China Reform Monitor: No. 911

July 20:

Despite warnings from China, five members of the Philippines’ parliament, accompanied by a small group of soldiers, local officials and journalists, arrived on Thitu island in the disputed Spratly Islands chain, and raised two Philippine flags above a government building. One legislator stressed that Filipinos are ready to defend their territory. “Filipinos are born to resist aggression. Filipinos are willing to die for their soil,” he said in comments carried by Channel News Asia. About 60 Filipinos live on Thitu, which is just 37 hectares (91 acres) in size and lies about 450 km northwest of Palawan island, the nearest major Philippine landmass. Hainan Island, China’s nearest territory, is roughly twice as far away. In response, China’s embassy in Manila released a statement that said the visit “serves no purpose but to undermine peace and stability in the region and sabotage the China-Philippines relationship.” One Philippine lawmaker responded that the Chinese government does not understand because they “are not used to democratic processes.”

July 26:

Taiwan’s United Daily News reports that two Chinese SU-27 fighter jets attempted to intercept an American U2 reconnaissance plane collecting intelligence surveillance on China while flying along the Taiwan strait. During the encounter, which took place in late June, one of the Chinese fighters crossed over the Taiwan Strait’s middle line, widely considered to be the unofficial boundary between Taiwan and China’s airspace. The jet did not leave until Taiwan sent two planes to intercept it. Beijing's defense ministry said the U.S. must discontinue such flights, calling them a “major obstacle,” in the bilateral relationship. Following the incident, Admiral Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, vowed to press ahead with surveillance flights near China despite opposition from Beijing, Reuters reports.

July 27:

Effective August 1, China’s courts will enforce new laws penalizing people who forge military documents, uniforms or car license plates. The interpretation, jointly issued by the Supreme People’s Court (SPC) and Supreme People’s Procuratorate, says people can face up to 10 years imprisonment if found guilty of forging, trading or stealing military documents, stamps, uniforms or car plates. Such practices are “rampant,” said a SPC spokesman, who said that each year the forgery of military license plates alone cost the state 1 billion yuan in vehicle taxes and road tolls. Fake military ID cards and uniforms are also regularly used to defraud and deceive the public, the official China Daily reports.

July 28:

A debt crisis has emerged in the Ministry of Railways. By the end of 2010, China’s spending on rail construction had put the Ministry of Railways 1.8 trillion yuan in debt. The plan remains to build 16,000 km of high-speed railways across the country by 2020, requiring at least 2 trillion yuan in further investment. “The yearly interest for the ministry’s debt will soon exceed 100 billion yuan and its only source to repay it is the 50-billion-yuan railway construction fund (from the state treasury),” said Zhao Jian of Beijing Jiaotong University. “Without support from the central government’s 4-trillion-yuan stimulus package, and without a new way to finance the increasing interest, the ministry’s cash flow will rupture,” Zhao warned. Judging from ticket revenue so far, the ministry is likely sinking deeper into debt. “The Zhengzhou to Xian high-speed line has only 11 pairs of trains a day and carries less than 10 million people a year. But it’s capable of having 160 pairs a day. This is like building a 160-storey luxury hotel where only 11 storeys are used and the occupancy rate of those floors is below 50 percent.”

[Editor’s Note: At a national rail conference in January, then-rail minister Liu Zhijun said the high-speed rail network would cover almost 13,000 km this year. According to China’s plan, which was drafted in 2004 and amended in 2008, the total rail network would cover more than 120,000 km by 2020. Of this, 16,000 km would be high-speed railways carrying trains travelling at more than 200 km an hour.]