Ron Wagner

What China is Learning from Russia's War in Ukraine and its Consequences

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https://www.theepochtimes.com/preserving-overseas-assets-causes-woe-for-the-ccp_4460847.html

What China is Learning from Russia's War in Ukraine and its Consequences RCW

 

A man looks at information posted on a bank door showing how to distinguish counterfeit banknotes in Beijing on July 20, 2018. (Wang Zhao/AFP via Getty Images)
A man looks at information posted on a bank door showing how to distinguish counterfeit banknotes in Beijing on July 20, 2018. (Wang Zhao/AFP via Getty Images)

Preserving Overseas Assets Causes Woe for the CCP

Fearing the West's cuts to Russia’s financial lifeline could happen to China, CCP seeks a way out
By Anne Zhang
 
May 13, 2022 Updated: May 13, 2022
 

Since China opened its doors in the 1980s, the ruling Communist Party has been scrambling to grab resources worldwide and amass tremendous foreign exchange reserves by turning China into a global factory. However, the Western sanctions against Russia for its invasion of Ukraine put the Chinese Communist Party (CCP) on alert that its staggering wealth abroad could be frozen overnight.

China’s Ministry of Finance and the Central Bank Governors convened on April 22 for an urgent internal conference that included dozens of top executives of both domestic and international banks, to discuss how to protect the regime’s assets from U.S. sanctions similar to those imposed on Russia, reported the Financial Times on April 30.

At the meeting, some CCP officials raised the concern that Beijing could be subject to the same sanctions should it attack Taiwan, after roughly half of Russia’s foreign exchange reserves and the assets of multiple key financial institutions abroad were frozen by the United States, the UK, the European Union, and Japan.

Some bank executives suggested adopting measures like those recently used by Russia. They proposed that the Central Bank could command exporters to convert all foreign exchange earnings into Chinese yuan in a bid to increase China’s onshore U.S. dollar holdings. Others put forward cutting the annual amount of foreign currency that Chinese citizens are allowed to buy.

But no one came up with a sound solution, according to a source who was briefed on the meeting.

China’s foreign financial assets balance surpassed $9.3 trillion at the end of 2021, a 5 percent increase from the end of 2020, stated a financial report of China’s Foreign Exchange Administration.

Among external assets in 2021, the balance of international reserve assets accounted for nearly 67 percent or about $3.4 trillion, foreign exchange reserves reached $3.25 trillion, and currency gold went beyond $113.1 billion.

Regarding the currencies in foreign exchange reserves, the U.S. dollar made up an overwhelming proportion in long term despite the official data not mentioning it.

As reported by Jiemian, a Chinese financial media, on July 20, 2016, data from research of China International Capital Corp showed, as of the end of June 2016, the U.S. dollar comprised nearly 67 percent of China’s foreign exchange reserves, the euro nearly 20 percent, the British pound about 10 percent, and the Japanese yen about 3 percent.

The United States, Europe, and Japan are the main countries to hold down the Russian foreign exchange reserves and other financial assets in the Russia-Ukraine war.

In 2021, China has nearly $2.6 trillion in direct investment assets, sharing almost 30 percent of external financial assets, while $2.3 trillion, or 25 percent is in investments like deposits and loans, and approximately $1 trillion, or 11 percent, is in securities investment assets.

According to the 2021 direct investment data released by the United Nations Conference on Trade and Development, by the end of 2020, China’s foreign direct investment covered all sectors of the national economy, with more than 80 percent, or 189 countries or regions, receiving investments from China. Those investments incorporate six major sectors including leasing and business services (about 30 percent), wholesale and retail, software and information technology, manufacturing, finance, and mining.

Since the Russia-Ukraine war began, at least 41 countries around the world have imposed economic sanctions on Russia ranging from foreign investment withdrawal, and energy embargoes, to freezing of personal assets.

The Chinese Communist Party would face a tough challenge should similar sanctions be imposed on China.

Epoch Times Photo A man places an application form in a box minutes before the deadline ended for the initial public offering (IPO) of China CITIC Bank Corporation Limited in Hong Kong, 19 April 2007. (Mike Clarke/AFP via Getty Images)

Trillions in Foreign Investment in China

In this round of sanctions against Russia, a number of multinational energy giants pulled out their investments in Russia, inflicting a considerable blow to Russia’s energy industry.

In late February, BP, a British oil and gas firm, announced the sale of its nearly 20 percent stake in the Russian state-owned oil company. Another British energy conglomerate Shell also declared that it was dropping its joint venture with Gazprom, a Russian natural gas company. The U.S.-based Exxon Mobil said it would shut down a large oil and gas exploration project on the Sakhalin island in the far east of Russia.

Foreign companies have been investing in China for decades, with an accumulative stock of $7.3 trillion at the end of 2021, according to China’s “Balance of Payments” report.

If a large-scale capital exodus occurs, the CCP could not tolerate the impact.

By the end of 2021, foreign direct investment in China exceeded $3.6 trillion, which is equivalent to half of China’s foreign liabilities. Securities investment reached $2.15 trillion, the total market value of Chinese stocks and bonds held by foreign investors was close to $1.3 trillion, and the stock of other investments such as deposits and loans amounted to about $1.55 trillion, said the report.

Epoch Times Photo Immigration inspection officers check an oil tanker carrying imported crude oil at Qingdao port in China’s Shandong Province on May 9, 2022. (STR/AFP via Getty Images)

Reliance on Imports and Exports

Global buyers shunned doing business with Russian companies after major Russian banks were excluded from the SWIFT international clearing system. Meanwhile, Russian energy and other commodities were embargoed, which drove Russia to trade oil at a record discount of $30 per barrel. Even then, it was difficult to find buyers as Russian vessels have been excluded from a number of key ports.

The EU has decided to significantly cut its dependence on Russian energy, planning to reduce Russian natural gas imports by two-thirds by the end of this year. Russia’s daily oil and gas exports to Europe amount to $750 million.

China’s trade interaction with the West is even greater than Russia’s, which means the Communist regime’s economy would find it difficult to withstand the same sanctions.

According to China’s General Administration of Customs, in 2021, China’s total imports and exports were at $6 trillion, with $828.1 billion (14 percent of the total) from the European Union, $755.6 billion (12.5 percent) from the United States, $371.4 billion (6.2 percent) from Japan, $362.3 billion (6 percent) from South Korea, $232 billion (3.8 percent) form Australia, $112.6 billion (1.8 percent) from the UK, and $81.8 billion (1.3 percent) from Canada; adding up to 46 percent of China’s total import and export market.

Unlike Russia’s export structure, which is dominated by energy, food, and other daily necessities, China mainly exports electrical and mechanical products such as automatic data processing equipment and parts, cell phones, home appliances, car chassis and parts, and other electrical and mechanical products, which amount to nearly $2 trillion, or nearly 60 percent of China’s total exports in 2021.

In addition, clothing and textile exports shared a higher proportion of approximately 10 percent.

China’s import dependence is relatively high on agricultural products, iron ore, and crude oil, and very high on  semiconductor products.

China spent $432.5 billion last year on imported integrated circuits due to the accelerated development of emerging industries such as 5G, smart cars, and the Internet of Things.

In recent years, the United States and its allies are working to reshuffle a supply chain to exclude China and reduce dependence on Chinese products. If unforeseen circumstances speed up this process, China’s manufacturing exports and imports of key technology products could be in jeopardy.

Epoch Times Photo A pedestrian wearing a face mask to protect against Covid-19 walks by the logo of Swiss banking giant UBS engraved on the wall of its headquarters in Zurich on March 3, 2021. (Fabrice Coffrini/AFP via Getty Images)

Sanctioned Personal Assets

The sanctions imposed by the West on Russia include freezing the personal assets of high-ranking officials and wealthy individuals such as Russian President Vladimir Putin.

The overseas assets of the Red family, controlled by top CCP officials, are astounding. The 2018 billionaire report co-published by UBS and PwC revealed that 373 Chinese billionaires own $1.12 trillion in assets.

Swiss banks have been a haven for depositing money for the CCP’s corrupt officials because of its banking confidentiality.

According to WikiLeaks, the CCP officials have about 5,000 personal accounts in Swiss banks, “two-thirds of whom are central-level officials from the level of vice premier, bank governors and ministers to central committee members,” as reported by Indian-based Business World on July 28, 2020.

However, among sanctions on Russia, Switzerland froze the assets of Promsvyazbank, one of the largest private banks in Russia, as well as VEB.RF, the largest Russian investment company, reported the Tony Blair Institute for Global Change on March 24.

Therefore, from the standpoint of the CCP, Switzerland would not be a reliable place to hide money, rather, it will pose a great threat to the Party cadres’ overseas assets when it joins the West in possible sanctions.

Anne Zhang 
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Anne Zhang is a writer for The Epoch Times with a focus on China-related topics. She began writing for the Chinese-language edition in 2014.

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Good points Ron.  But they miss the key.  The Taiwan strait is about 150 km (100 miles) AND  filled with giant sharks called submarines both nuclear and air independent designs that don't need air for 30 days.  You couldn't  transport 40 divisions without sea lift  6 times the size of the Okinawa invasion sea lift in 1945(7 divisiions).  The US Navy didn't try Taiwan because the number ships didn't work and they would need to transfer 20 divisions from Europe to do it.

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(edited)

20 hours ago, nsdp said:

Good points Ron.  But they miss the key.  The Taiwan strait is about 150 km (100 miles) AND  filled with giant sharks called submarines both nuclear and air independent designs that don't need air for 30 days.  You couldn't  transport 40 divisions without sea lift  6 times the size of the Okinawa invasion sea lift in 1945(7 divisiions).  The US Navy didn't try Taiwan because the number ships didn't work and they would need to transfer 20 divisions from Europe to do it.

A year or so ago the topic of invading Taiwan came up and I said that Taiwan would have a good chance at defending itself due to the geographical situation and the unity of its people. Also the technological superiority of Western weaponry and our help as well as our allies. I didn't get much support then. Glad you think that way. I think subs are the best investment our navy has made. 

Edited by Ron Wagner
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(edited)

On 5/14/2022 at 9:32 PM, Ron Wagner said:

A year or so ago the topic of invading Taiwan came up and I said that Taiwan would have a good chance at defending itself due to the geographical situation and the unity of its people. Also the technological superiority of Western weaponry and our help as well as our allies. I didn't get much support then. Glad you think that way. I think subs are the best investment our navy has made. 

The USNS Jimmy Carter was the last of the three Seawolf subs built and had a 100 foot section added aft of the conning tower that gives her operating capability  to carry up to 10 SEAL teams at once, improved antiship and anti-air missiles.  She could wipe out the entire Chinese sea lift without any help. The one sub SOSUS can't find or track.

Edited by nsdp
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(edited)

2 hours ago, nsdp said:

The USNS Jimmy Carter was the last of the three Seawolf subs built and had a 100 foot section added aft of the conning tower that gives her operating capability  to carry up to 10 SEAL teams at once, improved antiship and anti-air missiles.  She could wipe out the entire Chinese sea lift without any help. The one sub SOSUS can't find or track.

The new AUKUS agreement will enable the best of, in particular, US design and UK designed subs to be the most fearsome subs on the planet. The Columbia class and Dreadnought class subs will be very very difficult to detect with the Dreadnought boat having a signature the size of a dolphin and it is 153.6M x 12.8M in size. The Columbia class is a bit larger so will probably have a slightly larger signature. The quieter turbo-electic drive propulsion system will assist both Dreadnought and Columbia class subs to be even harder to detect along with their anechoic tiles and new hull designs.

I would be surprised if SOSUS can track these when they are commissioned.

https://www.navalnews.com/naval-news/2021/11/first-submarine-to-use-new-stealth-technology/

https://www.navalnews.com/naval-news/2021/11/new-submarines-compared-columbia-class-dreadnought-class-and-snle-3g/

Edited by Rob Plant
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China has learned more than you will ever know or comprehend.

 

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5 hours ago, nsdp said:

The USNS Jimmy Carter was the last of the three Seawolf subs built and had a 100 foot section added aft of the conning tower that gives her operating capability  to carry up to 10 SEAL teams at once, improved antiship and anti-air missiles.  She could wipe out the entire Chinese sea lift without any help. The one sub SOSUS can't find or track.

Always the same shit from you. Destroy everything. You have the God given right to destroy. To destroy is good, is noble, is moral. To force others to kneel to you is good. Only you are human, all others are sub-human. Only you have the God given right to exploit the Earth's wealth, nobody else. Anybody opposing your view must be destroyed.

I do wonder how vile amurcunts like you will respond when your cities are nuked and vapourised: will you stop the madness, or continue to destroy the planet and yourselves?

 

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3 hours ago, frankfurter said:

Always the same shit from you. Destroy everything. You have the God given right to destroy. To destroy is good, is noble, is moral. To force others to kneel to you is good. Only you are human, all others are sub-human. Only you have the God given right to exploit the Earth's wealth, nobody else. Anybody opposing your view must be destroyed.

I do wonder how vile amurcunts like you will respond when your cities are nuked and vapourised: will you stop the madness, or continue to destroy the planet and yourselves?

 

Frankie you might have missed this but its Russia that is at war with Ukraine (their brothers) and are destroying cities and killing innocents, not Americans.

Got anything to say about Russia?

You are the one saying "I do wonder how vile amurcunts like you will respond when your cities are nuked and vapourised" It sounds like you are the one using agressive language and insults not Americans.

Nuclear subs are a deterrant, nobody is advocating using them.

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(edited)

13 hours ago, nsdp said:

The USNS Jimmy Carter was the last of the three Seawolf subs built and had a 100 foot section added aft of the conning tower that gives her operating capability  to carry up to 10 SEAL teams at once, improved antiship and anti-air missiles.  She could wipe out the entire Chinese sea lift without any help. The one sub SOSUS can't find or track.

Wow, I had no idea they could handle more than one team if that. I am too used to watching the old submarine movies. 

How many seals per team? 

I hope we are training Ukrainian seals too attach some mines to Russian ships. Maybe we could help them find some mini subs! 

Most of the worlds cities are built along the coastlines or rivers. I think that one of the subs I visited (in a Chicago museum was recovered from the Great Lakes or St.Lawrence Seaway). I think it was about the size of most WW2 subs. It was basically just one small hallway with everything built on the sides. From the exterior it looked fairly big but it was probably about one tenth the volume of modern subs, or far less. 

I think subs would be a great way to stage hit and run attacks. Perhaps with mini subs attached for quick entry and exit of seal teams. I think they mainly used inflatables with electric motors now. I fear them getting sunk and leaving seals stranded. 

Another idea is to use drones to the maximum extent for tasks such as attaching mines to enemy ships. They could be drone subs, boats, or helicopters. I really don't see much future for large naval ships except to deliver weapons, supplies, fuel, medical care, etc. 

https://www.msichicago.org/press/press-releases/u-505-submarine/

U-505_ForewardTorpedoRoom.jpg

U-505_EngineRoom.jpg

 

 

Video of the Virginia class submarine. It is our latest and best submarine class.

https://www.youtube.com/watch?v=recgNGI3FWA

Edited by Ron Wagner

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Russia Panic: US Finally Tests The New Super A-10 Warthog
Imagine if Ukraine had these! They could not afford to fuel or maintain them but we should have them in Germany just in case. 

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You can bet your ass there watching; that said, it would not be land but a sea attack which is much more complicated.

Even the supply logistics would be a bitch.

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