Since it was announced, the United States’ ‘pivot to Asia’ has raised many questions and answered only a few. Everyone agrees it is China-centered, but there is no conclusive evidence on its nature: is it about hedging or engaging? Or both? Despite many reassurances and warnings, many believe it has a lot to do with containing and encircling a potential foe – China – and there are signs that at least some hedging is in fact taking place, both on the American and Chinese sides. Two events unfolding this month could be just another confirmation.

The United States and Japan are now working together in a drill which simulates the retaking of remote islands – which most likely should be identified as the Diaoyu/Senkaku, although no official has confirmed such a theory. The Wall Street Journal reported that Japan has sent three warships, 730 Maritime Self-Defense Force troops, 250 ground troops and seven combat helicopters to join the drill in California, which began on June 10 and will go on for two weeks. According to David Lai, Research Professor at the Strategic Studies Institute (SSI) of the U.S. Army War College, “strategically, the joint military exercise reinforces U.S. commitment to the security treaty obligation with Japan. Operationally, it shows that the United States and Japan are preparing the two militaries for possible contingencies.”

The Senkaku/Diaoyu Islands. Pic: AP.

Last month, a study by the Carnegie Endowment for Peace concluded that there is much need for reinforcing their security alliance: “current economic and military trends in China, Japan, and the United States suggest that existing policies and strategies might fail to ensure a stable security environment conducive to U.S. and Japanese interests over the long term.” Japanese Prime Minister Shinzo Abe has publicized the idea of modifying the pacifist constitution and normalize Japan’s military forces, which have not operated outside national borders – at least outside UN-sponsored operations – since World War Two.

Any change in the Constitution of Japan or in the characteristics of the US-Japan alliance, however, would likely look dodgy in Beijing’s eyes, especially as China and Japan are engulfed in a long-standing dispute for the sovereignty of the aforementioned Diaoyu/Senkaku Islands. The spat has been latent since the islets were handed back to Japan by the US in the 1970s, but it was reignited in 2012 when Tokyo Governor Shintaro Ishihara proposed to buy them on behalf of the city administration. The Japanese government stepped in and bought the islands itself, claiming it was doing so in order to prevent tensions from escalating. China did not think so and reacted furiously. Since then, protests, angry diplomatic statements, overlapping maritime patrols and nationalist rhetoric have been common in Sino-Japanese relations. The current drill looks very much like a plan to get the islands back in case Beijing intervenes militarily and it has been criticized by Chinese authorities, who called for the operation to be cancelled. “There is little ambiguity about this. More importantly, the Chinese clearly see it this way,” said Dr Lai, even though he noted that so far China’s response has been “curiously low key.”

As the US and Japan improve their ability to operate in hostile environments, Beijing is looking west for support. On June 11, a military drill began involving Chinese and Russian military forces in Beijing. China’s Global Times reported that according to the Chinese People’s Armed Police Force (PAPF), “forty-six personnel from the Snow Leopard Commandoes, an elite anti-terrorism force under the Chinese People’s Armed Police Force, and 29 from a special task force unit of Russia’s domestic security force, are taking part in the exercise.” A similar operation took place in 2007 in Moscow, and, referring to that event, a study by the Stockholm International Peace Research Institute (SIPRI) pointed out that, “China is now using joint exercises to demonstrate to friend and potential foe alike its ability to project its growing military power.”

In March, newly nominated President Xi Jinping chose Moscow as the first capital he would visit as a top leader, and during the trip a deal to buy more fighter jets and submarines was disclosed. On April 25, Yu Zhengsheng, chairman of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), epitomized the mood stressing that the comprehensive strategic cooperation between the two countries is “at a new historic starting point.”

Chinese President Xi Jinping during his visit to Moscow in March. Pic: AP.

The notion that China and Russia are upgrading their ties often strikes a painful chord in the West. Dr Lai told the Asian Correspondent that despite bilateral problems, the coming together of China and Russia “can only be explained by one compelling reason: their common problems with the United States. This common interest can get China and Russia to compromise on their conflict of interests in Central Asia and elsewhere.”

(READ MORE: Analysis: Xi Jinping’s Moscow visit hints at China-Russia thaw)

It is not a bed of roses by any menas and persistent or even aggravating issues remain. The mentioned research by SIPRI, for example, pointed out that “long-standing mutual mistrust” and “practical commercial and technical impediments,” stand in the way of cooperation. As causes of friction, the paper included a steady decline in arms flow from Russia to China – a staple of the post-Soviet era – and rising concerns that Chinese producers may copy and reproduce Russian military technology. The changing international situation can also be an obstacle: while China and Russia have often stood together to counterbalance US power and influence, at present both countries attach more importance to their respective relationships with Washington than with one another.

Borrowing the term from Bobo Lo’s book, Dr Andrew Scobell, a senior political scientist with the RAND Corporation, told Asian Correspondent that the best way to characterize the relationship is as “an axis of convenience [..] China and Russia agree on a good number of issues, conduct a significant amount of bilateral trade.” But he, too, believes that there are limits to the degree of cooperation they can achieve.

The case has been ongoing  since September 6 last year, when the Commission began investigating whether Chinese companies are selling solar panels at a price below their cost of production, an illegal practice known as “dumping”. According to EU Trade Commissioner Karel De Gucht, the answer is pretty obvious: “It’s clear that the dumping of these Chinese solar panels is clearly harming the European solar panel industry. This jeopardizes at least 25,000 current jobs,” he said in a statement released on Tuesday. According to EU figures, a “fair” price should be about 88 per cent higher than what it is now.

Pic: AP.

By imposing tariffs EU authorities have started a quarrel both inside and outside the continent. On the domestic front, many members loudly voiced their opposition against what they see as a danger to their bilateral trade with China. Admittedly, the timing was not the best: at the end of May, just days after the Commission said it was going to impose sanctions, German Chancellor Angela Merkel met with Chinese Premier Li Keqiang during a state visit in Germany. Ms Merkel torpedoed the plan, saying Berlin is against protective measures. The German government was followed by 18 other member states, including the Netherlands and the UK.

This could be the reason why the Commission lowered duties to just 11.8 per cent when the original figure was supposed to be about 40 points higher, averaging 47 per cent. In announcing the measures, Mr De Gucht said they constitute a “one-time offer to the Chinese side, providing a very clear incentive to negotiate. [..] but the ball is now in China’s court.” After Ms Merkel delivered the blow, however, the Commissioner himself had acknowledged that “we all know that China is trying to influence and scare off member states,” which begs the question whether we are witnessing yet another fracture in a union that has already dithered in various occasions. Are we seeing a divergence between countries that heavily rely on China for growth and others who have more incentives to protect their domestic producers? Time will tell, but the portents look grim for European politics.

EU Commissioner for Trade Karel De Gucht. Pic: AP.

The business community does not show much unity either. According to Milan Nitzschke, President of EU ProSun, a joint initiative of EU solar businesses, “China systematically breaks world trade law and sells its products under production costs, financed by the government and state-owned banks.” Mr Nitzschke told us that “the imposition of anti-dumping duties is necessary to end unfair competition. This is the only way to restore fair competition.”

Not everyone shares this point of view. Bosch – a German company which is going to abandon activities in crystalline photovoltaics due to sinking prices – said it nevertheless opposes the introduction of any anti-dumping-duties because “such measures are not long-standing solutions in any case.” The key, says Bosch, should be dialogue. The European Photovoltaic Industry Association (EPIA) avoided endorsing either party, but said in a statement that “the fast price decrease observed over the last two years has resulted in negative margins over almost the entire value chain of the solar PV industry and put many of its players in severe financial difficulties.”

While European groups and governments diverge, Beijing’s response has been a loud and clear refusal to bow – which does not come as a surprise. What is disquieting is that words are being followed by action: on June 5, the Ministry of Commerce announced it has started investigations into wines imported from Europe that may have received unfair government subsidies. It is interesting to note that the move hits countries – such as France, Italy and Spain – which are believed to be more supportive of sanctions. It could well be a sign that China is indeed throwing her weight around to dissuade EU members from supporting the Commission.

(READ MORE: Italy expresses concern about China wine probe) 

According to Fredrik Erixon, Director of the European Center for International Political Economy, serious retaliation is a real possibility. “The Commission thinks they can use [the 11.8 per cent duties] to discuss with the Chinese, but it is terribly dangerous,” says Mr Erixon, who is critical of the decision and believes a full 47 per cent tariff will likely follow in August.

“Trade remedies are a necessary evil as we do not want Chinese companies to crowd out the market and become a monopoly,” argued Dr Markus Gehring, Deputy Director of the Centre for European Legal Studies (CELS) and Fellow in Law at Robinson College, Cambridge. Dr Gehring believes that in the long run the effect of these measures could be positive for Europe, as the continent has large unexploited potential and can find good producers outside China, but lamented how unfortunate it is that it had to be solar panels, because “if anything, we should be collaborating on a global scale to move toward a green economy.”

Meanwhile, hornets keep on flying over Brussels and more nests lay ahead. On May 14, the Commission started investigating equipment imports from Chinese telecommunication giants Huawei and ZTE, even despite the lack of any complaint by European companies. The two Chinese giants already faced strong pressure in the US and Australia, where intelligence is concerned they may be cooperating with the Chinese government in dangerous ways.

Many experts believe that as China grows we are bound to see trade disputes increase, and the People’s Daily just published an article reminding everybody that as far as the dispute on solar panels goes, “We set the negotiating table, [but] there are many cards we can play. ” If that is really the case and the Commission does not budge, the current spat may not be the highest moment of friction over a tough market, but the first salvos of a longer conflict.

Ever talked to an average Chinese citizen about living in China? If you haven’t, here is a spoiler: one of the most common complaints will likely be the ever-growing price of apartments, a topic never less than omnipresent in conversations about urban life. The pain only gets bigger if you speak with a recent graduate who hopes to marry, as having an apartment is an indispensable prerequisite for settling down.

Behind this frustration is a booming property market where prices have tripled in the last decade. Underpinning the phenomenon are rapid urbanization and industrialization, as well as lack of other assets available for investment. A 2012 paper published by Blackrock observed that, “a lack of viable alternatives has funneled money into housing; in particular, the domestic capital market is underdeveloped, deposit rates are low, and overseas investment is restricted.”

Skyscrapers are seen at sunset in Shenzhen, in southern China's Guangdong province. Pic: AP.

Many experts believe that such developments have created a dangerous bubble, but there is no definitive agreement. Nouriel Roubini, an economist at the University of New York, warned in 2011 that, “China is rife with overinvestment in physical capital, infrastructure, and property,” predicting that this could be a driver of a hard landing after 2013. Professor Roubini has been nicknamed ‘Dr Doom’, which make such bearish remarks more understandable. Other analysts, however, share his fears. Just a few days ago, CNBC quoted Jianguang Shen, chief China economist with Mizuho Securities Asia, as saying that “China’s current home prices have far exceeded a sustainable level that the country’s economic fundamentals can support.”

Also negative is Gillem Tulloch, founder and managing director of Forensic Asia, a research firm based in Hong Kong, who told Reuters in 2012 that the Chinese market is heading for a big crash involving all major real estate companies and affecting the whole economy.

There is plenty of data to support the views of the gloom-and-doom mongers. According to a story reported by Chinese magazine Caixin, 64.5 million urban electricity meters registered zero consumption over a recent six-month period, which “led to a theory that China has enough empty apartments to house 200 million people,” basically the population of the three largest countries in Europe. The author suggested that, “even if China’s stock of empty flats is only half that recent estimate of 64.5 million, it would still be equivalent to 20 percent of all urban households. That’s higher than Taiwan’s vacancy rate at the peak of its bubble [in 1980s].”

Some of these empty buildings make up entire ghost towns. Like Kangbashi – the most widely-covered case but not the only one – in Inner Mongolia: a modern, glitzy city built next to Ordos, a mining town of over 1.5 million people. Kangbashi features squares, skyscrapers, scores of apartment, even a museum. The only thing it lacks are people, who prefer to live in cheaper apartments in nearby areas.

Despite signs of a property bubble, some see the situation in a more benign light. Optimists point out that China is still experiencing rapid urbanization: a 2010 census report established that about 50 per cent of the population was living in cities at the time, a number that seems certain to grow in the future, fueling demand for houses. In an interview with the Financial Times, Commerzbank’s Ashley Davies noted that even overpricing is not as terrible as it is often assumed to be: in many urban centers house price-to-income ratios are around 10 times the average annual incomes (lower than in New York, where it is around 12.) The key to solve the problem – in this scenario – would be to have incomes rise enough to allow more access to housing.

Long-term predictions aside, inflation in the sector has become a chief concern for policy makers, who have been trying to tame prices since 2010. With little success, apparently. On top of other restrictive measures, the State Council asked local authorities in March to introduce a 20 per cent capital gains tax which had already been tried as a pilot project in Shanghai and Chongqing two years ago. Xinhua News Agency reported that the local experiment gave good results, but the effect has yet to become evident at a national level. Property prices in 70 major cities continue their upward trend, rising 3.9 in March and 4.3 in April.

While trying to prevent a property crash, Beijing also has to guard against putting too much pressure on a sector that provides growth and jobs, especially as the country undergoes an economic slowdown. In May, the HSBC/Markit Purchasing Managers’ Index (PMI) dropped to 49.2, the lowest level since October 2012, increasing fears that economic activity may decelerate further this year.

The Chinese property market has contributed substantially to China’s stunning growth in the last decades and has provided local governments with large revenues. According to a 2012 study by the IMF, “the real-estate-dependent construction industry, which accounts for 7 per cent of GDP, creates significant final demand in other domestic sectors [..] As a result, a decline in real estate investment has the potential to disrupt the production chain throughout China’s economy, and with that a potential for external spillover to G20 trading partners.” The study mentioned mining, manufacturing of construction material, metal and mineral products, machinery and equipment, consumer goods, and real estate services as sectors that are strongly connected with real estate.

So, if the next time you speak with Chinese acquaintances they do not mention rising property prices, it may not be all good news: they may have shifted attention to a deteriorating jobs market.

The reaction of the Chinese public was furious, with netizens venting their fury on the web. On Weibo, the Chinese Twitter, one user commented that, “Ding Jinhao’s behaviour should be condemned. How low his quality as a person must be, destroying cultural relics with thousands of years of history. A 15-year-old is not a kid anymore… Shame to the Chinese people”.  Gududundoufu, another netizen, noted that inside China things are hardly better: “How can we ask anyone to value other people’s cultural relics while we don’t pay any attention to our own!”

Foreign tourists visit the Hatshepsut Temple, in the ancient southern city of Luxor, Egypt. Pic: AP.

One of these angry netizens turned turned hunter and tracked down Ding, who was found to be a high school student from Nanjing. As the case took nationwide proportions, his parents came out and offered their apologies “to the Egyptian people and to people who have paid attention to this case across China”.

(READ MORE: China: ‘Noodles crisis’ lands Maldives hotels in hot water)

Xinhua News Agency wrote that “leaving graffiti is common among Chinese tourists, damaging historic sites and demonstrating poor education and behavior.” Last year, this supposed bad behavior was much criticized by Hong Kong residents, who accused mainlanders of being ill-mannered “locusts” swarming toward the former colony for shopping. Reactions in China were fervent, with one Professor at Beijing’s Peking University accusing Hong Kong locals of being “dogs of British imperialists.”

A few months ago, Chinese people found a hot topic for discussion when a Maldivian hotel was accused of removing kettles from rooms taken by Chinese tourists – and only by Chinese tourists – on the ground that they preferred to eat instant noodles inside and avoided going to local restaurants. Comments leaned markedly toward nationalism and one Weibo user went as far as saying: “People’s Liberation Army, get it done, speed is everything.”

Different as these episodes are, they all reveal the inherent Chinese fear of being both misunderstood and criticized. Damaging an ancient relic could happen in many other places involving other nationalities, but the act assumes bigger proportions in a country with a long tradition of valuing the concept of “face” and an equally long dread for losing it. In the accompanying notes to one of his lectures at Fudan University, Professor Li Weisen wrote that “as many sinologists noticed, although a universal human nature and a ubiquitous concept that occurs in all culture, face is particularly salient for Chinese culture…]‘Face’ is evident in all aspects of Chinese life.”

In the aftermath of the incident in Egypt, deputy Prime Minister Wang Yang noted that sometimes his countrymen’s behavior abroad can be embarrassing. Referring to tourists abroad, he said: “They speak loudly in public, carve characters on tourist attractions, cross the road when the traffic lights are still red, spit anywhere and [carry out] some other uncivilized behavior. It damages the image of the Chinese people and has a very bad impact.”

Authorities are realizing that China’s efforts to polish the country’s image could suffer because of travelers’ poor conduct, an idea all the more irritating at a time when Beijing spends big money on boosting local culture’s appeal in the eyes of foreigners.

In the last decade, the number of Chinese tourists trotting the globe skyrocketed. According to the World Tourist Organization, the volume of international trips by Chinese travelers has grown from 10 million in 2000 to 83 million in 2012. Their expenditure abroad has increased by 40 per cent from 2011 to 2012, making Chinese tourists the biggest spenders in the world last year. While such trend are good news for the countries they visit, having more Chinese exploring the world will likely increase the number of such incidents.

Aside from opinions on the relevance of this concept, a recent piece of news – which has very much stayed under the radar – could be telling of how China is becoming more influential in the world. In a “soft” way, of course.

Chinese students taking part in the annual college entrance exams walk by a giant bust of Chinese philosopher Confucius. Pic: AP.

On May 15, Zhejiang University and Imperial College London signed a memorandum of understanding for enhancing their academic collaboration. The two universities are now working on the possibility of co-locating Research and Development facilities in a new campus in White City, west London, where a new £150 million Research and Translation Hub should be completed in 2015. Last November, the Higher Education Funding Council for England (HEFCE) provided £35 million for the project.

According to Imperial College, the 42,000 square meter hub will provide facilities for 1,000 scientists and engineers and will be able to accommodate 50 or more spin out companies from inception through to maturity. On its website, Imperial noted that in the last 10 years the university has produced more spin out businesses than any other in the UK but has never been been able to accommodate more than 10-15 at any single time, a problem that could be solved with new infrastructure.

Speaking with Asian Correspondent, a communication officer at Imperial College said the launch of the collaboration received a “very strong” response from potential global partners in business, industry and academia. The full nature of the partnership has yet to be established, but Imperial told us that both partners could have “the potential to benefit from further collaboration in the fields of science, engineering, medicine and business.” Council Chairman of Zhejiang University Jin Deshui praised the deal, too, saying that the partnership will help in developing “a new model with mutual-benefit and sustainable-development to carry out an equal and two-way in-depth strategic cooperation.”

Rosy perspectives for the future of global education? Quite possible. But there is a soft power element in educational cooperation that is not lost on policy makers and analysts. A leaked 2008 cable from the US embassy in Beijing, for example, already noted that, “China actively pursues educational exchanges, cultural performances, youth exchanges and other instruments of ‘soft power.’” Professor Nye himself often argued that education is a chief way to prop up influence. “Academic and scientific exchanges played a significant role in enhancing American soft power during the Cold War,” he noted in a paper.

Political implications are highlighted by the fact that the Imperial-Zhejiang cooperation is not an isolated case, as Chinese universities are becoming increasingly entangled in global education. Beijing’s Tsinghua University, for one, boasts 19 joint master programs with various institutions across the globe and Zhejiang University itself carries on research projects with 16 universities in the United States, Canada, Europe and Japan. Besides, more and more foreign students are set to do at least some studies in China. According to the Institute of International Education, in 2011 some 26,000 Americans studied in the People’s Republic for academic credit.

In an interview published by the Times Higher Education, University of Hong Kong’s Professor Rui Yang argued that China is actively trying to attract more and more students and making a conscious effort to prop up its educational outreach – even though he contended that the soft power projection associated with these initiatives is not enough, at least from the government’s point of view.

Will the cooperation between Imperial College and Zhejiang University reinforce such a projection? Or will it prove to be a gain for the UK, as the campus is in London and people joining the program will arguably be more exposed to British rather than Chinese culture? After all, commentators often argue that the soft power is more beneficial to those who take students and academics rather than those who send them abroad.

There is no clear answer to these questions and Imperial College avoided commenting on the topic, but the attention received by the deal beyond China’s academic world might be a clue of the importance officials attach to it. Governor of Zhejiang Li Qiang, vice governor Liang Liming and even vice Minister of Education Hao Ping all took part to the signing ceremony. Director General of the Department for International Cooperation of the Ministry of Education, Zhang Xiuqin, reportedly dubbed the move a “valuable step.”

It is of course a matter of national standing, and officials close to academic institutions are well entitled to cheer international results (Boris Johnson, the mayor of London, has done the same). But the questions remains: is it also a matter of power?

The government has made heavy-handed efforts to crack down on the phenomenon. According to China’s national news agency Xinhua, in 2010 the Ministry of Public Security sent 27 groups of inspectors to 651 entertainment business venues in four municipalities and 20 provinces, uncovering cases of prostitution in about 381 places. Another campaign took off in 2012 and according to China Daily, 48 entertainment venues in Beijing were shut down. These interventions were not the only ones undertaken by Beijing and surely they are not going to be the last.

Pic: AP.

The government has usually deemed its policies successful, but on May 14 Human Rights Watch (HRW) slammed Beijing’s policies arguing that they carried out serious abuses on sex workers. The group argued that “sex workers are most at risk of abuses such as police brutality and arbitrary detention during these drives,” and provided a long list of cases.

It is also unclear whether these campaigns are any help in dealing with the rise of HIV infection in China. A research about China published by the Oxford Journal’s International Journal of Epidemiology points out that crackdowns in China are “a contentious approach since it focuses on punishment rather than on education.”

In its paper, HRW said that during crackdowns many of the women detained were tested for HIV/AIDS, but it reported significant flaws in the process, including the disclosure of tests results to third parties or the non-disclosure of the results at all – not even to the patients. One of the women interviewed by HRW lamented that she had been tested the year before but was never given any information concerning her situation.

Aggressive behavior toward sex workers can also reduce their willingness to take health check-ups, if they perceive a risk of mistreatments. “I don’t go to those clinics anymore. They were really disdainful of me when I went last time. Also, I was scared they would report me to the police,” a girl reportedly told HRW. Avert, an international HIV charity, wrote on its website that “it is feared that reaching sex workers, and sex workers who use drugs, with HIV prevention may be hindered by government crackdowns.”

This is no small issue, especially as according to a research by the Joint United Nations Programme on HIV/AIDS (UNAIDS), sexual transmission of HIV is the single largest cause of new infections in the country: of the 780,000 people estimated to be living with HIV in China in 2011, 46.5 per cent had been infected through heterosexual transmission.

Prostitution is commonly believed to be an underlying factor in these dynamics. In 2012, China Daily reported that according to official statistics HIV is increasingly prevalent among people over 60 years old, presumably because of unsafe sex. The paper quoted official statistics as saying that 483 new HIV carriers aged over 60 were diagnosed in 2005, accounting for 2.2 percent of the total that year. In 2010,  the number had surged to 3,031, nearly 9 percent of total new infections.

In the past decade, the government’s efforts to reduce risks posed by infections have been ongoing. According to the mentioned UNAIDS report, “data from national sentinel surveillance sites shows that coverage of sex workers increased from 74.3 per cent in 2009 to 81.0 cent in 2011; the percentage who received at least one HIV testing during the past 12 months and received their result increased from 36.9 per cent to 38.2 per cent; the percentage using a condom during the last sex act increased from 85.1 per cent to 87.5 cent.” China has also “continued to strengthen its HIV testing network, improving testing capacities.” When looking at these apparently successful policies, it truly seems a sad irony that the fight against HIV should be hampered by the crackdowns on prostitution.

Israeli Prime Minister Benjamin Netanyahu meets rabbis as he visits the Shanghai Jewish Refugees Museum at former site of Ohel Moshe Synagogue in Shanghai. Pic: AP.

According to the Jerusalem Post, upon his arrival in Shanghai, Mr. Netanyahu praised the city saying it represents “the future of China and the entire world,” and remembered the role it played during the Holocaust, when Jews escaping Nazi persecution found shelter in the Far East. But he also reminded his listeners that Israel does not need to be saved anymore: it has an army of its own and can defend herself.

(READ MORE: Netanyahu: Jewish people capable of own defense)

Up to now, both Chinese leaders and Mr. Netanyahu have refrained from making any remark on the unfolding Syrian tragedy. There would be much to discuss, however, as the Chinese Foreign Ministry rebuked Israel’s actions in the civil war on the very same day Mr Netanyahu arrived. According to US sources, last weekend the Israeli air force hit Syrian facilities near Damascus, and Beijing reacted by indirectly accusing Tel Aviv of violating Syria’s sovereignty. Chinese Foreign Ministry spokeswoman Hua Chunying’s comments were straightforward: “We oppose the use of military force and believe any country’s sovereignty should be respected,” she said.

In the past, China sided with Russia and vetoed three UN resolutions sponsored by western countries against the government of Bashar Al-Assad. The measures – at least according to the proposers – aimed at preventing the conflict from escalating.

The unusually outspoken Chinese stance at the UN has been subject to much discussion. China has justified its position by referring to its long-held foreign policy principle: non-intervention into other countries’ internal affairs.

Chinese diplomats also vented the possibility that sanctions targeting only one party in the civil war could lead to an increase in violence. “A position of pressure on only one party will not help resolve the Syrian issue. [..] On the contrary it will derail the political settlement of the crisis, cause further escalation of the turmoil and let the crisis spill over to other countries in the region,” argued Wang Min, the country’s deputy ambassador, after the third veto was issued. Ambassador Li Baotong shared his concerns, saying that sanctions against only one side would “aggravate the turmoil and cause spillover to the other countries in the region.”

China's President Xi Jinping, right, shakes hands with his Palestinian counterpart Mahmoud Abbas Monday. Pic: AP.

Besides principles, experts have pointed out adjunctive factors that may have prompted Beijing’s inflexibility. Some argue that China and Moscow did not wish to repeat the Libyan experience, when a UN action was followed by a NATO intervention and eventually led to the fall of the Gheddafi government. According to the US Council of Foreign Relations (CFR), for example, “analysts say the diplomatic opposition stems from fears of another Western-backed military intervention similar to that in Libya and the Ivory Coast.” As part of its explanation, the CFR also mentioned the two countries’ “significant economic and military relations with Syria.”

The geopolitical balance in the Middle East may have played a role in shaping Chinese decisions, too. Syria is widely perceived as an ally of Iran, which in turn has strong ties with Beijing. This version seems partially confirmed by the words of Russia’s ambassador to the UN, Vitaly Churkin. The Wall Street Journal reported that in the aftermath of the last failed negotiations on a possible UN resolution, Mr. Churkin said the matter was strictly connected with Iran’s position in the region. “There is no serious person I’ve talked to that doubts that a major geopolitical battle is being fought in Syria and the people of Syria have no interest in that,” he stated.  Mr. Churkin reportedly added that the West “fanned the flames of extremists and terrorists groups.”

On Monday, while the Israeli leader was visiting China’s business capital, Mr. Abbas met in Beijing with Xi Jinping, China’s newly appointed President. According to Xinhua, China’s State agency, Mr Xi reassured him that Chinese support to the Palestinian people “is sincere and hearty.” Mr Xi also said until the national rights of the Palestinian people have been restored, there cannot be either peace with Israel or peace in the region. 

One might be forgiven for thinking that the Old Summer Palace (Yuanmingyuan) in Beijing is just another – albeit important – historical tourist attraction. A must-see for people traveling to China’s capital, it looks like a vast park showing what remains of it past grandeur. But it is actually much more than a simple reminder of the power of the Qing dynasty: it is a place of memory, a symbol of China’s tragic past. And the attention received by a recent donation by French billionaire François-Henri Pinault of two bronze water faucets originally belonging to the palace is yet further proof that the history it embodies is far from dead for the Chinese.

Yuanmingyuan Old Summer Palace. Pic: Shutterstock.com

First constructed in the year of 1709 by the Qing emperor Kangxi, the palace was enlarged by successive emperors. In 1860, it was looted by Anglo-French troops seeking revenge for the torturing and killing of their countrymen at the hands of imperial forces. Western troops stormed the numerous buildings, looting what they could and burning down the rest. A sharp representation of  foreign imperialism and a humiliation which even the communist regime, more than 150 years after, has yet to forget.

The decision made by Mr. Pinault – chief executive of PPR SA, soon to be renamed Kering – to give back the two bronze taps has drawn immediate media attention. It is not the first time that these two bronze faucets come under the spotlight: they already made headlines in 2009 when they were auctioned by Christie’s as part of the sale of the properties of designer Yves Saint Laurent. The sale fell through when a rich Chinese citizen who had bid over $37 million bailed out for “patriotic reasons”. The pieces were then bought by the Pinault family.

Four years ago, Chinese netizens agreed that the objects should not be taken back at a price. Some argued that it would be a shame if something that was looted had then to be re-bought. “Seeing China’s plundered cultural relics being auctioned is as if I was painfully seeing the shadow of the time period our ancestors were killed, robbed, and pillaged!!! It cannot be like this!!! Now the French want to again hurt the Chinese people a second time!!!” wrote a user on an online forum, whose comment was reported by ChinaSmack. The government itself resolutely opposed the plan, and Agence France-Presse (AFP) quoted foreign ministry spokeswoman Jiang Yu as saying that “auctioning cultural objects looted in war time not only offends the Chinese people and undermines their cultural rights, but also violates relevant international conventions.”

Now things look quite different. The intent of restituting the faucets – which observers have been quick in linking to Mr. Pinault’s desire to expand his business in Asia – has been welcomed as a good gesture, an act of friendliness. Not surprisingly, the move was announced at an official dinner during French President Francois Hollande’s China tour.

Francois Henri-Pinault decision to return the artefacts will not be bad for business. Pic: AP.

Popular reactions have been varied. One netizen bitterly reflected: “what is the point of getting all them back, the national shame will still be the national shame, as long as it is written in the history books, the number of the faucets doesn’t matter”. Others were relatively disinterested in the deal, on the ground that these are not major pieces of art.

But there is something in this story which is more interesting than the peregrination of two art pieces: it is the strong sense of history that pervades in the Chinese psyche. When the Fukushima nuclear incident happened in Japan, a waitress in a coffee shop in Beijing commented by saying that “it is destiny that makes them pay for what they have done.” The comment was less surprising because it came from a young, polite lady than because it is revealing of how events that happened almost a century ago – the Japanese occupation of China took place in the 1930s – are still be remembered so vividly.

The burning of the Yuanmingyuan is by no means the most tragic event that happened to the Chinese people in the past two centuries. But in the People’s Republic’s memory is not allowed to fade, and some selected events can be used to mobilize masses of people. Jackie Chan’s “Chinese Zodiac” has enjoyed huge success in the mainland: in the movie the protagonist sets sail to rescue the bronze heads of the 12 Chinese Zodiac animals taken from the Old Summer Palace.

Professor Phillip Dieringer of the University of Wisconsin-Madison wrote in a paper that “as the reform era sought to replace a class-based nationalism with a culturalist one, Yuanmingyuan’s primary identity as a national patrimony lost to imperialist robbers and vandals became crystallized in public discourse.” The ruin of the palace has become a powerful piece of nationalist rhetoric, often to be found in textbooks or publicly denounced on the web when China clashes with other countries. From this point of view, the palace has never ceased being a center of power. Hundreds of years after its construction and more than a century and a half after its destruction, it keeps on being a symbol of national humiliation. Good for the Party and the tourist agencies that organize visits inside it. Admittedly, a bit more disturbing for international observers.

Detected for the first time last month and code-named H7N9, the virus has already infected 109 people – of whom 29 died – on the mainland, resuscitating fears of the SARS, which hit China in 2003 and subsequently spread internationally, causing hundreds of casualties. The H7N9 virus comes from poultry, as was confirmed on April 23 by Chinese scientists who discovered that the gene sequence of the virus which infected humans is similar to that of the virus found in poultry.

Pic: AP.

One of the main concern is that this type of bird flu may spread directly from people to people or from animals other than poultry. According to China’s National Health and Family Planning Commission, so far there has been no case of contagion from one person to another, a notion confirmed on April 13 by the World Health Organization (WHO). According to WHO, “there is no evidence of sustained human-to-human transmission.”

WHO, however, said that two cases have been associated with possible family clusters which “suggest that limited human-to-human transmission may occur where there is close contact between cases and other individuals, as occurs in families and, potentially, healthcare settings.” The New York Times reported that the Taiwanese patient currently under treatment denied having been exposed to birds or eaten undercooked poultry. “Cases like his have puzzled scientists and led some to suspect that an animal other than birds is harboring the virus and spreading it to humans. But so far no other animals have been found to be infected.”

Another problem is that even if human-to-human contagion is not possible at this stage, it may be in the future thanks to adaptation. “Genetic changes seen among these viruses suggesting adaptation to mammals is of concern and further adaptation may occur,” argues the WHO.

A study by Dutch and Chinese scientists recently quoted by Reuters states that the virus is able to mutate significantly and rapidly. Marion Koopmans, head of virology at the Dutch National Institute for Public Health and the Environment , told the agency that past history is no guarantee that human-to-human transmission of H7N9 is not possible.

Governments are taking measures to prevent the spread of the flu. According to CNBC, the Hong Kong government “has put on standby several hundred hospital beds specially designed after SARS for the isolation and treatment of highly infectious respiratory diseases. A system of infrared scanners operating at the territory’s borders ever since the SARS outbreak checks arrivals for fever, and nurses take aside anyone who seems sick for further questioning and sometimes testing.”

Tokyo, too, does not understate the problem, with authorities “racing to make changes that would essentially allow local governments to consign bird flu patients or suspected patients to hospitals, and order them to stay away from their workplaces.”

Authorities have good reason for taking precautions. The US Centers for Disease Control and Prevention warned that influenza viruses constantly change and if they manage to spread directly from human to human they could trigger a pandemic. According to the WHO, this would be even easier in a globalized world where people and goods – or poultries, for that matter – move quickly across borders: “a localized epidemic can transform into a pandemic rapidly, with little time to prepare a public health response to halt the spread of illness.”

The paper highlights China’s broad strategic strategy as already conceived and publicized by authorities on previous occasions. Namely, that China is not interested in foreign expansion and that its armed forces are chiefly worried about national security: “China unswervingly pursues an independent foreign policy of peace and a national defense policy that is defensive in nature. China opposes any form of hegemonism or power politics, and does not interfere in the internal affairs of other countries. China will never seek hegemony or behave in a hegemonic manner, nor will it engage in military expansion. China advocates a new security concept featuring mutual trust, mutual benefit, equality and coordination, and pursues comprehensive security, common security and cooperative security”.

In an interview to the PLA Daily reported on the People’s Daily, Chen Zhou, director of the Defense Policy Research Center of the Academy of Military Sciences, argued that “China insists on using peaceful solutions to resolve international disputes, but when it comes to the fundamental issues concerning national sovereignty and territorial integrity, China will hold on to the bottom line, persist in fighting, and will never give in or compromise.”

On the first page, the paper identifies a situation of remaining challenges and even growing threats to the country’s security due to intensifying competition in the international military field, with international security issues “growing noticeably more abrupt, interrelated and comprehensive”.

The authors mention the United States’ pivot to Asia as profoundly changing the regional landscape in the Asia-Pacific region. They also argue that “some country has strengthened its Asia-Pacific military alliances, expanded its military presence in the region, and frequently makes the situation there tenser.” It is not hard to see the reference as being to the US government, which has recently paid more attention to the Pacific.

One of the most important aspects of the paper, however, is its relative transparency. For the first time, Chinese authorities have been willing to share more details about their armed forces’structure, equipment and deployment.

We learn, for example, that the People’s Libration Army’s mobile operational units “include 18 combined corps, plus additional independent combined operational divisions (brigades), and have a total strength of 850,000.” The combined corps, composed of divisions and brigades, workrespectively under seven military area commands in Shenyang, Beijing, Lanzhou, Jinan, Nanjing, Guangzhou and Chengdu.

The army is “accelerating the development of army aviation troops, light mechanized units and special operations forces, and enhancing building of digitalized units, gradually making its units small, modular and multi-functional in organization so as to enhance their capabilities for air-ground integrated operations, long-distance maneuvers, rapid assaults and special operations”.

At the same time, the People’s Liberation Amy Air Force (PLAAF) is “strengthening the development of a combat force structure that focuses on reconnaissance and early warning, air strike, air and missile defense, and strategic projection”. It is also “developing new-generation fighters and new-type ground-to-air missiles and radar systems, improving its early warning, command and communications networks, and raising its strategic early warning, strategic deterrence and long-distance air strike capabilities”.

The PLAAF can count on 398,000 officers and men. It has an air command in each of the seven Military Area Commands of Shenyang, Beijing, Lanzhou, Jinan, Nanjing, Guangzhou and Chengdu. Under each air command are bases, aviation divisions, ground-to-air missile divisions, radar brigades and other units.

According to the white paper, the PLA Second Artillery Force (PLASAF) - equipped with “Dong Feng” ballistic missiles and “Chang Jian” cruise missiles - is the core force for China’s strategic deterrence. Composed of nuclear and conventional missile forces and operational support units, it aims primarily at deterring other countries from using nuclear weapons against China. In case that happens, it is their duty to carry out nuclear counterattacks and precision strikes.

Given China’s current embroilment in disputes over maritime issues with many of its neighbors – including the Philippines, Vietnam and Japan – an interesting chapter is the one about the navy(PLAN), which openly harbors blue water goals. In a post on its website, the Heritage Foundationdeemed the emphasis placed on maritime roles as “striking”.

Since 2007, the PLAN has conducted training in the sea waters of the Western Pacific involving over 90 ships in nearly 20 batches, and from April to September last year, the training vessel Zhenghe completed global-voyage training. The PLAN is now “improving the training mode of task force formation in blue water”, while “highlighting the training of remote early warning, comprehensive control, open sea interception, long-range raid, anti-submarine warfare and vessel protection at distant sea”. Part of this strategy was arguably the launch of the aircraft carrier Liaoning in September 2012. In November, the first fighter jet landed on the carrier.

Related to China’s naval buildup is the issue of its overseas interests, which the paper says have become an integral component of China’s national interests. They involve “energy and resources, strategic sea lines of communication (SLOCs), and Chinese nationals and legal persons overseas”.According to the document, actions taken to support these interests included dispatching a combined naval task force to conduct escort operations in the Gulf of Aden and waters off Somalia on December 26, 2008.

As of the end of last year, the Chinese Navy has dispatched 34 warships, 28 helicopters, and 910 Special Operations Force soldiers in 13 task groups, escorting 4,984 ships in 532 batches. The task forces also rescued two Chinese ships from pirates who had boarded them and 22 which were being chased by pirates.

The most serious crisis mentioned in the paper – and the largest overseas evacuation since the founding of the People’s Republic - was the repatriation of 35,860 Chinese nationals from Lybia in February 2011. During that operation, the PLA Air Force reportedly evacuated 1,655 people (including 240 Nepalese) from Libya to Sudan, and took 287 Chinese nationals from Sudan back to China.

Absences, too, are noteworthy. James M. Acton, a senior associate at the Carnegie Endowment for International Peace, published an article on the New York Times observing that the document does not make any reference to China’s long-held principle of “no first use” of nuclear weapons. Mr. Acton argues that such an essential statement could not possibly have been forgotten by the authors,which in turn may signal a change in Beijing’s position on the issue.

Meanwhile, Japan strongly reacted to the mentioning of the Diaoyu/Senkaku Islands and reportedly filed a protest with the Chinese embassy in Tokyo. On April 16th – the very day the paper was out -Deputy Chief Cabinet Secretary Hiroshige Seko said that for Japan “there is no sovereignty issue to be resolved over the Senkaku Islands”.

Yes, they do export chemicals used for manufacturing  psychoactive substances. And yes, business is good, Mr. Zou Wenlong from Qingdao Hecheng Chemical Factory told Asian Correspondent in a phone interview. They sell their products both on the domestic and foreign markets, but the latter option is available only when orders are large. In any case, they export through intermediaries, not directly.

During another interview in February, a Fujian-based producer told us that his company does ship new – supposedly legal – drugs to international customers. Even mephedrone, which has recently lost his ‘legal’ status: it was banned in 2010. The interviewee was aware that these substances are used as drugs, but replied that “all things have two sides”, probably meaning that all they do is sell the chemicals, what customers decide to do with them is none of their business.

Mephedrone was made illegal in the UK in 2010, but was quickly replaced by new 'legal' psychoactive substances.

The two companies are among many that provide Europe with the latest products on the drug market, the so-called legal highs – powerful, little known psychoactive substances. The European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) uses the term to indicate “unregulated psychoactive substances or products [..] which are specifically intended to mimic the effects of controlled drugs”, including “a wide range of synthetic and plant-derived substances, which are usually sold on the Internet or in smart or head shops”. They warn, however, that “describing these substances as ‘legal’ can be incorrect or misleading: some products may contain substances controlled under drug legislation, while others may be covered by medicines or food safety laws”.

(READ MORE: Legal highs: Asia faces a new war on drugs)

Chiefly manufactured in China and India – but also inside the EU – legal highs are flooding the markets in the Old Continent, with governments cornered by their number and uncertain chemical composition.

According to a 2013 report by the EMCDDA, legal highs are “emerging at an unprecedented rate”, with 73 substances notified in 2012, up from 49 in 2011 and 41 in 2010. Prolonging the surveyed years makes figures all the more striking: more than 200 new substances have been notified across the EU since 2005. The number of sellers has dramatically increased, too, moving from 170 shops in 2010 to 693 last year.

According to Ms Linda Nilsson, project manager at the Sweden-based World Federation Against Drugs, numbers for the Swedish market show that legal highs account for a significant segment for the drug market, and while cannabis is still the most sold and consumed drug, “numbers point towards this to be number two”. Europol contends that while legal highs are still taking a small share of the drug market, “lower prices, increased availability and quality are likely to attract more users”.

Legal highs are often produced by organizations headquartered in developed countries who find it cheaper to relocate their production elsewhere. According to the Monitoring Centre for Drugs and Drug Addiction, European organized crime groups “produce synthetics cheaply in Africa and Asia and distribute their products to markets in Europe”.

“China remains the main source of precursors and pre-precursors. [..] India and Thailand are also sources for the substances used in the conversion process, albeit to a lesser extent”. A primacy which could be challenged soon, as the same report points out that “western, northern and eastern Africa are likely to become increasingly attractive locations to producers of synthetics due to improved transport links with profitable markets in Europe, new local market opportunities and inexpensive labor.”

Ms Nilsson told Asian Correspondent that the Customs in Sweden believes that as a general rule synthetic cannabinoids come from inside Europe and synthetic cathinones come from China and India. Harry Shapiro of DrugScope confirmed that imports can be “either the precursor chemicals used in production – or the finished product itself”.

Pic: AP.

New drugs are sold in legal shops – either physical or online – which offer a variety of substances and market them with fantasy names such as “A3A”, “EM2 ultimate chiller” or “Benzo Fury”. Some are natural – like salvia and magic mushrooms – but most are synthetic and vary greatly in terms of composition. A major challenge governments have to face is the speed at which new chemical compounds appear: before a new drug is labeled as illicit, many others have already reached consumers.

Mephedrone, a drug which mimics the effects of amphetamines, was initially sold freely but was banned in 2010 by the British government. In 2012, “Black Mamba” and “Mexxy” entered the list of illegal drugs, too.

Legal highs are relatively cheap and often distributed as plant food or glass cleaning powder. Sellers usually publish a disclaimer on their websites saying that if you use their products “improperly” they will not be responsible for consequences. A smart policy on their part, because these substances can be harmful, even lethal. Mr. Shapiro emphasized that as they mimic the effects of illegal drugs they present the same risks. Sometimes even greater, because “the purity of some illegal drugs has fallen so people have been switching in the hope of getting more ‘bangs for bucks’”.

Producers pay attention to medical studies to create new products, but for many of these substances there is little or no available information , and consequences can be bad. Ms Nilsson said that  “many of the drugs sold as legal highs are extremely dangerous”, adding that “it is difficult to say something general about all the drugs that are considered to be legal highs since it is thousands of different drugs, some are extremely lethal and others are probably not as toxic.”

Lack of knowledge, both from users and medical staff, is a danger in itself. “Since the drugs are new and there is no experience of using or treating, they are extra dangerous”, said Ms Nilsson. “Many of the users don’t know which dose they are supposed to take or which effect they can expect from the drug, they can’t even be sure of which drug they are using. Also the healthcare is lacking knowledge. When a drug user comes in to hospital after an overdose they often don’t know which drug they should treat the patient for, and even if they know which drug they have low experience in treating an overdose”.

It could be years before we know the consequences of long exposure to these chemicals, but we already know that at least some legal highs are no less dangerous than their traditional peers. In 2010, the United Kingdom registered over 40 deaths resulting from using new substances sold as legal highs, more than eight times as many as the previous year. The Daily Mail reported figures from the National Programme on Substance Abuse Deaths according to which “mephedrone, also known as meow meow, claimed 29 victims in 2010, compared to five the previous year”.

“Little Becks, we love you,” was a popular online refrain during David Beckham’s recent 4-day trip to China. Taking advantage of the international break, the 37-year-old midfielder temporarily left Paris – he plays for Paris Saint-Germain – to visit the Far East, where he has officially been appointed as ambassador for his sport in China.

Mr. Beckham was invited by the China Football Association and visited schools and local football teams in Wuhan, Qingdao and Beijing. While in the capital, he spoke at Peking University – the country’s most prestigious university – and offered an unusual show to China’s top students: pulling up his shirt, he showed a vertical tattoo written in hanzi, Chinese characters. Probably more embarrassing was slipping and falling on the ground in Wuhan, where he appeared at a local football pitch wearing a suit and tie.

David Beckham plays soccer with students of Beijing's No. 2 High School during an event to promote the sport in China recently. Pic: AP.

The trip was organized in order to boost interest in football among young Chinese and help restore the image of the national league, which has recently suffered from a massive wave of scandals involving bribes, manipulated referees, and match-fixing. It was clear that the widespread corruption reached the very top of the administration when Nan Yong, the boss of the Chinese Football Association, confessed that players could buy spots on the national team.

Whether this will be a successful strategy is not clear. Despite being relatively old, David Beckham is one of the most popular players in the world and the attention the media paid to his international travel will arguably add to the visibility of the Chinese Super League (CSL). But it will hardly be enough to solve its deep-rooted problems. Zhang Chi, founder of Hubei Emo Football Fan Club, told the Global Times that, “fundamentally, what Chinese football needs is establishing good order, improving rules and regulations and creating an environment where more and more kids come to play and are able to develop”, adding that “it is more important than appointing an image ambassador”.

Despite his “ambassadorship”, Mr. Beckham refused to acknowledge any role in tackling the malaise in Chinese football, saying that he is not a politician and has nothing to do with what happened in the past. “I am not here to clear up anything. I am here to educate the children and give them a chance of becoming professional footballers,” he said while in the capital. He did not offer any information on his compensation either, but the Oriental Sports Daily reported in February that his three travels would grant him 2 million euros.

Opinions on Weibo, the Chinese Twitter, are divided between those who cheer the event and those who see it as a waste of money. The prevailing sentiment seems to be the same expressed by experts: good that he came, but it won’t make much of a difference. One user, for example, argued: “Beckham is indeed very handsome, I really appreciate his diligence in work! However, the fact that the Chinese football association has reached out to him is mere entertainment, they might as well invest that money in youth football. It would be better if they were to use the funds to do some actual business.” Another similarly pointed out that the trip “will only allow more children to enjoy the fun of football”, but it “will not change the corruption in Chinese football”.

Beckham’s China trip is also feeding rumors that he may soon leave Paris to play for Shanghai Shenhua in China. Such a decision would inevitably raise once again the issue of expensive image over more solid substance, especially after last year the Shanghai team enlisted and then suddenly lost both Didier Drogba and Nicolas Anelka, two big names from the English Premier League.

Xinhua, China’s national news agency, quoted the paper as saying that, “China has 45,203 rivers each covering an area of at least 50 square kilometers, totaling 1.51 million kilometers in length. Some 2,865 lakes with a regular surface area of over 1 square kilometer took up 78,000 square kilometers…. The capacity of 98,002 reservoirs amounted to 932.31 billion cubic meters and the total installed capacity of 333 million kilowatts were generated by 46,758 hydropower stations”.

Part of the Yangtze River's river bed is exposed as water level lowered by drought, in southwest China's Chongqing Municipality. A new study has revealed rivers are disappearing all over China. Pic: AP.

The picture is alarming, especially when compared with the past. According to the South China Morning Post, “there were 22,909 rivers in China which had catchment areas of at least 100 sq km – as of the end of 2011. This is less than half the government’s previously estimated figure of over 50,000. The large fall in the number of these rivers has prompted fears that China’s rapid economic development has also caused considerable water and soil loss”.

The problem had already been highlighted by Elizabeth Economy in an article published in 2007 on the International Herald Tribune: “although China holds the fourth-largest freshwater resources in the world (after Brazil, Russia, and Canada), skyrocketing demand, overuse, inefficiencies, pollution, and unequal distribution have produced a situation in which two-thirds of China’s approximately 660 cities have less water than they need and 110 of them suffer severe shortages”.

As China develops, large quantities of water are either absorbed by agriculture and industry or polluted. Consequences are dire: about 70 per cent of Chinese rivers and lakes are polluted from industrial waste, while in 2009 the World Bank pointed out that 300 million people in rural areas lack access to safe drinking water. In 2003, the economic cost of disease and premature deaths associated with the excessive incidence of diarrhea and cancer has been estimated at 66.2 billion Rmb (US$10.7 billion), or 0.49 percent of national GDP. Even the Yellow River, an icon of Chinese history, often does not make it to the Yellow Sea, drying up and dying in the sand far away from it natural end.

In a 2006 interview, Ma Jun, director of the Institute of Public and Environmental Affairs and an expert on water-related issues, said that China “is facing a water crisis that includes water shortages, water pollution and a deterioration in water quality. 400 out of 600 cities in China are facing water shortages to varying degrees, including 30 out of the 32 largest cities. In the north, due to the drying up of the surface water, the underground water has been over-extracted. The situation is not sustainable”.

The mentioned World Bank report suggested that “China’s water resources are scarce and unevenly distributed. China’s renewable water resources amount to about 2,841 cubic meters per year, the sixth largest in the world. Per capita availability, however – estimated at 2,156 cubic meters per year in 2007 – is only one-fourth of the world average of 8,549 cubic meters per year and among the lowest for a major country. While China as a whole is facing serious water stress, its problems are made more severe by the fact that its water resources are unevenly distributed, both spatially and temporally”.

Most recently, the issue of water pollution has made its way to the front page of newspapers when thousands of dead pigs were found in the Huangpu river network, which supplies the city of Shanghai. More than 16,000 carcasses were pulled from the river but the cause of their deaths is still unknown, as is their origin. Online discussion of the pig dumping has attracted much attention, a sign that the burgeoning middle class is more concerned with the environment than previous generations used to be. Whether this will be enough to prevent a future water crisis, however, remains to be seen.

As the order in which national leaders visit foreign countries is usually believed to be an unspoken declaration of their foreign policy priorities, Mr. Xi’s travel has been interpreted by experts as a sign that the new administration will look forward to reinforcing ties with Russia, with which China has a historically difficult and politically ambiguous relationship. Whether this will succeed is another story: former President Hu Jintao did the same in 2003, but since then there has been no major breakthrough in bilateral relations.

Chinese President Xi Jinping, right, and Russian Prime Minister Dmitry Medvedev pictured in Beijing in 2010. Pic: AP.

The China Daily published an optimistic op-ed saying that “Xi’s visit to Russia will be a landmark, because it will be the first country he travels to after becoming president. His decision to visit Russia also reflects the high mutual regard and confidence the leaders of the two countries have”. The same mood was already in the air in 2011, when the Chinese Foreign Ministry announced on its website that the year before “the strategic partnership of coordination between the People’s Republic of China and the Russian Federation continued to deepen across the board. The bilateral political mutual trust, practical cooperation, people-to-people exchanges and strategic coordination reached an unprecedented level”. Not least because “China and Russia continued to give each other strong support on issues concerning core interests including national sovereignty, security and development interests”.

However bright contemporary rhetoric may be, the two countries – allowing for an imperfect equation between Russia and the former Soviet Union – have a bumpy history. The friendship between Mao’s China and the Soviet Empire was “eternal” and “indestructible” only before they went to war against each other in 1969. In fact, one of the driving factors behind the Sino-US rapprochement which took place soon afterward was the common fear of Moscow.

For a few decades, relations between the two neighbors have been ice-cold, but the end of the Cold War and China’s rise on the global scene changed the situation. The disintegration of the Soviet empire and the birth of a new Russia pushed the old animosity in the past, leaving a window for cooperation and leading the two countries closer. In 1996, they created the Shanghai Cooperation Organization, a group that includes China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan and focuses on security in Central Asia. In 2001, they signed the “Treaty for Good Neighborliness, Friendship and Cooperation” which covered a variety of topics, from arms sales to energy cooperation and geopolitics. The communiqué also states that China and Russia will “endeavor to enhance relations between the two countries to a completely new level, determined to develop the friendship between the people of the two countries from generation to generation”. Most recently, both have united against Western-sponsored plans to impose sanctions against Syria at the United Nations.

However, despite newfound common ground in foreign policy, experts say mutual distrust still lurks behind polite smiles. In a one-on-one interview at China Town Hall, former Secretary of State Zbigniew Brzezinski stated that “Mr. Putin seems tempted to play the China card against us [the US] if he can. I do not think he can play it too well, because for one thing the Chinese are not going to let him. [..] The Russians moreover are profoundly fearful of China and greatly aware of the fact that their resources-rich territories in the Siberian area and the far east are increasingly vacant – literally vacant – and right next door to a country which is setting the pace for modernization without precedent historically”.

Strategically, China and Russia are latent rivals in Central Asia, an area traditionally influenced by Russia but where in recent years Beijing has been gaining a strong foothold. Moreover, historical issues have not been forgotten by the Chinese, who still resent early Twentieth Century Russian imperialism. When the Russian embassy in China opened a Weibo account in 2011, Chinese netizens flooded it with comments that can be synthetically reassumed as “give back the territories you have taken from us”.

In an interview published on the Global Times, Professor Zhu Feng, an expert of international relations at Peking University, argued that Sino-Russian relations have not improved much since former President Hu’s own visit in 2003. According to him, there are several factors suggesting a less than optimal relationship. He mentions the neutrality of Russia over the Diaoyu/Senkaku Islands and the disappointment of Chinese leaders at watching the war in Georgia unfold right when the 2008 Olympic Games were underway in Beijing. Trade between China and Russia, he contends, “has been restricted by the differences in bilateral economic structure”, and “both China and Russia are chiefly fixated on the US, not on each other”. He concludes that the two countries “need to rethink their own foreign policies”.

One field in which there seem to be a genuine cooperation is energy. Earlier this week, the Chinese Foreign Ministry said that Mr. Xi’s visit will be a chance to  boost cooperation in this sector. On March 20, Reuters wrote that according to sources Xi could sign an agreement that will enable Rosneft – Russia’s largest crude producer – to “increase oil supplies via the East Siberia-Pacific Ocean (ESPO) pipeline by 1 million tons this year already, by a further 2 million tons next year and by a further 5 million tons from 2015 to 2017.” According to the same article, Rosneft will increase exports to China by 34 million tons to around 50 million tons by 2018.

Taste matters, and many Chinese tourists do not seem to enjoy Maldivian food, preferring instead to consume a quick cup of noodles in their hotel rooms. However, as money matters, too, hotel managers have reportedly started removing kettles from rooms rented by Chinese mainlanders. This, in turn, has fuelled anger and accusations of racism.

A Chinese man carries his suitcase and a bag of Instant noodles. Pic: AP.

The Nanjing-based Oriental Guardian – as reported by Want China Times – also quoted a tourist complaining that Chinese visitors are the only ethnic group asked to undertake a swimming test before diving in the ocean and that even those Chinese who pass it are only allowed to dive three meters deep and charged extra money.

A special case has been that of the The Beach House Iruveli holiday resort, whose directors were accused of discrimination by the resort’s former guest service manager Zhao Jianke. According to the South China Morning Post, Mr. Zhao wrote on Weibo – the Chinese Twitter – that since the new general manager assumed office in December 2012 employees have been required to treat Chinese tourists in a different way from other guests. In order to prevent them from cooking, the staff had to “remove the kettles in every Chinese tourist’s room, while the kettles in the rooms of European tourists remained”. He added that the hotel did not cave in to complaints.

The Global Times, a Chinese state-owned paper, quoted Mr. Zhao as saying that he and other Chinese employees quit their jobs in February after security personnel began surveilling Chinese employees and “confiscated their phones, blocked their Internet and controlled their external communications”.

The South China Morning Post obtained an official statement from The Beach Hotel Iruveli which “dismissed the accusations as ‘defamatory’ and denied treating Chinese guests differently”, noting the importance of the Chinese market for their business.

Chinese tourists. Not to be trifled with. Pic: AP.

In the meantime, the story is spreading quickly and posts are stockpiling on Sina Weibo. Xia Wutong, an Internet user, plays down the whole issue saying that “it is normal for people to bring some bowls of noodles as eating in touristic areas is very expensive, not to mention the food there is not tasty”. Another user points out that culinary differences are a factor: “they all think it is about money, but actually another possibility why they are having noodles is that they are not used to local food. Chinese people are picky about what they eat”.

There have been angry reactions, too. Niuzaide Very De Mang encourages wealthy Chinese to buy the whole archipelago and leave nothing but noodles to eat, while Baobao Bo Dou Luo says Beijing should go take strong measures: “People Liberation Army, get it done, speed is everything”. VipTing Ting takes a more nationalistic view: “they discriminate against Chinese customers, I cannot believe such a small country dares  bully our nation!”

Many are now calling for a general boycott to hit the Maldives’ tourism industry, which heavily relies on Chinese customers. According to China Xinhua News Agency, in 2012 the islands received 230,000 Chinese tourists, who accounted for 24% of all foreign visitors. Data also highlights an increase of over 15 per cent on the year before, suggesting huge potential for the future market.

Reaction to the new test has been predictably harsh on the part of the country’s international critics. Japanese Premier Shinzo Abe dubbed the test a “grave threat”, while Obama spoke of a “highly provocative act”. Russia, too, expressed disappointment.

Pic: AP.

Less expected was China’s criticism. According to Reuters, authorities in Beijing summoned the North Korean ambassador and “protested sternly”, while Foreign Minister Yang Jiechi said China was “strongly dissatisfied and resolutely opposed” to the test.

And China has so far backed its words with actions: on March 11, China supported the UN Security Council and approved Resolution 2094, which will strengthen sanctions on North Korea even more. According to the Stockholm International Peaces Research Institute (SPRI), it remains to be seen if Beijing will increase their implementation. What is sure, says the Sweden-based institute, is that “while all member states have been asked to implement these new measures, their strength will be ultimately determined by China’s actions”, as  “the majority of North Korean cargo – including illicit consignments of military and dual-use goods – passes through Chinese ports and airspace”.

After a general agreement for a resolution was found last week, Li Baodong, the Chinese ambassador to the United Nations, was quoted by Bloomberg as saying: “a strong signal must be sent out that a nuclear test is against the will of the international community [..] they have got to bring an end to that program.”

Professor Zhu Feng, a leading expert on China’s foreign policy at Peking University, told the New York Times that “one nuclear test will not make China’s new administration decide to ‘abandon North Korea’ but it will definitely worsen China-North Korea relations”. According to Professor Zhu, “North Korea’s nuclear test will make the new Xi Jinping administration angry, and give China a headache.”

China’s irritation is evident in a piece written by General Luo Yuan on the state-owned Global Times, where he points out the risk of escalation that Pyongyang’s actions entail: “once North Korea has nuclear weapons, the nuclear security situation around China will further deteriorate, which could even cause a chain reaction. Japan, South Korea and others will use this as an excuse to build anti-missile systems or even develop nuclear weapons themselves.” According to the general, “China doesn’t have to pay for North Korea’s rashness at the cost of its own hard-earned period of strategic opportunities, and China must let North Korea clearly know this”. He suggests Beijing to stick to a moderate strategy and target only “nuclear program-related personnel, capital, materials and technology”.

Indeed, China’s position vis-à-vis North Korea is an uncomfortable one. Traditionally, Beijing favors the regime as it provides a shield against pro-American forces in South Korea and, at a time when China’s position is more isolated than it has ever been since the end of the Cold War, keeping old allies seems to be plain common sense. Moreover, an eventual collapse of the North Korean regime would raise fresh problems, from a likely wave of refugees that would move north through the border to the issue of radioactive material which would be left behind and could fall in unfriendly hands.

The logical outcome of this reasoning is that the top priority for Beijing is maintaining the stability and possibly increasing the prosperity of its neighbor. However, some in China believe that there is another risk for their country: namely that North Korea may follow the path traced by Burma and play the American card against its current ally. This point was highlighted by Ren Weidong on the Global Times roughly one week before General Luo published his piece. An associate research fellow at the China Institutes of Contemporary International Relations, Mr. Ren, argues that “although North Korea regularly denounces the US, it is anxious for improvement in North Korea-US relations as well, because it is the US, rather than China, that has the biggest effects on the North’s security and development”. “North Korea-US relations,” he warns, “may suddenly improve when China is worrying about nuclear tests.” China should bide her time, leave the US and North Korea to deal with the nuclear issue and “maintain and develop Sino-North Korean cooperation”. He specifies that Beijing should not tolerate the nuclear problem as it has been presented, but he adds that the only condition which may lead to denuclearization is the removal of foreign troops from the peninsula and the reunification of the two Koreas.

The two opinions, both published on a nationalistic outlet and both supporting only limited action, look rather like a confirmation of Beijing’s uneasy position. On the one hand, Chinese leaders recognize the importance of having a stable ally in North-East Asia to cope with outside pressure. On the other hand, however, they have to deal with a regime that could cause a serious deterioration in Asia’s international environment – a situation for which China would be largely held responsible, and which would be to the detriment of China’s own interests.

The IMF website reports that the 2010 reform would include three major changes. There would be an “unprecedented doubling of quotas and a major realignment of quota shares”, shifting more than 6 percent from over-represented to under-represented members. The reforms would “protect the quota shares and voting power of the poorest members”. Finally, “an amendment to the Articles of Agreement that would facilitate a move to a more representative, all-elected Executive Board.”

IMF Managing Director Christine Lagarde, left, speaks to People's Bank of China Governor Zhou Xiaochuan. Pic: AP.

The IMF was created in 1945 and reflected the international reality at the time: it was designed to suit the interests of the countries which had emerged as world powers from the Second World War. Its voting system is based on the amount of money which every country provides and the US has over 16 per cent of the votes: as approving decisions requires a 85 per cent majority, Washington has de facto veto power. For decades, the structure of the institution has held steady, but globalization is now creating pressure for change as the voting system becomes increasingly outdated, over-representing America and Europe and under-representing rising new players. The latter, whose movement is headed by the BRICS – Brasil, Russia, India, China and South Africa – are now loudly demanding adjustments in the way the Fund takes its decisions.

The 6 percent increase which Obama may propose to the Congress goes in this direction and is supported by a number of influential U.S. intellectuals. In an open letter sent by the Bretton Woods Organization to Senate Majority Leader Harry Reid and House Leader John Boehner, the signatories argue that supporting the IMF “lessens the global fallout and financial instability of affected economies, advances the interests of U.S. business and workers of companies that trade and invest in these countries, and supports American jobs and exports”. Therefore, “continued support will ensure the U.S.’ ability to leverage its economic development dollars and ensure its on-going influence on the IMF”. Among those who signed the document are Alan Greespan, former Federal Reserve chairman, Zbigniew Brzezinski, former security advisor to the Carter Administration, and former World Bank president Robert Zoellick.

However influential these suggestions may be, approval is not secured yet. According to the Reuters’ piece, “the Treasury Department submitted the request as a provision to be inserted into pending legislation to keep the U.S. government funded through September 30 this year [..]. The Treasury sought authority to shift $65 billion in U.S. funding from an IMF crisis fund into U.S. quotas, which determine voting power in the Fund.

The news agency reported that no decision has been made by Democrats on whether to include the IMF request in the Senate version of the funding bill – which is expected to be introduced later this month – and that some officials are concerned that eventual delays may take a toll on the U.S. credibility in the Fund. The proposed reforms were already postponed due to the impending elections in November, which made the topic too sensitive to be discussed.

In the meantime, the atmosphere among vote-seekers in the developing world is becoming tenser. In a 2012 BRICS Summit statement, leaders urged reforms for both the IMF and the World Bank, pointing out that global institutions must reflect changing realities across the world.

In the course of the same summit, BRICS leaders spoke about creating a new bank which would be controlled by developing countries and which would focus on their needs. Speaking to Al Jazeera, Dr Alexandra A Arkhangelskaya, head of the Centre for Information and International Relations at the Institute for African Studies at the Russian Academy of Sciences, said the project would be a “good in terms of a multilateral framework of cooperation” and could “shift the weight of economic power”. She cautioned, however, that operating it would be no easy task, as China’s presence would marginalize others.

According to Bloomberg, Russian Deputy Finance Minister Sergei Storchak linked the creation of the new bank to reforms in the IMF, stating that “practical steps will depend largely on the extent to which the BRICS’ position will be taken on board concerning the allocation of new quotas (in the IMF)” because  “BRICS states have reached a level of development that gives them the right to insist on getting their interests respected.”

The need for reforming this institution has also been highlighted by Martin S. Edwards, a professor at the John C. Whitehead School of Diplomacy at Seton Hall University. In an article on Project Syndicate, he criticized Europe’s unwillingness to reduce its voting power and argued that Washington should shift sides from Europe to emerging countries, supporting the latter against the former. “The status quo can only lead to increasing resentment by rising BRIC countries [..]. It is time for the White House to forcefully advocate reform of the IFIs, effectively allying with the BRICS against Europe.”

Broadly speaking, the task of revamping global institutions – not just the IMF, but also the World bank and the UN, where at some point the issue of modifying the composition of the Security Council will inevitably come up – represents a test for the willingness of existing powers to accommodate rising challengers. From this point of view, the increase in BRICS’ voting power at the IMF can be considered a test for possible future power attrition: accepting or excluding the new kids on the block?

Mephedrone has been linked with the death of scores of people around the world. Pic: AP.

Legal highs are chemical compounds which have drug-like effects but are not covered by national and/or international laws, often because new types appear too quickly for governments to intervene. As soon as authorities study and outlaw one, others are already pouring into the market. According to the UNODC 2011 World Drug Report, many of these new synthetic substances are substitutes for illicit stimulant drugs such as cocaine or ecstasy. The same report suggests that Europe is at the forefront of global trade: more than 40 new substances were notified in the European early-warning system in 2010, compared to 24 in 2009. However, a new UNODC report to be released later this month will reveal that legal highs are now a global problem.

(MORE: Asia: Walking the “legal high” wire)

According to joint research by the EU Monitoring Center For Drugs And Drugs Addiction and the Interpol, mephedrone – a drug outlawed in 2010 – has been “found to have some of the same toxic features as MDMA [ecstasy] and cocaine, causing acute problems similar to those seen with the use of illicit stimulants. Moreover, the available data suggested that the drug could produce dependence in users”.

It seems that the case of mephedrone has been of little concern to unscrupulous sellers, as online shops offering legal highs have been mushrooming for years in Europe, from 170 in January 2010 to 693 in the same month of 2012. If only the overall European economy was performing that well.

Online outlets

One such online outlet advertises several products, with prices ranging from tens to hundreds of US dollars. Sellers appear to well aware that these products may be risky, as the disclaimer at the bottom of the page states: “by using this website and experimenting with the legal highs, research products and novelty collectors items which are not for human consumption, you here by agree to hold harmless, this website, it’s owners, contributors, product manufacturers, distributors, retailers and wholesalers for any damages arising out of the use of any products or information found on this website”.

Another website sells wholesale and has more than 20 items on display. One of them, significantly named WTF!, is advertised as “white crystal research chemical”, but the picture next to it may say more about its effects than words can: it shows an Asian man – presumably of Chinese origin, as on the background one can read Chinese characters – drilling his head. 5-APB comes with more detailed information: “5-APB is variant of the research chemical 5-APDB developed in the 1990s by David E. Nichols whilst investigating non-neurotoxic MDMA analogues.”

Mr. Nichols, who works as a pharmacologist at Purdue University, has been quoted by the Wall Street Journal saying that the fact that his scientific research is being exploited by drug makers is “very troubling” to him.

As legal highs are numerous and fast changing, their effects are poorly studied. In some cases, they not known at all. The aforementioned EU-Interpol report contends that, “a common feature is that there is usually limited information about the effects of these drugs in humans and the harm that they may cause”.

Interviewed by the Telegraph, John Ramsey, a toxicologist at St George’s University of London hospital, said, “We haven’t got a clue how harmful these drugs are. There is no question they can cause deaths – there have been several deaths associated with mephedrone, but there could also be some long term health effects – they could be carcinogenic, they could cause kidney problems or birth defects”.

As a matter of fact, the toll is rising. The BBC, quoting a report for the National Programme on Substance Abuse Deaths, stated that in 2010, 43 people died in the UK after taking methcathinones. Mephedrone alone was behind 29 deaths.

Many new psychoactive substances reportedly come either from India or China, though hard evidence on where these substances are being manufactured is scant. In 2010, according to the EU-Interpol report, 22 EU member states announced seizures of mephedrone and some of them noted that “production and export took place in Asia and in particular China”. Professor Barry Everitt, a neurobiologist at Cambridge University interviewed by the Telegraph, confirmed that most of the 40 new drugs designed in 2010 and imported in the UK were produced in China.

Researching the topic on the Chinese internet has proven fruitless. Legal highs are neither discussed in the press nor on Weibo, the Chinese Twitter. The topic does not seem to be covered by the media and is not popular among people.

However, in 2010, the Daily Mail conducted an investigation into a Shanghai company which “manufactures and ships hundreds of kilograms of drugs to Britain every week.” Acting as customers, the journalists talked with the company’s owner, who told them that they produce two tons of MDPV (a psychoactive drug) every month and avoid customs checks in the UK by shipping their products through other European countries.

Restraining production

Asian Correspondent spoke over the phone with an employee of a producer based in Fujian province who confirmed that his company sells mephedrone to international customers. Asked about what his company considers “legal highs” and whether the staff is aware that such substances can be used as drugs, he replied that “all things have two sides”. According to the interviewee, you need a purchase permit in order to buy from them. “The government has this policy of restraining production for this kind of drugs,” he said.

Whether it would be better to fight drugs by every means or loosen restrictions is a matter of heated debate among experts. If governments choose to take a tough stance, however, there is space – need might be a better word – for cooperation on both the consumption and the production side. And this, at a time when Reuters writes about a possible solar panels trade war between the EU and China, could be something they can actually cooperate on.

Taiwan's Lien Chan was in China this week. Pic: AP.

On Monday, the issue of reunification was again brought up by President Xi Jinping during a meeting with Lien Chan, honorary chairman of Taiwan’s ruling Nationalist Party and former vice-President of the Republic of China (Taiwan).

During the meeting Mr. Xi said that “the new Communist Party ruling collective will continue to push forward the peaceful development of relations between the two sides and advance the cause of peaceful unification”. He also pointed out that Beijing is looking forward to the development of the island, stressing that “safeguarding the interests of our Taiwan compatriots and expanding their well-being is the mainland’s oft-repeated pledge and solemn promise of the new leaders of China’s Communist Party central committee”.

The fact that this was Mr. Xi’s first time meeting with a Taiwanese leader as future President – he is set to replace outgoing President Hu Jintao in March – and that he spoke of reunification in front of the leader of Taiwan’s Nationalist Party may have hit the headlines, but the bottom line underlined by Mr. Xi is hardly new. It actually fits Chinese foreign policy like a glove.

(MORE: China’s Xi affirms goal of unification with Taiwan)

After the end of the Cold War and amid China’s incredible economic boom, Chinese leaders have increasingly advanced their claims over the island through economic integration and have framed an eventual reunification in their “peaceful development” strategy. At the same time, Beijing has never taken the possibility of using force completely off the table, letting it be understood that their political goal is not in question, but that they would rather achieve it through peaceful means than by deploying big guns.

The issue of Taiwan’s reunification goes back all the way to the late 1940s, when the People Liberation Army defeated and drove the Nationalist Party out of the mainland. In 1950, as Chiang Kai-shek took refuge in Taiwan, the American Seventh Fleet positioned itself in the strait which separates Fujian province from the island and effectively blocked the PLA from pursuing reunification. It was a sign of the new global order which was taking shape after World War II. As relations with the Soviets turned bitter, a communist regime in Beijing was not an asset. Having a military ally in Taipei, on the contrary, was a sound policy for keeping a strategic position in the Pacific. Taiwan has since often been called “America’s unsinkable aircraft carrier”.

Beijing and Taipei thus entered the Cold War, and never really extricated themselves from it. Since 1949, when the People’s Republic was founded, China has never stopped longing for the island, which is deemed a “core interest” of the People’s Republic (together with Tibet, Xinjiang, the South China Sea and the Diaoyu/Senkaku Islands), but unification has proved impossible. Even today, the Taiwanese public does not seem to favor it, while the US has kept an effective balance of power in place and has prevented China from forcefully retaking its “last province”.

In 1954, Beijing and Washington signed the Sino-American Mutual Defense Treaty, establishing the Republic of China as part of their collective security system. When the US and China normalized their relations in 1972, American and Chinese leaders issued a joint statement – the so-called Shanghai Communiqué – switching from the “two Chinas policy” to a new line which acknowledged that on this planet there is only one country to go by the name of China. As there was no solution to the underlying issue of reunification, the statement was crafted in a way not to specify if the new China was to be the People’s Republic or Taiwan, leaving enough space for reaching normalization but not effectively ending the stalemate.

The diplomatic recognition of People’s Republic in January 1979 did not solve the problem either. In the U.S.-PRC Joint Communiqué on the Establishment of Diplomatic Relations, the two parts agreed that the government of the People’s Republic of China is the sole legal government of China, that there is only one China and that Taiwan is part of it. Within this context, the people of the United States would only maintain “cultural, commercial, and other unofficial relations with the people of Taiwan.” 

In March of the same year, however, the US Congress enacted the Taiwan Relations Act, according to which the future of Taiwan was to be decided by peaceful means and that any danger posed to the island would be considered by Washington as a grave concern. The TRA provides for the necessity of enabling Taiwan to maintain a sufficient self-defense capability – which entails transferring weapons to the government in Taipei.

Recent years have seen the development of more friendly ties, especially after the election of pro-China President Ma Ying-jeou in 2008 (then re-elected in 2012). In particular, there has been a sharp rise in economic and people-to-people interactions. According to the Xinhua, in 2012 trade between the Chinese mainland and Taiwan expanded 5.6 percent year on year to US $168.96 billion. Exports to Taiwan rose to US $36.78 billion, 4.8 percent year on year, and its imports from Taiwan reached 132.18 billion U.S. dollars, 5.8 percent up from 2011.

In 2010, the two governments signed the “Economic Cooperation Framework Agreement” (ECFA) to lower tariffs on hundreds of traded goods. At the time the Wall Street Journal described it as a deal which “promises to bind Taiwan’s economy to its giant neighbor to an unprecedented degree”.  According to Xinhua, in 2012 “the mainland imported goods worth 8.43 billion U.S. dollars from Taiwan under the Economic Cooperation Framework Agreement, a jump of 105 percent from a year earlier”.

Increased economic ties are good both for growth and political relations, but Beijing has not yet come down to the thorny issue of how to unite two very different political systems and two peoples who do not share the same sentiments toward each other.

The solution could be another “one country, two systems” policy similar to the one adopted for Hong Kong and Macau, bar the presence of Chinese armed forces in Taiwan. For now, however, there is no agreement and no agreed framework to get to one, which means that Taiwan has to stay in the rather uncomfortable position of “potential flashpoint” in the Pacific region.

These are the first words of  “APT1 – Exposing One Of China’s Cyber Espionage Unit,” a report published last Monday by Mandiant, a cyber-security company, accusing the Chinese government of supporting hacking operations against 141 targets around the world.

Mandiant founder and CEO Kevin Mandia. PIc: AP.

Mandiant is a world leader in information security, providing services to companies that wish to protect their computers or investigate previous attacks to find out who is responsible. The American company – which began operating in 2004 – enlists various experts with a background in the US military and intelligence forces. The founder, Kevin Mandia, previously served as a computer security officer in the 7th Communications Group at the Pentagon, and as a special agent in the Air Force Office of Special Investigations (AFOSI). Travis Reese, President and Chief Operating Officer, used to work as a special agent with the United States Air Force Office of Special Investigations. Richard Bejtlich, the company’s Chief Security Officer, used to be a military intelligence officer at the Air Force Computer Emergency Response Team (AFCERT), Air Force Information Warfare Center (AFIWC) and Air Intelligence Agency (AIA).

Mandia’s team has tracked “Advanced Persistent Threats” (APT) since 2006 and has subsequently issued a report focusing on “the most prolific” ones (named ATP1), finding that they mostly originated from China. The company has followed them all the way back to four large networks in Shanghai, two of which are allocated directly in the Pudong area where  PLA Unit 61398 is located, a special body of the Chinese armed forces specialized in cyber-espionage. Despite the lack of straightforward proof of the involvement of the Chinese military, the report obviously links the attacks and the PLA.

Their work  is rich in detail. It includes the Unit position inside the People Liberation Army, the way in which it operates, the characteristics sought in recruiting its staff and the code names of some of the hackers who have entered information systems worldwide as part of APT1. They left some space even for aesthetics, publishing a picture of the white, multi-storey building where part of the Unit operates.

The building housing Unit 61398 of the Peoples Liberation Army is seen in the outskirts of Shanghai. Pic: AP.

Of  the 141 industries targeted by APT1, 87 per cent are headquartered in countries where English is the native language. The investigation points out that “in over 97% of the 1,905 times Mandiant observed APT1 intruders connecting to their attack infrastructure, APT1 used IP addresses registered in Shanghai and systems set to use the Simplified Chinese language.” Besides, “817 of the 832 (98%) IP addresses logging into APT1 controlled systems using Remote Desktop resolved back to China.”

As mentioned, there is no ultimate proof of a linkage between ATP1 and Unit 61398. But Mandiant argues that “given the volume, duration and type of attack activity we have observed, APT1 operators would need to be directly supported by linguists, open source researchers, malware authors, industry experts who translate task requests from requestors to the operators, and people who then transmit stolen information to the requestors.” It stresses that “APT1 would also need a sizable IT staff dedicated to acquiring and maintaining computer equipment, people who handle finances, facility management, and logistics (e.g., shipping).”

Considering such a scale of operations – on top of the mentioned data, Mandiant estimates that the infrastructure needed to support the attacks would “conservatively” include 1,000 servers – and the fact that the source is located right where a unit of the PLA specialized in cyber-security operates, the authors conclude that “the totality of the evidence [..] bolsters the claim that APT1 is Unit 61398.”

Otherwise, it could be that “a secret, resourced organization full of mainland Chinese speakers with direct access to Shanghai-based telecommunications infrastructure is engaged in a multi-year, enterprise scale computer espionage campaign right outside of Unit 61398’s gates, performing tasks similar to Unit 61398’s known mission.”

The authors also point out that the stolen information could be “used to obvious advantage by the PRC and Chinese state-owned enterprises,” not least because “the industries APT1 targets match industries that China has identified as strategic to their growth, including four of the seven strategic emerging industries that China identified in its 12th Five Year Plan.” Their conclusion is that “APT1 is likely government-sponsored and one of the most persistent of China’s cyber threat actors. [..] APT1 is able to wage such a long-running and extensive cyber espionage campaign in large part because it receives direct government support.”

(READ MORE: New York Times hacking: A sign of things to come? )

The report comes after a scandal at the New York Times, which in January this year claimed its computers had been hacked for four months following an article on the relatives of former Chinese Prime Minister Wen Jiabao (October 2012). Mandiant was hired by the paper to smoke out the intruders, whom they found were based in China. On that occasion, China’s Foreign Ministry Spokesman Hong Lei declared that “to presume the source of a hacking attack based on speculation is irresponsible and unprofessional.”

Reuters reported that on Wednesday the Chinese Defense Ministry published a statement in which it claimed that Mandiant’s methods are not safe because they rely on the tracking of IP addresses, which – says the Ministry – are easy to usurp.

On the same day, the Global Times, a Chinese State-controlled newspaper, published a long article reporting the words of Geng Yansheng, a spokesman for the Ministry of National Defense. He assured that “the Chinese military has never backed any hacking actions.”

According to Mr. Geng, statistics show that both the Chinese military and other users are subject to attacks from abroad – mostly from the US – and added that the Chinese side “do not point fingers at the US based on the aforementioned findings, and every country should deal with cyber security in a professional and responsible manner.”

Again on Wednesday, without naming China, the White House unveiled a plan to combat security threats. According to Reuters, US authorities are thinking of strengthening international effort and revise relevant laws by “increasing criminal prosecutions and launching a 120-day review to see whether new U.S. legislation is needed.” Washington is also thinking about “promoting a set of ‘best practices’ that companies can use to protect themselves against cyber attacks and other espionage.”

NANJING – “I work for a Chinese company in Laos. The Chinese are building everywhere, they have the money now. They can invest,” an Australian miner told me during a visit to Burma last month. He claimed that his company was law-abiding – not least because being listed on the stock market meant they had to play by the rules – but he added that villagers were not always happy with foreign workers popping up and “drilling holes”.

The tale offers a glimpse into how Laos has become a frontier for Chinese investments. Land-locked between Vietnam, Cambodia, Thailand and China, Laos is the smallest economy in Southeast Asia and with US $1,130 per capita income, the country is no Eldorado. Its small population and its geography make Laos dependent on regional partners for economic development, and the giant to the north is a good bet as a partner.

China's then-Premier Wen Jiabao, center, inspect an honor guard with Laos' Prime Minister Thongsing Thammavong in Vientiane late last year. Pic: AP.

After a period of turbulence during the Cold War, relations between China and Laos were normalized in 1989. Former President Jiang Zemin paid a visit in November 2000, the first by a Chinese head of state. Since then, cooperation has rapidly increased and French newspaper Le Monde reported that in 2011 the Chinese government had already invested US$3.3 billion in the country, making it the third largest foreign investor in Laos after Vietnam and Thailand.

A couple of years ago, while visiting Laos, I caught the positive mood when talking with a local tour guide. As we were sitting in the back of a small van on a potholed road in northern Laos, I asked him what he thought of China. He absent-mindedly answered that he was happy with Chinese people visiting: surely he was not dissatisfied with wealthy tourists eager to spend money.

The growing Chinese presence will soon be on display in the capital itself. Last year, Bloomberg reported that Shanghai Wanfeng Group had invested $1.6 billion to develop 365 hectares around That Luang Lake in Vientiane order to build a tourism and commercial complex.

According to the Asia Economic Institute, other signs of the partnership include “the introduction of economical and fuel-saving cars made in China”, “the growth in membership of the Laos-China Business Association to more than 100 members in April 2008” and “the establishment of a center for cooperation on land and natural resource management.”

In this 2010 photo released from the NGO International Rivers, a fisherman works near the site of the proposed Xayaburi Dam in Paksey, northern Laos. There are serious concerns about the environmental impact of foreign investment in Laos. Pic: AP.

This all pales in significance compared to the new railway that – if approved and eventually built – will link Vientiane with Kunming, in south-western China. The railway will serve as a major highway for trade between the two countries and, according to what Laos’ Energy and Mining Minister Soulivong Dalavong told the Wall Street Journal last October, by 2020 it may supply about 5 million tons a year of mineral resources along with other raw materials to China. Building hundreds of kilometers of railway in mountainous, forest-covered Laos, however, is neither easy nor cheap.

In order to carry on with the project Laos could receive a US$7 billion dollar loan from China Export-Import Bank. To get an idea of what this means, one has just to think that World Bank figures for the Laos GDP in 2011 stood at about U.S. $8.2 billion. The railway, in other words, would amount to slightly less than the combined output of the whole economy in one year.

Critics of the project focus on its environmental impact and the displacement of local communities. After years of discussions, last October the two sides seemed to be close to an agreement. Roughly at the same time, however, Radio Free Asia, quoting an official inside the Lao Ministry of Finance, announced that Vientiane would have to pay a staggering US$3 billion in interest. This would considerably postpone the date on which the project would reach a “break-even point” (the moment in which Laos would actually begin making money out of it).

The railway project highlights the importance of raw materials in forging economic ties between the two states. From this point of view, there is a much common ground between China and Laos: while the former is hungry for Laotian resources, the latter needs technology and money that can be provided by Chinese companies.

In October 2011, for example, China Daily wrote that the China-ASEAN Fund on Investment Cooperation invested U.S. $50 million in the development of a potash mine in Khammouane Province. The mine will boast an annual capacity of 3 million tons and will be Asia’s biggest potash fertilizer producer.

Despite the willingness to cooperate, problems remain. Bad practices by Chinese companies and environmental damage are a primary sources of concern. The International River Network – a US-based NGO – reported that Chinese companies are funding the construction of as many as 29 dams inside the Lao DPR, thus supporting a dam-building binge which activists say threatens the country’s long-term prosperity.

In November 2012, the Environmental Investigation Agency (EIA), another NGO, published an investigation into timber trade, claiming that China is now the world’s biggest importer of illegal timber. On page 26, the report points out that, “Laos exported 80,000 cubic meters of rosewood logs directly to China in 2011 in contravention of log export and rosewood harvesting bans.” And, even though “the bulk of the illegal timber is transported through Vietnam and controlled by Vietnamese traders,” most of it eventually winds up in China.

Finally, there is the thorny issue of political dependence. Being among the biggest investors in the country, Beijing has now a considerable leverage on the government in Vientiane. An analysis by the Jamestown Foundation contends that “within the next decade or so, China seems destined to become the LPDR’s largest trade partner and source of external funding, and hence its new closest friend in Asia.”

Then US Secretary of State Hillary Rodham Clinton, left, and Laotian Prime Minister Thongsing Thammavong in Vientiane, Laos last July. It was the first visit by a US Secretary of State in 57 years. Pic: AP.

In an article published online by the London School of Economics, Southeast Asia politics expert Oliver Hensengerth stressed the importance of water management in cooperation among China, Laos and Cambodia, concluding that “the economic and political closeness coupled with the interest of Vientiane and Phnom Penh to develop the national water resources gives the Chinese government and Chinese companies tremendous influence.”

It remains to be seen how Beijing’s enhanced role in Laos will play out for the larger Southeast Asian block; don’t forget that Laos is a member of the Association Of South East Asian Nations (ASEAN). As the heat stemming from territorial disputes lingers and big power politics – between China and the US, but also India and Japan – make a comeback to the region after the end of the Vietnam war, Vientiane may turn out to be a valuable friend for Beijing. Authorities there – locked away from the sea by mountains and forests – are understandably not too concerned about the South China Sea issue, while China’ market and investments provide their country with an opportunity for development – albeit not an environmentally friendly one.

The most imminent risk is that China’s hold may create another crack in ASEAN, whose internal tensions became manifest in July 2012 when for the first time an ASEAN Summit failed in coming up with a final statement. Members were not able to find an agreement on the Code Of Conduct, a document which was supposed to prevent conflicts among members.

The United States, too, are back in the region. Spearheading America’s “pivot to Asia” in the summer of 2012, Hilary Clinton did not forget to pay her country’s respect to small, land-locked Laos. The visit, aside from the specific issues discussed, was highly symbolic: it was the first time an American Secretary of State had set foot there in 57 years. And certainly its purpose was not admiring Laos’ stunning natural beauty.

New York Times. Pic: AP.

Mandiant – the company hired by the newspaper to investigate the case in November – found out that the attacks were rerouted through American universities, presumably to hide their origin. These institutions appear to be the same used by Chinese hackers in previous attacks.

Another detail worth noting is the timing of the attacks. Again according to what the New York Times reported, intrusions began after October 25, when the paper published a story on the fortunes accumulated by the relatives of Chinese premier Wen Jiabao. Before the publication of the reportage, Chinese officials had reportedly warned the paper that there would be consequences. And, indeed, the Times’ Chinese website was blocked right after the big story got out. But that may have just been the beginning.

The attacks which began after that date resulted in the corporate passwords of every employee being copied. Among the targets were David Barboza, who broke the story about Mr Wen’s family, and Jim Yardley, who used to be the paper’s Beijing bureau chief and is now based in India. It seems that the hackers were looking for the names of the people who provided information to Mr. Barboza for his article on premier Wen’s relatives.

[READ MORE: Burma denies hacking journalist email accounts]

On January 31, the Wall Street Journal, stated that it, too, had fallen victim to hackers. For four months the company’s computers had been under threat by unidentified intruders who were apparently looking for information about the Wall Street Journal coverage of China. According to Paula Keve, a spokeswoman for the Journal publisher Dow Jones, the attempts were not aimed at obtaining commercial advantages or customer information.

China’s Foreign Ministry’s spokesman, Hong Lei, has denied any connections between Chinese institutions and the hackers. He recently argued that “cyber attacks are transnational and anonymous,” adding that “to presume the source of a hacking attack based on speculation is irresponsible and unprofessional.”

Geng Shuang, the spokesman of the Chinese embassy in the United States, has criticized such allegations too. “It is irresponsible to make such an allegation without solid proof and evidence,” he said. “The Chinese government prohibits cyberattacks and has done what it can to combat such activities in accordance with Chinese laws.”

Their positions, however, do not reflect feelings in other countries, where China is often blamed for hacking enterprises. It is widely speculated, for example, that in 2010 Beijing supported an attack on Google, while in 2011 doubts about a possible government involvement again spread as Chinese hackers successfully broke into the US Chamber Of Commerce.

China herself, however, claims she has often been under fire from cyber-attackers. According to what has been reported by Forbes Magazine, between January and June 2012 about 7.8 million Chinese computers were affected in 27,900 IP attacks that originated in other countries. Most of them came from the US.

The rise in attacks – not just in China and the US, but in plenty of other countries, too – and the attention they increasingly receive both from policymakers and scholars highlight how cyberwarfare is not a futuristic idea anymore. It can work in the real, present world and could arguably become more common in the future. A cyberattack can harm national infrastructure, steal information or block communications inside a chosen country, thus forcing it on its knees or paving the way for traditional intervention.

The most striking, recent example of such methods came in 2010, when operations at an Iranian nuclear plant were damaged by Stuxnet, a virus which had infected the facility’s computers. It is not yet clear who had created it, but The National reported that according General Michael Hayden – a former director of the National Security Agency and CIA – its complexity could indicate that it was realized with the backing of a state. Rumors have it that either Israel, Britain or the US may have been responsible.

Coming back to China, the intrusion in the New York Times’ computers means that there is someone out there who is very eager to find out what reporters do and where they get their information. And that “someone” is most likely the government itself. But why is that happening? Why are authorities interested in tracking down what journalists do? The explanation is likely to be the same that journalist and historian Jonathan Fenby gave about the Communist Party’s reaction to the Falun Gong movement in the late 90s: paranoia. Chinese people may be patriotic, but their feelings are not as benign toward the Party. Corruption and plain injustice, for example, are among the most felt issues by common people, and reporters who come up with “bad” stories concerning the leaders threaten their credibility.

As for the journalists, they have to deal with the dangers of the very tools they use. From finding information and keeping up with the news to double-checking dates and facts, the internet has become unavoidable. But being connected exposes journalists’  to hackers and other threats to their privacy. Today, the biggest threat to their integrity and the safety of their sources may dwell inside their hard disks.

Diana Pang. Pic from YouTube.

Diana Pang was born in 1972 in Changsha, Hunan province, from where she moved to the United States to study. She then went to Hong Kong where she became famous for starring in category 3 films – aka adult movies – such as Erotic Ghost Story – Perfect Match and The Six Devil Woman.

On January 22, she found herself on the crest of a new wave of popularity, as reporters spotted her in Gansu province while attending a local meeting of the Chinese People’s Political Consultative Congress (CPPCC), a legislative body inside the Communist Party.

The following day, she told China News Service that she would like to “do a little investment in Gansu, and shoot more films and TV programs featuring Gansu – especially mainstream programs.” “Mainstream programs” is an expression which refers to patriotic, historical movies. She stated that her interest in this genre is a legacy of her family, as her grandfather was the mayor of Zunyi and used to tell her “stories about the Long March.”

Since then, numerous posts on the topic have appeared on the Chinese web. Many argue that her involvement with the Party is not appropriate. On Weibo, the Chinese Twitter, one user writes: “it is shocking to know that Hong Kong porn star Peng Dan has become a CPPCC member in Gansu province. I do not know how to react, this is unbelievable… Since Gansu province is so ‘tolerant,’ why not legalize a red light district?” Others are more lenient, and just joke about the story.

According to a survey published by The Beijing News, 46.4 per cent of people surveyed deem Ms Pang’s new ambitions inappropriate and say they will mislead the public, while 16 per cent have no problem with it and believe the CPPCC should overlook her previous career. Finally, 37.6 per cent take a pragmatic view: never mind what she used to do in the past, the important thing is what she is going to do in the future.

Despite recent, deep changes in traditional customs, the Chinese public tend to be conservative about sex-related matters and the story of an adult movie actress entering a legislative body felt immediately sketchy. Which begs the question, will this turn out to be the next scandal for the Communist Party?

According to an article published on January 28 in state-owned The Global Times, the fact that celebrities are joining the CPPCC and that people discuss the phenomenon should be seen as a welcome development of the Chinese society. “This shows that on the one hand, the public expect more influential politicians who are close to the masses, while on the other hand they also put higher requirements on them to better perform their duties.  This reflects the public’s growing demands, and should also be the trend of the development of Chinese public servants: to have both public pulling power and political ability.”

Some internet users, however, have already begun to link the presence of Ms Pang in the Consultative Congress to other political scandals. “What is this story of Peng Dan being elected as Gansu provincial CPPCC member? Does Gansu want to shoot its own anti-corruption film or TV shows? Is Peng Dan going to play the leading role of Zhao Hongxia in the show?” reads one post on Sina Weibo. Zhao Hongxia is the name of a girl who was paid for having a sexual intercourse with Lei Zhengfu, an official in Chongqing administration. The video went public in November and sparked an outcry, at a time when Beijing is trying to crack down on corruption.

A commentary on The People’s Daily is even more explicit, openly pointing at potential troubles for the Party: “what is scary is that some of our celebrities consider CPPCC Membership a minor matter, they take politics as an entertainment alternative, and this will bring massive dangers to the CPPCC.”

A Cambodian army soldier looks at Chinese military vehicles displayed before a hand over ceremony at a military air base in Phnom Penh, Cambodia in 2010. Pic: AP.

On January 23, Moeung Samphan, Secretary of State at the Cambodian Defense Ministry, and General Qi Jianguo, deputy chief of staff of the People’s Liberation Army, signed a military cooperation agreement under which 12 Chinese-built Zhi-9 helicopters will be delivered to the Royal Cambodian Army. As part of the deal, the People’s Liberation Army will also continue to provide military training to the Cambodian military.

A previous agreement under which the PLA would continue to deliver military training to Cambodian armed forces was signed in May last year, while back in 2010 Beijing had donated 250 jeeps and trucks to Cambodia’s army.

China is not the only nation providing training to the Cambodian armed forces – the United States and Australia, among others, do the same – and the recent deal is obviously limited. It does, however, highlight the growing ties between Beijing and Phnom Penh.

According to the Council for the Development of Cambodia (CDC), China is now by far the biggest foreign investor in Cambodia. On its website, the Council shows that in 2011 Cambodia attracted $1.15 billion in Chinese investments, with an increase of 71 percent from $694 million a year earlier. From 1994 to 2011, Chinese investments totaled $8.866 billion dollars. By comparison, South Korea, the second biggest investor in the same period of time, stopped at little more $4 billion, less than China invested in 2008 alone.

(READ MORE: China test flies heavy air force freight plane)

Xinhua, China’s chief news agency, reports that Chinese investments have focused on “property development, mineral business and processing plants, motorcycle assembly factories, gold mining, rice mill and garment factories.”

Bilateral trade figures have dramatically improved, too. According to Xinhua, in 2011 bilateral trade between Cambodia and China amounted to 2.5 billion U.S. dollars, a staggering 73.5 percent increase from a year earlier.

Cozy relations with Beijing, however, have also put the Cambodian government under significant pressure, especially due to disputes over the South China Sea, whose islands are claimed in whole or in part by China, Vietnam, the Philippines, Malaysia, Taiwan and Brunei. The Cambodian government finds itself in an awkward position as other ASEAN countries, and especially Vietnam and the Philippines, see it as a close ally of the Chinese government ready to act to the detriment of their interests.

In July 2012, a clash occurred while discussing the Code Of Conduct, a document which was supposed to prevent conflicts among members. The participants could not find an agreement on whether to mention the South China Sea in the final communiqué, with Cambodia and the Philippines struggling with each other. As a result, for the first time in 45 years, no final statement was issued and, most importantly, the whole affair turned out to be lost chance to work on a set of rules to avoid future clashes.

In November last year, tensions again flared up during the ASEAN summit hosted by Cambodia in Phnom Penh. The Cambodian side argued that members had reached a consensus not to internationalize – read “not to call in outside power in general and the United States in particular” – the South China Sea issue, but Philippines authorities contended that such a point was never agreed upon. According to Reuters, Philippine President Benigno Aquino stated that “there were several views expressed [..] on ASEAN unity which we did not realize would be translated into an ASEAN consensus,” and added that “this was not our understanding. The ASEAN route is not the only route for us. As a sovereign state, it is our right to defend our national interests.”

Given such a background, it is not a surprise that the recent military deal attracted the media’s attention. The Bangkok Post, for one, has written that while there has not been any formal reaction from neighboring countries, “Hanoi [..] is likely to view the military training of the Cambodian army with major skepticism, if not outright opposition”. The article also contends that “for Thailand, any upgrade to the Cambodian army will almost certainly result in both increasing hostility from the ultra-nationalist ‘patriots’ involved in the dispute surrounding the Preah Vihear temple. There are likely to be calls from the military to upgrade Thai forces facing Cambodia, the only country with which Thailand has had armed conflicts in recent years.”

Many in Burma do not welcome China's economic or cultural presence. Pic: AP.

BEIJING –  As Burma opens its doors to the rest of the world, a chilly wind rages on Sino-Burmese relations. The first sign that things between the two long-time allies were about to change came on September 30, 2011, when the construction of the Myitsone dam on the Irrawaddy river was suddenly halted by authorities Naypyidaw. On that occasion, president Thein Sein stated: “we have to respect the will of the people as our government is elected by the people.” He added that the construction would not resume at least until 2015, when his term will be over.

China Power Investment Corp project was worth US$3.6 billion and was supposed to produce 29,400 million kilowatt-hours a year. Almost all of them would have been sent back to the People’s Republic.

Interestingly enough, just the day before, Wunna Maung Lin, Burma’s Foreign Minister, had met Derek Mitchell, the newly appointed US coordinator on Burma (Myanmar), which sparked suspicions of a connection between the meeting and the suspension of the dam project. Regardless of whether the connection existed or not, the decision was interpreted by analysts as a clear message that trouble was brewing for Beijing.

After more than two decades of isolation and sanctions, Burmese leaders have grown worried because of their country’s over-dependence on the giant neighbor to the north. According to Bertil Lintner, a journalist and expert in Burmese affairs, this problem was acknowledged by the Burmese government already seven years ago in a top secret document written by Lieutenant Colonel Aung Kyaw Hla, a researcher at Burma’s Defense Services Academy. In an article on Asia Times Online, Mr Lintner writes that the document – titled ‘A Study of Myanmar [Burma]-U.S. Relations’ – indicates that dependence on China has created a national emergency that threatens the country’s independence. The paper calls for Naypyidaw to establish a more acceptable regime in order to avoid criticism from the international community. Mr Lintner writes that “although the author does not specify those interests, it is clear from the thesis that he is thinking of common ground with the US vis-à-vis China.”

The opening up of Burma began right after the Obama administration hailed the idea of a new American pivot to Asia, which has understandably concerned the Chinese leadership. Zhu Feng, professor of international relations at Peking University in Beijing, a well known expert on Chinese foreign policy, states on Project-Syndicate that China’s “good neighbor” policy is under unprecedented pressure and argues that the Myitsone dam episode came as a shock for the Chinese government.

In an effort to fight off suspicions, Burmese authorities have tried to reassure their Chinese counterparts. In September 2011, Thein Sein reassured the Chinese audience that ties between the two countries are still strong. Aung San Suu Kyi herself has said in July 2012 that she hoped for improvements in bilateral relations.

Recent reports, however, point out that tensions between the Chinese and the Burmese side are rising rather than dissipating. Reuters, for one, has published an analysis whose authors claim that “in some cases, long-festering resentment is flaring into the open.”

China’s economic penetration – whose signs are everywhere in today’s Burma – is partly to blame for this. Just have a ride on a local bus and keep your ears open for the songs that are playing: plenty have been adapted from Chinese ones. Or have a look around in Mandalay and notice how many restaurants advertise their food in Mandarin. China’s presence is evident also in infrastructure and resources, sectors where Chinese companies have enjoyed a relatively free hand for a long time. Chinese companies, however, have not always been welcome.

Protests at the Monywa copper mine are a case in point. Located in the Letpadaung mountain range, the mine is a joint venture between the Burmese military-owned Union of Myanmar Economic Holdings Ltd and China’s Wanbao Mining Company. Locals claim they were forced to give up their land in exchange for housing and some financial compensation. In June 2012, tensions culminated in protests which lasted until November, when government forces intervened and violently clamped down on protesters.

While traveling in Burma this month, I spoke to a young Kachin who had worked in China’s Yunnan province for a while before moving back to Yangon. Asked about how things were going between China and Burma, he said that relations are “bu hao,” not good. Despite difficulties in communicating in Chinese, he made it clear that the copper mine and the dam were not appreciated.

Chinese media so far have played down the repercussions of Burma’s foreign policy change. On November 20, 2012, The Global Times – a state-owned newspaper – published an article titled ‘Don’t read too much into Myanmar visit’, which argues that “Myanmar’s democratic reforms and opening up to the West not only satisfy Washington but are also in China’s long-term interests. Sino-Myanmese relations must undergo some changes to adapt to this. But the changes will be limited.”

Whether changes will be limited or not is indeed a crucial matter for all players involved. Stakes are high because of the strategic position of Burma, located literally at the crossroads between Southeast Asia, China and India. In an extract from ‘Where China Meets India: Burma and the New Crossroads of Asia’ published on Foreign Policy, Burmese scholar Thant Myint-U writes that “if Burma indeed takes a turn for the better and we see an end to decades of armed conflict, a lifting of Western sanctions, democratic government, and broad-based economic growth, the impact could be dramatic. [..] What happens next in Burma could be a game-changer for all Asia.” If it does not, however, it may become a flashpoint between the US and the People’s Republic: not an encouraging thought for any country.