Filipinos in South Korea

FORBES: China SENT H-6K NUCLEAR BOMBER to Panatag Scarborough Shoal . can attack any target in the entire territory of the Philippines.- PLA Website Said"

A Chinese H-6K bomber flies over Scarborough Shoal, which the Permanent Court of Arbitration ruled on Tuesday belongs to the Philippines’ exclusive economic zone. The People’s Liberation Army Air Force (PLAAF) released the photo on their Weibo social media account two days after the ruling. PLAAF.

Chinese Bomber Buzzes Philippines' Scarborough Shoal In Latest Salvo Of U.S.-China Signalling War

China released a photo Thursday of a nuclear-capable Chinese bomber flying south near Scarborough Shoal (Panatag Shoal). This is the latest salvo in a signalling war between the U.S. and China over Philippine territory.

In April 2016, the U.S. sent A-10 Thunderbird attack planes over Scarborough. These heavily-armored “Warthogs” are not nuclear-capable planes, but rather designed for close-air support to ground troops. According to the U.S. Air Force, the A-10 missions over Scarborough promoted “transparency and safety of movement in international waters and airspace, representing the U.S. commitment to ally and partner nations and to the Indo-Asia-Pacific region’s continued stability now and for generations to come.” The Chinese H-6K nuclear bomber is a significant escalation in what has become a signalling war over the South China Sea.

The effect of the release on the Weibo social media account belonging to the People’s Liberation Army Air Force (PLAAF) should be interpreted as an attempt to signal to the Philippines and the U.S. that China is serious about its South China Sea claim, as delineated by the 9-dash line. The claim includes Scarborough Shoal, far to the north of most of the occupied islands of the Spratlys and Paracels.

According to retired Captain James Fanell, former Director of Intelligence and Information Operations for U.S. Pacific Fleet,  “My cut is that this flight is indeed a direct and intentional strategic signal that is in keeping with China’s post-PCA [Permanent Court of Arbitration] ruling statements that they neither acknowledge nor accept the court’s verdict.”

The photo release followed quickly after Tuesday’s ruling in the Hague by the Permanent Court of Arbitration. The PCA ruled the 9-dash line illegal according to the United Nations Convention on the Law of the Sea (UNCLOS). China immediately responded to the ruling on Tuesday by calling it “illegal” and “null and void”, and attempted to discredit the Court.

According to Mr. Fannell, “while it may not be unprecedented for a PLAAF H-6K bomber to fly from its bases on the Chinese mainland out towards Scarborough, it is unprecedented to have such a flight advertised by PRC press and to specifically orchestrate the pictures and public message over Scarborough.”

The H-6K bomber (tail number 11097) depicted in the photo is capable of delivering a nuclear-armed cruise missile to all major U.S. military bases in Asia, including Singapore, Guam, and Okinawa. The H-6K is based on the Russian Badger bomber and has a combat range of up to 3,500 km. It can carry six CJ-20 cruise missiles under its wings, plus additional missiles internally. The CJ-20 cruise missiles can travel an additional 1,500 to 2,000 km beyond the H-6K’s combat radius. When fully loaded with ordnance, the bomber’s range decreases slightly.

Mr. Fanell said that the H-6K flight near Scarborough “should be taken as another reminder of the military threat to our U.S. Seventh Fleet and the naval assets of our allies in the region.” The U.S. Seventh Fleet has been based in Singapore, since losing its lease for Subic Bay from the Philippines in late 1991. The Fleet left the Philippines for Singapore in 1992.

Given China’s threats and occupation of islands within Philippines’ EEZ, the Philippines allowed a rotation of “temporary” U.S. forces into Subic Bay in 2015. Scarborough Shoal is only 162 miles from Subic Bay, and so a Chinese air strip at Scarborough would be a major strategic threat to U.S. forces stationed there, and the utility of Subic Bay as a naval base. Chinese maritime and military experts said that China plans to build an airstrip on the shoal in 2016.

The U.S. could reply to the Chinese H-6K flight over Scarborough by executing and publicizing its own nuclear-capable flight over the South China Sea in the near future. The U.S. similarly signalled after China declared an air defense identification zone over the East China Sea in 2013 by flying two nuclear-capable B-52 bombers through the ADIZ. This was widely seen as an invalidation of the ADIZ since the U.S. and Japanese militaries do not officially recognize its existence.

Failure to publicly respond to China’s H-6K flight could be seen by Chinese military planners as backing down on the Scarborough issue, and giving China a subtle green light to start building a military airstrip. Military flights provide strategic signalling that is seen as an escalation over diplomatic statements. Military moves such as the H-6K flight over Scarborough demonstrate resolve on an issue.

Military theory, such as that promulgated by Harvard Professor and Nobel Laureate Thomas Schelling, predicts that the less powerful competitor (in this case China) will back down first when two potential combatants climb a “ladder” of escalation. Dr. Schelling’s theory is known as “escalation dominance”.

But China has not reached that point yet, and is still escalating. The CCG augmented the number of ships at Scarborough since June 12, when two CCG cutters, a medium-sized CCG ship, and two speedboats maneuvered dangerously close to Philippine activists and fishermen who raised a Philippine flag at the shoal. I was an eye-witness on that day.

Thursday, four Chinese Coast Guard (CCG) boats denied Filipino fishermen access to Scarborough, which is 139 miles from the Philippine coastline and within the Philippine exclusive economic zone (EEZ). Scarborough Shoal is 539 miles from Hainan Island, the closest point in China.

On Monday last week, a CCG cutter and speed boat warned and turned back two New York Times reporters who had chartered a yacht to Scarborough. It is likely that the other CCG boats at the shoal did not make themselves visible. The reporters met a fishing boat on the way home that confirmed that the CCG was not allowing them to fish at the shoal — and as a result their normal $1000 catch was reduced to a few hundred. China’s blocking of Philippine fishermen from access to the shoal is in direct violation of the PCA ruling on Tuesday.

Not all analysts saw the PLAAF’s Scarborough flight as necessarily indicative of a threat. “Things are still fresh since the arbitral decision and reading hostile or proactive intent into the flight of [a] single Badger would be pure speculation, especially since flights like this have occurred prior to the decision,” said Michael Listner. Mr. Listner is a Principal at Space Law & Policy Solutions. “That isn’t to say the Badger flight isn’t significant and may have internal propaganda value, but it has to be taken in the context of the totality of other actions China may take. Analysts should be watching and take this flight into consideration, but they should not jump to conclusions about China’s intent towards the disputed territory and their response to the arbitral decision solely on this one flight.”

The H-6K was not visibly carrying cruise missiles beneath its wings. The photos released did not show it accompanied by other bombers, fighter jets, or airborne early warning and control planes. Without these critical complements for an actual tactical flight, the purpose of the H-6K flight could be interpreted as for domestic Chinese propaganda only, rather than strategic signalling to the U.S. The flight was not published in the major English-language Chinese papers, such as China Daily, Xinhua, or People’s Daily.

However, the PLAAF Weibo site did release other photos of military planes in the same post with the H-6K flying over Scarborough. These included another H-6K (tail number 10190) and a Sukhoi SU-27UBK fighter jet.

A Chinese-language news site covering the flights over Scarborough noted that “After the South China Sea arbitration case, the [PLA] Air Force quietly made a big move!” The news site also wrote that “The H-6K over Huangyan Island [Scarborough] … can attack any target in the entire territory of the Philippines.” - FORBES

I worked in military intelligence for five years, including on nuclear weapons, terrorism, cyber-security, border security, and counter-insurgency. I covered and visited Asia and Europe, and worked in Afghanistan for one and a half years. I have a Ph.D. in Government from Harvard University, and a B.A. and M.A. in international relations from Yale University (Summa cum laude). My company, Corr Analytics, provides political risk analysis to commercial, non-profit, and media clients, and publishes the Journal of Political Risk. I am editing a series on the South China Sea conflict, and have covered and visited Africa, the Middle East and Latin America.

The author is a Forbes contributor. The opinions expressed are those of the writer.

I cover international politics, security and political risk.

Follow me on Twitter @anderscorr. If you have any additional information related to this article, contact me at corr@canalyt.com.

 

Pidcock backs Philippines to emerge as EM power player

Jason Picdcock. Photo: citywire.co.uk

The Philippines is one of the best and fastest-growing countries in the emerging market universe, according to Asian income specialist Jason Pidcock.

Writing in an investor update, the manager of the Jupiter Asian Income fund said, despite having low GDP per capital, the country was growing sustainably at around 6%.

Pidcock said the Philippines is moving towards developed-market norms, such as smaller families, which is, in turn, increasing their spending.

‘The young Philippine middle class is already growing rapidly. Annual disposable incomes are up 14% annualised over the last three years, and the portion of the workforce earning more than US$5,000 has surged from 6% in 2005 to 21% in 2013. I expect these trends to continue as the country’s economy continues to move up the value chain,’ Pidcock said.

He added that the country was benefitting from Chinese tourism, while foreign direct investment had increased due to the population’s English language skills.

The comments on Philippines come in the same week as tensions in South East Asia. This has seen the Philippines state China should abide by an international tribunal’s ruling that is has no rightful claim to the South China Sea.

Adding exposure

Pidcock has allocated 6.9% of the fund, which was launched in March of this year, to the Philippines and said, while it is still developing, it produces lower dividend yields and the choice of other developed markets.

‘The macro attractions of the Philippines are hard to deny. But as an equity investor the fundamental question is whether there are attractive, well managed companies for me to invest in. The answer is that while this maturing market doesn’t have the depth of some of its more developed peers, I see a number that do fulfil my investment criteria,’ he said.

In terms of holdings, Pidcock has around 2.7% in shopping centre operator SM Prime, which he said will benefit from a rise in domestic consumption. He also holds food producer Universal Robina (2%) and the diversified conglomerate GT Capita (2.4%)

Persuasive politics

Pidcock added the political environment is stable in the Philippines and this will support the economy over the long term. He expects growth in the Philippines to overtake growth in Thailand within the next 15-20 years.

‘Politics are always a risk in emerging markets. On balance, the political situation in the Philippines looks favourable and it seems likely that politics will be a positive factor. President Duterte talks freely – occasionally too freely – but I think he will be good for the economy and therefore the stock market,' he said.

‘He wants to cut down corruption, has some slightly unorthodox ways of going about that, but the objective is a good one – there’s an upbeat feel in the country, generally Filipinos are optimistic. And the fact that he won his election clearly is a good thing – there was also no dispute with the result, which is good.’

In the three months since launch to the end of June 2016, the Jupiter Asian Income fund returned 1.7% in US dollar terms, which compares to a return of 0.89% by the average manager in the Equity – Asia Pacific Ex Japan sector over the same period. – CITY WIRE - WEALTH MANAGER

FORBES: The Philippines Should Sue China For $189.48 Billion USD In South China Sea Rent And Damages

This Monday, May 11, 2015, file photo, taken through a glass window of a military plane, shows China’s alleged on-going reclamation of Mischief Reef in the Spratly Islands in the South China Sea. China’s campaign of island building in the South China Sea might soon quadruple the number of airstrips available to the People’s Liberation Army in the highly contested, environmentally delicate, and strategically vital region. (Ritchie B. Tongo/Pool Photo via AP, File)

The Philippines Should Sue China For $177 Billion In South China Sea Rent And Damages

China owes the Philippines and other countries more than $177 billion in rent and damages for China’s South China Sea fiasco. The Permanent Court of Arbitration found on Tuesday that Mischief Reef is a low-water elevation and within Philippines’ exclusive economic zone. This gives the Philippines’ indisputable legal rights to the reef. But since 1995 when China occupied the reef, China irreparably harmed the reef’s delicate marine ecosystem by dredging and building an artificial island there, including a military garrison and air-strip. By my estimate, China owes the Philippines $12.4 billion in rent and damages for Mischief Reef alone. Considering other Chinese island-building, the country owes the Philippines and other claimant countries more than $177 billion. If China doesn’t want to pay, the Philippines can sue in the courts of the U.S. and other countries where China holds property.

Billing Computation is a separate computation provided by the PesoReserve.com

Here is how to calculate what China owes. In 2015, the U.S. paid $1.97 million to the Philippines for 0.58 acres of coral reef destroyed when the USS Guardian went aground. That is a key reference point for environmental claims. Rent is even more costly. In 1988, the Philippines demanded $1.2 billion from the U.S. in rent for 6 military bases — $200 million each per year in 1988 dollars. The U.S. refused and got evicted.

By those metrics, the Philippines could sue China for about $4.6 billion of environmental damages to Mischief Reef in 2016 dollars, plus the requirement to pay $7.8 billion in rent. If China refuses to pay the combined $12.4 billion, the Philippines could seek redress in foreign civil courts to attach China’s offshore assets — of which there are plenty.

But China is liable for much more.  China occupied six additional features in 1988 in the Spratley’s claimed by the Philippines, plus Scarborough Shoal in 2012.

The Philippines did not resist because they justifiably feared violence on the part of China. In 1988, Vietnam claims that China killed 64 Vietnamese soldiers who resisted on Johnson South Reef in the Spratley’s. China disputes the claim, but according to historian and BBC reporter Bill Hayton, “Strangely, a propaganda film released by the Chinese Navy in 2009 to celebrate the navy’s 60th anniversary gives more credence to the Vietnamese version. The video, now available on YouTube, was shot from one of the Chinese ships and shows the Vietnamese force standing knee deep in water as the tide rises over the reef. Huge spouts of water then erupt around the Vietnamese troops as the Chinese ships open fire. Within seconds the thin line of men has completely disappeared and 64 lie dead in the water: the machine guns are Chinese and the victims Vietnamese. The Chinese won the battle of Johnson Reef with a turkey shoot.”

China occupied six features within Philippines’ claim in 1988: Hughes Reef, Johnson South Reef, Gaven Reef, Subi Reef, Fiery Cross Reef, and Cuarteron Reef. China has since dredged and built on all these reefs. Based on Philippines’ 1988 demand for rent from the U.S., each of these six features should yield (in 2016 dollars) about $10.3 billion for 29 years of use — a total of $62 billion.

China occupied Scarborough Shoal in 2012, but has not yet built there. There are no known environmental damages to the shoal, but rent for five years should be about $1.8 billion (inclusive of 2012 and 2016).

By my count, and including the $7.8 billion in rent for Mischief Reef, China owes the Philippines about $71.6 billion in rent for occupation of all 8 China-occupied features in the Philippines’ claimed part of the South China Sea.

In addition, the Court found that China destroyed a total of 48 square miles in the South China Sea through illegal dredging and artificial island building. Based on the $1.97 million paid by the U.S. to the Philippines in 2015 for the grounding of the USS Guardian, an international court could levy a $105 billion fine on China for ecological destruction of all 48 square miles, payable to the Philippines and other claimant states.

Should China refuse to pay, the Philippines and other claimants can bring civil suits in the U.S. and any other locations where China holds substantial assets. The total levy on China for rent on Philippine-claimed features, plus ecological damage to the entire South China Sea, should be about $176.6 billion: double Philippines’ annual GDP, and about a third of China’s GDP. That doesn’t include rent payable to other claimants, which should also be paid.

When China vacates its artificial islands in the South China Sea and pays this fine, plus rent to other claimants and any additional payments to the families of those killed, most attentive citizens will consider justice to have been done. Until then the international ruling in favor of the Philippines, as China has said, is just a sheet of paper. - FORBES

I worked in military intelligence for five years, including on nuclear weapons, terrorism, cyber-security, border security, and counter-insurgency. I covered and visited Asia and Europe, and worked in Afghanistan for one and a half years. I have a Ph.D. in Government from Harvard University, and a B.A. and M.A. in international relations from Yale University (Summa cum laude). My company, Corr Analytics, provides political risk analysis to commercial, non-profit, and media clients, and publishes the Journal of Political Risk. I am editing a series on the South China Sea conflict, and have covered and visited Africa, the Middle East and Latin America.

The author is a Forbes contributor. The opinions expressed are those of the writer.

I cover international politics, security and political risk.

Follow me on Twitter @anderscorr. If you have any additional information related to this article, contact me at corr@canalyt.com.

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