Night Watch

North Korea - South Korea: For the record. South Korea's defense minister said Thursday that North Korea has completed preparations for another nuclear test, and would also test-launch long-range missiles sometime in the future. 'Many preparations have been made for a third nuclear test,' Minister Kim Kwan-Jin told reporters, adding the timing would depend on 'a political decision'.

Comment: There is less here than meets the eye or ear. North Korea probably has been capable of detonating a third nuclear device for months, based on South Korean defense reporting this year. As for a long range missile launch, North Korea can do that with relatively little warning, using either a new and enlarged west coast launch site or the older Taepo Dong launch site on the east coast.

Minister Kim correctly identified the issue as "a political decision'. The last thing the North's leaders would do during China's 18th National Party Congress is to take some action to cause instability in Northeast Asia. The Chinese were pleased at the outcome of US elections because they interpreted it as contributing to stability.

In April North Korean leaders defied Chinese admonishments to maintain stability by attempting a missile launch that failed. Relations were strained. But that strain would be trivial compared to the consequences of a North Korean missile launch or nuclear detonation during the 18th National Congress.

At least for a week and probably considerably longer, North Korea will behave.

China:  President and outgoing Secretary-General if the Communist Party Hu Jintao told the opening session of the 18th National Party Congress, "If we fail to handle the corruption issue well, it could prove fatal to the party, and even cause the collapse of the party and the fall of the state."

The reform of the political structure," he said, "is an important part of China's overall reform." "However," he added, "we will never copy a Western political system."

On this issue, Cai Mingzhao, a spokesperson for the party congress, emphasized to reporters the limits of political reform that the Party is willing to consider, stressing that any measures would maintain its firm leadership. Reforms, he said, would combine "centralism and democracy, discipline and freedom, and unity of will and peace of mind".

Comment: Hu's suggestion that corruption could cause the collapse of the party and the fall of the state is extraordinary for several reasons. In Communist lore, the corruption of the Kuomintang - the nationalists-was responsible in large measure for the Communist takeover of China. Secondly, Hu implies that the expulsion of regional party leader Bo Xilai involved a much more serious threat to the Communist system than just the removal of a corrupt regional head. Hu's statement suggests China survived a near-existential threat.

Finally Hu implied that the Chinese Communist leaders are aware that they have been skirting the limits of political reform within the Communist system and revolutionary change to a more Western style of democracy. The leadership sees one or more scenarios in which Communist China could collapse.

NightWatch judges that there are so many contradictions and fault lines in the jerry-rigged communist system that violent, revolutionary upheaval could begin with little additional warning at almost any time. China might even fragment into Muslim and non-Muslim states. Hu's speech indicates the leaders are aware of some of the threats.

The Party leaders have decided that China's political system will remain Communist, centralized, disciplined from the top-down and un-Western. Experts who expected China could not resist the pull of increasingly greater political openness in a semi-capitalist economy have misread badly the Communist leadership.

On economic issues, Hu Jintao warned of the challenge of "unbalanced, uncoordinated and unsustainable development" and stressed the need to "speed up the creation of a new growth model and ensure that development is based on improved quality and performance".

With a continuing slowdown in China's export-led economy on account of the troubles in the West, Hu said China would push forward reforms to spur domestic demand as a driver of growth. He said China should target doubling its 2010 Gross Domestic Product and per capita incomes for urban and rural residents by 2020 - a target which suggested China would look to maintain an annual growth rate of 7.5 per cent in the next decade.

Comment: Hu's remarks about the economy echo themes set in Party economics meetings in January 2012. Principal among these is a new economic model that moves away from an export-focused modern sector towards a growing internal, middle-class consumer economy. Hu indicates that progress towards greater self-sufficiency has been slow but the goal is to accelerate it.

This is a monumental undertaking that no modern countries have accomplished. For one thing, there are only about six countries the size of continents, which is essential for shifting an economy from export oriented to serving a growing domestic demand to sustain national growth. China's internal market is continental, but insufficiently developed to sustain the growth rates China requires to stay ahead of workforce and population growth.

Chinese communist leaders have preached frugality, equality and material detachment for more than 60 years and now want the population to become middle class consumers in eight years.

China's inward turn appears to go against the broad trend towards greater global economic integration. In that trend China's role is largely that of an exporter of cheap merchandise to the world -- the world's supply house of cheap manufactured goods. The new model would alter the direction of demand flows, though the Chinese would try to maintain both exports and domestic consumption to keep everyone working and to meet growth targets.

However, there is another issue. Hu insisted that state-owned businesses remain the vanguard of the economy. This is in part because in China everyone has a constitutional right to work.  Chinese leaders interpret that to mean everyone who can work must be given a job, by the state or private enterprise. Hu's speech reinforced that precept of communism, despite the inefficiencies of state-owned enterprises. The idea of the state sector leading the country is quintessentially retro-communism -- i.e., Marxist-Leninism.

As for military affairs, Hu promised that China would complete military mechanization and "full IT application" in its armed forces by 2020. He described the military's most important task as its ability "to win local wars in an information age".

Comment: This statement means that China's leaders do not envision their armed forces as capable of winning a general war with the United States or a coalition of its neighbors. This self-portrait might be deceptive, but it apparently is the genuine and current formula for force development. It implies that cyber warfare is intrinsic to winning.

Final Note: Chinese media reported that Hu will step down as the head of the party next week, but will continue serving as President - head of state -- until March 2013. He was accompanied by his predecessor Jiang Zemin as he greeted the 2,268 delegates of the congress, who will over the next week choose the party's next Central Committee.

Israel-Syria: Israel's military reported that three mortar rounds fired from Syria have landed inside the Israeli-held Golan Heights. It's the third time in less than a week that Syria's internal instability problems have spilled over into the Golan.

Comment: Israel did not react.  This action strikingly resembles the desultory mortar fire on the Turkish border, which is almost certainly executed by rebel provocateurs. The only group interested in widening the conflict is the Syrian rebels because they have shown the ability to kill, but not to win.

End of NightWatch for 8 November.

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