Beware the Chinese Sea-Dragon

Chinese bellicosity in the near seas could usher in a new era of instability.

Recently, Chinese assertiveness was brought to the fore by its sparring with Japan over the Senkaku/Diaoyu islands in the East China Sea. In early September a conflagration of anti-Japanese protests and boycotts engulfed China after the Japanese government attempted to buy ownership of the disputed atolls from a Japanese businessman. The Chinese government responded forcibly, sending roughly 1,000 fishing vessels to the area, flanked by six frigates and several surveillance units. 

However, this is not an isolated incident; such territorialism has long been visible in Beijing's regional strategy, particularly in its aggressive posture toward rival territorial claimants in the South China Sea dispute. Since the early 2000s, China has pursued an unwavering campaign to claim ownership of the sea's two disputed archipegalos – the Paracels and the Spratlys – that has embroiled it in countless diplomatic stalemates with the seven Southeast Asia states that also claim to hold sovereignty over the disputed reefs. 

Combine this with its intense naval modernisation programme and alarm bells begin to ring. To some, it’s a harbinger of things to come; that China is increasingly working off a more imperial playbook. All across East Asia, from Tokyo to the Jakarta, the notion that Beijing is carving out its own Monroe Doctrine is taking on a new degree of salience.

To others, it can be argued that China is simply responding to American containment policies, especially at a time when Washington is embarking on a diplomatic and military “pivot” to East-Asia.

Either way, the statistics are staggering. According to SIPRI, an independent research institute, China’s annual military budget has skyrocketed from $30bn in 2000 to $120bn in 2010 – a 400 per cent increase.

Worryingly for Japan and the seven nations embroiled in the South China Sea dispute (Vietnam, the Philippines, Indonesia, Malaysia, Taiwan and Brunei), much of this spending has gone on a kaleidoscope array of naval weaponry.

Last month, China unveiled the Liaoning – its first aircraft carrier – with five more reportedly in development. The People’s Liberation Army Navy (PLAN) has also stepped up its rate of submarine commissionings some 260 per cent between 2003 and 2012, whilst simultaneously transforming its previously outdated battleship force into a vast fleet of modern frigates, destroyers and amphibious vessels.

Such an extensive naval overhaul has afforded China the hardware it needs to buttress its claims and flex its muscle in the East and South China seas. More importantly, the wholesale development of “anti-access/area-denial” capabilities – or in layman's terms, land-based weaponry designed to destroy naval units – poses a profound threat to American interests in the region.

With weaponry as sophisticated as the anti-ship ballistic missile – a missile capable of destroying US aircraft carriers – alongside heavy investment in land-based maritime strike aircraft, the concern is that China is gearing its navy towards one that can deter US intervention when things get heavy in territorial disputes. Many pundits are warning of China establishing the near seas as a zone of exceptionalism in which it has carte blanche to pursue its ambitions unhindered; a domain in which even the world’s largest heavyweight, the US, has no jurisdiction.

Whilst such comprehensive naval build-up is alone cause for substantial concern, Beijing's staunch posture on its sovereignty claims in the seas’ disputed atolls provides an added dimension to fears over China’s rise. In both the East and South China seas, the Chinese politburo have approached their claims as a matter of indisputable sovereignty; unfaltering claims of absolute ownership. Any backtrack on these would be catastrophic, given the vociferous nationalism that often accompanies such claims.

The disputes also encompass a pronounced economic dimension: Oil. Chinese analysts estimate that the waters surrounding the Senkaku/Diaoyu islands may hold as much as 160 billion barrels of oil, and the South China Sea 213 billion – vastly outstripping Saudi Arabia’s reserves of 265 billion. And with China recently becoming a net oil importer, the seas’ hydrocarbon offerings become all the more tantalising.

The vying for sovereignty over the seas’ hydrocarbon-rich waters is at the heart of these territorial disputes and has drawn China into numerous naval standoffs in the past couple of years, the Senkaku/Diaoyu being the latest in a long list of confrontations.

Earlier this year, the Philippines and China were engaged in shadow-boxing over Scarborough shoal in the Spratly islands. In June, China invited foreign oil companies to partake in seismic surveys within Vietnamese waters, much to Hanoi's chagrin.

The net result of such assertiveness has led to sharp deteriorations in Beijing's relations with the Association of Southeast Asian Nations (ASEAN) and almost all of its individual member states. Furthermore, China’s routine reference to the infamous “nine-dashed-line” – which covers 90 per cent of the sea’s waters and all its islands – as the basis for its claims has sparked a spiralling arms race in Southeast Asia. Virtually every state embroiled in the dispute has responded to China’s modernisation programme with its own, with overall ASEAN defense spending set to increase from $24.5bn in 2011 to $40bn by 2016, according to the Economist.

Whilst apocalyptic predictions of China entering a momentous Pacific showdown with the US are entirely misplaced, if not ridiculous, China has developed an extensive near-seas capacity that provides Beijing the wherewithal to pursue its ambitions, whatever they may be.

Even though confrontations have so far been limited to standoffs between paramilitary ships and fishing vessels, China’s inexorable naval spending and the vehemence of its sovereignty claims undoubtedly cast a long shadow over its neighbours in the near seas.

And as the spectre of an expansionist China puts the wind in the sails of America’s “return” to East-Asia, Beijing may soon feel the pinch of its increasing regional isolation.

If it responds negatively to this, or if pushed, it will undoubtedly deal profound blows to the foundations of East-Asian stability, whilst putting the future of global security under thick clouds of uncertainty.

Watch this space.

Map source: NPR

Sailors aboard the Chinese Navy destroyer Qingdao. Photo: ©David Rush

Alex Ward is a London-based freelance journalist who has previously worked for the Times & the Press Association. Twitter: @alexward3000

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.