World View: China Drills for Oil as ‘Strategic Weapon’ in South China Sea

This morning's key headlines from GenerationalDynamics.com.

  • China deploys oil rig as weapon to assert South China Sea claims
  • China hails a 'new era' for its oil industry
  • China's media 'accidentally' claims Philippines as part of China
  • China cracks down further on internet free speech
  • China considers postponing its quinquennial Communist Party Congress
  • Waves of immigrants are overwhelming Germany
  • The era of the 'negative money multiplier'

China deploys oil rig as weapon to assert South China Sea claims

China has been aggressively asserting its claim to a huge region in the South China Sea, including many islands that have historically belonged to other countries. Now the Chinese are drilling oil in disputed waters as a "strategic weapon," according to an analyst reported by the state-run Xinhua:

"Large deep-water drilling rigs are our mobile national territory and strategic weapon for promoting the development of the country’s offshore oil industry."

Bloomberg

China hails a 'new era' for its oil industry

China is hailing the the new oil drilling venture in the disputed region of the South China Sea as a "new era for China's oil industry." The semi-submersible deepwater rig will drill for oil at a depth of 1,500 meters at its current location for 56 days, and then will move on to drill in other disputed regions of the South China Sea. It's expected that the rig will drill about five or six wells per year. China Daily

China's media 'accidentally' claims Philippines as part of China

He Jia, an anchor on China's state-run television network CCTV, said:

"As we all know, the Philippines is Chinese territory. China has unquestionable sovereignty over the Philippines.

We all know that the Philippines is China's inherent territory and the Philippines belongs to Chinese sovereignty, this is an indisputable fact."

This gaffe is being described as an accidental slip of the tongue, but I don't think that's what happened at all. He Jia appears to be a young girl who's too dumb to find the Philippines on the map, and is just reflecting the ultra-nationalist attitudes of the younger generations of Chinese. Generational Dynamics predicts that there will be a Clash of Civilizations world war, led by China and the United States. Telegraph

China cracks down further on internet free speech

Chinese officials continue to be infuriated because they've been unable to exert complete dictatorial control over the internet, though they've tried just about everything possible to do so. The latest attempt is to issue "Community Management Regulations" that everyone has to follow, at risk of being thrown into a torture pit. Here's the announcement on the extremely popular blog site Sina Weibo:

"Dear netizens, in order to maintain order in the Weibo community, we are establishing open and transparent mechanisms to deal with violators of our regulations. Today we are issuing the “Sina Weibo Community Convention (Trial)”, along with the “Community Management Regulations (Trial)” and the “Community Committee System (Trial).” The above regulations will take effect on May 28th, 2012, at which time corresponding features will go live. Order is something that we all must work together to maintain."

Article 13 of the new regulations describe what's forbidden:

"In Article 13, the contract lists nearly ten kinds of information users are not allowed to publish on Weibo, including that “harms the unity, sovereignty, or territorial integrity of the nation” and that “spreads rumors, disrupts social order, and destroys societal stability.”

[...]Article 13) Users have the right to publish information, but may not publish any information that:

1.Opposes the basic principles established by the constitution

2.Harms the unity, sovereignty, or territorial integrity of the nation

3.Reveals national secrets, endangers national security, or threatens the the honor or interests of the nation

4.Incites ethnic hatred or ethnic discrimination, undermines ethnic unity, or harms ethnic traditions and customs

5.Promotes evil teachings and superstitions

6.Spreads rumors, disrupts social order, and destroys societal stability

7.Promotes illicit activity, gambling, violence, or calls for the committing of crimes

8.Calls for disruption of social order through illegal gatherings, formation of organizations, protests, demonstrations, mass gatherings and assemblies

9.Has other content which is forbidden by laws, administrative regulations and national regulations."

China Digital Times

China considers postponing its quinquennial Communist Party Congress

Like the United States and other countries, China is embroiled in bitter political divisions, which became particularly apparent recently by the downfall of Bo Xilai, a charismatic rising political star. The turmoil is so great that the Chinese Communist Party (CCP) is considering a delay of the Communist Party Congress, normally held every five years, from September/October to December/January. According to one analyst:

"If the party congress were delayed, it's to (decide) how to deal with the legacy of Bo Xilai.

It's like dinner being put off because cooking was abruptly disrupted and (the party) had to attend to other matters. Now it's back to cooking."

One purpose of the Congress is to appoint a new standing committee. A delay in the Congress will not delay the time when the members start in the new roles, in March of next year. Reuters

Waves of immigrants are overwhelming Germany

A flood of impoverished people from Bulgaria and Romania are streaming into Germany hoping to find a job, overwhelming the system. They're not illegal immigrants, since they're from EU countries. They often arrive in Germany penniless, and with no ability to speak or understand German. Ironically, they're worse off than illegal immigrants from north Africa and other non-European countries, since they can't be forced to attend language and integration courses that are offered free of charge to immigrants who hold non-European passports -- and if they voluntarily choose to do so, they are charged for the privilege. Spiegel

The era of the 'negative money multiplier'

Pundits and faux economists have been wondering for years why the Fed's ZIRP (zero interest rate policy) and quantitative easing have not led to hyperinflation. I've explained it in generational terms, but here's an interesting analysis of how QE actually contributes to deflation by creating a "negative money multiplier effect," because the Fed is competing with shadow banks that had previously provided liquidity, and which now are absorbing liquidity instead.

FT Alphaville Part 1 and Part 2