Amid China's worsening trade-war fueled economic slide, the Communist country's April decision to slap a 25% tariff on imports of US soybeans has remained one of its most rewarding retaliatory maneuvers. So far, at least, the food-price inflation that many feared would follow hasn't materialized - while the plunge in soybean purchases (imports to China fell 94% between the beginning of September and mid-October) has helped maximize the pressure on Trump-supporting farmers in North Dakota, Iowa and across the US farm belt.

When the British took Hong Kong over in the late 1800s, it was nothing more than an irrelevant backwater made up of fishing villages and illiterate fishermen.

But after a few decades, it became one of the most prosperous places in the world.

he US pressed China to halt militarization of the South China Sea during a joint news conference on talks aimed at smoothing already tense relations ahead of this month's G20 summit in Argentina.

“We have continued concerns about China's activities and militarization in the South China Sea,” US Secretary for State Mike Pompeo told media following talks on Friday with US Defence Secretary James Mattis and their Chinese counterparts.

We pressed China to live up to its past commitments in this area,” he added.

In response, Chinese Politburo member Yang Jiechi said the situation in the South China Sea was “treading towards greater stability,” but rebuked Washington over its sending of warships and military aircraft near Chinese islands and reefs, in what he described as actions that undermined Chinese interests.

Beijing’s fifth-generation stealth jets displayed a dazzling fifteen-minute performance earlier this week at Airshow China 2018. The jets wowed more than 20,000 spectators by performing combat maneuvers in Zhuhai, South China's Guangdong Province, said People's Daily Online.

The J-20 stealth jets were first unveiled to the public at Airshow China 2016.

Wei Dongxu, a Beijing-based military expert, told the Global Times on Tuesday that the J-20s sported a new camouflage look for improved stealth capability.

It seems that China's fifth-generation stealth capabilities could be on par with the US. This threat will certainly not going unanswered by the West. China is preparing for war with new stealth technology, as a trade war between both countries is spiraling out of control. When trade stops, that is when a hot conflict could develop over the South China Sea.I

Forget PIK - this is PIG.

Regular readers of Zero Hedge are probably familiar with money-for-oil loans. But one liquidity-challenged pork producer is pushing an absurd twist on that concept that has helped to expose the financial dysfunction at many small- and medium-sized Chinese companies.

Instead of receiving cash, holders of local-currency bonds issued by Zhengzhou-based pork producer Chuying Agro-Pastoral Group Co will be paid with the company's ham, thanks to an agreement reached between the company and its creditors. Assuming the agreement, which was revealed in a security filing on the Shenzen Stock Exchange, holds, the "in kind" payments will only apply to the interest on the bonds, according to the South China Morning Post.

According to The South China Morning Post, "some of China's smartest students have been recruited straight from high school to begin training as the world's youngest AI weapons scientists." A total of 27 boys and four girls all under the age of 18 were chosen for the four-year "experimental program for intelligent weapons systems" at the Beijing Institute of Technology (BIT) from more than 5,000 candidates. From the report:The BIT is one of the country's top weapons research institutes, and the launch of the new program is evidence of the weight it places on the development of AI technology for military use. "These kids are all exceptionally bright, but being bright is not enough," said a BIT professor who was involved in the screening process but asked not to be named because of the sensitivity of the subject. "We are looking for other qualities such as creative thinking, willingness to fight, a persistence when facing challenges," he said.

China’s “Belt and Road Initiative” is famous as an extension of their domestic infrastructure investments, but Russia is also investing heavily in infrastructure. Both countries need to do it in order to improve the future for their respective populations, and both Governments have avoided the Western development model of going heavily into debt in order to pay for creating and maintaining infrastructure. Both are, in fact, exceptionally low-debt Governments.

According to the “Global Debt Clock” at Economist, China has a public debt/GDP of 17.7%, and Russia’s is 8.0%. For comparison, America’s is 93.6%. (Others are: Germany 85.8%, Spain 91.2%, Italy 122.6%, Greece 147.1%, India 54.2%, Pakistan 47.0%, and Brazil 55.0%.)

Things are again rapidly heating up in the East China Sea amidst already heightened tensions in a region where Washington is increasingly asserting the right of navigation in international waters against broad Chinese claims and seeking to defend the territorial possessions of its allies.

According to a bombshell new Reuters report the tiny and rocky Senkaku Islands which lie between northern Taiwan and the Japanese home islands are “rapidly turning into a flashpoint for war”. Alarmingly, Japanese government sources have been quoted as saying Tokyo and the United States are drawing up an operations plan for an allied military response to Chinese threats to the disputed Senkaku Islands.

From nearly the start of his entering the White House, President Trump has said he’s committed to upholding Article 5 of the US-Japan security treaty signed the post-war years of the mid-20th century:

Communicating is the most vulnerable element in any foreign agent operation, particularly as counter-intelligence services commit major resources to cracking the systems used to link an agent in the field with his case officer or handler, who might be in the same country under diplomatic cover but just as easily might be in another nearby country or halfway around the world.

Things are again rapidly heating up in the East China Sea amidst already heightened tensions in a region where Washington is increasingly asserting the right of navigation in international waters against broad Chinese claims and seeking to defend the territorial possessions of its allies.

According to a bombshell new Reuters report the tiny and rocky Senkaku Islands which lie between northern Taiwan and the Japanese home islands are "rapidly turning into a flashpoint for war". Alarmingly, Japanese government sources have been quoted as saying Tokyo and the United States are drawing up an operations plan for an allied military response to Chinese threats to the disputed Senkaku Islands.

The Senkaku Islands, historically claimed by both Japan and China.

Although the incident occurred in late September, some details, namely a transcript of the verbal exchange between the crews of both ships, have surfaced only now. According to Chinese authorities, the country’s destroyer lawfully reacted to a foreign ship entering their sovereign waters.

An unnamed UK defense company has been granted a license to supply an unlimited quantity of goods to China's military, "including airborne radar technology likely to be used by the PLA Air Force," reports Stephen Chen of SCMP.

The contract governed by an "open individual export license (OIEL)" has been active since April, two months after Prime Minister Theresa May visited Beijing, as made public by Britain's Department for International Trade.

Unlike previous deals involving British arms sales to China, which were capped by amount and value, under the new agreement the supplier can “export an unlimited quantity of goods”, including equipment, components, software and technology for military radar systems, the department said.

Its strategic export control database described the equipment covered by the licence as “target acquisition, weapon control and countermeasure systems” for “aircraft, helicopters and drones”. -SCMP

"Worry about your own damn self (Mr. Trump)."

That was the overriding message delivered by Chinese President Xi Jingping during his address at the International Import Expo Opening Ceremony in Shanghai on Monday, which featured more than 3,600 companies from 172 countries, regions and organizations, and where Xi urged critics of China's policies to worry about their own problems before opining on China's, according to the FT.

"Each country should work hard to improve its own business environment. One cannot always beautify oneself while criticising others, and one can’t shine a flashlight on other people without looking at oneself," said Mr Xi.

Turkish Foreign Minister Mevlut Cavusoglu’s recent remarks echoed President Recep Tayyip Erdogan’s earlier call to put an end to the dollar’s domination and begin trading in national currencies.

Delivering an opening speech at the 18th session of the D-8 Council of Foreign Ministers in Antalya, Turkish Foreign Minister Mevlut Cavusoglu announced that Ankara was looking to engage in trade with Russia, China and Iran using national currencies.

“We are experiencing a period of trade wars. The best response against this would be using our local currencies in trade. Turkey is preparing to do trade in local currencies with countries such as China, Russia, Iran and Ukraine. We also continue such negotiations with other countries,” he said.

After horrifying the executives at HBO by tweeting a meme about the impending reinstatement of sanctions against Iran on Friday (the image was a play on HBO's "Winter is Coming" advertising campaign for its hit series "Game of Thrones"), President Trump clarified that the White House remained open to working out a "more comprehensive" agreement with Iran that would ideally help curb the regime's "malign activities" in the Middle East and "forever block" Iran from building nuclear weapons.

This isn't the first time that Trump has said he is open to a "new deal" with Iran. But the mildly less threatening rhetoric was, we imagine, designed to encourage the pullback in oil prices seen in recent weeks. Earlier in the day, Secretary of State Mike Pompeo said the US would grant sanctions waivers to eight countries (but not the European Union as a whole). The US has also decided not to encourage SWIFT to disconnect Iranian banks from the global financial system.

The last chance to avoid a full-blown 2019 trade war may come later this month when President Trump is scheduled to meet with Chinese President Xi Jinping at the G-20 Buenos Aires summit in the city of Buenos Aires, Argentina. It will be the first-ever G-20 summit to be hosted in South America and could be one of the most significant meetings in quite some time -- as both leaders will try to resolve trade disputes.

Right now, the economic impact of the escalating trade war between Washington and Beijing seemed to deepen last month as factory activity and export orders dove across Asia, with some analyst warning Reuters that the worst has yet to come.

Washington is pressuring Beijing to act like a “normal nation” on the world stage, Mike Pompeo has repeated, accusing China, ironically, of disregarding international laws and seeking to impose “decades of pain” around the globe.
“We’re very worried that China will put the people in many countries around the world, in Africa and Central America and Latin America, in a debt trap that will cause those countries decades of pain,” the Secretary of State said on the Laura Ingraham Show

Secret U.S. missile and electro-optics technology was transferred to China recently by Israel, prompting anger from the U.S. and causing a senior Israeli defense official to resign.

The head of defense exports for the Israeli Defense Ministry resigned after a U.S. investigation concluded that technology, including a miniature refrigeration system manufactured by Ricor and used for missiles and in electro-optic equipment, was sent to China, according to the Israeli newspaper Maariv.

Another Israeli news site, Aretz Sheva, reports the U.S. is concerned the technology could ultimately find its way to Iran, which last year sought to buy military equipment from China for its nuclear program.

One of the key responsibilities of the Southern Theater Command is protecting China’s interests in the South China Sea, where Beijing claims sovereignty over a number of islands. The sea is of strategic importance to Chinese trade. The US rejects the territorial claims and has been sending so-called Freedom of Navigation missions through the waters and airspace, which Beijing considers its own, as a gesture of defiance.

Chief of US Naval Operations Admiral John Richardson said Tuesday the US and China “will meet each other more and more on the high seas” as the two nations confront each other in the South China Sea.

It has been a while since the market was reminded of how quickly and violently it can be rocked as a result of Trump's mood swings, and moments ago it got a quick refresher when Bloomberg reported that the U.S. is preparing to announce by early December tariffs on all remaining Chinese imports if next month's talks between presidents Donald Trump and Xi Jinping fail to ease the trade war.

As Trump had threatened previously, the latest tariff list would would apply to all imports from China that aren’t already covered by previous rounds of tariffs which would add up to $257 billion using last year’s import figures.

Approximately 2,500 researchers from Chinese military universities have infiltrated Western universities over the past decade, focusing on the so-called "Five Eyes" group of countries, reports the Financial Times, citing a new report from Australian government-funded think tank, the Strategic Policy Institute (ASPI).

According to the report, many of the Chinese researchers failed to disclose their military affiliations, while publishing a large volume of joint papers with Western scientists which can help Beijing's technological ambitions.

Egon von Greyerz met with a large group of individuals from China that manage money for the elite in China.

Chinese Ambassador to Tehran Pang Sen underlined his country's full support and continued cooperation with Iran despite the US sanctions.
"We are strongly opposed to any unilateral sanctions. We oppose the US sanctions (against Iran). We will continue our cooperation with Iran," Pang said on Sunday.

He added that Iran and China have been in contacts and consultations in the past few months to find ways to continue their cooperation during the sanctions era.

Pang also said that Beijing supports Iran's full membership in the Shanghai Cooperation Organization.

China is one of the main customers of Iran's oil and a trade partner.

Beijing and Tokyo sealed a multi-billion dollar currency swap arrangement on Friday, aimed at enhancing financial stability and spurring business activity in both countries.

According to the Bank of Japan (BOJ), the arrangement which will last until October 25, 2021, will allow the exchange of local currencies between the two central banks for up to 200 billion yuan or 3.4 trillion yen ($30 billion).

And of course it is a good thing that nobody has been hurt by these devices. Obviously targeting anyone with packages containing explosive materials is terrible, even if those devices were not rigged with the intention of detonating and harming anyone, and it is a good thing that not a single one of them has done so. It is a good thing that none of America’s political elites were targeted by the sort of explosive device that America drops on people in other countries every single day.

You know, the kind that actually explode.

Apparently some Acme comedy bombs mailed to a number of extremely rich people, which thankfully did not hurt anybody at all, are infinitely more newsworthy than the real bombs which maim and destroy children in Yemen on an industrial scale.

— Craig Murray (@CraigMurrayOrg) October 24, 2018

Ties may be warming between Beijing and Tokyo but rapprochement is dividing Japan, with some questioning if it is worth risking upsetting one of the island nation’s key allies: the United States.

The former commander of the U.S. Army in Europe says it’s likely the United States will be at war with China in 15 years.

Retired Lt. Gen. Ben Hodges said at a Warsaw security forum on Wednesday that European allies will have to do more to ensure their own defenses against Russia as Americans focus more on the Pacific.

Just after U.S. warships again made a provocative passage through the Taiwan Strait on Monday, further making already strained tensions between the Washington and Beijing — currently in the midst of a trade war — even hotter, Steve LeVine at Axios poses the question long on the Western public's mind: what are the chances of a US-China war?

LeVine recently crossed paths with Graham Allison, who published his explosive "Destined For War: Can America And China Escape Thucydides Trap?" a year ago which detailed the reasons for a coming major war being all but inevitable, sparking a global debate about the Harvard professor's controversial thesis. LeVine followed up with Allison in relation to the recent uptick in tensions in the region of the South China Sea:

He said, if history holds, the U.S. and China appeared headed toward war.

Over the weekend, I asked him for an update — specifically whether the danger of the two going to war seems to have risen.

North Korea imported at least $640 million (£493 million) worth of luxury goods from China last year, in defiance of UN sanctions outlawing such trade over North Korea's nuclear and missile programmes, a South Korean politician said on Monday.

The United States has urged strict implementation of sanctions as part of a "maximum pressure" campaign which Washington has credited with bringing impoverished North Korea to the negotiating table.

But there have been signs the campaign has been losing steam since North Korea suspended nuclear and missile tests and leader Kim Jong-un vowed steps towards denuclearisation at a US-North Korean summit in June - and as China and Russia called for relaxed sanctions.

Lu Wei, once the gatekeeper of the internet for the entire population of China, pleaded guilty on Friday to abuse of power and accepting what amounted to US$4.6 million in bribes over the span of his 15-year career.

Lu Wei also made a final statement to the court, and admitted guilt and expressed regret,” Xinhua said.

Wei became the head of the Cyberspace Administration of China (CAC), in 2014, after a career in which he rose to become the director of the state news agency Xinhua, then worked at the Beijing municipal party committee, and the party’s Central Publicity Committee.

As head of the CAC, Wei controlled China’s notorious regime of internet censorship—which included blocking access to Facebook, Google, and Twitter, and introducing criminal charges against citizens who posted banned content.

China's President Xi Jinping today officially launched the world's longest sea bridge that cost £14 billion to build and connects Hong Kong, Macau and mainland China.

The 55-kilometre (34-mile) crossing, which includes a snaking road bridge and underwater tunnel, will open to traffic tomorrow at 9am local time, linking Hong Kong with the southern mainland city of Zhuhai and the gambling enclave of Macau, across the waters of the Pearl River Estuary.

The submerged tunnel, which is under the Lingding Ocean near Hong Kong, is connected by two artificial islands each occupying 10,000 square metres (one million square feet). At 6.75 kilometres (4.2 miles) long and 40 metres (131 feet) deep, the tunnel creates a gap in the bridge that will allow cargo ships to pass through the busy delta.

Xi presided over an inauguration ceremony attended by Hong Kong's and Macau's city leaders at a new port terminal in Zhuhai.

US President Donald Trump threatned Russia and China that Washington intends to build up its nuclear arsenal until “people come to their senses.”
The president said his words were directed towards Moscow and Beijing, as he prepared to unilaterally leave the Intermediate Nuclear Forces in Europe (INF) treaty. The US president implied China should be part of any new nuclear arms control treaty.

“Russia has not adhered to the agreement,” neither in form or in spirit, Trump told reporters outside the White House on Monday, before departing for a campaign rally in Texas.

Until people come to their senses, we will build it up

One wonders what went on in Russian minds during last month’s spectacle of US President Trump raking Beijing over the coals on accusations of meddling, in the upcoming US midterm elections, to try to undermine his trade policies.
Certainly the Chinese, who evidently didn’t expect it, were shocked and outraged, but it was behavior to which Moscow was accustomed to being on the receiving end of – this time aimed at someone else for a change.

Geng Shuang, China’s Foreign Ministry spokesman, called Donald Trump’s claims “totally far-fetched and fictional,” and advised the “US side to stop its unwarranted accusations and slander against China and refrain from wrong words and deeds that might hurt our bilateral relations and fundamental interests.”

The Justice Department has brought its first criminal case over alleged Russian interference in the 2018 midterm elections.

Elena Khusyaynova, 44, a St. Petersburg, Russia-based accountant, was charged in a criminal complaint with conspiracy to defraud the United States for taking part in a scheme to spend in excess of $10 million since the beginning of the year on targeted social media ads and web postings intended “to sow division and discord in the U.S. political system.”

Khusyaynova, who is not in U.S. custody, allegedly works for Concord, a Russia-based firm that special counsel Robert Mueller's office indicted in February for alleged interference in the 2016 election.

A crucial Pentagon report on the US defense industrial base and “supply chain resiliency” bluntly accuses China of “military expansion” and “a strategy of economic aggression,” mostly because Beijing is the only source for “a number of chemical products used in munitions and missiles.”

Russia is mentioned only once, but in a crucial paragraph: as a – what else – “threat,” alongside China, for the US defense industry.

Russia’s Ministry of Economic Development said on Thursday that Moscow and Beijing are working on an inter-governmental agreement to boost the use of the ruble and yuan in mutual trade settlements.

“The document is currently being prepared, the process is not easy,” said Deputy Minister of Russia’s Economic Development Sergey Gorkov, as quoted by TASS. “Russia and China have had some experience of using national currencies in bilateral trade.”

Gorkov added that Russia and China have been successfully implementing the terms of ruble-yuan currency swap agreement, clinched in 2014 to boost trade using national currencies and eliminate dependence on the dollar and the euro. The deal was extended at the end of 2017.

China’s local governments may have accumulated 40 trillion yuan ($5.8 trillion) of off-balance sheet debt, or even more, suggesting further defaults are in store, according to S&P Global Ratings.

“The potential amount of debt is an iceberg with titanic credit risks,” S&P credit analysts led by Gloria Lu wrote in a report Tuesday. Much of the build-up relates to local government financing vehicles, which don’t necessarily have the full financial backing of local governments themselves.

Last week, the Global Times confirmed that the Hong-20, China's newest long-range stealth bomber was ready for imminent trial flights.

Now, it seems Chinese media, as per Defense Blog, has indicated that the stealth bomber will be unveiled during a massive military parade in 2019.

As President Donald Trump continues to ramp up trade pressure on China, Beijing may be "less motivated to cooperate" with the U.S. over sanctions against North Korea, an expert told CNBC Wednesday.

"China has been taking steps to relax its enforcement of sanctions even before the trade tensions with the United States flared up," according to Scott Seaman director of Asia at political risk consulting firm Eurasia Group.

But as the trade war between the world's two largest economies drags on, China could find more reasons to relax its enforcement of sanctions against North Korea, he said.

China’s soybean imports in June jumped 13.1 percent from a year ago as buyers scooped up Brazilian supplies to avoid potentially higher costs on U.S. soybeans that are subject to Beijing’s tariffs, customs data showed on Friday.