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China Reform Monitor - No. 1260

Beijing seeks to combat capital flight;
Myanmar rebels attack trading post on China border

Edited by Joshua Eisenman
December 20, 2016

November 15:

The Bangladesh Navy has procured two type 035 submarines equipped with torpedoes and mines from China. The submarines will be incorporated into Bangladesh's navy in 2017. At a ceremony in the shipyard in Dalian, Liaoning People's Liberation Army Navy (PLAN) Rear Admiral Liu Zizhu presented the submarines to Bangladesh Chief of Naval Staff Admiral Mohammad Nizamuddin Ahmed. The latter thanked the Chinese navy for the submarines and for training the Bangladesh Navy personnel,
The Daily Star reports.

November 20:

A major trading zone on the Chinese border in Myanmar has come under attack by a combined force of hundreds of rebels from three ethnic rebel groups resulting in the death of least one person and injured six others. From 2:00am to 6:00am the rebels launched multiple attacks on army posts, police stations, and trading facilities in Muse in northern Shan State, across the border from Ruli, Yunnan,
Kyodo news agency reports. Rebels attacked army posts and some bridges near Muse and detonated bombs on two bridges on the Mandalay-Muse highway, a major trading route with China. The Kachin Independence Army, the Ta-ang National Liberation Army, and the Myanmar National Democratic Alliance Army launched the attacks to counter the intensifying military offensive in ethnic rebel areas. The attacks are expected to hurt Burma-China border trade, about 80 percent of which goes through Muse.

November 25:

Amid an overseas buying binge by Chinese companies, capital flight, and a wreaking currency, the State Council will soon announce new measures that subject large overseas deals to "strict control." The new regulations are part of intensifying efforts to slow a surge in capital fleeing offshore amid an uncertain economic outlook at home,
the Wall Street Journal reports. Total overseas direct investment rose more than 50% to $145.9 billion in the first nine months of this year from the same time a year earlier. Targeted for scrutiny are "extra-large" foreign acquisitions valued at $10 billion or more per deal, property investments by state-owned firms above $1 billion and investments of $1 billion or more by any Chinese company in an overseas entity unrelated to the investor's core business. Other deals covered by the new rules: overseas direct investments of limited partnerships, investments in overseas-listed companies that are less than 10% of those firms' equity, and Chinese capital supporting the delisting of overseas-listed Chinese companies.

[Editor's Note: Since the new controls will remain in effect until the end of September the goal appears to be stabilizing outflows ahead of a major leadership reshuffle at the 19th party congress late next year.]

The PLAN has deployed two naval vessels to Pakistan's Gwadar port and will deploy more ships to safeguard the port alongside Pakistan's Navy. "China would deploy its naval ships in coordination with Pakistan Navy to safeguard the port and trade under the China-Pakistan Economic Corridor (CPEC)," said an unnamed Pakistan navy official. The PLAN will use Gwadar to repair and maintain its vessels. Pakistani defense officials are keen for the Chinese navy to expand its presence in the Indian Ocean and the Arabian Sea to counterbalance India's navy,
The Times of India reports. Pakistan is considering buying a half dozen "super-fast warships" from China for a special squadron to secure the Gwadar.

December 1:

At a meeting of the Political Bureau of the CPC Central Committee presided over by General Secretary Xi Jinping, new trial rules were adopted "concerning how issues are discussed and policies made in Party organs," at or above county level. "The rules for meetings on democratic life aim to improve regulation of intra-Party political life, as well as guide Party officials to establish correct political consciousness, carry out criticism, maintain loyalty and responsibility,"
the official Anhui News reports
. All "meetings on democratic life" must aim to "strengthen and standardize the work of the CPC's working organs, promote Party building and push forward socialism with Chinese characteristics. Upholding and improving meetings on democratic life are key to ensuring Party unity, advancement and purity," the statement said. Authorities will organize annual democratic life meetings to analyze Party members' integrity based on their loyalty, honesty, frugality, it added.

Related Categories: China; China and East Asia Program

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