One Belt-One Road and

Chinese Cyberspace Sovereignty:

South China Sea Region Economic and Demographic Risks
RO M M EL C. GAV I ETA A RCH, M A ( U R P) , M S C ( EN G) PA ( R ES )
Former Un d ersec reta r y Plan n in g D ep art ment of Tran sp ortat ion
S t rate g ic Intelligen c e Tra in in g S c h o o l,
Inte llige n c e S er vic e A re me d Fo rc e s O f Th e Ph ilip p in e s
1. Introduction
Global Economic Shifts from East to West and now West to East

Shifting Global Economic Poles US$ 22.048trillion (33.3%) Asian (17), US$13.589trillion (19.5%)
www.businessinsider.com/evidence-of-economic-shift-to-the- Europe (17) and US$28.059trillion (40.6%) North America (5)
east-2013-3
Eurasian stock exchange has total value of US$50.077trillion
(52.8%)
Shift from Political Borders to Communication and Energy
Connectivity
Current Trading Routes and West Philippine Sea (South China Sea)
Chinese Interest to the SE Asian Sea Line Of Communication (SLOC)

China has strong economic incentives to maintain freedom of navigation thru the SE Asian SLOC
Chinas dependence on these sea-lanes is expected to grow, especially for imported oil: by the year
2015, according to several forecasts, Chinas demand for energy is projected to increase 160 percent
and Chinese consumption of Persian Gulf oil, which would pass through Southeast Asian sea-lanes,
is expected to triple.
China has political disincentives that would discourage action to interdict Southeast Asian sea-lanes
although Chinese naval forces might engage in police actions to combat piracy,.
Elicit severe ASEAN, regional, and international condemnation and, in particular, deal a severe
setback to Chinese efforts to improve relations with the ASEAN countries; and
Provoke the United States, Japan, the European Union [EU], and ASEAN to impose economic
sanctions, including reductions in investment, trade, and technology transfer.
China needs to take into account military, operational, and geographic constraints that would make
operations to achieve a closure of the SE Asian SLOC.
Chinese navy remains vulnerable to air and surface naval attack. In addition, Chinese forces suffer
from low readiness, inadequate training, and deficiencies in logistics support; command, control,
communications, computing, and intelligence (C4I); and modern equipment.
Chinese would face serious constraints on the use of mines for interdiction in the South East Asian
SLOCs.

Authors photo (2015)

2. One Belt One Road Policy
Marshall Plan and One Belt One Road Comparison
One Belt One Road and Multipolar World
Countries covered by the One belt One Road Initiave
ASEAN and European Regional Economic Architecture
East Asia Supply Chain in relation to OBRO

ASEAN
Largest country in terms of land area is 2700
times larger than the smallest country; the
country with the largest population has 580
times more people than the smallest country;
and the richest country has a GDP per capita
that is 145 times the poorest country.
Varying degrees of political openness and
liberal tradition.
Varying faith system within states and among
ASEAN nations.
SMEs contribution to GDP is between 30% and
53% and the contribution of SMEs to exports
is between 19% and 31%.
SMEs account for more than 96% of all
enterprises and 50% to 85% of domestic
employment.
3. Chinese Cyberspace Sovereignty Policy
Evolution of Cyberspace Sovereignty in China
Chinas Consumer Base and Cyberspace Market Place
Russian Hybrid Warfare: Key Characteristics

Economizes the use of force. Recognizing Russia would stand little chance of winning a protracted
conventional conflict with NATO, Moscow seeks instead to pursue its interests without overt use of
military power if possible. Russia may still use its conventional and even nuclear threats as part of a hybrid
strategy, but in general it prefers to minimize the actual employment of traditional military force. The use
of cyber tools is an excellent example of one way in which Russia economizes on the use of force.
Single-mindedness in use of force: Hybrid war breaks down the traditional binary delineation between
war and peace. The reality of hybrid war is ever-changing intensity of conflict. Hybrid war strategies are
always underway, although at certain moments they may become more acute and intense or cross over
into conventional combat operations.
Focuses on population-centric platforms. Russian military experts have watched as the United States and
its allies fought in the Balkans, the Middle East, and elsewhere over the course of the last quartercentury.
They seized upon the importance of an approach that seeks to influence the population of target
countries through information operations, proxy groups, and other influence operations. Russia uses
hybrid warfare to work within existing political and social frameworks to further Russian objectives.
Internet Presence and Time Spent on the Internet
Connectivity and Weaponization of Social Network Sites

Facebook friend connections map

Hacking and Weaponized Social Media:
Public Perception Engineering
USA
Moscow stockpiled stolen information and selectively
disseminated it during the campaign in an effort to
undermine the legitimacy of the American political
process (Bill Priestap, FBI counterintelligence official,
Senate Intelligence Committee Hearing, June 2017)
Current and former government officials painted a sinister
portrait Wednesday of Russian cyberattacks on the United
States aimed at interfering in the U.S. presidential
election last year.
Designation of U.S. election systems as critical
infrastructure was aimed at providing more federal
cybersecurity assistance to state and local governments
(Jeh Johnson former Homeland Security Secretary Obama
Administration, House Intelligence Committee, June
2017).
France
massive hacking attack and confirmed that some of the
documents were taken from campaign officials, although
it claimed other portions of the archive may be fabricated.
The techniques showed significant technical similarities to
the hacks against the Democratic National Committee,
which US intelligence agencies attributed to an active
intelligence campaign by the Russian government, directly
ordered by President Vladimir Putin.
In April, independent researchers detected a phishing
attack against the Macron campaign, although the
campaign insisted that no data had been compromised by
the attack.
Ukraine
Ukrainian soldiers and medics two miles (three kilometers)
from the front when their cellphones began buzzing over
the noise of the shelling. Everyone got the same text
message at the same time.
4. Key Economic and Financial Intelligence
Indicators
Market Capitalization and Asset Returns
GDP, Market Capitalization, Government Debt & Corporate Debt
Per Capital GDP and Per Capital Debt
Comparative GDP per capita to Debt Level vs Economic
Advancement
GDP and Poverty Indicators
Chinas Economic Response to the 2008 Global Financial Crisis

Chinas export to GDP ratio in 2007 was 35 per cent. Compared with a growth rate of 25 per cent in September, exports shrank by
2.2 per cent in November. This fall in exports may have cut GDP growth by 3 per cent.

expansion of the Chinese economy, it has become increasingly difficult for the global market to absorb Chinas excess capacity.
Again, the steel industry is a case in point. China has already become the worlds number one steel producer. In 2007, 37 per cent of
global crude steel was provided by China

Chinas debt problems stem from the global financial crisis in 2008. As world growth faltered, China unleashed a wave of spending
to build highways, airports and real estate developments all of which kept its economic engine chugging.

In November 2008, the Government introduced a Rmb4 trillion stimulus package for 2009 and 2010
Chinas Economic Response to the 2008 Global Financial Crisis

If overwhelming debt does trigger a crisis in China, its more likely the
spark would come from corporations and their main creditors, the
banks. Chinas bond market has shown signs of growing stress, including
17 defaults through June 30, almost triple the number in 2015. That and
a series of delayed payments prompted rising credit spreads and
cancellations of new issues.

Fortunately for the rest of the world, China has a high savings rate.
Capital controls arent fully lifted, making capital flight difficult. The
government has almost complete control of the banking industry. In
addition, Chinas listed banks get about 70 percent of their funds from
deposits. In comparison, U.S. investment banks in 2008 relied heavily on
short-term money-market funding.

China is different from other markets in an important way. Many large

corporations and nearly all the major banks are state-owned. In other
words, the debtors and creditors are ultimately owned by the same
entity. That means the country could address debt problems in some
unusual ways.
5. Key Demographic Intelligence Indicators
 Chinese Demographic Profile

Population Growth Rate (1950 to 2015) Population Densities and Urban Centres
Global Population: Young and Graying Demographics

http://populationpyramid.net/
Global Demographics
Migrants and Global Graying Population
Migrants (Including OFWS) and Remittances
Migrants and Refugees

Migrants and Refugees

Migrants: Migration is also driven by economic reasons,
family reunification, or other reasons not included in the
legal definition of a refugee. Data on migrants are mostly
taken from national census reports.
Irregular migrants or undocumented migrants are those
who have entered, or are living in, a country without a
proper visa or in violation of laws governing entry and exit
of foreigners.
Refugees are those fleeing conflict, violence or
persecution across an international border. Asylum
seekers are those still in the process of having their
refugee status determined.
Internally-displaced persons (IDPs) are people who have
been forced to move due to conflict, violence or
persecution but who have not crossed international
borders.
Integration and Assimilation of Migrants and Refugees
Graphic Migrants and Refugee Movement Pattern
Radicalization of Refugees Due to Convergence of Variables Like

the geographic placement and legal status of the refugees,

the level of social and economic support for local populations in those locations,
The preexistence of militant groups in refugee areas,
andperhaps more criticalthe policies and actions of the receiving country, including its
acceptance of militant organizations and its ability to provide security.
Another finding was that refugee-receiving countries, naturally under significant economic,
security, and other stresses themselves,
do not always report refugee involvement in violent activity objectively.
Some governments accounts of violent incidents are unreliable, exaggerated through media, or
biased against certain refugee populations, complicating analysis.
Critical factors on Radicalization of Refugees
6. Key Changes in Global Order
Global Concerns to the Future of International Order
Nature (global warming and pandemics) and from failure of
technology.
Populism/Nationalism: currently a rising political force globally and
from the failure of traditional political structures
Fundamental premise of all U.S trade/globalization talks and
discussions is that the participants are all playing the same game of
liberal, neo-classical, free market, resource endowment and
comparative advantage based free trade.
Global economy is, in fact, sharply divided between those who are
playing the free trade game and those who are playing some form of
mercantilism
Chinese Economic Mercantilism (through the mid-2000s) largely
focused on actively encouraging foreign direct investment (FDI) in
the country, promising to be a low-cost production platform for
foreign multinational corporations (MNCs)
Shift towards a China Inc or Indigenous Innovation or zizhu
chuagnxin (starting 2006) from attracting the commodity-based
production facilities of foreign MNCs to a focus on helping Chinese
firms move up the value-chain to higher-value-added production
activities.
Neomercantilism is a policy regime that encourages exports,
discourages imports, controls capital movement, and centralizes
currency decisions in the hands of a central government
Accelerating Urbanization: . These emerging markets are going through
simultaneous industrial and urban revolutions, shifting the center of the world
economy east and south at a speed never before witnessed
Accelerating Technological Change: Accelerated adoption invites accelerated
innovation, Processing power and connectivity are only part of the story. Their
impact is multiplied by the concomitant data revolution
Responding To The Challenges Of An Aging World: 2013, about 60 percent of the
worlds population lived in countries with fertility rates below the replacement
rate. A smaller workforce will place a greater onus on productivity for driving
growth and may cause us to rethink the economys potential. Caring for large
numbers of elderly people will put severe pressure on government finances.
Trade, People, Finance, And Data: Greater Global Connections: Instead of a
series of lines connecting major trading hubs in Europe and North America, the
global trading system has expanded into a complex, intricate, sprawling web. Asia
is becoming the worlds largest trading region.
Southsouth flows between emerging markets have doubled their share of
global trade over the past decade.
The volume of trade between China and Africa rose from $9 billion in 2000 to
$211 billion in 2012.
Global capital flows expanded 25 times between 1980 and 2007.
More than one billion people crossed borders in 2009, over five times the
number in 1980.
Forces inspiring a New Narrative of Progress: Global Growth Shifts

o Balance local precision and global scale

o Harness the power of billions of consumers in

India, China, Africa and South East Asia

o Question assumptions about resources,

scarcity and growth
Global forces inspiring a new narrative of progress, Ezra
Greenberg, Martin Hirt, and Sven Smit, McKinsey
QuarterlyApril 2017
Forces inspiring a New Narrative of Progress:
Embrace Accelerating Disruption

o Exploit the combinatorial power of technology

o Operate as if your customer is in the drivers

seat

o Learn to compete in an era business

ecosystem evolution
Global forces inspiring a new narrative of progress, Ezra
Greenberg, Martin Hirt, and Sven Smit, McKinsey
QuarterlyApril 2017
Forces inspiring a New Narrative of Progress:
Forge a New Societal Deal

o Confront the dark side

o Contribute to middle class progress

o Embrace economic experiments

Global forces inspiring a new narrative of progress, Ezra

Greenberg, Martin Hirt, and Sven Smit, McKinsey
QuarterlyApril 2017
The End