Pence adds to pressure on China, Brazil’s Duterte, Timor-Leste’s LNG pipedream. By Hamish McDonald.

Pence drops bomb on China’s US influence

Supporters of Brazilian presidential candidate Jair Bolsonaro outside his home in Rio de Janeiro at the weekend.
Supporters of Brazilian presidential candidate Jair Bolsonaro outside his home in Rio de Janeiro at the weekend.
Credit: Mauro Pimentel / AFP / Getty Images

Prepare for some gunboat diplomacy in the South China Sea as relations between the United States and China enter an even more fraught confrontation across a widening spectrum.

US admirals in Honolulu are working on plans for large-scale exercises by warships, aircraft and embarked troops through the South China Sea and, even more pointedly, the Taiwan Strait next month, according to CNN.

At a forum in Singapore earlier this week, your world editor heard the well-connected former head of Singapore’s foreign ministry, Bilahari Kausikan, float the possibility of the US Navy holding part of its huge Rim of the Pacific (RIMPAC) naval warfare exercise in the South China Sea. Usually conducted around Hawaii, RIMPAC involves a score of allied and friendly countries. Australia normally sends a few frigates, a submarine and aircraft. However, the next one is not due until June 2020. China was “disinvited” from the most recent one held in July.

But the main bombshells are civilian. On October 4, US vice-president Mike Pence delivered an extraordinary list of complaints against Chinese mercantilism, intellectual property theft, cyber intrusions and political interference. It was using “political, economic and military tools, as well as propaganda, to advance its influence and benefit its interests in the United States”.

Bloomberg provided an example. Citing numerous US intelligence officials, the news agency said China’s spy services had got subcontractors to insert microchips into motherboards made in China by Super Micro Computer Inc for IT servers used by major US companies, such as Google and Apple, and government agencies, including the CIA. Super Micro and its customers have issued denials, but Bloomberg has since reported the discovery of one such spying microchip in the hardware of “a major US telecom company”.

Kausikan says the Bloomberg story could have “profound geopolitical implications” if proved, speeding up a shift in supply chains away from China and back to the US that may be happening anyway with the so-called fourth industrial revolution based on advanced automation.

China is starting to feel the US pressure. This week its central bank freed up the equivalent of $A250 billion for lending, and its authorities have eased limits on steel output normally applied in winter to reduce air pollution. Kausikan said Xi Jinping’s China has fallen for its own post-GFC propaganda that the US is a declining force. It missed completely the “steadily souring mood” of US business, historically a stabilising factor in US–China relations, mainly over intellectual property theft and forced technology transfers. Pence was signalling the US will compete with China, not retreat.

Meng dynasty ends

When Meng Hongwei – a high-ranking official in China’s Ministry of Public Security, its police and internal security agency – was appointed as president of Interpol two years ago, Beijing glowed with pride at this international recognition of its policing skills.

It was the prize perk of the liaison agency of police services from 192 countries, headquartered in the French city of Lyon set in the gastronomically favoured Rhone valley. The working cops looking after transnational crime, criminal fugitives and missing persons duly batted away Meng’s attempts to apply “red notices” (arrest warrants) to Beijing’s political enemies, such as Dolkun Isa, president of the Munich-based World Uygur Congress.

But Meng has fallen out of favour, disappearing on a trip back to China, but not before texting his wife an emoji of a dagger. On Monday, it was announced he was under investigation for bribery by the new National Supervisory Commission, reporting to Xi Jinping.

However, it seems that’s not the only issue. The Ministry of Public Security said its Communist Party committee held a pre-dawn meeting that day to condemn Meng’s corruption but also stress the need for everyone to “maintain a high level of conformity with the political stance, the political direction and the political principles of the party centre with Comrade Xi Jinping at its core”. Meng’s career flourished under former security boss Zhou Yongkang, who was ostensibly sentenced to life in jail for corruption in 2015 but was actually purged for being a rival power centre to Xi.

No one is too big or popular for Xi’s officials to take down, as actress Fan Bingbing found when embarrassing copies of her dual invoices for a role turned up, the one for her tax returns one fifth of the actual payment. After disappearing for three months, she’s resurfaced, making abject public apologies and paying $A184 million in back taxes and penalties.

Meanwhile, the equivalent of Mao’s Little Red Book for the digital age is out. Chinese TV is running the new show Studying Xi Jinping in the New Era, in which contestants are quizzed about trivia from Xi’s life and the benefits of his powerful thoughts. It’s part of a season of programs titled Socialism Is Kind of Cool. But off air it’s not that cool: a group of leftist students who recently tried to put socialism into practice by organising factory workers found themselves under arrest.

Brazil’s loose canon 

What we saw in the Philippines two years back – the election of Rodrigo Duterte on a platform of summary execution for drug users and criminals – could play out on a much bigger canvas in Brazil, a giant of the emerging economies.

Jair Bolsonaro, a former army paratroop captain, wants criminals shot rather than put on trial, and likes to mime pulling a trigger. He calls indigenous people “parasites”, proposes eugenic birth control, calls refugees “the scum of humanity” and Afro-Brazilians obese and lazy, and advocates corporal punishment to turn children from homosexuality.

As a result, it seems, he’s popular with the middle classes seeking radical solutions to economic stagnation, corruption and crime. He won 46 per cent of the vote in the first round of Brazil’s presidential election last Sunday. Fernando Haddad, leading the Workers’ Party as stand-in for former president Luiz Inácio Lula da Silva who is disqualified by a corruption conviction, gained only 29 per cent and will have a struggle in the runoff on October 28.

Bolsonaro’s rise would mark a reversal for Brazil. He promises to bring military officers into his cabinet, and has a retired general as running mate. Brazil’s democracy was restored in 1985 after two decades of military rule marked by disappearances and torture. Bolsonaro has said the main thing wrong with the former junta was that it didn’t kill enough people. He’s even hinted at an army coup if he loses.

Folly in the pipeline

Timor-Leste continues to throw resources behind former leader Xanana Gusmão’s obsession with building a liquefied natural gas plant on his nation’s rugged south coast, taking gas by pipeline from the offshore Greater Sunrise field.

After spending about $US250 million on a seaport and highway for a project that is opposed by the companies involved in Greater Sunrise, Gusmão has now got the Dili government to agree to spending $US350 million to buy out the 30 per cent share in the field owned by the US oil company ConocoPhillips, which is shamelessly willing to sell.

It has to be approved by the other partners, including Australia’s Woodside Petroleum, and even then would not oblige them to agree to Gusmão’s pipeline scheme, rejected by most technical experts as too costly and risky. They want the gas piped to Darwin, or processed on a ship. Dili would get just as much revenue.

The $US350 million would be drawn out of Dili’s $US17 billion Petroleum Fund, which are savings from existing fields that are fast depleting. Its earnings are the main revenue source for the government. As Dili research group La’o Hamutuk points out, $US350 million is more than twice what Timor-Leste spends each year on education. Having then to pay its 30 per cent of Greater Sunrise development costs would either draw about $US7 billion from the fund, or bring an interest bill to offset against any profit stream. It’s doubling down on folly. La’o Hamutuk is urging a rethink.


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This article was first published in the print edition of The Saturday Paper on October 13, 2018 as "Pence drops bomb on China’s US influence".

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Hamish McDonald is a Walkley Award-winning foreign correspondent.

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