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China Reform Monitor - No. 1285

Chinese coast guard begins regular patrols off Malaysia;
Xi announces massive economic zone for Hebie

Edited by Jushua Eisenman
May 30, 2017

April 24:

China's coastguard has been running "near constant patrols” near the Luconia Shoals off Malaysia’s coast. Three different Chinese vessels were patrolling the shoals regularly in the first two months of this year, which are 1,600kms from China but only 145km north of Borneo in Malaysia. Up to 11 coastguard vessels, including a 5,000- ton ship, have been involved in rotating patrols since early last year, according to the Asia Maritime Transparency Initiative (AMTI). The presence of the Chinese coast guard at Luconia Shoals "speaks to Beijing's determination to establish administrative control throughout the nine-dash line," the AMTI report said. They have adopted tactics that deviate from standard operating procedures of safety and good seamanship, such as ramming and using water cannon against civilian vessels,
the South China Morning Post (SCMP) reports. They are now deploying larger cutters with bigger guns to intimidate and coerce vessels from other claimants.

[Editor’s Note: Last month, Malaysian Foreign Minister Anifah Aman said that Kuala Lumpur did not acknowledge Beijing's nine-dash line. Beijing’s South China Sea claims were also denied by the Permanent Court of Arbitration in The Hague last July.]

April 25:

Last week, Thailand’s military-led cabinet "secretly approved” the controversial procurement of at least one, and as many as three, Yuan-class S26T submarines from China for a total of 36 billion baht (more than $1 billion) over 11 years,
the Bangkok Post reports. The Royal Thai Navy will initially procure one submarine from China for 13.5 billion baht (about $400 million) with payments issued between 2017 and 2023. Next month, the Thai Navy chief, Admiral Na Areenich, will visit China to sign the contract for the submarine procurement. Prime Minister (and former Commander in Chief of the Royal Thai Army) Prayut Chan-o-cha said the three Chinese submarines were "cheap," and likened the cost to "buying two, getting one free" when compared to prices from European manufacturers.

April 26:

After years of delay, Russia has begun to supply China with S-400 anti-air missile systems, Russian state arms export agency Rosoboroneksport has confirmed. "We are fulfilling our contract with China," agency director Alexander Mikheev
told Interfax news agency. Mikheev refused to comment on reports that Moscow is set to hold talks with Ankara on the possible supply of S-400 systems to Turkey.
April 27:

The Xiongan New Area economic zone, which encompasses Xiong, Rongcheng and Anxin counties in Hebei, is "a big strategy for a thousand years,” according to President Xi Jinping. Xi aims for Xiongan to be as important as Shenzhen in the 1980s and Pudong in the 1990s. He believes Beijing has succumbed to "the illness of a big metropolis," including stretched public services, jammed roads and air pollution. The cure,
Xinhua cited him as saying, was to move merchants, factories and migrant workers, schools, hospitals and institutions elsewhere. The goal is for the new economic zone to be environmentally friendly and deliver top-notch public services, SCMP reports
."Xi is a strongman who wants to undermine vested interest groups that have established roots in Beijing for generations. Starting from a new place could reduce their influence, while Xiongan would become Xi's ¬legacy," said Mei Xinyu, a researcher at the Ministry of Commerce. Dozens of state-owned enterprises have already pledged to move part of their operations into the zone.

When Beijing announced the plans on April 1, shocked local residents thought it was an April Fool's joke. Dozens of farmers have since protested amid fears of a land grab. Not everyone in Beijing is supportive either. Jiang Hong, a Chinese People's Political Consultative Conference delegate, said: "I don't like this plan and I don't think it will have a bright future. It's totally a planned economy thing and building a nationally important special economic zone completely from scratch will come at tremendous cost."

[Editor’s Note: A decade ago, the central ¬government named Caofeidian, Hebei, as a "state-level" new zone, promising to make it China's answer to Rotterdam. Covering nearly 2000 sq kms, it remains one of 19 "state-level" zones, 10 of which were created in 2014 and 2015. Today, however, Caofeidian is a graveyard of ¬construction sites, unfinished buildings and a vast, unoccupied stretch of reclaimed seafront land after a decade of wasteful investment.]

Related Categories: China; China and East Asia Program

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