left us.”

The TV coverage offered glimpses into just how impressively far along the island construction has come in a short time. The island even has runways suitable for fighter jets. This suggests China is well into Step 4 above. And indeed, it’s grown increasingly stern in its responses to “provocations.”

When a US Navy warship passed by the Spratlys last October, China simply warned it against acting irresponsibly. But this week when another warship did the same thing, it sent fighter jets scrambling and shadowed the US ship with its own warships—thanks in part to the convenient military base nearby.

Even talking about China’s activities in the sea—in diplomatic settings—now draws ire from Beijing. In April it warned G7 leaders meeting in Japan to not discuss the matter at all, and then said it was “strongly dissatisfied” after they did anyway.

Last week, one Chinese diplomat warned that criticism of China’s actions in the sea would rebound like a coiled spring. If comments are “aimed at putting pressure on China or blackening its name, then you can view it like a spring, which has an applied force and a counterforce. The more the pressure, the greater the reaction,” said Ouyang Yujing, director-general of the foreign ministry’s department of boundary and ocean affairs.

In other words, Beijing is pressing its outrageous claims in the South China, and will take any opposition as a reason to press them even harder.

One US commander is having none of it. Admiral Harry B. Harris Jr., in charge of military operations in the Asia-Pacific region, says China is “clearly militarizing” (paywall) in the sea. “You’d have to believe in a flat earth to think otherwise,” he said in one appearance before Congress.

China knows it can’t go it alone, though, and it can muster some diplomatic chumminess when merited. It’s been attempting to enlist allies—including Gambia, of all nations—ahead of an international tribunal’s ruling on its sea claim that won’t likely go its way.

Albert F. del Rosario—the Philippines’ foreign affairs secretary—at the Permanent Court of Arbitration in July 2015.(Permanent Court of Arbitration)

The Philippines brought a legal challenge against China’s claim in January 2013 to the Permanent Court of Arbitration, in The Hague, under the United Nations’ Convention on the Law of the Sea. The court was established in 1899 and has settled numerous maritime disputes between nations. China has refused to recognize its authority—probably because it knows it doesn’t have much of a case for its claim. The court is widely expected to rule in the Philippines’ favor.

Meanwhile, in a neat bit of logic, China’s defense ministry used this week’s US freedom of navigation operation to justify its militarization of the Spratly—or what it calls the Nansha—islands. The operation “again proves that China’s construction of defensive facilities on the relevant reefs in the Nansha islands is completely reasonable and totally necessary,” its defense ministry said.

FILE - In this Jan. 20, 2016 file photo, the USS William P. Lawrence guided missile destroyer, foreground, awaits refueling from a tanker, top left, in the waters off Coronado, Calif. The U.S. has upset China by sending the destroyer close to China's largest man-made island in disputed South China Sea waters. Beijing responded by saying it will step up its own patrols. The USS William P. Lawrence made ¿innocent passage¿ on Wednesday, May 11, within 12 nautical miles (22 kilometers) of Fiery Cross Reef, the limit of what international law regards as an island's territorial sea. The likely election of Rodrigo Duterte in the new Philippines could undermine his predecessor¿s policy that was unusually hostile to Beijing and relied on U.S. military backing. (AP Photo/Gregory Bull, File)

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US RILES CHINA WITH 3RD SAIL-BY

A U.S. destroyer last week sailed by China's largest man-made island, the third freedom of navigation operation in seven months that challenges Beijing's vast claims in the South China Sea.

The USS William P. Lawrence made "innocent passage" within 12 nautical miles (22 kilometers) of Fiery Cross Reef, the limit of what international law regards as an island's territorial sea. The reef, which used to be submerged at high tide for all but two rocks, is now an artificial island with a long airstrip, harbor and burgeoning above-ground infrastructure. It dwarfs all other features in the disputed area, was recently visited by China's second-highest military officer and became prominent in the Chinese media when a famous singer of patriotic anthems entertained troops there recently.

China's Defense Ministry said it deployed two navy fighter jets, one early warning aircraft and three ships to track and warn off the vessel.

In response, it said that it will increase the scope of sea and air patrols and "boost all categories of military capacity building."

U.S. Assistant Secretary of State Daniel Russel said during a visit to Vietnam — which also claims Fiery Cross Reef, as does the Philippines — that the U.S. considers the area as international waters.

"If the world's most powerful navy cannot sail where international law permits, then what happens to the ships of smaller countries?" he told reporters.

The sail-by came as President Barack Obama prepares to visit Vietnam and Japan, the latter for a Group of Seven summit.

Chinese Foreign Ministry spokesman Lu Kang said that freedom of navigation should apply to commercial, not military ships. Such interpretation of international maritime law is controversial because the U.S. and most other nations consider innocent passage applicable to all vessels. It doesn't require prior notice, but also prohibits any hostile action or a stop by a ship unless it breaks down.

Critics in the U.S. Congress have demanded more assertive action from the Obama administration and called on the Navy to conduct helicopter flights and intelligence gathering within the territorial waters of China's man-made islands — a move that would sharply escalate tensions.

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PENTAGON'S REPORT ON CHINA'S BUILDUP

The Pentagon released its most detailed report of China's island-building program. Some highlights:

— After reclaiming more than 3,200 acres (1,295 hectares) of land in the southeastern South China Sea, China's focus has shifted to developing and building military installations on man-made islands so it will have greater control over the region without resorting to armed conflict.

— The accelerated building effort doesn't give China any new territorial rights. But the airfields, ship facilities, surveillance and weapons equipment will allow China to significantly enhance its long-term presence in the South China Sea.

— China is using coercive tactics short of armed conflict, such as the use of law enforcement vessels to enforce maritime claims, to advance its interests in ways that are calculated to fall below the threshold of provoking conflict.

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WILL NEW PHILIPPINE PRESIDENT CHANGE COURSE ON SOUTH CHINA SEA?

Rodrigo Duterte, the presumptive winner of the Philippine presidential election, says he wants to do things differently from his predecessor who has antagonized China, reopened military camps to U.S. troops and filed a U.N. court case challenging Beijing's claims in the South China Sea.

Duterte says he's open to talks with China on territorial conflicts, but also declares he will travel by a Jet Ski to one of the artificial islands that China has built and plant a Philippine flag there.

He says China should abide by an upcoming decision by the U.N. arbitration court, but he also asks why longtime allies America, Australia and Japan did nothing as Beijing built up the islands.

China apparently sees an opening.

According to Foreign Ministry spokesman Lu Kang, Beijing hopes the Philippines will "meet China halfway, taking concrete measures to properly deal with the disputes so as to put the ties of the two countries back on the track of sound development."

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CHINA WON'T RECOGNIZE UN TRIBUNAL'S RULING

China is bracing for a possible unfavorable ruling by a U.N. arbitration court in The Hague in the next few weeks by publicly casting the process as biased.

Beijing has refused to take part in the proceedings, saying the U.N. has no jurisdiction in the case. That didn't stop the process, and even though the ruling is non-binding, it can damage Beijing's reputation and image if it refuses to heed it.

China says that at its core, the dispute is about sovereignty — who controls disputed features. China claims absolute sovereignty within its so-called "nine-dash line" that encompasses most of the sea.

The Philippines says China's claims are contrary to the U.N. Convention on the Law of the Sea. But it acknowledges that issues regarding sovereignty are not within the tribunal's jurisdiction and is not seeking a ruling on those claims. Instead, the Philippines wants the court to declare China's occupation of eight features reefs and outcroppings illegal and invalid.

Chinese diplomats have been busy briefing reporters and lobbying friendly nations to support Beijing's position that the tribunal has no jurisdiction and issues must be solved between China and other claimants individually.

FILE - In this Friday, April 15, 2016 file photo, an FA-18 jet fighter lands on the USS John C. Stennis aircraft carrier in the South China Sea while U.S. Defense Secretary Ash Carter visited the aircraft carrier during a trip to the region. The U.S. has upset China by sending The USS William P. Lawrence guided missile destroyer on Wednesday, May 11, close to the largest man-made island in disputed South China Sea waters. Beijing responded by saying it will step up its own patrols. The likely election of Rodrigo Duterte in the new Philippines could undermine his predecessor¿s policy that was unusually hostile to Beijing and relied on U.S. military backing. (AP Photo/Lolita C. Baldor, File)

FILE - In this Jan. 6, 2016 file photo released by China's Xinhua News Agency, people pose for a group photo together after landing at the airfield on Fiery Cross Reef, known as Yongshu Reef in Chinese, in the Spratly Islands, known as Nansha Islands in Chinese, in the South China Sea when a pair of Chinese civilian jet airliners landed at the newly created island in a test to see whether its airstrip was up to standard. A U.S. destroyer on Wednesday, May 11, 2016 sailed by the China¿s largest man-made island, the third freedom of navigation operation in seven months that challenges Beijing¿s vast claims in the South China Sea. (Xing Guangli/Xinhua via AP, File) NO SALES

FILE - In this Feb. 26, 2016 file photo, U.S. Assistant Secretary of State for East Asian and Pacific Affairs Daniel Russel, left, answers a reporter's question after the meeting with South Korean senior officials at the Foreign Ministry in Seoul, South Korea. The U.S. has upset China by sending a destroyer on Wednesday, May 11 close to the largest man-made island in disputed South China Sea waters. Beijing responded by saying it will step up its own patrols. Russel said during a visit to Vietnam - which also claims Fiery Cross Reef, as does the Philippines - that the U.S. considers the area as international waters. ¿If the world's most powerful navy cannot sail where international law permits, then what happens to the ships of smaller countries?¿ he told reporters. (AP Photo/Lee Jin-man, File)

FILE - In this Monday, May 9, 2016 file photo, front-running presidential candidate Mayor Rodrigo Duterte gestures at photographers to move back prior to voting in a polling precinct at Daniel R. Aguinaldo National High School at Matina district, his hometown in Davao city in southern Philippines. The U.S. has upset China by sending on Wednesday, May 11, a destroyer close to the largest man-made island in disputed South China Sea waters. Beijing responded by saying it will step up its own patrols. The likely election of Duterte in the new Philippines could undermine his predecessor¿s policy that was unusually hostile to Beijing and relied on U.S. military backing. Beijing sees an opening even as it braces for a possibly unfavorable ruling from a U.N. tribunal, calling the process biased. (AP Photo/Bullit Marquez, File)

China to dispatch nuclear submarines to the Pacific in latest expansion of Beijing defence policy

• Beijing officials say US weapons systems in the area have forced its hand
• It will 'deploy nuclear warhead-armed submarines into the Pacific this year'
• The move is a huge change in China's defence policy, based on deterrence
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China is planning to dispatch nuclear submarines into the Pacific for the first time amid heightened tensions with the US, it has been reported.

Officials claim new US weapons stationed in South Korea have forced its hand - among them is an anti-ballistic system and hypersonic glide missiles.

The prediction comes from a recent Pentagon report for Congress which states China will 'probably conduct its first nuclear deterrence patrol sometime in 2016'.

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Chinese submarines armed with nuclear warheads will begin patrols into the Pacific Ocean this year, Pentagon officials believe (file image)

China's focus has shifted to developing and weaponising man-made islands in the South China Sea so it will have greater control over the maritime region without resorting to armed conflict (file image)

China's island-building program and the Defense Department said three of the land features in the Spratly Islands, in the South China Sea, now have runways (pictured) and large ports in various stages of construction

It marks a hugely aggressive change in China's defence policy and is likely to ratchet up tensions over territorial disputes in the South China Sea.

According to The Guardian, Beijing officials are refusing to comment on when the first patrol will take place but say it is inevitable.

In recent months the US has stepped up its deterrence measures around the South China Sea due to an international territorial dispute.

China claims most of the South China Sea, through which $5 trillion in ship-borne trade passes every year. The Philippines, Vietnam, Malaysia, Taiwan and Brunei have overlapping claims.

Washington has accused Beijing of militarising the sea after creating artificial islands, while Beijing, in turn, has criticised increased US naval patrols and exercises in Asia.

Meanwhile, today China's Defence Ministry said its had aircraft followed rules after two Chinese fighter jets carried out what the US said was an 'unsafe' intercept of a US military reconnaissance aircraft over the South China Sea.

The incident took place in international airspace last week as the plane carried out 'a routine US patrol', the Pentagon said.

A US defence official said two Chinese J-11 fighter jets flew within 50 feet of the U.S. EP-3 aircraft. The official said the incident took place east of Hainan island.

China has deployed anti-aircraft missiles to Woody Island, in the South China Sea as it continues on with its strategic aggression

Chinese Defence Ministry spokesman Yang Yujun told a monthly news briefing China's aircraft acted completely professionally and in line with an agreement reached between the countries on rules governing such encounters.

However, he said the agreement, called the Rules of Behaviour for Safety of Air and Maritime Encounters, could only provide a 'technical standard', and the best way of resolving the problem was for the US to stop such flights.

'That's the real source of danger for Sino-US military safety at sea and in the air,' he said.

The encounter came shortly after China scrambled fighter jets as a US Navy ship sailed close to a disputed reef in the South China Sea.

Another Chinese intercept took place in 2014 when a Chinese fighter pilot flew acrobatic manoeuvre around a US spy plane.

China Sets Example for World-Beating Import Substitution

Russia is bearing the first fruit of the import substitution policy it began in 2014, and can take some inspiration from China’s successful attempts at producing home-grown alternatives to imported products.

Chinese Forces Near Moscow: China, Russia Commence Security Drills

In 2014, import substitution became one of Russia’s most pressing policies due to Western sanctions and Russian counter-sanctions.In April 2014, the Russian government implemented an updated program for industrial development aimed at improving competitiveness in major areas like the automobile industry, agricultural machinery and construction by 2020.

In April 2015, Russian Prime Minister Dmitry Medvedev spoke of the necessity for state support of national industry, and the challenges faced by Russia and other countries which began to pursue open market policies during the 1990s.

Among the sectors with an over-reliance on imported products, Medvedev named the machine tool industry, the manufacture of heavy machinery, and machinery used for oil and gas extraction.

Other areas of Russia’s economy are already extremely self-sufficient. Imported goods only have a 7-12 percent share in the Russian defense industry, and in the majority of defense sub-sectors the issue of import substitution has been solved.

The same can be said for many areas of the chemical industry, and in agricultural sectors such as fish farming, poultry and brewing.

In 2015, the Russian government financed more than 800 economic investment projects, with 73.5 billion rubles ($1.2 billion) invested through state development funds. In addition, the government provided subsidies for loans and research and development.

Following the reforms, last year already saw some progress in import substitution: the share of imported consumer goods in the retail sector decreased from 42 percent in 2014, to 38 percent in 2015.

Russia is not the only developing economy seeking to produce its own alternatives to imported products; neighboring China has managed to substitute imports in a range of areas, albeit taking a different approach.

On Saturday, RT Russian compiled a shortlist of sectors in which China has managed to provide its own alternative to imports.

Technology

In 2000, China launched the BeiDou Navigation Satellite System, its own alternative to the US GPS and RussianGlonass satellite navigation systems, which were launched in 1978 and 1982 respectively.

The system’s 23rd satellite was launched last month, and it aims to deploy a constellation of 35 satellites by 2020 to provide services to global users.

Around 70 percent of China’s population uses the satellite system on their mobile phones to search for locations or organize travel arrangements.

Chinese manufacturers of consumer goods have also gained inspiration from imported mobile phones, and transport vehicles.

© FLICKR/ RL GNZLZ

Lifan 330

© WIKIPEDIA/ ROGER WO

Geely GE concept car

Among their achievements are the iPhone clone Dakele 3, and cars Lifan 330 (Mini Cooper), Geely GE (Rolls-Royce Phantom) and Land Wind X7 (Range Rover Evoque).The similarities don’t end in the consumer goods industry, because the Chinese have also copied imported defense weaponry, such as the Shenyang J-11 jet fighter based on the Sukhoi Su-27, and the Dongfeng EQ2050, a Chinese version of the US Humvee.

© WIKIPEDIA/ U.S. AIR FORCE STAFF SGT. D. MYLES CULLEN

Shenyang J-11

Alexander Gabuev, a journalist and researcher in the Asia-Pacific Program at the Carnegie Moscow Center, told RT Russian that China does not perceive these kinds of products to be fakes.

“Copying as a kind of high art is a Chinese cultural concept. To do it well is a good thing, it is not considered a fake. It is following a very good model,” Gabuev explained.

“Secondly, there is a purely Chinese concept called Shanzhai. This is a complete copy, with the addition of some technological ingenuities.”

“Now, copying is taking a back seat. Engineering education in China is quite developed, it has its own national schools and Chinese research centers are making a lot of new developments,” Gabuev said.

The Internet

The Chinese Amazon, AliExpress, is an online shopping marketplace which in November 2015 reported a new world record $14.3 billion of sales in a single day. TaoBao, also operated by the Alibaba group, is a Chinese shopping website similar to eBay.

Instead of Facebook and Twitter, in China there is Sina Weibo, which has 500 million users. Around 100 million messages are posted to the network each day.

Payment

In 2002 China established the UnionPay payment system, and ten years later it had more cards in circulation than any other payment system, including established rivals Visa and Mastercard.

The card is now accepted in 160 countries worldwide, and is issued in more than 40 countries. In 2015 UnionPay credit cards accounted for 6.79 percent of purchase transactions worldwide, and debit cards accounted for 6 percent.

© PHOTO: RESTAURANT DR.ZHIVAGO

Moscow Restaurant Dumps Visa and MasterCard, Switches to Russian Mir System

Following this example, Russia has created its own National System of Payment Cards, which has processed domestic transactions since April 2015.In December 2015, Russia launched its own alternative payment card, called ‘Mir,’ which will be accepted throughout Russia and abroad thanks to cooperation with Mastercard’s Maestro, Japan’s JCB and American Express.

AliPay, a third-party payment provider similar to Paypal, was launched in 2004 by China’s Alibaba Group. By 2015 the company had signed up over 350 million registered users, almost triple the number of US rival PayPal, and carried out an average 80 million transactions per day.

Banking

The Asian Infrastructure Bank is a Beijing-based institution that aims to finance the building of infrastructure in the Asia-Pacific region.

The logo of Asian Infrastructure Investment Bank (AIIB) is seen at its headquarter building in Beijing January 17, 2016

A rival to the World Bank and Asian Development Bank, it began operations in December 2015 with support from 37 regional founding members and 20 non-regional Prospective Founding Members.In October 2015, the Chinese Cross-Border Inter-Bank Payment System was launched offering an alternative to Swift. The first participants included 19 banks in China and abroad, which now complete bank clearing and settlement services in renminbi rather than the US dollar.