The Geopolitics Of China [复制链接]

Summary In public, the Chinese government has sought to present a fairly confident picture of the country’s capabilities and response to the global financial crisis. But the internal assessment is very different, and the problem is not limited to the impact of a global financial slowdown. Analysis Related Special Topic Page     * China’s Economic Imbalance Chinese leaders and media recently have been proffering relatively upbeat assessments of Beijing’s ability to cope with the global financial crisis, suggesting that China not only can weather the crisis, but can perhaps even come out in a stronger global position. Beijing has been particularly eager to emphasize its 4 trillion yuan (US$585 billion) “stimulus” package — pledged not just as a boost for the Chinese economy, but also as a contributing factor to a global recovery. But behind the optimistic facade, there are much deeper worries in Beijing. There are concerns about the Chinese economy as well as about the government’s ability to handle problems at home given the international economic slowdown. Chinese economists recognize that the global financial crisis is not the direct cause of Beijing’s woes, but simply a compounding factor, exacerbating an already-existing and increasingly apparent domestic crisis. What the crisis has done, however, is bring China’s problems squarely into the light. Beijing had long managed the situation through a combination of continued support of the export-driven industries (or at least minimal controls on them) and supplementation of domestic demand via large infrastructure projects (the Tibet railway and the West-East natural gas pipelines being recent examples). In short, China relies on continued inflows of money from exports and investments to support its own domestic spending on its interior provinces. However, Beijing also has relied on a relatively stable or rising global economy to enable it to carry out the deeper reforms needed to strengthen its domestic economy, without also ripping the fabric of Chinese society. But with global economic stability slipping, China’s economic buffer is fast disappearing — raising fears that a long-delayed reckoning can no longer be pushed back. The Chinese Economy and the Threat of Unrest For Beijing, these efforts, and the recognition that the Chinese economic model is not sustainable, trace back much further than the current crisis. In the 1990s, as the Chinese economy recovered from the temporary international political setbacks triggered by the 1989 Tiananmen Square incident, Beijing happily continued down the path of the Asian tigers, promoting high rates of growth through economic programs that were resource-intensive, based around strong export growth, and heavily dependent on continued foreign investment. When the inevitable crisis struck East Asia in 1997 and 1998 — something that should have been foreseen after Japan’s descent into malaise a few years earlier — China was not immune. Its gross domestic product (GDP) growth rate fell as low as 6.8 percent for the second quarter of 1998, compared to 9.5 percent in the second quarter of 1997. This was a far cry from the double-digit negative growth rates seen in some Southeast Asian countries at the same time, and in many ways China appeared to dodge the bullet of the 1997 meltdown. Chart: Chinese GDP Growth But Chinese policymakers still heard alarm bells going off. They believed at the time that anything below 7 percent growth would not provide enough jobs to soak up the new workers joining the workforce, and they were afraid that rising unemployment could destabilize the country politically. Given the deep economic divisions between China’s wealthy coastal regions and its less-developed interior, Beijing has a deeply ingrained fear of anything (such as high unemployment) that increases social unrest, and thus Chinese economic policy is designed primarily with social stability in mind. It has not been all that many decades since these economic disparities brought the Chinese Communist Party to power, and Beijing is well aware that the same disparities could unseat the Party if they are not well-managed. This fear sent the government scrambling. The recognition that the Asian model — cheap capital and high export-driven growth — wasn’t all it was cracked up to be led to a reformation of Chinese thinking, at least in spirit. Beijing took a bipolar approach to the imminent crisis, seeking to address the short-term social crisis by ramping up exports just to keep funds flowing, while also trying to rectify the long-term contradictions in the Chinese economic model. When the Party’s Central Economic Committee met in December 1998, it announced an ambitious refocusing of the Chinese economic model. The new approach would emphasize profitability and sustainability of growth, rather than growth for its own sake. In practice, however, such plans were overtaken again and again by the fundamental need to maintain social stability through continued employment, the desire by various interests to maintain the high-growth-rate model for their own financial and political ends, and the underlying structure of the Chinese bureaucracy, which had grown flabby, unwieldy and resistant to change. Over the ensuing decade, there were occasional moves to streamline the Chinese economy and make it more sustainable: reform of state-owned enterprises (SOEs); accession to the World Trade Organization; banking reform; consolidation of heavy industry; and ultimately, the appreciation of the yuan. These initiatives often were peripheral, however, or only partially implemented. The question of social stability as a byproduct of high growth rates continued to drive political decisions on China’s economy. The concern for stability became even more important as China began noting that emerging efficiencies in its industries and agriculture were pushing the 7 percent GDP growth floor ever higher — to a minimum of 8 percent after the Asian economic crisis, and later to 9 percent. Basically, the more China developed its industries and agriculture and made the processes more efficient, the fewer workers were needed for the same amount of production. Advancements in technology ironically also led to higher unemployment, particularly in the low-skill sectors. This meant that policies intended to eliminate (or at least reduce) redundancies, and to reshape the economy to focus on domestic consumer-driven demand rather than on exports and foreign investment, rarely gained the sustained traction necessary to change China’s deeper economic structures. Postponing the Crisis By 2002, then-Premier Zhu Rongji was urging greater attention to statistics collection in China in order to draw a better picture of the real status of the economy. By early 2003, signs of internal inconsistencies were clearly apparent. As China underwent a leadership transition from the Jiang Zemin-Zhu Rongji government to the Hu Jintao-Wen Jiabao government, the picture was becoming clearer: China would face a future economic crisis along the lines of that suffered by the other Asian nations in 1997-1998 if it could not quickly reform its economic model. Beijing then began announcing a series of economic policies intended to stimulate the domestic economy, from plans to end lifetime employment for state workers to small-business loans for the unemployed and rural tax reform. At the end of 2003, however, when China’s top economic planners held their annual meeting, they came up with a very familiar assessment and an equally familiar plan: China needed to focus on quality, efficiency and sustainable growth rates, and the non-coastal economy needed to be bolstered through social spending and job creation to strengthen domestic demand and maintain employment levels. It was effectively the same thing the Jiang-Zhu team had said in 1998. But once again, recognition of the problem did not necessarily translate into actual solutions. A slowdown in economic growth, induced in part by rising oil prices in 2003 and the impact of the SARS crisis, led to continued resistance among policymakers to broader reforms that would have created social dislocation (at least in the near term) as part of a deeper restructuring. Beijing did take some steps 2004 to slow the unrestrained growth, including rumors of a temporary halt in commercial lending, increases in banks’ capital reserve requirements and an October hike in interest rates. But with annual official unemployment reaching 4.3 percent for 2003 — up 0.3 percentage points from a year earlier — the dragon was still breathing down Beijing’s neck. The general trend of economic policy continued to encourage exports and investment as the primary drivers of the economy in order to mitigate the risk of massive unemployment. Chinese GDP growth, which had slipped down to 7.9 percent in the second quarter of 2003, was quickly lifted back above the 9 percent threshold in the third quarter and then continued to climb, hitting double-digit growth rates briefly in the second quarter of 2005 and holding at that rate from 2006 onward. China’s stock market, which had begun surging in the latter half of 2006, reached a peak in October 2007. The boom was also reflected in a massive rise in property prices and real estate construction and speculation, and in ballooning trade surplus and foreign currency reserves. Attempts to rein in rapid growth had failed once again, as political considerations and bureaucratic stagnation undermined reform efforts. Contraction and Crisis The contractions that occurred in late 2007 and early 2008, then, might well have been corrections to an overheating system. But corrections or not, these contractions began triggering unwelcome consequences, once again bringing to a head conflicting factional debates over economic policy. By the second half of 2007, as international prices for oil and other key commodities began rising sharply, China started to feel the pinch. Inflation was increasing and margins in export-based industries were narrowing; this was compounded by the steady rise of the yuan, which discouraged demand in importing countries. Low-skilled export sectors such as the toy industry (suffering from a lead paint scandal) and textile industry were particularly hard-hit. Rising commodity prices also began affecting critical heavy industries like steel, though the full impact on metal and cement industries was buffered somewhat by the construction boom in Beijing ahead of the August 2008 Olympics. By early 2008, fuel shortages were occurring, transportation was being disrupted by blizzards, the Shanghai Stock Exchange was falling, and real estate values were slowing. The threat of social unrest once again began to rear its head, from farmers protesting over land seizures to airline workers striking, to the Tibetan uprising in March. Before the slowdown began, Beijing was already worried about the economic system — particularly the widening divide between the coastal areas and the interior, the latter accounting for between two-thirds and three-quarters of the population. Chinese leaders had sought to slow down overheated growth rates through various measures, including an acceleration of the appreciation of the yuan and several interest rate hikes in 2006 and 2007. By July 2008, however, the compounding crises were more than apparent. At a special Politburo meeting on July 25, China’s leaders finally admitted that the crisis was much more significant than the Olympics (which had been their near-obsession in the preceding year), and that action needed to be taken. As the economic crisis bubbled up, and as social stability began to weaken ahead of the Olympics, a political crisis was brewing in Beijing. Premier Wen Jiabao, though popular with the common people, was criticized strongly within the Party. He was seen by many in government and by China’s business community as lacking the skills necessary to maintain or reform the Chinese economy. At the special meeting of the Politburo in July, several of the economic policies implemented by Wen were suspended or reversed. Rumors even began to surface that Wen would “resign” at the National People’s Congress (NPC) session in March 2009. These rumors are now being quelled, because the Party is concerned that, given Wen’s public popularity, his resignation could trigger new social turmoil among the masses. (Social affection for similar popular leaders contributed to the 1989 Tiananmen Square incident.) In addition, pushing Wen out early would undermine a 15-year process of trying to stabilize leadership transitions in China. Around the same time as the July meeting, the precipitous spike in global commodity prices began to fall off, granting Beijing some breathing room during the Olympics. But China’s economic crisis (and Beijing’s political crisis) was far from over. Economic turmoil was once again brought to the forefront just a few weeks later, as the U.S. financial system slipped into crisis mode and was quickly followed by the rest of the world. If the Chinese economy does not see marked improvement — or at least stabilization — by the March 2009 NPC session, not only Wen but many others could be forced to resign, triggering a fairly substantial political reshuffling and competition for power, and throwing the stability of the Party itself into question. A Critical Moment China’s top economists, policy recommendation bodies and government officials are all searching for short-term fixes to maintain employment levels, seen as the key to social stability, amid the current downturn. At the same time, they are seeking to effect real change in the structure of the Chinese economy to strengthen it in the long term. That is much easier said than done. China’s present economic stimulus package is a cobbled-together combination of previously existing initiatives. Overall, it is focused almost exclusively on maintaining that magic 9 percent GDP growth rate seen as vital to maintaining employment and therefore social stability. Even at the top levels, complete political buy-in for deeper reforms is lacking due to patronage, personal gain, and a very strong uncertainty that the reforms will even work without triggering more pronounced and immediate crises. Chinese economists cannot even agree on what a stable economy should look like. They are split between Western-trained and Asian-trained camps, and their views frequently clash. This means economic policy from the center is fragmented, unreliable and poorly enforced; Beijing tends to implement programs piecemeal and drop them when they do not work quickly. Meanwhile, the bureaucratic mechanisms to implement real economic policy reform down through the provincial and local levels are simply not there. Enforcement, incentive and oversight are all lacking, and Party cadres face the entrenched reality that promotion up through the ranks is still based almost solely on the criterion of their ability to maintain high rates of economic growth. Truly changing the Chinese economic system will almost certainly mean a major unhinging of the social order. Change of this magnitude simply is not going to be smooth — it requires breaking the system and rebuilding it. Jiang’s reform of SOEs led to a significant rise in unemployment. Hu’s attempts to consolidate and make heavy industries more efficient triggered a similar problem. In other countries, there have been massive political and social upheavals that allowed partial reform of the system. In China, this path also has been used in the past (e.g., the Great Leap Forward, the Great Proletariat Cultural Revolution). But the current leadership is not sure the Party could survive another self-made crisis now that the economic and social evolution has come this far, particularly as there is no paramount leader like Mao Zedong to serve as a central point of unity. In short, the Chinese leadership is once again running as fast as it can simply to stay in place. The economic bailout package is a case in point of knee-jerk policy ideas thrown out in a muddled heap — few of which provide any clear direction other than to trying to keep growth high to avoid (or postpone indefinitely) a massive social dislocation, and none of which are likely to be carried out to completion. The Chinese system is reaching a critical moment. Many among the Chinese leadership see the next few years as the crisis point for China and the Party. Low-skilled export industries, which soak up a lot of migrant labor in China, were already closing down in 2007 and early 2008 as commodity prices rose and margins narrowed; now the European and U.S. slowdown is forcing even more to close their doors. Laid-off workers, frequently dismissed without pay, are beginning to protest, requiring local and central government intervention and payoffs to avoid widening unrest. The stock market has already crashed. The real estate market, another staple of Chinese middle-class investment and a field in which many of China’s SOEs have significant investments, is flagging. The steel industry, a bastion of Chinese heavy industry and an underwriter of many other segments of the economy, is facing a significant contraction. Beijing wants and needs to stimulate consumer spending, but economic uncertainties are prompting Chinese consumers to hold onto their money. On top of the financial woes, leaders in Beijing are raising concerns over potential social crises in 2009, triggered by anniversaries of key events including the 1959 Tibet uprising, the 1989 Tiananmen Square incident and the 1999 Falun Gong suppression. The Chinese also expect increased friction from the United States on trade issues as Washington faces its own economic problems and could be looking for a scapegoat. From Beijing’s perspective, an untested President Barack Obama and a Democratic-controlled Congress (with protectionist sympathies) only increase the uncertainty. The Chinese are uncomfortable with implementing economic reform, however badly needed, during a global economic downturn. Before embarking on such a project, Beijing would prefer to have as much cash on hand as possible in order to deal with the social dislocation caused by economic restructuring. But Chinese leaders will have to plan on the slowdown in the U.S. and European economies lasting a year or more. This means Beijing cannot count on continued investment flows into the export industry to prop up the economy while the central government pushes forward with initiatives to increase wages and bolster labor rights in the wealthier coastal region, in hopes of pushing foreign investment inland. Caught in the horns of a dilemma, Chinese leaders have no clear solution before them. The traditional method of putting a on a bandage to deal with the outward signs of the underlying cancer is likely to continue. For policymakers in Beijing, social stability takes precedence, as it has in the past. This means that, as before, reforms are likely to remain peripheral or short-lived, while the resource-intensive export industry will continue to get support. Beijing might be able to postpone a serious social and political crisis for a while longer, but every delay simply makes the ultimate crisis that much more catastrophic. Beijing’s policies are making it clear that the Chinese leadership does not really intend to let the current slowdown do what a slowdown is supposed to do: trim the fat and cull the weak, in the process increasing the efficiency of the economy and freeing up capital for new uses. Job security remains Beijing’s primary concern, which means increasingly inefficient and unprofitable businesses will continue to be propped up by government money, export rebates, and probably an expansion of bad loans. But these policies will only prolong and worsen the problems, no matter how many “new” infrastructure projects are launched in the stimulus package. At some point, China will have to pay the piper. And as the global financial crisis has shown, an added external pressure can quickly arise that the Chinese cannot control, but that forces them to respond while domestic problems rapidly deteriorate.

Chinese Social Security Minister Yin Weimin said Nov. 20 that the employment situation in China is critical and could get worse. Vice Minister Zhang Xiaojian added that unemployment levels could reach 4.5 percent by the end of the year, up from the current 4 percent, and could go higher still in 2009. The figure of 4.5 percent sounds low, and it in fact only represents officially registered urban unemployment. It does not take into consideration China’s migrant workers (some 200 million strong) or those laid off by state-owned enterprises. Employment levels have long been a critical measure of economic performance and a driver of economic policy in China. In recent years, Beijing has set its target gross domestic product (GDP) growth rate based on the estimated pace needed to keep up with new workers entering the workforce, and to absorb those laid off or made redundant as industries are restructured, made more efficient or move up the skill scale. Prior to the Asian economic crisis of 1997-98, Beijing pegged necessary growth at around 7 percent. It raised this figure to 8 percent after the crisis, and now puts the critical number at 9 percent. The infatuation with employment figures is seen clearly in the series of policy pronouncements coming out of Beijing, many of them reversing efforts to slow growth in recent years and shift away from the country’s overdependence on exports and investment flows. Chinese officials have implemented tax cuts and reforms to encourage export and high-employment industries. They have frozen the minimum wage, ending a fairly steady rise in wages. They have also increased export rebates for companies, in essence subsidizing exports — something that will likely raise complaints from other countries in the future. They have required government approval for any substantial layoffs in certain provinces. Finally, they have reduced loan quotas. There is still talk of shifting the economy to one driven by domestic consumption rather than one still dependent upon exports and investment flows; in practice, however, Beijing is focusing on propping up these less-efficient but more-reliable engines of money, growth and employment. While this may help China weather the crisis as it did in 1998-99 and in 2003, that comes at a cost. Beijing once again is pumping money and incentives into the low-skilled, labor-intensive export-based industries for the sake of maintaining employment levels. This means government-subsidized inefficiencies, selling at below cost to maintain employment, and probably a return of growing as companies borrow to keep employment despite falling profits. This intense focus on employment as the imperative is what has kept the Chinese from ever really restructuring to a more sustainable, rather than a growth-based, economy even when they knew the pitfalls of the model followed by Japan, South Korea and the Asian tigers. While China may hold employment and social stability in check with these measures, it may well come out of the immediate crisis weaker, flabbier and even less efficient than before.

Summary Strikes by taxi drivers in several Chinese cities raise the specter of coordinated protests and social unrest crossing provincial lines — one of Beijing’s biggest fears. Perhaps even more worrisome for Beijing are signs of growing coordination among petitioners challenging the government over land use and reimbursement. Such resistance is only going to increase as China begins to accelerate domestic infrastructure development. Analysis Related Special Topic Page     * China’s Economic Imbalance China has seen several strikes by taxi drivers in November, most recently in Shantou City, Guangdong province, where some 1,000 licensed cabbies protested competition from unlicensed drivers. The incident follows a series of strikes by cab drivers across the country, some of which turned violent. In early November, several thousand taxi drivers held a two-day strike in Chongqing over the availability of compressed natural gas, unequal sharing of profits between cab companies and drivers, competition from illegal cab drivers and perceived excessive fines for traffic violations. The Chongqing strike was followed by strikes in Sanya, Hainan province, and Yongdeng, Gansu province, both in part over competition from unlicensed drivers. Another taxi strike broke out in the Yongchuan district of Chongqing on Nov. 18 when the government announced plans to increase the number of cabs by a third, thereby reducing fares for existing drivers. The strikes themselves can be readily explained by the tightening economic situation in China, where unemployment is rising and operating a cab without a license is a readily available option for the unemployed. Even in cities where protests are not occurring, local cab-driver associations have expressed concerns to municipal officials about the rising competition from unlicensed drivers. But the regional dispersion of the protests, coupled with the short timeframe in which they have occurred (a couple of weeks), raises concerns in Beijing. A taxi strike can be seen as a reflection both of local conditions (something Beijing leaves for the local government to deal with) and of national dynamics (something Beijing must deal with). China’s central government has become more tolerant of short public protests in recent years, and even collective labor action, as long as the protests remain localized. Beijing’s biggest fear is the linking of common causes across provinces, creating the potential for a mass movement that could challenge government control. For the moment, the taxi strikes do not appear to be reaching a critical threshold. They remain locally organized, if inspired by reports of similar strikes in other regions, and for the most part are unable to generate much public sympathy. Nevertheless, there are other social issues being exacerbated by the current economic downturn that could evolve into a more coordinated movement, something Beijing will be watching closely. Over the past several years, as China embarked upon a massive infrastructure and real estate development boom, there has been a constant need for land. Since all land is technically owned by the state, the government has the authority to remove people from the property on which they reside and use the land for other purposes. The government is legally required to reimburse the resident for the value of the property, but the process is frequently mired in corruption and nepotism and payment is frequently delayed and far below market value. Protesting such land seizures has became more common as the unrestrained growth and construction boom has caused widespread and seemingly random dislocations, particularly along the urban-rural fringes but also well within the city limits as old housing was torn down for new apartment complexes, business towers and hotels. As the social dislocations grew — and recovering the value of the land remained difficult — protests became larger and more frequent. From Beijing’s perspective, these were isolated local problems, not strategic national concerns. But that began to shift as a number of rural and small-town protests apparently were organized or advised by lawyers from Beijing and other cities who came in and counseled local citizens about their legal rights. On the one hand, these lawyers represented the emergence of a new legal class, one that would be better able to guide a more rational implementation of economic and administrative regulation. On the other hand, if these lawyers turned into activists — even if justified by government corruption and bureaucratic neglect — the fine line between maintaining social stability (by ensuring proper payment and accountable government) and stirring up social unrest (by giving advice on the best way to coordinate mass demonstrations) would be crossed. This concern becomes even more significant as Beijing launches a massive expansion of domestic infrastructure development as a means to counter the economic slowdown and spur investment to keep the economy growing and employment levels up. More land is going to be requisitioned for construction and government projects, more people will be displaced and the chances for conflict will increase. For Beijing, this will be a manageable problem as long as conflict remains local. But coordinated protests across regions and social classes could quickly escalate, and this is something Chinese authorities will be watching very closely.

Summary China continues to take a very cautious approach in response to the rising tensions between India and Pakistan in the wake of the Mumbai attacks. Beijing has condemned the attacks but declared support for its ally Pakistan. Beijing’s relationship with Islamabad is a cornerstone of its South Asia and Middle East position, and as such, Chinese officials in some ways are locked into their response. Beijing is now stuck between supporting Pakistan in a potential conflict with India — something that could have its own repercussions in China — or losing a critical component of China’s future energy security plans. Analysis Related Special Topic Page     * Militant Attacks In Mumbai and Their Consequences As tensions rise between India and Pakistan in the wake of the Mumbai attacks, and as the United States takes an active role in trying to moderate New Delhi’s response, China has sat relatively quietly — though anxiously — on the sidelines. Beijing has adopted a cautious approach to a possible renewal of hostilities between two of its southwestern neighbors. Officially, China has condemned the attacks, sent condolences to India, and offered full support and assistance to Pakistan. Beijing in essence has thus condemned the act while simultaneously arguing against any Indian reprisal against the Pakistani state. In many ways, this fits the typical Chinese response to a regional crisis. But Beijing has deeper concerns about the current threat of hostilities, and few tools with which to shape the outcome. China and Pakistan have long been allies. Despite changes of government in Islamabad, Beijing has maintained steady support for its South Asian neighbor. The relationship, which initially emerged in part as a counterweight to India (for both China and Pakistan), has evolved over time. Now, Beijing sees Pakistan as a critical location for ensuring China’s interests in the Arabian Sea, including securing China’s energy supply routes. While shifting tensions between Islamabad and Washington in recent months have caused China to reassess how it supports Pakistan, the strategic benefits of the relationship still outweigh the problems. But the Mumbai attacks have added another layer of stress in China’s relationship with Pakistan. On one hand, Beijing agrees with the general views in Islamabad, New Delhi and Washington that it is in no one’s interest for the attacks to lead to a war between India and Pakistan. On the other hand, it appears that the political stresses in India suggest a response is forthcoming despite U.S. intercession. The Indian response might include airstrikes and shelling into Pakistani-controlled Kashmir or beyond, which could lead to another buildup of forces in Kashmir. It could also lead to Pakistan calling on China for diplomatic support and military supplies. This is dangerous territory for China. India could perceive Chinese support for Pakistan in the form of weapons and supplies (something China has done for quite a while) at this time as a hostile act. Even if New Delhi does not take official note of the support, it could exert pressure of its own on China by turning a blind eye to the activities of Tibetan activists and separatists in the border region. Beijing already fears a repeat of the March Tibetan uprising on an even grander scale in 2009, the 50th anniversary of the 1959 Tibetan uprising. Map: China, Pakistan and India (Click image to enlarge) Further complicating the situation, China and India have overlapping claims to parts of Kashmir, so a military escalation there will force China to expand its military presence to defend its own territorial claims. With several issues of border tensions rising between New Delhi and Beijing over the past year, a renewed focus on Kashmir could expand to other ill-defined or disputed parts elsewhere along the two nations’ long shared border. Finally, if India decides to call for some form of sanctions against Pakistan as part of its retaliation — perhaps to include sanctions against arms imports — Chinese ships traversing the Indian Ocean could face problems from the Indian navy if relations degrade further. Given Chinese military sales to Pakistan, which include the troubled FC-1/JF-17 fighter jet and potentially airborne early warning surveillance systems, Beijing could find itself in more direct confrontation with New Delhi than it would like. While China is concerned about the potential implications of angering India, it also sees a need to protect Pakistan. In the immediate term, Beijing is worried that a crisis in Pakistan triggered by India’s response could destabilize Pakistan and/or increase the movement of Pakistani and other multinational militants from Pakistan into perceived safe havens in China, particularly in Xinjiang. Beijing already has raised concerns with Islamabad that there are links between Uighur militants training in Pakistan and attacks in Xinjiang. Beijing also reportedly has stepped up its border patrols since the Mumbai attacks to keep fleeing militants or others out of Chinese territory. But Beijing’s long-term concern is that instability in Pakistan could undermine China’s broader strategy in North Africa and the Middle East. Pakistan’s location, plus its land border with China, gives Beijing a potential conduit through which to exert its interests and influence in the Arabian Sea, or at least to develop new ways to protect its increasing dependence on oil and other goods coming from the Middle East and North Africa. As part of securing its maritime supply routes, something China’s navy is currently not configured to ensure, Beijing has been looking to develop numerous alternative and redundant energy routes. These include pipelines, rail lines and highways through Central Asia, Myanmar and Pakistan. Many of these are not economically feasible, and some face daunting technological challenges. The idea is to use the developments that do work out to reduce China’s vulnerability at sea, particularly on the long run from the Middle East across the Indian Ocean, through the Strait of Malacca and up China’s eastern seaboard. But Beijing has also been developing Pakistan’s ports and naval bases. As the Chinese navy continues to evolve, there is the possibility of using Pakistan as a forward base of operations to provide Chinese maritime protection in the Arabian Sea. Geographically speaking, Pakistan is the best (if not the only) option for China, and with the relationship already well-established, there are really no comparable alternatives. China, then, is stuck between needing to support the Pakistani government and worrying about the implications of this support on India’s decision-making process while taking into account U.S. involvement. And all this is taking place while China lacks the tools or leverage to provide much in the way of direction or guidance to the outcome of India’s response.