| Welcome to the Stealth War Newsletter, a collection of the top 5 recent news items, collected on The Jamestown Foundation’s website, stealth-war.org. To continue to receive this weekly collection, click the button below to subscribe. |
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Stat Du Jour
This issue’s number to watch
12%
Percentage of water consumed in China that is used for thermal power generation. China remains heavily reliant on coal fired power plants, which uses large volumes of water for cooling purposes.
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| This Week:
* Chinese Coast Guard Seizes Rocket Parts from Philippines’ Territorial Waters
* Argentina Secures Sorely Needed Currency Swap With China
* Economic Ties Between China and Russia Deepen Further
* China Seals Largest Ever LNG Deal With Qatar Worth $60 Billion
* Chinese Exports to Mexico On Track to Surpass $100 Billion as Beijing Seeks to Avert U.S. Tariffs |
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(source: China Military Online)
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Chinese Coast Guard Seizes Rocket Parts from Philippines’ Territorial Waters
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On Monday, the Philippines accused the People’s Republic of China (PRC) of forcefully seizing parts of a rocket discovered floating in its territorial waters. A senior Filipino military official made the statement while U.S. Vice President Kamala Harris was making a three-day trip to the Philippines intended to boost ties between the two long-time allies. The visit included a stopover in Palawan, which abuts the disputed waters of the South China Sea.
According to reports, a Philippine rubber dingy located parts of a Chinese rocket in its waters, and was in the process of towing the remnants back to shore when they were intercepted by a PRC Coast Guard vessel near the contested Spratly Islands in the South China Sea. The Chinese vessel then deployed an inflatable boat team, which cut the tow line, reattached it to their boat, and brought it back to the Chinese vessel. Philippines’ Military spokesperson Major Cherryl Tindog states that the object in question found at sea resembles Chinese rocket debris recently recovered from the island of Busuanga, which is north of Palawan,. No Filipino soldiers were injured in the incident.
Later on Monday, the Chinese consulate confirmed that the rocket parts were recovered, but denied allegations that they were “seized” through “interception.” Rather, Chinese Foreign Ministry spokeswoman Mao Ning claimed that “after friendly consultation on the spot, the Philippine side returned the floating object to the Chinese side.” In July 2022, remnants of a Chinese rocket fell into the Sulu Sea in the Philippines. The Chinese did not choose to share information about where the hazardous rocket parts would fall, presumably because they sought to prevent other nations from recovering it, as this incident showcases.
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Argentina Secures Sorely Needed Currency Swap With China
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Last week at the G20 Summit in Indonesia, Argentina’s President Alberto Fernández held his second ever meeting with Chinese President Xi Jinping securing an additional $5 billion in currency swap agreements with the Bank of China. Buenos Aires has been pushing for the deal for months, seeking to build on the February renewal of $18.5 billion in currency swaps, which has helped prop up Argentina’s flagging currency and reserves. However, Beijing’s other promises, including improved trade balances and increased investment have largely failed to materialize, frustrating the Argentinian government. Such pledges included $23.7 billion in Belt and Road (BRI) investments.
Argentina’s economic woes are rooted in long-standing financial difficulties and a strong US dollar, resulting in “an annual inflation of 88 percent over the last 12 months…and the possibility of reaching 100 percent by the end of the year.” However, Russia’s invasion of Ukraine has also negatively impacted both the country and region, causing the latter to regress “27 years in time in its poverty levels, according to the Economic Commission for Latin America and the Caribbean (CEPAL in its Spanish acronym) of the United Nations.” Speaking on these issues, Argentina’s foreign minister echoed Chinese and Russian propaganda criticisms of the U.S. and NATO culpability for Ukraine stating that “in the Northern Hemisphere the merchants of death negotiate lethal weapons, but in the Southern Hemisphere food becomes expensive and scarce so what ends up killing are not the bullets or missiles but poverty and hunger.” Such financial struggles and sentiments are indicative of the challenges the U.S. and its European partners must overcome, in order to counter growing inroads by China.
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Economic Ties Between China and Russia Deepen Further
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Since launching its invasion of Ukraine in February, Russia has been increasingly cut off from western economies due to the impact of sanctions. Russia has been developing deeper economic links with China since Vladimir Putin moved to seize Crimea in 2014, but Moscow has leaned even more heavily on its economic lifeline to China since launching a full-scale invasion of Ukraine in February. Over the first eight months of this year, bilateral trade between China and Russia grew by 31 percent. The value of Russian energy exports to China has increased even more markedly, but this is largely due to higher energy prices rather than increased demand. Earlier this month, Deputy Prime Minister Alexander Novak touted a 64 percent increase in the value and a ten percent increase in the volume of Russia’s energy exports to China.
Despite slowing growth elsewhere, Chinese exports to Russia increased by more than 20 percent in the third quarter, as buyers sought alternatives to western products that were no longer available due to sanctions. This week, Ozon, one of Russia’s largest online retailers, announced it had opened an office in Shenzhen, South China’s Guangdong Province. As the state-affiliated tabloid Global Times notes, “from home appliances, laptops and smartphones to clothing and daily necessities, the wide range of Chinese products sold on Ozon fills gaps due to the pull-out of Western companies after the breakout of the Russia-Ukraine crisis.”
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China Seals Massive LNG Deal With Qatar Worth $60 Billion
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This week, Qatar News Agency announced that China and Qatar signed one of the largest ever LNG deals in their respective histories worth a record $60 billion. The news comes as countries are rushing to sign energy deals due to spiking prices and energy shortages resulting from the Russia-Ukraine War. According to reports, Qatar Energy, a state-owned petroleum company, will send Sinopec four million tons of LNG per year from 2026 through 2053. The deal is crucially significant for China, which is heavily dependent on oil and gas imports, much of which is purchased from producer countries in the Middle East.
The agreement is also significant because it will be China’s longest running LNG deal, and one of the largest ever in terms of volume. Qatar’s energy minister and head of Qatar Energy, Saad al-Kaabi, signed the deal with Sinopec’s chairman Ma Yongsheng. Together, they announced that the agreement would strengthen bilateral ties between the two nations as well as help meet China’s growing energy needs. This is not the first instance of growing ties between China and Gulf States in recent years. The UAE has considered hosting a Chinese naval base at Khalifa port, and signed a memorandum of understanding with Beijing for Belt and Road Initiative projects worth $3.4 billion.
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Chinese Exports to Mexico On Track to Surpass $100 Billion as Beijing Seeks to Avert U.S. Tariffs
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According to the latest figures from the Bank of Mexico, between January and August 2022, there was a 28 percent year-on-year increase in Chinese exports to Mexico. With Mexico already having imported $79.48 billion from China this year, it is on track to break $100 billion for the second year in a row (the total trade figure for 2021 was $101 billion). By comparison, exports from China to Mexico increased by 50 percent over the five year period from 2017 to 2021, only suffering a 9.54 percent drop in 2020 due to COVID-19. Similarly, “China’s share in Mexico’s total imports has risen over the last decade from 14. percent in 2011 to 19.9 percent in 2021,” and “It was 20.5 percent in the first four months of 2022.”
The trade increase has been largely driven by the U.S.-China trade war, as a means of bypassing tariffs by selling products across the U.S.-Mexico border. However, tax incentives, cheap labor, an interest in lithium mines for new car battery factories, and, increasingly, the mitigation of supply chain costs and risks have also proven strong incentives for trade and investment. These have been further bolstered by fostering connections between business communities from each country. For example, “the recent [annual] China Homelife México Fair in Mexico City,” anticipated, “about 20,000 business meetings between the fair’s 680 exhibitors and 15,000 projected attendees.”
As a result of all these factors, during the aforementioned period in 2022, 75 percent of PRC exports were intermediate goods, allowing most of them to be integrated into Mexican products, which are then sold to the US as Mexican products. Likewise, “companies based in mainland China and Hong Kong invested $606.3 million in Mexico during 2021, up 76 percent,” compared with $200 million in 2019, with some Mexican states seeing between a 300 and 500 percent increase in investment over the past couple of years. Based on just a few deals announced in 2022 alone, annual investments should well exceed last year’s figure. Meanwhile, the U.S. remains Mexico’s largest trading partner, accounting for $245.8 billion of its imports from January through September of this year. Mexico is also the U.S.’s second largest trading partner after Canada. However, if growth in China’s investment and trade continues at similar rates, it could reach parity with the U.S. as an economic partner for Mexico.
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