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Thousands of US troops will shift to Asia-Pacific to guard against China

Facing what a Trump administration official recently called “the most significant geopolitical challenge since the end of the Cold War” in the Indo-Pacific theater, the U.S. military will embark on a realignment of its global posture.

Several thousand of the troops currently posted in Germany are expected to redeploy to American bases in Guam, Hawaii, Alaska, Japan and Australia.

Priorities have changed. During the Cold War, American defense strategists thought it important to maintain a massive land force in Europe to keep the Soviet Union at bay. In the 2000s, the focus was primarily on the Middle East as the U.S. waged its “war on terrorism” in Iraq and Afghanistan.

Now the game planning centers on China.

To counter the “two great-power competitors” of China and Russia, “U.S. forces must be deployed abroad in a more forward and expeditionary manner than they have been in recent years,” wrote Robert O’Brien, President Donald Trump’s national security adviser, in a Wall Street Journal opinion piece late last month.

Toward this end, the administration will reduce its force permanently stationed in Germany from 34,500 troops to 25,000.

The 9,500 who are leaving will be reassigned elsewhere in Europe, redeployed to the Indo-Pacific region, or sent back to bases in the U.S.

On the Indo-Pacific, O’Brien wrote: “In that theater, Americans and allies face the most significant geopolitical challenge since the end of the Cold War.”

Beijing continues to pour money into its forces, for instance. The Japanese government’s defense white paper estimates that China’s true defense spending exceeds its announced annual budget, which amounts to roughly triple Russia’s.

The crux of the Chinese defense strategy is anti-access/area denial, or A2/AD — an effort to keep American ships and fighter jets from approaching the shores of China. Toward this end, the Chinese have been strengthening their precision missile systems and sophisticated radar capabilities.

Analysts see three trends in the U.S. military’s global operations. One is the geographical shift from Europe and the Middle East to the Asia-Pacific. Second is the shift from land-based combat to an “Air-Sea Battle” concept. The third, and perhaps most characteristic to Trump, is a desire to hold down defense spending. (more…)

China says that US have “gone too far” on sanctions

China continues to voice their dissatisfaction over the US sanctioning Chinese officials on the Hong Kong issue

US China
  • Says Beijing, Hong Kong will reciprocate if US takes further measures
China already said that they will hit back yesterday here but amid talk of barring financial institutions to provide accounts or do business with sanctioned Chinese officials, it is continuing to stir the pot between the two.
As much as the facade of the Phase One trade deal is still in place, tensions between the US and China will not be going away any time soon.

Trump’s national security adviser speech today, equated China’s Xi to Josef Stalin

Politico with the report, looks like US-Chia relations are going to chill further if this is a widely held view in the administration:

 Robert O’Brien, President Trump’s national security advise
  • “The Chinese Communist Party is Marxist-Leninist,” he said. “The party General Secretary Xi Jinping sees himself as Josef Stalin’s successor.”
O’Brien faulted both political parties
Link here for the report
Sheesh, politics. These geopol tensions are a negative for risk trades.

China’s Global Times says Navarro’s clarification can’t undo damage to phase one trade deal

On Monday evening US time White House trade adviser Peter Navarro really stuck his foot in his mouth.

ICYMI, as it happened:
  • Peter Navarro declares trade deal with China is over
  • Risk trades getting smashed on the Navarro comments that trade deal with China
  • More on White House trade adviser Navarro announcing the trade deal with China is over
  • Trump economic adviser Kudlow confirms the trade deal with China is not over
  • Epic Navarro stuff up –Donald weighs in to clear things up: “China Trade Deal is fully intact”
The GT is not letting him off the hook:
  • Navarro’s irresponsible comments have already had an impact on financial markets and the deal itself. 
  • Navarro has actually cast suspicion on the trade deal with his reckless and contradictory attitude.
  • the phase one trade deal is not the only issue in the US-China economic and trade relationship that requires efforts to eliminate doubts and concerns
  • The US government needs to reflect on all the battlegrounds it has opened against China in recent months
‘Risk’ was quick to bounce back from Navarro’s blunder.

(Old news) IAEA has confirmed Iran denied access to nuclear inspectors

A few headlines about the place along the lines that Iran has denied IAEA inspectors access to past nuclear sites

This is oldish news, from at least 24 hours ago, but getting a rerun now ICYMI I guess.
  •  Iran has repeatedly blocked investigators from visiting some of its nuclear sites, the chief of the International Atomic Energy Agency (IAEA) said on Monday. 
The latest reruns have been prompted by US Sec of State Pompeo saying (via tweet) that this obstructions is deeply concerning
  • & unacceptable
  • international community must demand Iran cooperate fully and immediately

North Korea says the US is ‘hell-bent’ on exacerbating tensions

Someone appears to have rattled the North Korean cage, KCNA on comments from the NK foreign minister:

  • says relations with the US have now shifted into despair
  • US is hell-bent on exacerbating tensions
  • US policy proves US remains long-term threat to our people
  • NK says sees no improvement in relations to be made by maintaining relationship between Kim and Trump
  • says will build up more reliable force to confront US military threats
I thought romcoms were supposed to have happy endings?
Someone appears to have rattled the North Korean cage, KCNA on comments from the NK foreign minister:

If Australia joins the US in a new cold war against China it will “pay an unbearable price “

China’s Global Times says Australia’s economy “cannot withstand” a cold war with China

Its an opinion piece in the outspoken GT and comes in response to US Republican Senator Rick Scott urging Australia to join the US in a new “Cold War” against China.
Here is the link, there is plenty more of this sort of thing here:
  • Canberra should be mindful of avoiding inappropriate statements from its officials or politicians that may echo what Scott urged. 
  • Due to escalating tensions between the two countries on multiple fronts – such as the Hong Kong affair, a US-led inquiry into the origin of the coronavirus origins, and a travel and study warning – China-Australia relations have been rapidly sliding to near freezing point. 
  • A new Cold War may only further jeopardize the already fragile relations between the two sides.
I wouldn’t think this sort of sentiment is a positive for AUD, yeah? Here is the link to the GT article
China's Global Times says Australia's economy "cannot withstand" a cold war with China 

China says it has expressed grave concerns to Japan over Abe’s remarks on Hong Kong

Tensions are still brewing surrounding the situation in Hong Kong

Japan is caught in a sensitive situation as prime minister Abe has reiterated ‘serious concern’ about China enacting the national security law in Hong Kong and also having said that they want to take the lead on issuing a G7 statement on the matter.

So, this is China responding on the matter and much like other geopolitical tensions involving China, the spillover to economic consequences is the real risk for markets.
Chinese president Xi Jinping’s proposed trip – originally in April – to Japan was initially postponed by the coronavirus crisis but amid this issue, it looks like it will be an indefinite situation until both sides can see eye to eye again.

Japan’s Suga says that relations with South Korea remain in a severe state

Japan and South Korea are continuing to fight on trade now that the coronavirus crisis is settling down

Old habits die hard and as the coronavirus crisis settles down, trade wars are coming back into focus and the one between Japan and South Korea remains a focal point in the region.

South Korea had earlier in the week sought to reopen a WTO complaint – which they halted back in November – against Japan on trade curbs over technology exports and that is renewing the rift between the two countries over the past few days.
Both sides tried to seek bilateral talks in the meantime but so far there doesn’t appear to be much progress in addressing the matter.
If anything, just take note of this as it will weigh on both countries’ economies.
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