QE3 is truly Collateral Easing。QE is jus

QE3 is truly Collateral Easing。QE is just one tool to achieve it.Fed’s market perception manipulation(the transparency gimmick)is a tool too

撒切尔夫人的奥斯卡和资本主义之死

 

(发表于美国最大的Financial Newsletter出版商Agora的旗舰刊物每日清算中国版）

为仍然活着的人拍传记电影并不多见，刚获奥斯卡最佳女主角大奖的《铁娘子》就是一部。撒切尔夫人曾被评为英国百年最杰出首相，超越带领英国人打败法西斯的丘吉尔，排名第一。是撒切尔夫人灭了工会和国营企业，把英国经济从社会主义的手里解救出来交给了自由市场。
于是西奴们歌颂撒夫人道：“ 如今，英美和欧洲都陷入了另外一场经济停滞的危机，这场危机，正是尾大不掉的政府管制、福利国家和政府垄断货币和金融体系所造成的恶果。对这场危机的反思在政界和学界广泛地进行，有很大的声音认为经济危机是对经济过于自由放任的结果，于是无论是在美国的左翼奥巴马政府还是英国号称继承“撒切尔夫人遗产”的卡梅伦政府，都捡起凯恩斯主义，以庞大的政府支出、财政赤字和“量化宽松”的滥印货币政策来拉动经济，死抱着福利国家的泰坦尼克沉船不放，但事实上，经过几年的“刺激”，英美的经济不但没有起色，而且危机还在深化。

时间如轮，英国、美国和欧洲仿佛又回到了撒切尔和里根革命之前的日子，经济停滞、失业率高企、人们信心丧失。这个时间点上，《铁娘子》赢得奥斯卡最佳女演员奖，是不是一个信号，昭示着人们期待又一个撒切尔夫人来发动新的自由市场的革命？

也许吧！时代造英雄。摩西带领犹太人逃出埃及，奔向流着奶和蜜的迦南地，撒切尔夫人在20世纪80年代带领英国走向新的繁荣。现在这个时候，带领英美和欧洲走出当前的经济萧条，重拾自由市场价值的新摩西或者说新的撒切尔夫人也到了应运而生的时候了。”

西奴把话说成这样，逼得我不得不冒着被骂五毛党的危险来反击他们了：

撒切尔夫人属于时势造英雄。她的思想和政策很多已经不符合现代英国甚至是现代世界的需要了。当西奴们搂着自由资本主义入睡，西方主流社会却在为自有资本主义写墓志铭：自由市场已死。你若不信，用谷歌搜一下”free market death”。

在撒切尔夫人私有化实业之后，实业在英国基本上已经死亡，资本抛离了就业密集和工会权力密集的实业开始向金融为主导的服务产业聚集。今天英国光金融业就占据了10%的GDP,以金融为主导的服务业更是占据了GDP的j绝大部分和80%的就业市场。英国经济已经全面空心化。

自由市场就是资本逐利，资本并不在乎就业。由于英国经济严重依赖金融业，而金融业由于欧元危机和美国复苏无力等大环境的影响一落千丈，把整个英国经济都拖入了谷底。英国明显犯了把所有鸡蛋放一个篮子里的错误。

任何事情都不能走过头，包括撒切尔夫人主义，也包括工会。工会是约束资本在自由市场过于逐利而忽视本国就业和贫富差距的重要社会机构，撒切尔夫人的一个重大失误就是矫枉过正的要把英国工会赶尽杀绝。资本的力量虽好但也需要多种社会机制彼此制衡，以达到社会利益而不只是市场利益的最大化。就像美国总统独尊，亦需要三权分立以保民主效率的最大化一样。唯制衡方能实现可持续的社会利益（societal benefit)最大化。只不过这一错到今天才看出来，而时至今日英国实业已死，经济完全空心化，亡羊补牢为时已晚。

作者：公民经济学家吴迪

從經濟學看一夫一妻制的消亡

在福布斯雜誌上看到一篇奇文《一夫一妻制有問題嗎？》。大意說是：讓我們回顧一下一夫一妻制度的起源，只有3%的哺乳動物形成一對一配對關係，這是一種繁殖策略，但是人類將其變成文化，但是性關係中的一夫一妻制行不通，這個制度會加強“嫉妒基因”，而在開放關係中，嫉妒心理會逐漸淡化；一夫一妻將會被人類淘汰。

   在福布斯雜誌上看到一篇奇文《一夫一妻制有問題嗎？》。大意說是：讓我們回顧一下一夫一妻制度的起源，只有3%的哺乳動物形成一對一配對關係，這是一種繁殖策略，但是人類將其變成文化，但是性關係中的一夫一妻制行不通，這個制度會加強“嫉妒基因”，而在開放關係中，嫉妒心理會逐漸淡化；一夫一妻將會被人類淘汰。

 

開放式的婚姻關係會減少妒忌因素（jealousy scripts）?我不知道這個作者是生活在哪個星球上。不過，我建議他去看一下“加州糜情Californication”這部片。開放式的婚姻關係是種娛樂性很強的悲劇，而我情願要與此相反的的攜子之手與子同老的平淡生活。

而且，用經濟學的觀點來看：一夫一妻制是計劃經濟。用道德而不是市場來調節男女的彼此需求比率，有半強制性的特徵。如果一夫多妻制，也就是完全用市場的價格機制調節男女彼此間的供求比率的話，不排除占人群中極少數的Alpha Male對女性供應形成絕對壟斷，到那時候Prostitution很有可能成為Public Service。

如果沒有一夫一妻制的約束，Alpha Male想要多少女人就要多少女人。女人的消費品屬性就會越來越強，價格會越來越高，性價比也會越來越低。女性供應與男性需求之間的博弈會越來越失衡，導致Market Failure。也就是用市場的價格機制調節男女彼此間的供求比率的話，會產生巨大的external cost。女人由於可以向婚戀或性配市場尋求更高的價格，女人的性優勢和女權都可以產生尋租收益。女權運動會受到致命的打擊或者在某些人的眼裏（Whore）蓬勃的發展。而男性會由於女性尋租收益的不斷上升，導致可支配收入和可支配尊嚴的減少，不但會產生嚴重的財政失衡，也會產生嚴重的心理失衡，這兩種失衡都會產生嚴重的社會摩擦成本（Social Friction Cost)，給社會包括Alpha Male本身帶來嚴重的人身財產威脅。到這個時候政府將不得不通過把Prostitution變成Public Service來解決這個market failure的問題。

而且妒忌因素（jealousy scripts） 一點都不會因為一夫多妻而減少？現在房子這東西就是按市場價格機制分配的，大家的妒忌好像愈演愈烈了，要不然仇富就不會成為時下最熱的一個關鍵字。

民族主義之殤和地緣政治的囚徒困境

近日看到鳳凰衛視一段反省中國“民族主義”的視頻，大意如下：“與鄰為善的十年時間也是中國周邊環境日益惡化的十年，而且如何來研判中國的外交，中國老百姓普遍的認為至少相當一部分中國老百姓認為中國外交過軟，而相當一部分的國際社會尤其是西方人士認為，中國外交過硬，所以這其中其實也是一個互相認知問題，到底硬還是軟，這個度如何把握。”

我認為“民族主義”雄起了才是愛國主義，而“民族主義”時下於我國就像閹雞一樣雞冠不舉，實在不足堪憂，更不值得檢討反省。

南海諸島長期被侵占，我們卻還在檢討自己是否太過”民主主義“。竊以為我們根本算不得民族主義，俄羅斯那樣真刀實槍守土衛國才是民族主義，我們頂多算是“唾沫星子民族主義”。

“西方認為中國過硬，國內認為中國國軟”這句話本身就是個言之無味的偽命題，比如中美貿易爭端的時候，美國選民認為政府過軟，沒有嚴懲中國這個美國就業機會的竊賊；中國這邊卻認為美國反應過激，保護主義走過頭了。沒有必要動不動就扣上民族主義的大帽子，保護自己的利益是正常的，特別是領土利益，而且唾沫星四濺也換不來我們失去的南海島嶼。

 

（越南的“保衛南海”反華游行）

看看人家越南是怎么民主主義的？成千上萬人自發走上街頭，高喊“打倒中國，保衛南海”的口號，無數年輕人表示願意從軍和我國血拼。今年7月，我在美國的《Business Insider》上發表了一篇捍卫中国南海主权的文章，立馬吸引了來自越南，菲律賓和印度的謾罵，還有威脅要滅了中國的仇恨郵件。在這場白熾化的激辯中從頭至尾沒有一個英文稍好的國人助我一臂。莫非中國真如西人所言除”五毛黨“之外別無愛國者？！比起越南，菲律賓和印度，我們的民族主義只能與“閹雞不舉之冠”相比。我們不是要檢討我們的民族主義，而是要哀嘆如今“文天祥不復存焉”之危局。

 

還有一位海外所謂民主人士寫信勸我不要寫那篇文章，說我是在幫“共產黨”大忙。我問他為什么？他說政府無力守護南海，才會加深民怨，民怨鼎沸之日便可速到。我說如果出賣主權方能獲得他所謂的民主和自由的話，我寧願馬革裹尸戰死沙場，也不要跪下來接受洋主子民主和自由的恩賞。出賣中國主權之人不是中國人，沒資格談中國的民族和自由。既然連中國人都不是，是美國人了，就他媽的別談中國的民主和自由，去談他媽美國的民主和自由。主權是不能用來做交易的！

 

通過和越南，菲律賓和印度的罵戰，我認識了一個很有趣的人，一個美籍越南華人Nah Ching。他告訴我他是70年代越南難民潮中的難民，有几十萬人，其中很多是越南華人，他們那個時候被越共趕到海里，成了boat people。生死由天的時候他們想到他們有一個強大的祖國–中國，但他們沒有等到中國的救援。中國對於援救越南華人的被動和消極態度傷了很多海外華人的心。Nah Ching現在一般只願介紹說他是越南難民，而絕口不提他的中國血統。衕樣的事還發生在馬來西亞，印度尼西亞等地，當地華人響應中國的共產主義運動，在他們所在國也企圖建立社會主義政權，結果招致了所在國政府的殘酷鎮壓。種族屠殺和種族迫害并不僅限於革命者，而系統性的覆蓋所有華人。種種暴行，曠日持久，罊竹難書。最近的一次大規模排華事件是印尼的黑色五月暴動，數千華人被殺，數千華人婦女被奸，財產損失無數，期間雅加達一日便有超過一百華人婦女被強奸。如果是美國僑民，美國的太平洋艦隊早就開過去了，即便是沒有正式軍隊的日本也派自衛隊遠涉重樣去保衛日本僑民的安全。而我們卻表示不干涉印尼內政，只是象徵性表示了一下“關注和不安”，國內沒有游行，媒體缺乏報道，就這樣白白放過了一次民族主義團結全國團結海內外華人的機會。

 

想當年為推翻帝制，多少南洋兒女拋家棄產為驅逐韃虜而血灑中華，抗戰時中國主戰場和中國遠徵軍白骨累累的東南亞叢林中都有無數南洋兒女為中華捐軀。這種民族主義已經永逝不返了。我現在終於理解了為什么在英國求學時聽到一個馬來西亞華僑說中文便高興地說”你也是中國人啊？”，他臉上被冒犯的表情。他名正言順的糾正我說他不是中國人，是馬來西亞人。

 

我們也許今后的几十年都將為我們對“東南亞華僑血淚磨難時的旁觀政策”付出慘重的代價。帝制就是華僑推翻的，華僑的力量是巨大的。東南亞華人吃苦耐勞，肯搏肯拼，是一個極為優秀的群體，如今他們在所在國的政治，經濟，文化等各方面都取得了其他族群難以望其項背的成就，如果他們依然如抗戰時那樣愛護中國，那么東南亞各國想在南海問題上孤立中國還有那么容易嗎?我們還會如此輕易地陷入地緣政治的囚徒困境嗎？

 

揚言要和中國血戰的菲律賓總統阿基諾就是華裔，他的爺爺奶奶也許沒有給他講多少關於“母國”的溫情故事。至少那數十萬越南華族難民一想起母國，想到的只是絕望而無助。

 

我們可以撒熱血保衛私下里只拿我們當槍使的朝鮮，為什么就不能保衛那些為中國革命撒過無數熱血的南洋華僑呢？他們能起到的作用和發揮的能量將遠遠大於朝鮮置美軍於國門之外千里的地理屏障作用。

（韓國因為“海警事件”而爆發全國性反華游行）

保護不了南洋華僑而喪失了打破東南亞“地緣政治的囚徒困境”最重要的一支族群力量已成事實，我們不能再軟弱的保護不了自己的國民了。近日“韓國海警死亡”事件鬧得紛紛揚揚。在韓國海警有可能是被自己人誤殺，中國漁民可能沒有侵犯韓國領海的情況下，韓國就把全韓的民族主義之火擅自點燃了，仇華情緒一時高漲無兩。無理取鬧，為戰略遏制中國勢力為虎作倀不說，又反映出大韓民國對大韓國民生命之堅決護衛和我國保護自己百姓正當權益的軟弱。於中國漁民可能是一千古冤案，與東南亞和全世界則是敲響了最大分貝的“中國威脅論”警鐘。當“無理取鬧”成為“全球共識”，我們到底要讓韓國大棒子猖狂到几時。如今民族主義不需當年的船堅炮利來護衛，可用貨幣戰爭貿易戰爭等軟武器，不戰而屈人之兵。大韓民國彈丸之地，若無中國市場，三星大宇們遑論全球巨頭？！我們只消抵制韓貨，當權的韓國財閥們就會讓青瓦台乖巧起來。

我理解精英階層和當權者檢討民族主義過激的動機，因為往日民族主義往往意味炮彈，近日則大可不必，我們可以用中國的經濟實力發動軟戰爭來保衛我國的正當權益。軟戰爭是中國民族主義雄起的捷徑，不戰而屈人之兵的運籌帷幄必須從現在開始操練。不然不能守護南海和國民的政府形象將把“地緣政治的囚徒困境”放大成國內民意的曆史和沸騰，給美國人提供“等桃子熟了再下山摘桃子的良機！

吴 迪：公信危机与企业治理

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首页 >> 观点 >> 今日观点 [buy English translation] 吴 迪：公信危机与企业治理 （2011-08-05） 早报导读 [中国早点] 特首选举的三条战线 [时事漫画] 20国集团誓言联手稳定金融市场 [金融风暴] 专家：全球股市短期会持续下跌 [国庆2011] [社论]传承与发扬新加坡精神 ● 吴 迪　　在微博上我看到了被疯转的“达芬奇的眼泪”，以为与艺术有关，近眼一看，才知是中国某高端家具代理涉嫌大规模“进口家具”造假，企业掌门人泪洒新闻发布会，央求公众再给她一次机会。由此联想到新闻集团窃听丑闻，还有前一阵子由草根微博玩家周亚武掀起的“郭美美事件”，以及因此而造成的中国红十字会空前的公信危机。 说这三家机构几乎走到了生死存亡的关头，一点也不为过。这三家机构的共性就是：过度依赖经营过程的不透明性，通过透支公众的信任和权益，来追求经营者利益的最大化。在微博，面簿和公民消费主义兴起的今天，经营过程的不透明性从过去可以帮助企业浑水摸鱼盈利的法宝，变成了一座随时可能喷发的活火山。危机管理显得前所未有的重要，但更重要的是在亡羊补牢之前，企业应该如何在当下的透明度危机下调整管理思路，防患于未然，并确保企业长期的竞争优势和发展。 这里借用一个经济学概念：外部效应（externality）指的是产品对其经营者和消费者之外的受众（环境、社区、员工或个人等）造成的影响。比如达芬奇家具的造假行为，影响的不仅是达芬奇的短期利润，还会带动整个行业的造假风气，因为不造假的话就不具备成本竞争优势。随着全球化和经营范围的扩大，企业的外部效应已经越来越具备规模效应，从容易遮掩的地区瑕疵，演变成了全国性甚至是全球性的公关危机。为了追逐利润和竞争优势而不择手段的经营信仰，因此到了必须改弦易张的时候。通过透支公众的信任和权益来赚取第一桶金，第N桶金，这样建立的企业不管多强大，也不过是火山边的庞贝古城，盛极一时，灰飞烟灭却只一瞬间。 所以我们必须把危机管理的被动性，变成外部效应管理的主动性。做到这一点的关键，在于准确确认及衡量企业的社会责任和外部效应，自愿并持之以恒地内化负面的外部效应。但很多企业对此存在认知误区，在媒体、公众和政府的监督下，做一些与主营业务缺乏关联，为慈善而慈善的善举。这样做既对企业产销帮助不大，在企业遭遇公信危机的时候，也起不到功过相抵的保险作用。 企业确认社会责任的三个变量 那么我们应该如何准确确认及衡量企业的社会责任和外部效应呢？这取决于三个变量：对事件的责任度、弥补的能力、品牌关联度。 如果一个事件的直接责任在你，而不是其他机构，那么你应该勇于宣称对事件负责，调动所有资源对其负面外部效应进行内化。1996年6月份的《生活》杂志，报道了耐克在巴基斯坦使用童工的恶劣状况，反耐克运动在全球范围风起云涌。耐克迅速致歉，并通过其巨大的市场影响力，要求其世界各地的供应商禁止雇用童工并改善工作条件。十多年过去了，耐克的品牌已经深深地和社会责任结合在一起，并牢牢地把持着世界第一运动品牌的宝座。致歉、负责、更正、复兴，而不是事情搞砸了就流眼泪扮可怜来乞求原谅，原谅是用行动挣来的，这就是耐克给我们的启示。管理学大师彼得·德鲁克说过：“对你行为的影响负责，不管你是有意还是无意的。这是首要原则。管理层必须对企业的社会影响负责，这一点不容置疑。” 如果一个事件你负有间接或部分责任，你没有必要宣称负责，但必须依据你弥补的能力和品牌关联度，采取适当的行动。2003年，印度南部喀拉拉邦佩鲁马蒂村的居民将可口可乐告上了法庭，指出由于工厂过度开采地下水，严重影响了村民的生活用水和农业灌溉，要求法院下令关闭这家工厂。2005年8月，喀拉拉邦环境控制委员会以污染问题，责令可口可乐关闭了当地的灌装工厂。可口可乐在印度面临着空前严重的公关危机。可口可乐为此在全球范围内展开对饮用水资源匮乏的研究，并积极采取应对措施。虽然无法确切衡量可口可乐生产用水，在多大程度上影响了当地居民用水，但可口可乐并没有否认问题的严重性和推脱干系。不管公众在多大程度上认定你是问题的一部分，如果你有企业资源去投入问题的解决，采取行动都是有益的，因为你在公众的眼中，就从问题的一部分变成了解决方案的一部分，这将在很多时候产生竞争对手所没有的优势。 如果一个事件很难确认你的责任，但是仍有可能与你的主营业务发生联系，你可以表示出适当的关切，并通过较直接的组织机构去为问题的解决出力。这并不是你负有责任的心虚表现，只是传达出对企业经营范围内公益的热诚。这并不是漫无目的的慈善，而是对企业产销有积极影响的智举。比如壳牌基金会捐助的范围，主要在干净节约的能源应用上，和壳牌产品发展的战略完全一致，很好地发挥了壳牌的资源和品牌优势。 自所有权经营权分离以来，现代企业管理经历了由经营者利益最大化，到所有者利益者最大化的革命。如今公民消费主义兴起，公民社会在企业永续经营中的话语权越来越大，企业经营必须完成受众利益最大化的转变，否则企业迟早将面临严峻的公信危机。最好的危机管理就是最好的外部效应管理。受众价值最大化，才是真正的永续经营之道！ 作者是中国及美国杂志财经专栏作者   【上一则新闻】 【下一则新闻】 【前七天新闻】 【回页顶 】 全 球 文 萃 深大运会 部署防空导弹 全球经济可有救？ 中国被困美国国债市场 传金正日下令暗杀“朝战英雄”南日 蔡英文竞选办公室遭黑客攻击 选战机密曝光 30多省区争建金融中心遭质疑 地方政府情境尴尬 贵阳地税局主任被曝包养数名情妇 短信亲密调情 伦敦骚乱扩散 目击者称有7岁儿童蒙面上街 山西醋业称陈醋加防腐剂不等于勾兑 爆料人辞职 网曝红十字会领导一人配2辆豪车应对限行 王濛年底或将归队 王春露恐怕将走人 范冰冰发声明否认怀孕传闻 称今日赴公安局报案 分享到： 新浪微博 腾讯微博 搜狐微博 网易微博

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The China-Vietnam Conflict: the Spratly Islands History Timeline

Image via Wikipedia

200BC around – China firstly discovered the Spratly Islands
220 – Nansha (Spratly) Island was settled by Chinese monks, building up a monastery on that island.
789 – The Tang Dynasty, China included the Nansha Islands into its administrative map
990 – Spratley Islands became a part of the Northern Song area in Hainan
1121 – Kublai Khan controlled most of the islands during China’s Yuan Dynasty

http://www.spratlys.org/history/spratly-is…ry-timeline.htm

http://www.spratlys.org/maps/5.htm

China was the first to discover, name, develop，conduct economic activities on and exercise jurisdiction of the Nansha Islands.
The earliest discovery by the Chinese people of the Nansha Islands can be traced back to as early as the Han Dynasty. Yang Fu of the East Han Dynasty (23-220 A.D.) made reference to the Nansha Islands in his book entitled Yiwu Zhi (Records of Rarities) , which reads: “Zhanghai qitou, shui qian er duo cishi”(“There are islets, sand cays, reefs and banks in the South China Sea, the water there is shallow and filled with magnetic rocks or stones”). Chinese people then called the South China Sea Zhanghai and all the islands, reefs, shoals and isles in the South China Sea, including the Nansha and Xisha Islands, Qitou.

In numerous history and geography books published in the Tang and Song Dynasties, the Nansha and Xisha Islands were called Jiuruluo Islands, $hitang (literally meaning atolls surrounding a lagoon), Changsha (literally meaning long ranges of shoals), Qianli $hitang, Qianli Changsha, Wanli $hitang, and Wanli Changsha among others. Reference was made to the Nansha Islands in over one hundred categories of books published in the four dynasties of Song, Yuan, Ming and Qing in the name of $hitang or Changsha.
http://www.southchinasea.org/docs/Historic…over%20Nans.htm

http://www.fas.org/news/china/2000/china-000600.htm

During World War II, Japan launched the war of aggression against China and occupied most of China’s territory, including the Nansha Islands. It was explicitly provided in the Cairo Declaration, the Potsdam Proclamation and other international documents that all the territories Japan had stolen from China should be restored to China, and naturally, they included the Nansha Islands. In December 1946, the then Chinese government sent senior officials to the Nansha Islands for their recovery. A take-over ceremony was held on the islands and a monument erected in commemoration of it, and the troops were sent over on garrison duty. In 1952 the Japanese Government officially stated that it renounced all its “right, title and claim to Taiwan, Penghu Islands as well as Nansha and Xisha islands”, thus formally returning the Nansha Islands to China. All countries are very clear about this part of historical background. As a matter of fact, the United States recognized China’s sovereignty over the Nansha Islands in a series of subsequent international conferences and international practice.

For quite a long period of time after WWII, there had been no such a thing as the so-called issue of the South China Sea. No country in the area surrounding the South China Sea had challenged China’s exercise of sovereignty over the Nansha Islands and their adjacent waters. Prior to 1975, Vietnam had, in explicit terms, recognized China’s territorial integrity and sovereignty over the Nansha Islands. Before the 1970s, countries like the Philippines and Malaysia had never referred to their territories as including the Nansha Islands in any of their legal instruments or statements made by their leaders. In the Treaty of Peace signed in Paris in 1898 and the Treaty signed in Washington in 1900 between the United States and Spain, the scope of the Philippines’ territory was expressly laid down, which did not include the Nansha Islands. This was further confirmed in the Philippines Constitution of 1935and the Mutual Defense Treaty Between the Philippines and the United States in 1951. As for Malaysia, it was only in December 1978 that it first marked part of the Nansha Islands, reefs and waters into the territory of Malaysia in its published continental shelf maps.

China the First to Exercise Jurisdiction over the Nansha Islands

The Nansha Islands came under the jurisdiction of China from the Yuan Dynasty. Geography Book of the History of the Yuan Dynasty and Map of the Territory of the Yuan Dynasty with Illustration both includes the Nansha Islands within the domain of the Yuan Dynasty. The History of the Yuan Dynasty has accounts of the patrol and inspection activities by the navy on the Nansha Islands in the Yuan Dynasty.

The inscription on the Memorial Tablet of the Tomb to General Qian Shicai of the Hainan Garrison Command of the Ming Dynasty reads: “Guangdong is adjacent to the grand South China Sea, and the territories beyond the Sea all internally belong to the Ming State.” “General Qian led more than ten thousand soldiers and 50 huge ships to patrol tens of thousands of li on the South China Sea.” All these descriptions clearly testify to the ownership by China of the Nansha Islands in the Ming Dynasty. The Hainan Garrison Command of the Ming Dynasty was responsible for inspecting and patrolling as well as exercising jurisdiction over the Xisha, Zhongsha and Nansha Islands.

In the Qing Dynasty, the Chinese Government marked the Nansha Islands on the authoritative maps and exercised administrative jurisdiction over these islands. The Nansha Islands were marked as Chinese territory in many maps drawn in the Qing Dynasty such as A Map of Administrative Divisions of the Whole China of the 1724 Map of Provinces of the Qing Dynasty, A Map of Administrative Divisions of the Whole China of the 1755 Map of Provinces of the Imperial Qing Dynasty, the 1767 Map of Unified China of the Great Qing for Ten Thousand Years, the 1810 Topographical Map of Unified China of the Great Qing for Ten Thousand Years and the 1817 Map of Unified China of the Great Qing for Ten Thousand Years.
http://www.fas.org/news/china/2000/china-000600.htm

International Recognition Of China’s Sovereignty over the Nansha Islands

1. The United Kingdom of Great Britain and the Northern Island

a) China Sea Pilot compiled and printed by the Hydrography Department of the Royal Navy of the United Kingdom in 1912 has accounts of the activities of the Chinese people on the Nansha Islands in a number of places.

b) The Far Eastern Economic Review (Hong Kong) carried an article on Dec. 31 of 1973 which quotes the British High Commissioner to Singapore as having said in 1970: “Spratly Island (Nanwei Island in Chinese) was a Chinese dependency, part of Kwangtung Province… and was returned to China after the war. We can not find any indication of its having been acquired by any other country and so can only conclude it is still held by communist China.”

2. France

a) Le Monde Colonial Illustre mentioned the Nansha Islands in its September 1933 issue. According to that issue, when a French gunboat named Malicieuse surveyed the Nanwei Island of the Nansha Islands in 1930, they saw three Chinese on the island and when France invaded nine of the Nansha Islands by force in April 1933, they found all the people on the islands were Chinese, with 7 Chinese on the Nanzi Reef, 5 on the Zhongye Island, 4 on the Nanwei Island, thatched houses, water wells and holy statues left by Chinese on the Nanyue Island and a signboard with Chinese characters marking a grain storage on the Taiping Island.

b) Atlas International Larousse published in 1965 in France marks the Xisha, Nansha and Dongsha Islands by their Chinese names and gives clear indication of their ownership as China in brackets.

3) Japan

a) Yearbook of New China published in Japan in 1966 describes the coastline of China as 11 thousand kilometers long from Liaodong Peninsula in the north to the Nansha Islands in the south, or 20 thousand kilometers if including the coastlines of all the islands along its coast;

b) Yearbook of the World published in Japan in 1972 says that Chinese territory includes not only the mainland, but also Hainan Island, Taiwan, Penghu Islands as well as the Dongsha, Xisha, Zhongsha and Nansha Islands on the South China Sea.

4. The United States

a) Columbia Lippincott World Toponymic Dictionary published in the United States in 1961 states that the Nansha Islands on the South China Sea are part of Guangdong Province and belong to China.

b) The Worldmark Encyclopaedia of the Nations published in the United States in 1963 says that the islands of the People’s Republic extend southward to include those isles and coral reefs on the South China Sea at the north latitude 4°.

c) World Administrative Divisions Encyclopaedia published in 1971 says that the People’s Republic has a number of archipelagoes, including Hainan Island near the South China Sea, which is the largest, and a few others on the South China Sea extending to as far as the north latitude 4°, such as the Dongsha, Xisha, Zhongsha and Nansha Islands.

5. Viet Nam

a) Vice Foreign Minister Dung Van Khiem of the Democratic Republic of Viet Nam received Mr. Li Zhimin, charge d’affaires ad interim of the Chinese Embassy in Viet Nam and told him that “according to Vietnamese data, the Xisha and Nansha Islands are historically part of Chinese territory.” Mr. Le Doc, Acting Director of the Asian Department of the Vietnamese Foreign Ministry, who was present then, added that “judging from history, these islands were already part of China at the time of the Song Dynasty.”

b) Nhan Dan of Viet Nam reported in great detail on September 6, 1958 the Chinese Government’s Declaration of September 4, 1958 that the breadth of the territorial sea of the People’s Republic of China should be 12 nautical miles and that this provision should apply to all territories of the People’s Republic of China, including all islands on the South China Sea. On September 14 the same year, Premier Pham Van Dong of the Vietnamese Government solemnly stated in his note to Premier Zhou Enlai that Viet Nam “recognizes and supports the Declaration of the Government of the People’s Republic of China on China’s territorial sea.”

c) It is stated in the lesson The People’s Republic of China of a standard Vietnamese school textbook on geography published in 1974 that the islands from the Nansha and Xisha Islands to Hainan Island and Taiwan constitute a great wall for the defense of the mainland of China.

http://id.china-embassy.org/eng/ztbd/nhwt/t87273.htm

History of Nanhai (South China Sea) Islands

The South China Sea islands were well-documented in Chinese records since Qin Dynasty (around AD 200). They were collectively named as Tough Heads of the Surging Sea(漲海崎頭 Zhànghǎi Qítóu) and Coral Cays (珊瑚洲 Shanhu Zhou) since their discovery by the Chinese in the Qin Dynasty. But seafaring did not occur until the next dynasty, the Han Dynasty. After the Song Dynasty, the Islands had been called The Thousand-Mile Long Sands (千里長沙) and Myriad-Mile Stony Embankment (萬里石塘).

There are houses dated back to the Tang or Song Dynasty on Ganquan Island (甘泉島), which is part of the Xisha Islands. In 1045, during the reign of Emperor Renzong of Song China, imperial troops (王師) were sent to the Paracel Islands. The fishermen of Hainan composed various “Notebooks on Paths and Timing” (更路簿) that recorded over 200 routes, the time needed for sailing among the different isles, and the names of over 100 islands commonly used by the fishermen.

http://www.sanshashi.com/

Before the 1970s, though, no country questioned China’s legitimacy and sovereignty over these islands and the waters of the South China Sea. For the Chinese, the South China Sea and its islands have historically been Chinese territory.

According to Chinese documents, the Chinese discovered the Nansha islands in the Han Dynasty some 2,000 years ago. From the Song Dynasty (960-1276 AD), the islands were under China’s jurisdiction, while in the Yuan Dynasty (1279-1368 AD) the Nansha islands were a part of Hainan (today’s Hainan province) and managed by the central government.

In the following Ming Dynasty (1368-1644 AD), China’s ships sailed by the islands of the South China Sea, symbolically implying China’s sovereignty over the waters. Then in the Qing Dynasty (1644-1911 AD), important official and royal Chinese political maps issued or drawn in 1724, 1755, 1767, 1810 and 1817 clearly marked the Nansha islands as Chinese territory.

In 1947, based on the Cairo Declaration and the Potsdam Proclamation, China’s central government appointed Mai Yunyu as official commissioner to take sovereignty over the Nansha islands from Japanese forces. In 1947, the Internal Ministry of the Republic of China finished marking the South China Sea boundary, and the Nansha islands were undoubtedly included as a part of China’s sovereignty
http://www.atimes.com/atimes/China/LG14Ad01.html

TREATY OF PEACE – The Republic of China and Japan

Article 2

It is recognised that under Article 2 of the Treaty of Peace which Japan signed at the city of San Francisco on 8 September 1951 (hereinafter referred to as the San Francisco Treaty), Japan has renounced all right, title, and claim to Taiwan (Formosa) and Penghu (the Pescadores) as well as the Spratley Islands and the Paracel Islands

http://www.ibiblio.org/chinesehistory/cont…ol/c02sb02.html

Discussion of the TREATY, particularly in regards to Taiwan (Formosa), the Pescadores, the Paracel Islands and other Chinese territories and others with China. BOTH Russia and Japan’s position. GRASP the context and how it led to the articles that specifically state Spratly and Paracel as well as Formosa and Penghu.

Statement of the First Deputy Minister of Foreign Affairs of the USSR, A.A. Gromyko, at the Conference in San Francisco (1951)

… The peace treaty with Japan should, naturally, resolve a number of territorial questions connected with the peace settlement with Japan. It is known that in this respect as well the United States, Great Britain, China and the Soviet Union undertook specific obligations. These obligations are outlined in the Cairo Declaration, in the Potsdam Declaration, and in the Yalta Agreement.

These agreements recognize the absolutely indisputable rights of China, now the Chinese People’s Republic, to territories severed from it. It is an indisputable fact that original Chinese territories which were severed from it, such as Taiwan (Formosa), the Pescadores, the Paracel Islands and other Chinese territories, should be returned to the Chinese People’s Republic.

The rights of the Soviet Union to the southern part of the Sakhalin Island and all the islands adjacent to it, as well as to the Kurile Islands, which are at present under the sovereignty of the Soviet Union, are equally indisputable.

Thus, while resolving the territorial questions in connection with the preparation of a peace treaty with Japan, there should not be any lack of clarity if we are to proceed from the indisputable rights of states to territories which Japan got hold of by the force of arms.

… As regards the American-British draft peace treaty with Japan in the part pertaining to territorial questions, the Delegation of the USSR considers it necessary to state that this draft grossly violates the indisputable rights of China to the return of integral parts of Chinese territory: Taiwan, the Pescadores, the Paracel and other islands severed from it by the Japanese militarists. The draft contains only a reference to the renunciation by Japan of its rights to these territories but intentionally omits any mention of the further fate of these territories. In reality, however, Taiwan and the said islands have been captured by the United States of America and the United States wants to legalize these aggressive actions in the draft peace treaty under discussion. Meanwhile the fate of these territories should be absolutely clear — they must be returned to the Chinese people, the master of their land.

Similarly, by attempting to violate grossly the sovereign rights of the Soviet Union regarding Southern Sakhalin and the islands adjacent to it, as well as the Kurile Islands already under the sovereignty of the Soviet Union, the draft also confines itself to a mere mention of the renunciation by Japan of rights, title and claims to these territories and makes no mention of the historic appurtenance of these territories and the indisputable obligation on the part of Japan to recognize the sovereignty of the Soviet Union over these parts of the territory of the USSR.

We do not speak of the fact that by introducing such proposals on territorial questions the United States and Great Britain, who at an appropriate time, signed the Cairo and Potsdam Declarations, as well as the Yalta Agreement, have taken the path of flagrant violation of obligations undertaken by them under these international agreements.

… To sum up, the following conclusions regarding the American-British draft peace treaty can be drawn:

1. The draft does not contain any guarantees against the reestablishment of Japanese militarism, the transformation of Japan into an aggressive state. The draft does not contain any guarantees ensuring the security of countries which have suffered from aggression on the part of militarist Japan. The draft creates conditions for the reestablishment of Japanese militarism, creates a danger of a new Japanese aggression.

2. The draft treaty actually does not provide for the withdrawal of foreign occupation forces. On the contrary, it ensures the presence of foreign armed forces on the territory of Japan and the maintenance of foreign military bases in Japan even after the signing of a peace treaty. Under the pretext of self-defense of Japan, the draft provides for the participation of Japan in an aggressive military alliance with the United States.

3. The draft treaty not only fails to provide for obligations that Japan should not join any coalitions directed against any of the states which participated in the war against militarist Japan, but on the contrary, is clearing the path for Japan’s participation in aggressive blocs in the Far East created under the aegis of the United States.

4. The draft treaty does not contain any provisions on the democratization of Japan, on the ensurance of democratic rights to the Japanese people, which creates a direct threat to a rebirth in Japan of the prewar Fascist order.

5. The draft treaty flagrantly violates the legitimate rights of the Chinese people to an integral part of China – Taiwan, the Pescadores and Paracel Islands and other territories severed from China as a result of Japanese aggression.

6. The draft treaty is in contradiction to the obligations undertaken by the United States and Great Britain under the Yalta Agreement regarding the return of Sakhalin and the transfer of the Kurile Islands to the Soviet Union.

7. The numerous economic clauses are designed to ensure for foreign, in the first place American, monopolies the privileges which they have obtained during the period of occupation. The Japanese economy is being placed in a slave-like dependence on these foreign monopolies.

8. The draft actually ignores the legitimate claims of states that have suffered from Japanese occupation regarding compensation by Japan for the damage that they have suffered. At the same time, providing for the compensation of losses directly by the labor of the Japanese population it imposes on Japan a slave-like form of reparations.

9. The American-British draft is not a treaty of peace but a treaty for the preparation of a new war in the Far East.

Japanese Response

3. Statement of the Prime Minister of Japan, S. Yoshida, at the Conference in San Francisco (1951)

The peace treaty before the Conference contains no punitive or retaliatory clauses; nor does it impose upon Japan any permanent restrictions or disabilities. It will restore the Japanese people to full sovereignty, equality, and freedom, and reinstate us as a free and equal member in the community of nations. It is not a treaty of vengeance, but an instrument of reconciliation. The Japanese Delegation gladly accepts this fair and generous treaty.

On the other hand, during these past few days in this very conference hall, criticisms and complaints have been voiced by some delegations against this treaty. It is impossible that anyone can be completely satisfied with a multilateral peace settlement of this kind. Even we Japanese, who are happy to accept the treaty, find in it certain points which cause us pain and anxiety. I speak of this with diffidence, bearing in mind the treaty’s fairness and magnanimity unparalleled in history and the position of Japan. But I would be remiss in my obligation to my own people if I failed to call your attention to these points.

In the first place, there is the matter of territorial disposition.

… With respect to the Kuriles and South Sakhalin, I cannot yield to the claim of the Soviet Delegate that Japan had grabbed them by aggression.

At the time of the opening of Japan, her ownership of two islands of Etorofu and Kunashiri of the South Kuriles was not questioned at all by the Czarist government. But the North Kuriles north of Urruppu and the southern half of Sakhalin were areas open to both Japanese and Russian settlers. On May 7, 1875 the Japanese and Russian Governments effected through peaceful negotiations an arrangement under which South Sakhalin was made Russian territory, and the North Kuriles were in exchange made Japanese territory. But really, under the name of “exchange” Japan simply ceded South Sakhalin to Russia in order to settle the territorial dispute. It was under the Treaty of Portsmouth of September 5, 1905 concluded through the intermediary of President Theodore Roosevelt of the United States that South Sakhalin became also Japanese territory.

Both the Kuriles and South Sakhalin were taken unilaterally by the Soviet Union as of September 20, 1945, shortly after Japan’s surrender.

Even the islands of Habomai and Shikotan, constituting part of Hokkaido, one of Japan’s four main islands, are still being occupied by Soviet forces simply because they happened to be garrisoned by Japanese troops at the time when the war ended.

The RESULTING ARTICLES

Article 2

(a) Japan, recognizing the independence of Korea, renounces all right, title and claim to Korea, including the islands of Quelpart, Port Hamilton and Dagelet.
(b) Japan renounces all right, title and claim to Formosa and the Pescadores.
© Japan renounces all right, title and claim to the Kurile Islands, and to that portion of Sakhalin and the islands adjacent to it over which Japan acquired sovereignty as a consequence of the Treaty of Portsmouth of September 5, 1905.
(d) Japan renounces all right, title and claim in connection with the League of Nations Mandate System, and accepts the action of the United Nations Security Council of April 2, 1947, extending the trusteeship system to the Pacific Islands formerly under mandate to Japan.
(e) Japan renounces all claim to any right or title to or interest in connection with any part of the Antarctic area, whether deriving from the activities of Japanese nationals or otherwise.
(f) Japan renounces all right, title and claim to the Spratly Islands and to the Paracel Islands.
Article 25

For the purposes of the present Treaty the Allied Powers shall be the States at war with Japan, or any State which previously formed a part of the territory of a State named in Article 23, provided that in each case the State concerned has signed and ratified the Treaty. Subject to the provisions of Article 21, the present Treaty shall not confer any rights, titles or benefits on any State which is not an Allied Power as herein defined; nor shall any right, title or interest of Japan be deemed to be diminished or prejudiced by any provision of the Treaty in favor of a State which is not an Allied Power as so defined.

China has indisputable sovereignty over South China Sea islands. The leaders then had no idea what kind of dilemma United Nations Convention on the Law of the Sea will put China in over its South China Sea islands sovereignty. The US is way too smart to sign it.
In Territorial Disputes, sovereignty is a fiat currency solely backed by the economic and military might. Otherwise it’s simply bluff. Even the US has exercised this principle countless times.
So yes Beijing made one grievous stupid mistake by signing UNCLOS, but it doesn’t matter. UNCLOS can’t comprise the US so how should it comprise China.
Here is “China’s Sovereignty over the South China Sea Islands A Historical Perspective” from oxford Journal:http://chinesejil.oxfordjournals.org/content/1/1/94.full.pdf

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The China-Vietnam Conflict:The Irony, American Interest and where to bet your money

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If the war does break out, the money will flee Asia, not to embattled Europe but to the US. Without increasing interest rate, the US will enjoy abundance of capital inflow as a safe haven. The Treasury will drop the Yield and still sell like a breeze. The gold price will shoot through the roof. However, the oil price will be confusing and go both ways because the global production will scale back when the world manufacturing powerhouses in Asia are swallowed by war and chaos. Those companies whose profits and growth hugely depend on Asia will jump the shark. However, the good news is many factories will be relocated to the US, which will greatly improve the employment in the US. Not to mention the US can sell billions of dollars worth of weapons to waring parties in the meantime. It’s a good day to be America by simply watching Asia burn.

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The China-Vietnam Conflict:The Winner&Loser Scenario

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Some people say China will lost the war. But it doesn’t really matter.

It doesn’t need to win a war to win.

I call this a limited invasion: destroy Vietnamese infrastructures and facilities to sustain the war and economic growth, and bring about the regime change or a civil war in Vietnam.

Vietnam’s communist regime is standing on the edge while the economy is melting down and people are thinking of unrest and democracy.

China should never consider occupation as an objective. Once the damage is inflicted enough to deprive Vietnam of the ability to sustain a war with China and bring about Vietnam’s economic collapse and domestic chaos, the PPL should withdraw. The Vietnamese communist regime will fall on its own sword and too busy with internal turmoil to wage a war against China.

I also call this a Scalpel Invasion. Once the objective is achieved, the army should retreat like Scalpel needs not to stay in the body after the operation is performed.

This will be the difference between the Chinese and American Vietnam war.

The mentality of modern war should be changed. A loser in the war can still be a winner in the overall game. Sometime it shouldn’t be about simply inflicting military damage and casualties. It could be about destroying the enemy’s economic growth, energy supply and production, food supply and production, and water supply. The ensuing famine, chaos and economic collapse will decapitate the adversary ruling structure, causing political and social earthquake, and even civil war and many other internal turmoils. The repercussion of such strategy far outstrips the performance any conventional war ideology can deliver, especially in the upcoming Chinese Vietnam War. It’s good enough to render the enemy paralysed in the economic, societal and governmental meltdown. This is what I call limited surgical warfare with permanent damage.

The “win or lose” should not be about military honor. It is only about the bigger game.

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The China-Vietnam Conflict:The Conclusion

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Yes, It’s true that Vietnam has tried really hard recently to make the South China Sea dispute an open-house party as crowded as possible. It’s crying out loud for the US’s interference, flirting with India against China and ganging up with the rest of ASEAN to beef up the offensive. Even so, no matter how fancily Hanoi plays the game, the deciding factor is still the substance of American support.

To Washington, it is of course very important to contain China’s burgeoning influence. However, it won’t be in the US’s strategic interest to include as many players as possible and exclude China from its coordinated alliance, because nobody knows for certain how far the US can come near Asia in 50 years, but it is certain that China will be a huge player in Asia for a thousand years. Without China’s cooperation, the US will sooner rather than later lose its strategic relevance in Asia. Let’s have no doubt about that

Moreover, Vietnam shouldn’t expect too much of the US. Washington at best can act as a buffer, deterrent and arms dealer between waring parties. It won’t directly engage China in the war in the foreseeable future, because the US dominates China with its superior naval and air force and the only way for China to level the playing field is to apply nuclear weapons. The nuclear nature of Sino-American warfare will make both the world no.1. and no.2 economy the fallen giants. The world can be effectively dominated by the Sino-American alliance if the two countries establish the mutual trust to cooperate. Nevertheless, if that window of opportunity passes in a war, the US and China will both be destroyed and at best become the also-runs just like Russian, Germany and France.

Washington’s most urgent task is to tackle the fiscal deficit, trade deficit and unemployment. As the US’s biggest trading partner and financier, China will play the biggest role in American renaissance. As the world’s biggest creditor for dollar liabilities, China will be pivotal to sustain the dollar’s status as world reserve currency. The pillar of the US superpower lies on the dollar’s world reserve currency status, because the operation cost of a superpower can’t be sustained by fiscal policy, which is often comprised by partisan politics while most emergent. That’s when you can count on the monetary relief of the fed. Without dollar’s world currency status, such relief won’t exist. In such a scenario, the importance of China is self-enforcing.

So Vietnam will be left to its own devices in the war cause the US’s priority lies somewhere else. It’s good to see the last two outstanding communist regimes fight against each other. In the end whoever owns the South China Sea will need the superior expertise and technology of American oil companies. It’s good to be America when there’s no losing scenario.

For China, it is very important to defeat Vietnam. It will serve as a wake-up call to Philippine among other contenders and remind them of the false hope for unrealistic American engagement. Furthermore, unlike Philippine, Vietnam shares land borders with China. So China’s attack against Vietnam won’t be restricted by sea. It also can utilize its superior land force to invade Vietnam. Chinese army has plenty of ground warfare experience against Vietnam in previous two wars. It can destroy Vietnamese infrastructures and facilities to sustain the war and economic growth, and bring about the regime change or a civil war in Vietnam. That’s the only cost-effective objectives for the army but not the costly occupation. Leave the chaotic Vietnam to Vietnamese themselves. A dissolved Vietnam will need another 50 years to muster enough strength to strike China.

Once the dust settles, China and the US can jointly exploit the rich oil and gas resources in the South China Sea. ExxonMobil, Chevron and Shell will be all over Spratly Islands.

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The China-Vietnam Conflict:The Inevitable

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Now Much to China’s dismay, the South China Sea dispute has become an open-house party: the US is invited by many to host the show, and even China’s arch rival India will tag along. The biggest allure for the party is oil, anywhere between 105 to 213 billion barrels of liquid gold deposited in the region—well-exceeding 80 percent of the entire Saudi kingdoms’ reserves, according to Chinese estimates.

The regional mess proves Beijing’s policy of “shelving disputes and developing jointly” is a total failure. In Territorial Disputes, sovereignty is a fiat currency solely backed by the economic and military might. Otherwise it’s simply bluff. Diplomacy and Economic ties alone will never win China the south China sea.

To solve the territorial dispute, Sino-Vietnamese war seems inevitable. It’s also the most cost-effective way for China to sort out the mess once and for all. The only thing that matters right now is the timing and how the US will factor in this event. We are going to look into the dynamics how this volcano is going to erupt:

The fragile Vietnamese economy hugely depends on the South China Sea oil production, which accounts for 30% of its GDP. Vietnamese economy will collapse if it loses its oil assets in the region. Vietnam is in dire straits: The inflation is running rampant while the consumer price index rose 20.82 percent in June from a year ago, the fastest pace since November 2008; The bank system is teetering with bad loans amid tight monetary conditions and busting economic bubbles; the widening trade deficit has eroded the country’s foreign-exchange reserves—estimated at $12.2 billion at the end of 2010, down 53% from the peak of $25.8 billion reached February 2008, which will deter foreign investment, worsen liquidity and increase systemic insolvency. All this will seriously aggravate social unrest and threaten the communist regime. Therefore, Stoking tension with China will be a good way for Hanoi to direct national grievance away from its domestic mismanagement and vindicate its legitimacy of rule with patriotism and even war. To Hanoi, the South China Sea is worth shedding blood for.

Now let’s look at this from Washington’s perspective: the diminishing American economic influence in Asia-pacific will force the US to sustain its engagement with the region in alternative capacities, for example, maintaining military power balance. China now serves as the hub for the region’s global supply chain, gobble up components, commodities and capital goods and is coming into its own as a vital pillar of support for the region’s economies, particularly at a time Western demand is lagging. “According to ASEAN statistics, China’s trade with ASEAN has jumped six-fold since 2000 to US$193 billion in 2009, surpassing that of the US. China’s share of Southeast Asia’s total commerce has increased to 11.3 percent from 4 percent in that time, whereas the US’s portion of trade with the bloc fell to 10.6 percent from 15 percent. During that time, ASEAN’s trade deficit with China widened by five times to US$21.6 billion. The bloc reported a US$21.2 billion trade surplus with the US in 2009, down 12 percent from 2000.” China is also a very important source of investment and the largest source of foreign tourists in the region. Meanwhile, Asia today is the region with the highest increase in defense spending in the world, and that combined with China’s skirmishes over territory disputes with Japan, Vietnam and Philippine, etc. present the US Military–industrial complex with a grave challenge and perfect opportunity. The South China Sea dispute offers the US a golden opportunity to come back to Asia, talk about friendship, energy deals and arms sales.

Now let’s look into the stakes for Beijing: the energy-intensive nature of Chinese Economy will underwrite the assertiveness of China’s south China sea stance and naval force buildup. “ China’s oil reserves have shrunk almost 40 percent since 2001 as the economy expanded 10.5 percent a year on average, according to data compiled by Bloomberg.” “Currently China depends on foreign imports for over fifty percent of the oil it consumes, and half of this imported oil is from the Middle East.” However, the Arab Spring and stand off between the US and Iran have intensified the volatility of the region to the extent that China must diversity its energy supply. China’s rapid economic development, expanding middle class population, motorization, and urbanization will aggravate its thirst for energy even further: IEA has predicted that China’s dependence on foreign energy will increase to over 60-70 percent of its total consumption in 2015. The fragile state of its energy security will leave China with few options but securing its oil supply more and more from the South China Sea. Failure to do so will not only threaten China’s status as World Factory but also its future survival. Furthermore, any concession on the sovereignty will seriously undermine CCP’s legitimacy of rule while it faces serious calls for democracy and freedom of speech. It is well known that China suffered a lot of humiliation, territory loss and slaughters in past wars with foreign countries. Nationalist sentiments are abundant for the government or the anti-government to tap into when necessary. CCP can’t afford to lose such a powerful initiative when it can tip the balance of. power.

All these variables will play out until we smell the blood and gun powder rippling across the South China sea.