Center for a New American Security

China is just one of the many East and Southeast Asian states that continues to pursue nuclear power in the wake of the March 2011 disaster at Japan’s Fukushima Daiichi nuclear generating station. But China, like most other states with nuclear reactors or aspirations, has not been blithe about the Fukushima crisis. According to The Wall Street Journal on Saturday, “China was one of the world's fastest-growing nuclear markets before the March disaster at Japan's Fukushima Daiichi nuclear-power facility.” That changed in March when “China's State Council, China's cabinet, ordered a suspension of approvals for new nuclear plants and began a nationwide nuclear-safety review as public fear over nuclear power widened after the Fukushima Daiichi incident.”

To help China improve its safety standards and develop other expertise, The Wall Street Journal reported that the U.S.-based Exelon Corps – which provides support services to the nuclear industry – will partner with China’s state-owned China National Nuclear Corps (CNNC), a move, the Journal says, that suggests that “China's secretive state-owned nuclear companies are determined to learn Western safety practices and other expertise in the aftermath of Japan's nuclear incident in March.”

CNAS is just several weeks away from publishing a major study on the South China Sea (look for it sometime early in January 2012). But with U.S. and other East Asian leaders preparing to meet in Bali on November 19, and the South China Sea likely to be a focus for some of those world leaders, it is important to keep track of the trends developing in the region.

Just yesterday, the commander of the U.S. Navy’s Seventh Fleet, Vice Admiral Scott Swift, raised concerns that minor territorial disputes in the South China Sea could precipitate greater conflict in the region. “There are lots of positive examples that people are reaching for dialogue as opposed to defense to solve these problems,” Swift said. Nevertheless, “A ‘miscalculation’ on the part of one actor could lead to the point where ‘presidents and premiers are engaged in a discussion to ensure it doesn’t escalate to something that nobody in the region wants,’” Swift cautioned, according to The Wall Street Journal.

The annual Asia Pacific Economic Cooperation (APEC) summit is underway in Honolulu. Trade representatives from the United States, China and 19 other countries will meet this week to discuss, among other things, a U.S. proposal for a Trans-Pacific Partnership, a free trade plan touted as the largest plan since the 1994 North America Free Trade Agreement. While most eyes will be focused on the TPP, another important agenda item worth following is the U.S. proposal for APEC countries to pledge to reduce tariffs on environmental goods – including green technologies like solar panels and wind and hydroelectric turbines – to 5 percent.

Supporters of the U.S. proposal have praised the Obama administration’s efforts to push the plan as a positive step in helping promote U.S. green economic growth. According to Reuters, “It's an environmental plan for the Asia-Pacific region that even President Barack Obama's harshest Republican critic could love: cut taxes paid by corporations and reduce market-distorting regulation.”

Despite slow economic recovery, the global green energy market continues to grow, with foreign markets offering significant opportunities for U.S. green energy companies. “A 2010 Commerce Department report said the global market for environmental technologies was $782.4 billion in 2008 and the United States was by far the largest single market, accounting for $299.5 billion of the total,” reported Reuters. That same Commerce Department report found that “foreign markets, particularly those of developing countries, continue to grow at a higher rate and offer the most opportunities for U.S. companies.”

Last month, I wrote a post trying to explain China’s energy strategy in order to make an observation about why China is so invested in protecting potential hydrocarbon resources in the South China Sea. That is, that China’s energy strategy relies in part on developing a broad portfolio of energy sources that does not overly rely on Middle East oil that must transit the Strait of Malacca or overland pipelines from Central Asia that must pass through vulnerable transit states like Burma and Pakistan. Indeed, for Beijing, the South China Sea is one potential input into China’s broader energy strategy that can help the Chinese mitigate their vulnerabilities elsewhere. Thus, China is determined to protect its interests there, which means challenging other states that could potentially exploit the seabed resources for themselves.

Yet, importantly, China’s energy strategy is based not just on those external challenges it faces, but domestic energy challenges as well. In recent years China has been investing heavily in coal development and hydroelectric projects to generate energy from domestic resources in order to reduce its dependence on oil imports. But these domestic energy resources themselves have their own vulnerabilities that only reinforce China’s need to seek energy abroad – and its assertive action to acquire those energy resources.

Last week, The Wall Street Journal reported that China once again faces an energy shortfall this winter in part because of limited energy resources at home. The report said that China’s State Electricity Regulatory Commission cautioned “that falling hydroelectric power output and tight coal supplies could result in a shortfall of at least 26 million kilowatts in the months ahead.”

Tomorrow, CNAS will formally launch Hard Choices: Responsible Defense in an Age of Austerity, at an event at the Newseum beginning at 8:30 AM. If you’re in downtown Washington, I strongly recommend stopping by. Along with the authors LTG David Barno, USA (Ret.), Dr. Nora Bensahel and Travis Sharp, Thomas Donnelly (of AEI) and Gordon Adams (of the Stimson Center) will discuss the critical question facing policymakers on Capitol Hill today: How can the United States responsibly and effectively maximize its security in this era of growing fiscal austerity?

Hard Choices does yeoman’s work in highlighting the implications of tough budget cuts on America's military capabilities and is a must-read for anyone who truly wants to understand the debate that is playing out on the Hill and across the river at the Pentagon. The report outlines four scenarios for defense budget reductions, with each scenario reflecting more defense cuts, and analyzes the strategic implications for the U.S. military under each example.

For me, one of the hallmarks of the report is the emphasis on the need to rethink U.S. defense strategy as it currently stands and the careful articulation of where U.S. priorities should be. “The United States has pursued a remarkably consistent military strategy over the past 65 years, although different American leaders have adopted varying approaches to national security,” the report states.

On Friday, the Burmese government announced that it would halt the construction of a Chinese-backed dam on the Irrawaddy River, marking a significant setback for China that has increasingly relied on Burma for access to energy and natural resources to feed its growing economy.

(Note: I first saw the report on The Wall Street Journal on Friday, but was glad to see it make it into the weekend news with a report by The New York Times on Saturday. Both reports are worth a read.)

As I noted on Twitter on Friday, the Burmese government’s announcement is an interesting departure from its close partners in Beijing, and may signal a growing rift between the two states. “The dam’s suspension was a blow to China, long considered a benefactor to the government in Myanmar,” The New York Times reported. “China Power Investment, a state-run Chinese company, was leading the construction of the project, which would have delivered electricity to southern China. It is unclear how the suspension will affect six other Chinese-led hydroelectric projects in northern Myanmar.”

China has increasingly relied on close ties with the Burmese government in order to secure access to natural resources and to gain rights to develop overland energy pipelines to deliver natural gas and other fossil fuels to southern China. Indeed, Burma has become a critical energy transit state for China that is busily developing a portfolio of overland pipelines and access to maritime resources as part of its overall energy strategy. For example, as the Times reported, “A pipeline that would carry natural gas and oil from the Bay of Bengal to southern China is currently under construction.”

Last week someone remarked to me that one research area that we really haven’t dug into – excuse my pun – is on land and security. And this person is right. That’s probably why I was drawn to this report in The New York Times on Saturday: “Farmers in China’s South Riot Over Seizure of Land.”

“Rioters in the southern Chinese province of Guangdong have besieged government buildings, attacked police officers and overturned SWAT team vehicles during protests this week against the seizure of farmland, said officials in Shanwei, a city that skirts the South China Sea not far from Hong Kong,” The New York Times reported. “The violence was the latest outbreak of civil unrest in China fueled by popular discontent over industrial pollution, police misconduct or illegal land grabs that leave peasants with little or no compensation.”

I think it’s safe to say that we have a pretty good idea of how land grabs (and a range of other land issues, including deforestation and degradation) can produce instability in a country, and what the potential implications may be for security. But there are other interesting questions that often go unanswered when our analysis is focused too pointedly on the potential consequences of land issues. For example, what is behind land grabbing and other environmental land degradation in a country? Is it part of a larger trend we need to be attuned to? In China, these questions offer some interesting answers and observations.

Yesterday I had the honor of testifying to the House Foreign Affairs Subcommittee on Asia and the Pacific on rare earth elements. Other than the Chairman misstating that I attended Ohio University (rather than THE Ohio State University), I think it went well.

Minerals are becoming a hot topic these days. The New York Times had yet another big piece on China’s rare earth exports last week. To boot, this subcommittee’s Chairman, Don Manzullo of Illinois, has someone from the State Department detailed to his committee working hard on the rare earths issue, and he has been seeking information and dialogue with key players from around the government on this topic for months. This is important work, and you’ve got to commend Rep. Manzullo for taking it up. We need to improve relations with China, and what should be working level issues like minerals supply chains should not be standing in the way.

Last week, The Times of India reported that India’s Oil and Natural Gas Corporation (ONGC) Videsh would, with Vietnam’s support, continue its exploration for oil and natural gas resources in the South China Sea. The announcement came despite warnings from China that it expects countries outside the region to stay out and support bilateral cooperation between China and its Southeast Asian neighbors as they deal with their competing claims.

The move by Vietnam to invite ONGC Videsh to the region is a particularly interesting maneuver, one that suggests that bilateral cooperation between Beijing and Hanoi may be more difficult than initially thought – at least in the near term. Vietnam seems to be hedging by deepening its ties with India, which observers note is increasing its Naval and Air Force capabilities to offset China’s strengthening military.  For Vietnam, strengthening its ties with India – and leveraging its military capabilities – it hopes will help it develop a stronger bargaining position in the region; after all, Beijing has shown that it prefers bilateral deals with countries in the South China Sea as opposed to working multilaterally (e.g., with ASEAN or within the East Asia Summit) for similar reasons: it can leverage its economic and military strength to its advantage much more efficiently.

China is likely to keep a watchful eye on the developing Indian-Vietnamese relationship, which could in the near-term chill cooperation in the South China Sea. Perhaps in the long-term the leveling of the playing field will work to facilitate cooperation, though. It is difficult to tell, but I’m fairly confident that cooperation is still possible if the conditions are right.

Last week, the Department of Defense (DOD) released its annual report to Congress on Chinese military and security developments. While the report largely mimics last year’s submission to Congress, this year’s does provide some interesting breakout boxes on issues that we are studying here at the Natural Security blog. Of particular note are the sections on China’s territorial disputes and regional energy strategy, two areas that are particularly important in trying to understand China’s activities in the South China Sea.

According to the DOD study, “China’s broad claim to potentially all of the South China Sea remains a source of regional contention.” The Defense Department points to China’s increased naval activity in the South China Sea and other parts of the region as a particular source of angst: “In recent years, some of China’s neighbors have questioned Beijing’s long-term commitment to peacefully and cooperatively resolve the remainder of its disputes. PLA Navy assets have repeatedly circumnavigated the South China Sea since 2005, and civilian enforcement ships, sometimes supported by the PLA Navy, have occasionally harassed foreign vessels.”