The Hong Kong Model: What would "One Country Two Systems" look like if it were applied to Taiwan?

If the Chinese government expects the Hong Kong Model to eventually be acceptable to the people of Taiwan, it will be sorely disappointed. 

Two American Secretaries of State, one from the past (Henry Kissinger) and one currently serving (John Kerry), have at different times in recent history stated their support for a "One China Two Systems" model that would in their view solve the long standing sovereignty dispute between Taiwan and China, which would allow for the primary impediment of improved relations between the United States and China to at long last be washed away.  If believing in this point of view, both Mr. Kissinger and Mr. Kerry would also have to accept the premise that the people of Taiwan would be accepting of such a grand bargain.  Both could be forgiven for failing to understand the complexities of  contemporary Taiwanese society: where it is currently, and the road in which it has traveled to arrive at its current point. For arguments sake, however, this article will attempt to take a speculative look at a scenario in which Taiwan were to enter into a "One China Two Systems" system that is similar to the system currently in place in Hong Kong; while taking the results of the  past 16 years of Hong Kong's experience under the system as a guide, as well as current trends in Taiwanese society.

Economics

Since the 1997 handover, Hong Kong has experienced seismic shifts both in its economic importance to Mainland China, as well as a number of troubling economic trends that have troubling signs for Hong Kong society.  In 1997, Hong Kong's contribution to the combined GDP of China plus Hong Kong stood at nearly fifteen percent, a figure that dropped to nearly three percent in 2012.  As China gets richer, Hong Kong will likely continue its downward slide of economic importance to China proper. As China's economy has been growing at well over 7.0% annually, Taiwan's GDP infusion would have an estimated  smaller impact mathematically in 2013 than that of Hong Kong in 1997, at 5.35%.

   It is not a well kept secret  that some of the strongest advocates of increasing Taiwan's relationship with China to even the point of  eventual unification are Taiwanese high level business executives who see China proper as a massive market with nearly limitless potential to turn profit, as well as having considerable political clout under such a system.  It is also likely that the stated executives wield substantially more power within Taiwanese society today than they would under a OCTS framework.  Taiwanese executives would be wise to look to the similar scenario that took place in Hong Kong in 1997--and where the  level of executive-political influence presently lies in Hong Kong.

Be careful what you wish for Terry Guo...

In 1997, officials in Beijing depended heavily on the tycoons of Hong Kong to lead the way in ensuring a stable transition from British colonial rule to Chinese control.  These business leaders did their part in placating fears among the citizenry of Hong Kong (and international investors), that an economic status-quo would be in place, and it would be business as usual within the city.  As time has passed, however, Beijing has had ample time to maneuver  its preferred leaders into prominent political and economic positions  (more on this aspect later).  Combining this fact with Hong Kong's decline in economic relevance, the tycoons who were once vital to Hong Kong's transition are now viewed by Beijing as actors who provide diminishing returns to their objectives within  the city.  In a Taiwan scenario, these tycoon types who currently hold a great deal of sway both politically and economically in Taiwan, would likely be counted on to have a similar role as their Hong Kong counterparts did.  However, these officials would quickly see their influence diminished as a result of being just a few fish within a much larger pond, and seeing their political relevance likely diminish with each year that passes by.

Socially, the economic ramifications of a One Country Two Systems (OCTS) approach would leave no aspect of Taiwanese society untouched.  With trade and investment barriers being removed on a wide scale following the handover, consider the following:

*In 2011, investors from Mainland China accounted for 25% percent of Hong Kong prime property purchases, which has resulted in pushing home prices out of reach for many aspiring middle class citizens

*Hong Kong's wealth gap, long being the highest in Asia, has reached its highest level in decades

It is more likely than not that Taiwan would experience similar results within a OCTS model.  With the housing market within Taipei already experiencing what many economists perceive as a housing bubble waiting to burst, a large influx of Chinese capital into the housing market would likely send the median home price in the city through the roof, causing even more discontent with aspiring homeowners than what currently exists.  Other major cities in Taiwan, such as Kaohsiung, Taichung, Tainan, and Hsinchu would likely see a considerable spike in real estate prices as well.

In the agricultural sector, Taiwanese farmers  would also face a bleak future, as China's agricultural industry attempts to emulate the quality of Taiwanese products, larger Chinese firms would likely have the ability to eventually produce similar products at a lower cost without the current trade barriers as a restriction to Taiwan's domestic market, forcing many producers in Taiwan to leave the industry.

In the tourism sector, Taiwan would also likely experience many of the similar effects that have been felt by Hong Kong since Mainlanders were permitted to enter the city on individual visas, rather than on the group visa program.  As Hong Kong based companies shifted much of their manufacturing base to China proper, tourism has grown as a vital economic aspect of the cities economy.  As a result, retail rental properties have skyrocketed in the city, rising as much as 32% in some prime locations, erasing the traditional landscape of some areas, such as Causeway Bay in the process.  In 2011, the retail chain Forever 21 opened its first store in Hong Kong in 2011, paying $1.4 million dollars in rent per month--the highest in the world in both total terms and square feet.

Forever 21 in Hong Kong

  While many areas in Taiwan would likely follow suit in developing areas that would cater to the influx of Chinese tourists, some would likely be in areas that are considered mainstays of Taiwanese society, such as night market areas.  It is likely that many areas within Taiwanese cities would become unrecognizable as they currently stand.


Identity 

The cultural impact within Taiwan as a result of a OCTS implementation would be massive, and the results of which are far too large to be explored in depth here, but a brief (albeit simplistic) overview is needed. Ironically, studies and polls have shown that since the 1997 handover,  residents of Hong Kong have latched on tighter to the notion of being a citizen of Hong Kong that has an identity separate from Mainland Chinese, instead of forming an identity that is one of simply being "Chinese".  In 2011, a University of Hong Kong poll asked residents to rate how strongly they felt as being a "Hong Kong citizen", with the average rating being 8.23, the highest result in 10 years.  The same participants in the poll rated their feelings about being a "Chinese citizen" at an average of 7.01--a 12-year low.  With many residents increasing their  daily contact with the population from China proper, there was likely a feeling that while ethnically bonds are indeed shared, culturally wide differences have developed over time, resulting in some level of a nationality difference.

In the case of a similar poll taking place in Taiwan 15 years after a hypothetical unification scenario, the numbers would likely be much further apart in those identifying themselves proudly as "Taiwanese" and at the same time "Chinese citizens".  For over a half-century, the citizens of Taiwan have combined (often times with considerable friction) aspects of Chinese culture from a large influx of Chinese immigrants--refugees that occurred in the mid to late 1940s with an existing Taiwanese culture that was already firmly developed prior to their arrival, sprinkled with aspects of Japanese colonial rule that lasted sixty years--without the interference of the guiding hand of the People's Republic of China.  The result could in fact be compared to the formation of a separate American cultural identity that occurred prior to the American revolution, as distance between England and its colonies allowed for such a development to occur.  For many colonists, the bloodlines did not change, but their mindset and self-identity evolved. One example in which China shows its inability to understand the complexities of the evolution of Taiwanese self-identity is the way in which it classifies the aboriginal population of Taiwan.  While Taiwan recognizes 14 distinct and separate native Taiwanese aboriginal groups within its borders-- the PRC sees one.

They're all "Gaoshan" in the eyes of Beijing

 From the perspective of Beijing, this aspect of a OCTS approach  with Taiwan would be perhaps its most daunting challenge in making such an arrangement a success.  Thus far, China's appeals to Chinese brotherhood and bloodlines (which could have been more effective in centuries past) has only appealed to a small fraction of Taiwan's population.  China would have to take a long term approach in its attempt to successfully integrate Taiwan's population into a greater China model, a task that would almost certainly fail due to Taiwan's strongly entrenched sense of self-identity that grows stronger with each day it is not under the flag of the PRC.


Political Structure and Social Freedoms --The Firewall to Annexation 

Despite the bleak economic and cultural scenarios that have been proposed in this article, the political and social freedom aspect is one that is perhaps the strongest barrier to China's objective to implement the OCTS approach with Taiwan.  If proponents of the OCTS approach towards Taiwan hope to look to Hong Kong for a viable model--upon closer inspection their hopes would likely be dashed. The following is the reality of the OCTS approach that has taken place in Hong Kong presented in bullet point form:

* Prior to the 1997 handover, the 1984 Basic Law was devised for the governance of Hong Kong. Within the framework it stated that universal suffrage was the "ultimate aim" for Hong Kong--an objective that has not yet been met.  Most observers do not believe expect the universal suffrage to occur before 2017 ( the targeted year stated by Beijing), as the provision was not included in the 2010 electoral reforms.  The Law also restricts law making powers, prohibits legislators from introducing bills that would affect Hong Kong public spending, government operations, or political structure.

* The selection of the Hong Kong's chief executive is done by a system in which special interests controlled by a small circle of wealth tycoons select the person who will take the position.  In 2012 the committee chose Leung Chun-ying, a member of the Mainland government advisory body--and the preferred candidate of Beijing.  Officials from China's Liaison Office reportedly lobbied members of the election committee to vote for Leung, and castigated media officials from critical coverage of him (source 2013 Freedom House Report on Hong Kong)

*   In 2002 Pro-Beijing lawmakers in the city attempted to pass Hong Kong Basic Law Article 23, which included the following:

• Any branch of an organization that is part of an organization banned by the central government of the PRC under state security reasons can be banned in Hong Kong at any time, and the Hong Kong government does not have to conduct any independent investigation.

• The concepts of government and country are confused and exchangeable in the proposed document. In a democratic country, citizens are empowered with the right to monitor and check the government. The proposed enactment of Article 23 makes opposing the government the same as opposing the country.

• In the proposed enactment, police are allowed to enter residential buildings and arrest people at any time without court warrants or evidence.

• Any speech deemed as instigative can be regarded as illegal, including oral, written and electronic forms; it is a crime both to express, and to hear such speech and fail to report it.

• Permanent residents of Hong Kong are under the power of this law, no matter where they reside. People who are in Hong Kong are also under the power of Article 23, regardless of nationality, including people who visit or transit through Hong Kong. Violations of Article 23 can result in a life term in prison. 

-Mass protests by the citizens of Hong Kong forced the legislature to suspend the vote and implementation of Article 23

-However in 2009, the territory of Macau (which was transferred from Portugal to China in 1999 ) passed the Macau Basic Law, which has exactly the same wording as Article 23 of the Hong Kong Basic Law.

Media Suppression  in Hong Kong since 1997 

Exerpts taken from the 2013 Freedom House Report

"A 2012 poll conducted by the Hong Kong Journalists Association (HKJA) found that for the first time, journalists’ concerns about tighter government control over access to information surpassed self-censorship as the most commonly cited threat to media freedom. Over the past two years, officials have increasingly used off-the-record briefings to announce policies and released official footage for news events rather than opening them to the press, while the police and fire departments have released less detailed and timely information about newsworthy incidents."

"In January, Wang Xiangwei, a mainlander who had once worked for the state-run China Daily, became the editor in chief of the popular local English-language paper South China Morning Post. He was accused of censoring the Post’s coverage of the suspicious death of Chinese dissident Li Wangyang in June, and of refusing to renew a contract with an award-winning reporter known for his articles about Beijing’s poor human rights record."

" Hong Kong journalists aiming to report from the mainland must obtain press cards from Beijing’s Liaison Office, though even with accreditation, they are often subject to surveillance, threats, beatings, and occasional detention by mainland authorities."

"At least three mainlanders were beaten or sentenced to labor camps after returning home from the July 1 protest in Hong Kong, the first such known cases of mainlanders punished for attending Hong Kong demonstrations."

As frustrated as Hong Kong residents are with their current political situation, it is vastly different from a potential Taiwan OCTS scenario for one primary reason.  The people of Taiwan have spilled considerable blood in their quest to establish a democratic form of representative government, and for this reason the vast majority of its citizens would be unequivocally opposed to any change that could effect their current democratic abilities.  While China has promised to maintain Taiwan's current governmental structure (with the exception of managing foreign policy), it would be impossible for it to do so.  The people of Taiwan would have the ability to elect representatives who could not only push back Chinese interests within Taiwan, the potential for speaking of Taiwanese independence would certainly be a possibility, something that Beijing does not have to deal with regarding the mindset of any large group in Hong Kong (....yet).  Such a scenario would force Beijing to allocate large resources towards maintaining public order inside Taiwan, and confronting millions of people who have become well-versed in the tactics of self-expression and have had prior exposure to living in a free and democratic society-- a potentially potent combination that could give Beijing headaches for years...or decades.  

In conclusion, there is no objective observer who could state that Taiwan and the majority of her population would beneficially gain from any sort of OCTS approach that is currently in place between Mainland China and Hong Kong.  Economic gains would be reaped by the top of Taiwanese society, while the rest of the population would likely see the gradual, if not subtle erosion of basic liberties that have become pillars of a modern Taiwanese society.  The government in Beijing likely sees a similar picture, as it continues to espouse an annexation of Taiwan by speaking of vague ancient territorial claims and a shared bloodline. Yet the people of Taiwan do not live in the past or seem willing to trade their hard-earned freedoms for something as tribal  as a shared ethnicity.  All the while citizens of Hong Kong look enviously across the Taiwan Strait to see what it is that they themselves desire most.  A society that still has the option to make a choice about its own future. 

Recent Geopolitical Developments in the East Asian Region

Busy doing research for the next few weeks for an upcoming project, so for now enjoy these links on recent developments taking place regarding the East Asian geopolitical scene.

Going Long

The United States navy is getting closer to developing its own "Carrier Killer" missile platform, the long-range anti-ship missile (LRASM).  The development is a necessary one for the U.S. military, as it looks to maintain the capability to strike adversaries from a distance outside a "danger zone" where its strike carrier fleets could remain relatively safe, from say an enemy ballistic missile threat.  Testing is likely to continue into 2014, and the project should remain safe from the recent federal government sequester budget cuts.

The Winds of Change 

James Holmes of the US Naval War College writes a great piece on Japan's need to change it's military structure.

China upset over US support of Taiwan's ICAO Observer Status....When they should be celebrating

China recently expressed its protest over a recent law signed by President Obama that supported Taiwan's bid for observer status in the International Civil Aviation Organization (ICAO), a UN-sponsored organization that promotes safe air travel, as well as keeps member states aware of the most up to date aviational safety regulations.  Rather than protesting, however, officials in Beijing should be doing this.  Why? Because for nearly 20 years the United States has held an official position of supporting Taiwan's Full Membership into international organizations that do not require statehood as a prerequisite. Taiwan officials in Washington DC (known by their acronym as TECRO officials) still insisted on pushing for observer status regardless.  I spoke about this particular issue when the bill was signed into law on Michael Turton's Taiwan-based site.

Brian Benedictus noted that there was a big TECRO (the Taiwan representative office in the US) push for this, remarking:

"[TECRO] knew what they were doing---which is setting a precedent--Which is to ask (and receive) support from Congress on Taiwan's international participation in a lesser degree than they should. This was a bad precedent to set, and Taiwan's international space actually got a little smaller tonight."

China releases its report on US-Japan Military Power 2012 

While the report is relatively void of aggressive wording against the United States per say, it does have a theme in which it states that US military exercises in the region are directed against China, and are not helpful for bilateral relations:

 "...exercises prepared against the so-called A2/AD threats are clearly targeting China and Iran. Exercises such as Internal Look 2012 and Austere Challenge 2012 are clearly aimed at Iran, while exercises such as Gold Cobra 2012, Balikatan 2012,RIMPAC 2012 are clearly targeting China. The exercises which were large in scale,high in frequency and intensity, and especially those that took place when tension in the region rose, naturally caused concern and anxiety, which in turn further intensified the situation, exerting a negative impact on world peace, stability, cooperation, and development."

Russian Vessels conducting  maneuvers during a recent joint exercise with Chinese military forces

The Chinese paper does not, however, mention recent joint-exercises that took place near Japan that consisted of PLA and Russian forces that were widely seen in Japan as provocative in nature.

Taiwan Reportedly Lobbying US Congress for assistance in acquiring new submarine platform

     What a difference a year makes.  In 2012 the hot topic around the beltway  regarding the U.S.-Taiwan arms sales relationship was seemingly focused on the long-pending sale of the F-16 C/D platform to Taiwan  (Actually this "pending" authorization has been in limbo for over twenty years and has covered four U.S. Presidential administrations).  With Sen. John Cornyn (R-TX) leading the charge, many members of Congress were placing pressure on  the Obama Administration into authorizing the sale of the fighter jet platform, which would then allow for Congress to vote on the issue.  However, at least publicly, the Taiwanese government made no statements vocally to coincide with the U.S. Congressional push, and the issue of F-16's has remained in a state of limbo ever since.  During this time, the issue of another long standing request from Taiwan was considered dead in the water: the 2001 approval from the Bush Administration authorizing the sale of 8 diesel-electric submarines to Taiwan.  It's well known among those who follow this issue the complex logistics that would be involved in making this sale a reality, and this blog has a previous 2-part article discussing in depth the complexities of the issue.  However, a brief overview:

1.  The United States has not domestically produced diesel submarines since the 1950's, therefore it would likely need to find a third country that would be willing to aid Taiwan in either the production of the requested submarines, or more likely, transfer the blueprints to either Taiwan or the United States for production.

2.  Third countries have been reluctant to agree to such a sale for fear of Chinese economic reprisals.

     Yet in 2013 among many think tanks, military experts, and US government officials the issue of Taiwan acquiring submarines has suddenly.....pardon the pun....resurfaced.

The Chairman of the House Foreign Affairs Committee, Congressman Ed Royce (R-CA), visited a Taiwanese Naval yard in Kaohsiung, and brought attention to Taiwan aging guppy-class subs, stating a need for Taiwan to modernize its submarine fleet. One source with knowledge to the visit stated that the Ma Administration was not aware that the issue of submarines was going to be brought up during the visit, and following the visit was "rather receptive" to the idea of pushing for the long-stalled purchase.  In addition to the Royce visit, a number of officials inside the halls of Congress have stated that Taiwanese officials from its TECRO office in DC have approached them in recent months regarding ways in which the sale could be facilitated.  The officials stated that the the talks focused primarily upon finding a third country that would be willing to transfer the blueprints and expertise to the United States, and then transferred to Taiwan, where the submarines would be built. American defense companies, most likely General Dynamics or Northrop Grumman, would be contracted to implement the weapon systems and electronics into the completed submarines. The sources also state that TECRO officials have specifically suggested that the United States "specifically approach Nordic countries to assess their interest in such a project." Currently, Sweden is the only Nordic country that actively has a domestic submarine production capability (although Denmark, Norway, and Finland  have the ability to transfer the technology on a smaller scale).

In 2006, a Swedish HSwMs Gotland-class submarine "defeated" a U.S. Navy carrier  in an exercise, as it  penetrated  the American defensive measures, essentially "sinking" the carrier. 

From the perspective of American interests in the region, increasingly aggressive behavior by various Chinese agencies in the disputed areas of the South and East China Sea over the past year could have triggered a change of heart regarding the importance of Taiwan obtaining the platform. The strategic benefits for Taiwan would be obvious:
- The ability to counter a potential PLAN blockade of Taiwan would allow Taiwan to keep vital sea lanes of communication open for potential American assistance in a conflict scenario---which is vital for Taiwan's chances of surviving such a conflict.
-Enhanced mine-laying capabilities
-Asymmetrical counter to upcoming PLAN aircraft carriers
-Chinese anti submarine warfare capabilities are still widely seen as poor, which would give Beijing pause to issuing a green light for any potential military action that would involve its maritime forces.

The completion of a sale could also have political implications within Taiwan. Unlike the F-16 platform, the diesel sub acquisition by Taiwan would likely  provide thousands of jobs domestically within Taiwan, with many of them being in Southern Taiwan, a traditional political stronghold of the opposition Democratic Progressive Party (DPP). Although unlikely to be finished in such short order,  if such a agreement could be completed,  the KMT government could point to the economic benefits for Taiwan before the 7-in-1 municipal  elections taking place in 2014.

Although the talks between the U.S. and Taiwan have appeared to begun on some level, they are merely informal, as Taiwan appears to be testing the waters for more meaningful discussions regarding its desire to see a modern submarine fleet as part of its naval capabilities. Such a scenario remains a distant prospect, albeit slightly more likely in the future.

DPP showing political maturation during Chairman Su's visit to the United States

(Below are my observations from attending DPP Chairman Su Tseng-chang's speech today at The Brookings Institution in Washington DC)
     It is only natural in the aftermath of political defeat for a political party to embark on a "soul-searching" mission,  and reflect on what might have been in a victorious scenario; as well as look towards the future and frame a message that will garner support among its electorate that will push it to a victory in the next round of elections.  Much in the same way that the Republican party looked inward following the defeat of its candidate in 2012, the Democratic Progressive Party (DPP) in Taiwan has spent the past year and a half searching for an effective platform that will ideally appeal to the electorate of Taiwan, as well as placate international concerns about its position on relations with the People's Republic of China (PRC).

     The week long visit by DPP Chairman Su Tseng-chang to the United States has shown in myriad ways that the party is looking to not only learn from its past mistakes, but is striving to further evolve as a political party.    The speech given by Chairman Su at the Brookings Foundation on Thursday gave an insight into the DPP platform heading into Taiwan's "Seven in One" local elections in 2014, followed by the 2016 Presidential election.

     Su began by stating that he sees the DPP evolving into "more than an opposition party", and listed a number of specific policy alternatives from what is currently being offered by the ruling majority  Kuomintang (KMT) party, including a proposed domestic stimulus package, reforms of Taiwan's troubled pension system, opposition to the recent media acquisition controversy, and halting the activation of a 90% completed nuclear power plant in Taiwan amid safety concerns about nuclear power on the earthquake-prone island.

     Regarding the issue of cross-Strait relations, many analysts have pointed to President Ma's strategy of portraying the KMT as the party of stability in respect to its interactions with the PRC since Ma won the Presidency in 2008.  Additionally, many have concluded that 2012 DPP Presidential candidate Tsai  was viewed with suspicion by many government officials in Washington as being someone who would not continue the cross-Strait policies of Ma if elected (although sources who were present at these meetings between Tsai and US officials stated that the officials viewed her with suspicion from the outset of the meetings, and  was not given a fair opportunity to explain her positions regarding Taiwan-China relations with  such officials).

     Chairman Su believed that "after five years of improved ties between Taiwan and China, the pace of agreements between the two will decelerate and soon stall."  Because of this, Su stated his desire to see Taiwan "regain the confidence of its international friends" and looked for Taiwan to actively pursue trade ties in order to better integrate Taiwan into the international economic system.  He also pointed out that with the recent opening of the DDP's China Affairs Council (CAC) on May 9th, the DPP is willing to engage Beijing in order to improve relations.  However, Su did state that he felt the "political and military" differences between the two countries were too wide at the moment to actively engage in negotiations regarding these two issues.  Su also stated that Taiwan was "already a sovereign country with an official title that is the ROC", and that there was no need to change the status quo at this time.

         In the realm of Taiwan's national defense, Su accurately stated that "..democracy and security does not fall from heaven," and that "it is time to demonstrate that we are serious about our national defense," noting that while President Ma's 2008 campaign promise to have defense spending at 3.0% of GDP has never been reached, that under the prior administration defense spending was 2.7% of the annual budget in 2007, and reached 3.0% in 2008.  Su also stated that while Taiwan could not expect to win a war against China, Taiwan could "at least demonstrate determination" and make China "pay a huge price" if it chose to initiate military action towards Taiwan.  This author also agrees with Su's statements that national security should not be politicized, and decisions made  with the nation's security in mind be the paramount deciding factor.

     In conclusion, Su appeared to come to Washington with a clear agenda of talking points that were directed for both domestic and international consumption.  Phrases such as "rebalancing relations with the US", closing "gaps of perception" between the DPP and the United States, and DPP's "soul searching" were repeated often by the Chairman.  Su also looked to placate fears that mistakes made in the previous DPP Presidential administration (under President Chen shui-bian) would not be repeated, in regards to political "surprises" that many felt hindered the Taiwan-US relationship during Chen's tenure as President.  Perhaps the most revealing statement made by Su was that in attempting to become a "more responsible DPP", the party should make decisions that are not always popular with the electorate, but are good for the country.  While it remains to be seen if the DPP will adhere to this bold decision making rationale, it appears that a more mature Democratic Progressive Party is attempting to evolve, and in doing so will give the people of Taiwan a clear choice in choosing their elected leaders, instead of merely having a system in which the DPP plays the role of simple opposition and lacks alternative policies of its own.  In the end, Taiwan's democracy continues to evolve, which bodes well for not only Taiwan, but for the prospects of stability in the region as well.

US Department of Defense 2013 Report to Congress regarding Chinese Military and Security Developments: Analysis

The 2013 DOD Annual Report to Congress is an important tool to not only gain insight into the current modernization of China's military capabilities and doctrine outlooks, but to gain an equally important look into the mindset of the US Department of Defense related to the developments that are taking place in China. Below are excerpts taken from the report with some brief analysis. The report in its entirety can be viewed here.

Chapter 1: Annual Update 

Regarding Sovereignty Claims of the PRC: 
"In September 2012, China began using improperly drawn straight baseline claims around the Senkaku Islands, adding to its network of maritime claims inconsistent with international law"

China has continued to approach its territorial claims in a manner that run counter to international norms.  Its approaches of historical claims, as well as ambiguous markers, such as its nine-dashed line regarding claims in the South China Sea, continue to hinder China's objective of making a "peaceful rise" in terms of international standing.  States such as the Philippines, Vietnam, and Japan have all made military cooperation overtures on various levels towards the United States as a result of such practices.

Current Capabilities of the People's Liberation Army 

*Second Artillery

"By December 2012, the Second Artillery's inventory of short-range ballistic missiles (SRBM) deployed to units opposite Taiwan stood at more than 1,100" 

"To improve the lethality of this force, the PLA is also introducing new SRBM variants with improved ranges, accuracies, and payloads"

Although  relations between  China and Taiwan have improved on many levels during the Taiwanese Presidential administration  of Ma Ying-jeou, who took office in 2009, China continues to enhance and build up its missile deterrent towards Taiwan.  Many analysts within Washington have stated that enhanced cooperation between the two countries would lower China's aggressive military stance towards Taiwan, the levels in which the PLA  adds missiles pointed at Taiwan has not decreased since 2009.

PLA Navy (PLAN) 

"During 2012, China continued series production of several classes (of guided missile destroyers (DDG) and guided missile frigates (FFG), including construction of a new generation of DDG.  Construction of the LUYANG II-class DDG (Type 052C) continued, with one ship entering service in 2012, and an additional three ships under various stages of construction and sea trials, bringing the total number of ships of this class to six by the end of 2013"

The report also states the launching of the LUYANG III-class DDG (Type 052D) , which is expected to enter service in 2014. The DOD report states that the vessel will be the PLAN's "first multipurpose vertical launch system, likely capable of launching ASCM, land attack cruise missiles (LACM), surface-to-air missiles (SAM), and anti-submarine rockets."

Beijing has taken a rather patient and methodical approach to modernizing its Navy.  Previous suggestions that the PLAN was modernizing its fleet with a traditional  defensive doctrine in mind look to be inaccurate.   As reported by Toshi Yoshihara and James Holmes in September, "...having experimented with various DDG designs, the PLAN was simply settling on a model that incorporated the best of each test platform."

PLA Air Force (PLAAF) 

"China bases approximately 500 combat aircraft within unrefueled operational range of Taiwan and has the airfield capacity to expand that number by hundreds.  China continues to field increasingly modern 4th generation aircraft, but the force still consists mistly of older 2nd and 3rd generation aircraft..."

PLAAF J-31 Test Flight 

While the PLAAF continues to modernize its aircraft modernization, it still lacks the numbers of modern aircraft, modern doctrine approaches, and training of their American, Japanese, and Taiwanese counterparts. With the development of the J-20 and J-31, however, the gap in qualitative aircraft capability will continue to shrink in the upcoming years.  Taiwan once enjoyed a highly superior air force over their PLAAF counterparts, yet with the upcoming retirement of its F-4 fighter platform without a viable replacement, the long-term upgrading of its F-16 fleet that will take a sizable portion of its most advanced fighters offline for years at a time, and the expensive maintenance costs of its French-built Mirage fighters, Taiwan faces a dire need for a modern addition to its current Air Force fighter jet arsenal.

China continues to look for options to acquire a long range bomber platform.  It currently utilizes the H-6, which was acquired from the Soviet Tu-16 design in the late 1950s, and has recently upgraded its current fleet. If a new platform was acquired, it would provide additional strategic depth for the PLA's nuclear delivery capabilities.

Part 2 of the Analysis will examine the PLA's objectives of joint training, coordination, and military information operations.

Rumors abound regarding a potential SOFA agreement between the United States and The Maldives

     When most people think of the Maldives, pristine beaches, world-class scuba diving, and its threatened existence due to global warming tend to come to mind.  Yet it is the issue of a rumored and under-the-radar Status of Forces Agreement between the United States and the Maldives that is perhaps thrusting  this small island nation into an increasingly competitive game of risk between regional and world powers.

On April 24th, Maldivian journalist and human rights activist Azra Naseem posted an entry into her blog, Dhivehi Sitee, reporting on a draft agreement that she had seen in which the United States and the Maldives were reportedly close to signing. (the full copy of the draft the Azra Naseem has stated she has seen can be viewed in its entirety here).  If the stated Status of Forces Agreement (referred to hereafter as SOFA) is authentic and were to remain unchanged before both countries were to sign the document, it would entail some of  the following provisions:

*"United States personnel shall be accorded the privileges, exemptions, and immunities equivalent to those accorded to the administrative and technical staff of a diplomatic mission...."
-The document states that "United States personnel" would include members of the United States Armed Forces and civilian employees of the United States Department of Defense.  The document also states that "United States forces" means "...the entity comprising United States personnel and all property, equipment, and materiel of the United States Armed Forces present in the Republic of Maldives". 

*"United States personnel shall be authorized to wear uniforms while performing official duties and to carry arms while on duty if authorized to do so by their orders."

*"Vessels and vehicles operated by or, at the time, exclusively for the United States forces may enter, exit, and move freely within the territory and territorial seas of the Republic of Maldives..."


While SOFA's are not by any means uncommon within the United States Military structure (it currently has over 100 of them; each with varying levels of American autonomy and agreement), what makes a potential SOFA between the United States and the Maldives potentially controversial is the timing, considering the recent political upheaval in the Maldives.  In some aspects, the US approach towards a SOFA with the Maldives appears to be ripped straight out the People's Republic of China's foreign policy playbook.

A Realist Approach 

For decades, Beijing has approaches foreign relations with a certain sense of ambiguity, as it will conduct business with states that have democratic governments and strong positive human rights records (Sweden, France, Denmark, Canada) while jointly pursuing relationships with those states who have authoritarian systems and reputations of rampant human rights abuses (Sudan, Iran, North Korea, Zimbabwe).  With a blanket approach and deep pockets, the PRC has been able to make considerable inroads in geographic areas such as Sub-Saharan Africa, Central America, and the Pacific that have often been considered afterthoughts following the Cold War due to their perceived degraded strategic value.  Unlike the United States, which often attaches human rights and moves towards democratic rule a prerequisite for foreign aid (although there are glaring exceptions to this), China has no qualms about spreading its economic largesse in the name of self interest.

In the fall of 2011, China opened its new embassy in the Maldivian capital of Male, setting off alarms in both Washington and New Delhi.  Speculation was rampant within India that the PRC was looking to further solidify yet another  "friendly maritime ally in the region, following Beijing's enhanced relationships with Sri Lanka, Seychelles, Bangladesh, and Mauritius, and of course Pakistan.  Rumors also surfaced regarding China's desire to establish a naval submarine base on the Maldivian island of Marao.  During the time coinciding with the opening of the new PRC embassy in Male, Beijing also extended a $500 million dollar loan (USD) to the Maldivian government.  Overseeing these developments was Maldivian President Mohamed Nasheed, and the course of events the followed shortly thereafter remains shrouded in dispute.

Mohamed Nasheed 

On February 7th, 2012, President Mohamed Nasheed resigned on national television.  A mere 24 hours later, Nasheed stated that his resignation was coerced by army and police officials, and was threatened with death if he did not comply. His Vice President, Dr. Mohamad Waheed Hassan Manik was sworn in within the hour after the resignation.  The given reasons behind Nasheed's alleged resignation have remained vague.  It should be noted that prior to  Nasheed becoming  the first democratically elected President of the Maldives in thirty years, the country was under over three decades of one-party authoritarian rule.  Nasheed was also arrested and imprisoned multiple times in the 1990s, including one episode in which he claimed he was forced to "eat food mixed with glass".  It seems that an abrupt "resignation" of a Presidency that he fought decades for would not be in his nature.

Since Nasheed's resignation, there have been multiple alleged human rights abuses in the Maldives, as well as the sacking of cabinet officials from Nasheed's Maldivian Democratic Party (MDP).  According the British newspaper The Guardian, 

*"Amnesty International has described events in the Maldives as a "human rights crisis", reporting widespread police brutality and arbitrary arrests"

*"Nearly 2,000 peaceful demonstrators calling for elections have been detained by security forces, many beaten and hospitalised"

A number of celebrities and British government officials have publicly condemned the current situation in the Maldives, including Ed Norton, Sir Richard Branson, and Karen Bilimoria and Eric Avebury of the United Kingdom's House of Lords.

   

Interestingly, the new government has appeared to be more receptive towards American overtures of a military relationship, as shown by a recent joint exercise between American Marines and the Maldivian Navy

(Although joint exercises have taken place previously on a biannual basis,  sources  say that military  contact between the two countries increased shortly after the military coup took place in 2012)

One potential reason behind the relative lack of fanfare of a potential SOFA between the countries is the sensitive political climate that remains in the Maldives.  According to Naseem's post:

"Article 77(3) of the 2008 Maldives Constitution stipulates that:
No part of the territory of the Maldives shall be given to a foreign person or party for a military purpose for any period without the approval of the People's Majlis (Parliament)"

Nasheem also goes on to state that before the SOFA can be sent to Parliament for approval, it must be endorsed by the Attorney General of the Maldives.  Adding to the intrigue, on April 10th, April Azima was "relieved of her Attorney General duties, and transferred to the post of Minister of Gender, Family, and Human Rights".  Nasheem states that the current President Waheed appointed Aishath Bishama, a young appointee who was unlikely to disagree with higher authorities.  From the perspective of the United States, it is understandable that such an agreement would be kept under the radar, as domestic and international human rights advocates and organizations would demand more answers behind such an agreement with a country who has recent questions regarding its human rights record.  With some of  its military stationed in bases throughout the world in countries with questionable human rights records (Saudi Arabia, Bahrain, and Uzbekistan immediately come to mind), why is the United States government looking to establish yet another  military presence in a country that presently is in the midst of a political crisis in the and raise questions about its long stated goal of rewarding democracies and shunning oppressive regimes when possible?  The answer lies in the Maldives increasingly vital  geographic position.

Maldivian government officials being wowed on the carrier USS John C Stennis (3-31-2013) 

Vital Links 
Geography is the primary reason why the United States is looking to outflank China in regards to a military presence on the Maldives, and while doing so largely ignore the human rights questions within the island state.

The Gan Airfield has been strategically important since the Second World War

The Gan airfield  was administered by the United Kingdom as a military facility until 1976, when it handed over control of the Atoll to the Maldives.  It's location in the center of the Indian Ocean potentially allows for patrol aircraft to monitor wide swaths of vital shipping lanes in the Indian Ocean. It could also serve as a base for long range bomber aircraft with proximity to the Middle East and Eastern Africa, as well as a submarine and naval vessel resupply and repair center.   The United States currently leases a base with similar purposes from England on the island of Diego Garcia.  The Diego Garcia base lies nearly 700km to the south of the Addu Atoll, but with America's lease on the island set to expire on 2016, with a deadline on renewal in 2014.  The island is also reputed to be one of America's "black site locations", a location used to interrogate high value captures, often from states targeted in the "War on Terror".


Conclusion: 

The governments of both the United States and the Maldives deny that any SOFA is imminent.  In the past two weeks both countries have issued blanket denials regarding the speculation.  There have not, however, been denials that talks have taken place in recent months.  The aggressive pace in which the United States is pursuing some sort of binding agreement, however, suggests that defense officials in Washington place a high value on having some level of a permanent military  presence within Maldivian territory.  The timing of the ouster of Mohamed Nasheed that coincided with almost immediate engagement between Washington and Male raises further questions.  While China's $500 million dollar loan offer  to the Maldives was an overt attempt by Beijing to curry favor with officials, it is not yet clear what sort of incentive the United States is prepared to offer in return for potential basing rights within the country.  What is clear, however, is that the current Administration is prepared to resort to Beijing's foreign policy blueprint of foreign relations realism, and toss aside the necessity of democracy and human rights if a situation beneficial to the United States strategic position arises.  Hans Morgenthau would be most proud.