China Reform Monitor: No. 1200

December 9:

The South Korean Navy has fired warning shots at a Chinese patrol boat that crossed the Yellow Sea border between Seoul and Pyongyang and sailed 2km into South Korean waters. South Korea's Navy fired after broadcasting six warnings through radio communications. The Chinese naval vessel boat had been monitoring Chinese ships poaching fish across the Yellow Sea border. The South Korean side mistook the Chinese boat for a North Korean patrol, which regularly violate the sea border known as the Northern Limit Line (NLL). The NLL was set by UN forces at the end of the Korean War in 1953 and is not recognized by Beijing or Pyongyang, Yonhap reports.

December 11:

Beijing is urging high-ranking officers to lead a military restructuring initiative that will cut 300,000 personnel. "The central departments and the big units, which are the objects of the reform have to be responsible and obedient," the PLA Daily reports. "Whether they have a sense of the overall situation and obey the order determines whether the reform is a success." Officials who will be redeployed or retired should think less about themselves and more about the PLA and the nation. The paper has published more than 20 articles on military reform since the initiative was announced last month and eight have called on top officers to lead the way. "We must not allow irresponsible remarks, must not allow taking liberties or double-faced behavior and we must not allow alternative approaches," said an article published by both the PLA Dailyand the People's Daily. Xu Guangyu, at the China Arms Control and Disarmament Association in Beijing, said officers would accept the overhaul since they could get civilian jobs or retire with a generous pension. The lower ranks, Xu said, would find it harder, the South China Morning Post reports.

December 14:

For the first time the CPC Central Committee has released a directive on Party school work urging "intensified ideological and political education," the official China Dailyreports. The document, which was adopted on November 23, noted that the "fundamental principle" is to adhere to the "right political direction," strictly observe the Party's political discipline, rules and regulations and maintain "conformity with the CPC Central Committee in ideology and action." CPC General Secretary Xi Jinping told a two-day meeting on Party school work that "the key is to mold a troop of officials that are as strong as iron in belief, faith, discipline and sense of responsibility." The China Daily reports that: "The move is aimed at warning Party schools not to swerve from the ‘right direction.' It stressed that all teaching and research work must be conducted in accordance with decisions and arrangements of the CPC Central Committee." As president of the Central Party School from 2007 to 2012 Xi gave nineteen lessons.

December 15:

China's state-owned enterprises are seeing shrinking profits and sizable losses. The coal-mining and ferrous metal industries are producing only 10 and 20 percent of 2011 profits, respectively. "A combination of sluggish demand and large oversupply, caused by overcapacity in China's traditional sectors, is the main drag on its economy," according to Standard Chartered Bank. Overcapacity in oversupplied sectors, such as steel, non-ferrous metals, petrochemicals and electricity generation has caused prices and profits of key industrial products to plunge. The producer price index, which measures the average change in selling prices of goods and services, has been falling since March 2012. Steel and coal prices have fallen 40 percent in the last four years. The chemical, ferrous metal and coal-mining industries employ 4.7 million, 3.6 million and 4.4 million workers, respectively. "An abrupt shutdown of these industries could lead to a sharp rise in unemployment and defaults in the financial market," SCMPreports.

December 20:

Next month five new "strategic zones" will replace the PLA's seven military commands and three of the four army headquarters will be closed: the General Political department, General Logistics, and General Armaments. Only the General Staff department will remain. The five new "strategic zones" include a north, south, east, west and central zones, each with less than 3,000 staff, SCMP reports. The West zone will focus on threats in Xinjiang and Tibet, and is closest to Afghanistan and other states that host training bases for separatists and extremists. It will include more than half the country, 22 percent of the population, and more than one-third of the nation's land-based military. The North zone will include all the northeast provinces and Inner Mongolia and will concentrate on Mongolia, the Russia and Korea. The Jinan command, which will lay off more than 60,000 officers, will be included in the Central zone and protect Beijing. The Guangzhou and Nanjing commands will be renamed the South and East zones and made responsible for maritime security in the South and East and China seas, respectively.