Big Black Swan:U.S./China War?

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#1 Tue, Jul 19, 2011 - 10:45am
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Big Black Swan:U.S./China War?

Senators Warn China That Escalations In South China Seas Threaten US "National Interests", China Likely To Retaliate Tyler Durden's picture Submitted by Tyler Durden on 07/19/2011 10:19 -0400

  • Archipelago
  • Eurozone
  • France
  • India
  • John McCain
  • Middle East
  • Obama Administration
  • Robert Gates


  • Just because China was already delighted with Obama's reception of the Dalai Lama, here come John McCain and John Kerry warning China to mind it territorial waters, because apparently US national interests are threatened. Per the FT: “We are concerned that a series of naval incidents in recent months has raised tensions in the region,” said John Kerry, the Democratic chairman of the Senate foreign relations committee, and John McCain, the former Republican presidential candidate. “If appropriate steps are not taken to calm the situation, future incidents could escalate, jeopardising the vital national interests of the United States.” The logical follow up is glairngly obvious but here it is: "China is likely to see the comments as a provocation as they echo remarks by Hillary Clinton, US secretary of state, last year that infuriated Beijing. Speaking at the Asean Regional Forum (ARF) in Hanoi last July, Mrs Clinton angered Beijing by saying the US had “a national interest in freedom of navigation . . . in the South China Sea." What is surprising is that the US is dumb enough to bait China with such provocations as the US Treasury market is now, more than at any other point in the past 3 years, reliant on Chinese bond purchases. And for all those who claim that China has no other alternative where to recycle its trade surplus dollars, we bring you exhibit i) the EURUSD, where China sells dollars and buys euros, and ii) Eurozone bonds over the past months, which it has been gobbling up ravenously. So yes: it does have alternatives, and it may very well make a rather forceful statement to that extent.

    From the FT:

    Edited by: ¤ on Nov 8, 2014 - 5:05am
    Tue, Jul 19, 2011 - 10:49am
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    Read the Letter

    You need to go to ZH and read the letter.

    Serious shit that's been mostly under the radar. I've been thinking for awhole how you never really hear about Taiwan anymore.

    I'm pretty sure Taiwan is going to enter the MSM shortly.

    An epic lack of foresight, accuracy and rationale... https://www.tfmetalsreport.com/comment/170246#comment-170246

    Tue, Jul 19, 2011 - 11:59am
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    War as Alternative to Financial Armageddon

    This pattern has repeated before...

    https://www.youtube.com/watch?v=KdQMOo_az5k

    Tue, Jul 19, 2011 - 1:52pm (Reply to #3)
    bobby
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    BASEBALL 13 wrote: This

    BASEBALL 13 wrote:

    This pattern has repeated before...

    https://www.youtube.com/watch?v=KdQMOo_az5k

    I think I just lost a few brain cells.

    Sun, Jul 24, 2011 - 2:51pm
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    Global Response to S. China Sea Risks Needed

    Global Response to S. China Sea Risks Needed

    Q

    By Nicole Gaouette and Daniel Ten Kate - Jul 24, 2011 12:00 PM ET

    bloomberg.com

    U.S. Secretary of State Hillary Clinton said “the rest of the world needs to weigh in” on resolving disputes over the South China Sea, where confrontation threatens to disrupt one of the world’s busiest shipping lanes.

    There has been an increase in “intimidations, the ramming, the cuttings of cables -- the kinds of things that will raise the cost of business for everyone,” Clinton said yesterday in Bali. “At least 50 percent of all global trade goes through the South China Sea every year and it’s important for us to support freedom of navigation, unimpeded commerce.”

    Her comments come at the end of a regional security forum on the Indonesian island, where China and the 10-member Association of Southeast Asian Nations agreed a set of guidelines to prevent conflict in the oil-rich waters around the disputed Spratly Islands. Philippine Foreign Secretary Albert F. del Rosario signaled in a July 23 interview that the guidelines won’t be enough to stop tensions continuing to rise.

    Hydrocarbon resources “well within” Philippine sovereignty are essential to the country’s energy strategy, del Rosario said at the end of the Bali forum. “The need for us to develop them is greater than China’s. China can afford to wait forever. We don’t have that luxury. We’ve got to move ahead.”

    The Philippines’ push to secure energy resources against the wishes of Asia’s biggest economy and military spender risks clashes that may ensnare the U.S., a treaty ally. Clinton left Indonesia for Hong Kong and the neighboring city of Shenzhen, where she is due to meet State Councilor Dai Bingguo today.

    ‘Nine-Dash Map’

    Clinton’s call to internationalize the South China Sea issue may irk China, which maintains that disputes are a bilateral affair. China lays claim to most of the sea based on a “nine-dash map” that it drew up and says any attempt to challenge this is a violation of its sovereignty.

    The non-binding guidelines for operating in the sea “will go a long way to maintaining peace and stability and good neighborliness,” Chinese Foreign Minister Yang Jiechi told reporters on July 22. Asean members Philippines, Vietnam, Malaysia and Brunei have competing claims in the sea.

    The Philippines “went along with the family” in signing the agreement though expressed misgivings because it is non- binding and fails to define a specific area, del Rosario said. That aids China because it maintains the status quo, he said.

    ‘Risk of Clashes’

    “If China is not challenged on this nine-dash map, which effectively gives them sovereignty over the South China Sea, at some point in time there may be potential threats to freedom of navigation for” other countries, he said. “I don’t know how those guidelines will actually work. The risk of clashes remains.”

    Chinese vessels in May sliced cables of a survey ship doing work for Vietnam, the second such incident in a month. In March, Chinese ships chased away a survey ship working for U.K.-based Forum Energy Plc off the Philippines.

    Clinton said the increase in conflicts meant China and Asean should move quickly to establish a code of conduct based on international law.

    “The declaration is a first step, nobody claims it is more than that,” she said. “What we want to see is a resolution process that will be aided by the code of conduct that Asean is working toward.”

    China’s map includes oil and gas fields more than three times further from its coast than they are from Vietnam. That includes two of 15 exploration blocks the Philippines put out for tender last month.

    Oil Roadshow

    More than 100 energy companies including Chevron Corp. and Total SA attended a June 11 roadshow in Singapore to meet Philippine energy officials and get more information on the blocks, according to the Department of Energy. Three weeks later, Energy Secretary Rene Almendras said the government may offer more exploration contracts in Chinese-claimed waters because it is “staking claims to these areas.”

    The Philippines, with an economy about 1/30th the size of China’s, plans to boost hydrocarbon reserves by 40 percent in the next two decades to reduce its almost total reliance on imports, according to a department of energy plan. Vietnam’s domestic gas demand is set to triple by 2025, World Bank estimates show.

    Chinese studies suggest the waters sit atop more than 14 times estimates of its oil reserves and 10 times those for gas.

    Moves by private oil and gas companies are necessary to spur action on the blocks “because no politician wants to make tough decisions,” said Randall C. Thompson, whose former company Crestone Energy Corp. was awarded rights by state-owned Cnooc Ltd., China’s largest offshore energy producer, to explore an area also claimed by Vietnam. Any discoveries will hasten joint development agreements, he said.

    Crestone is now owned by Houston-based Harvest Natural Resources Inc., which holds Chinese rights to the same block Vietnam has awarded to Calgary-based Talisman Energy Inc.

    “By taking no risk, you get no rewards,” said Thompson, who now owns Denver, Colorado-based Global Resource Holdings. “Somebody needs to just go in and drill, and then they’ll sit down and figure it out.”

    An epic lack of foresight, accuracy and rationale... https://www.tfmetalsreport.com/comment/170246#comment-170246

    Sun, Jul 24, 2011 - 4:03pm
    TheGoodDoctor
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    Well, I think the China/Iran

    Well, I think the China/Iran oil bourse might not be the response they were looking for. LOL.

    From ZH:

    China And Iran To Bypass Dollar, Plan Oil Barter System, And A Deeper Dive Into The Iranian Oil Bourse

    https://www.zerohedge.com/news/china-and-iran-bypass-dollar-plan-oil-bar...

    “Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.” Norm Franz
    Sun, Jul 24, 2011 - 7:24pm
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    The US is pretty war weary

    The US is pretty war weary right now, so the timing is pretty good if China wants to make a move in their area of influence.

    Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as “bad luck.” ~ Robert Heinlein
    Mon, Jul 25, 2011 - 12:22pm
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    Two Chinese Fighter Jets Repelled US Spy Aircraft In Taiwan

    Two Chinese Fighter Jets Repelled US Spy Aircraft In Taiwan Strait Last Month Tyler Durden's picture Submitted by Tyler Durden on 07/25/2011 11:42 -0400

    • China

      China continues to flex its wings, in this case literally. The FT reports that last month two Chinese Su-27 jets crossed the middle line in the Taiwan Strait to repel a US spy aircraft. "This marks the first known encounter between US and Chinese military aircraft in mid-air since a US reconnaissance aircraft collided with a Chinese fighter jet in 2001 and was forced to land on Hainan island, sparking a crisis that severely damaged bilateral relations." And while this is certainly not the first such incident, it is the first one disclosed publicly, with the sole purpose of humiliating the US. Furthermore, recent tensions in the South China seas (profiled previously here) have become a big sticking point for the US administration so it should not be surprising that China will do everything in its power to embarrass America before the global community, a task in which it has just succeeded.

      More from the FT:

      Highlighting the strategic rivalry between the two countries in the region and the security risks remaining between China and Taiwan despite the recent detente between the two, Taipei moved to downplay the incident.

      Taiwan’s defence ministry confirmed that two Chinese Su-27 fighter jets had briefly crossed the so-called middle line on June 29 but added the incident was not a provocation.

      “This was not between Taiwan and China, but between China and the US,” said a senior Taiwanese defence official. “The Chinese crossed the line to repel a perceived intrusion by a US reconnaissance aircraft.”

      A Chinese defence source said: “This once again shows that US military activity very close to our territory is a destabilising factor in the region.”

      What would be even more disturbing is if China uses US "regional intervention" to continue with its encroaching approach to demonstrate that Taiwan has always really been part of the fatherland.

      Chinese military aircraft have not crossed that line since July 1999. That summer, the People’s Liberation Army Airforce, which normally rarely patrolled the area, flew hundreds of sorties over the Taiwan Strait. That incident came after Lee Teng-hui, then Taiwan’s president, described ties with China as special state-to-state relations, coming closer than ever to declaring the island’s independence.

      The Taiwanese official said the island’s air force sent two of its fighters up in reaction to the intrusion of the Chinese jets. He said there had not been any direct contact with the Chinese military, and the aircraft had not come dangerously close to each other at any time during the incident.

      US military surveillance missions close to China both at sea and in the air are a sore point in relations between the world’s military superpower and the nation believed to be its most likely challenger.

      Lastly, "China’s Ministry of Defence could not be reached for comment." Understandable: at this point all China domestic resources are scrambled to contain (read censor) the fallout from this weekend's bullet train collision.

      As for what happens next, we look forward to a statement from Clinton, who has yet to issue an official statement on an act many, on either side, would consider a provocation (and retaliation).

    An epic lack of foresight, accuracy and rationale... https://www.tfmetalsreport.com/comment/170246#comment-170246

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