US President Joe Biden has said twice over the last year that Washington will militarily defend Taiwan in the event of a Chinese invasion attempt. His latest explicit security guarantee to Taiwan was made in Tokyo last week.

But does America have the military superiority over China in this part of the world to deliver what President Biden pledged?

This is a question that many security analysts in the US are asking, given the fact that the US Navy, which has to play the most important role in case China attacks Taiwan, is undergoing structural changes because of budgetary constraints that many consider will weaken both its capacity and capability in the near term.

Critics are pointing out that given the current threat, the fleet is not growing fast enough to meet the potential challenge of fighting competitors like China and Russia.

The US Navy recently released its long-awaited 30-year shipbuilding blueprint, providing three options for future fleet force structure.

The first option would yield an inventory of 316 ships by FY 2052, the second would yield 327 ships by FY 2052 and the third would yield 367 ships by FY 2052. However, the document of the blueprint notes that “the ability of the industrial base to support” the third option with the largest fleet size “has not been independently assessed,” this has worried the analysts.

Big Changes On The Anvil

The new shipbuilding plans show the Navy decommissioning two Independence-class LCS – USS Jackson (LCS-6) and USS Montgomery (LCS-8) – in FY 2024. Jackson entered the fleet in 2015, while Montgomery was commissioned in 2016. Both ships were built by Austal USA.

The Navy also wants to continue decommissioning its aging Ticonderoga-class cruiser fleet, starting with USS Antietam (CG-54), USS Leyte Gulf (CG-55), and USS Shiloh (CG-67) in FY 2024. Under the proposal, the Navy would decommission the entire cruiser fleet by the end of FY 2027, including the ones that are currently in the cruiser modernization program.

The blueprint shows the Navy decommissioning USS Nimitz (CVN-68) in FY 2025 and USS Dwight D. Eisenhower (CVN-69) in FY 2027, which aligns with the 50-year service lives for the Nimitz-class carriers.

According to the blueprint, the first two options would be for “a budget with no real growth,” while the third option “represents an additional $75 billion real growth beyond the [Future Years Defense Program] in FY2022 constant dollars.”

The document says that “The increased procurement level, informed by industrial base capacity and on-time and on-budget performance, achieves 326 manned battle force ships in the mid-2030s, and ultimately achieves 363 manned battle force ships in FY2045.”

Overall, the long-range plan shows the Navy decommissioning 13 ships in FY 2024, another 13 in FY 2025, 14 ships in FY 2026, and 13 in FY 2027. FY 2027 would also see the service decommission of USS Arleigh Burke (DDG-51), the lead ship of the class.

Fresh Procurement Schemes

The three procurement schemes show what ships the Navy could purchase between FY 2028 and FY 2032, a time frame the service is calling a “transition” period after the FY 2023 five-year spending plan, and between FY 2033 and FY 2052, which the Navy is calling the “future force design” time frame.

While the first two options only show the Navy buying one Ford-class aircraft carrier between FY 2028 and FY 2032, the third option shows the service purchasing one in FY 2028 and another in FY 2032.

“A decision on CVN 82/83 two-ship buy is required no later than FY25 and will be evaluated during upcoming force structure and industrial base studies,” the document reads. “The Department is reviewing Large and Small Surface Combatant and Attack Submarine procurement quantities in FY 2028-2032.”

The blueprint makes it clear that the US Navy is “prioritizing readiness before capacity”. It says, “Assuming no real budget growth, the two low ranges of the plan do not procure all platforms at the desired rate (e.g., DDGs, SSNs, and FFGs at two ships per year), which industry needs to demonstrate the ability to achieve, but do maximize capability within projected resources, industrial factors, and technology constraints to build the most capable force. Overall, this approach accepts risk in capacity to field a more capable and ready force.”

The 30-year blueprint talks of the US Navy having 327 ships by FY 2052. The Navy has always planned a goal of having more than 300 ships. But then the fact remains that the fleet has never achieved that goal since 2003.

China’s Massive Strength

In the year 2018, it had been said that with the People’s Liberation Army Navy (PLAN) adding more than 120 battle-force ships, the US should have at least 355 ships of which it was short of 57.

Over the last four years, the PLAN has further increased its strength. The Chinese have built a large fleet including aircraft carriers, cruise missile-armed surface ships, and several submarines. The PLAN is supported by land-based missiles and aircraft.

And that prompted the Trump administration in its final days to encourage the Navy to have a fresh force structure assessment. The Navy said accordingly that given the rising profile of the PLAN, it should have a figure between 382 and 446 manned ships and an additional 143 to 242 unmanned ships.

But within two years, the Navy seems to have changed its assessment. The US is driving down fleet numbers and ship production, the critics point out. They say that the average gap between ordered and achieved battle fleet size over the last five years was roughly 10 ships.

“Integrating the precipitous drop from 2022 to 2023 and loosely projecting that magnitude of 50 ships over five years shows a battle force of 275 ships or smaller”. It may be noted that at the moment the US Navy has 298 ships.

Major Gaps

Further, buried within the FY23 capacity gap is a lethality gap. As Congresswoman Elaine Luria (Democrat), who represents Coastal Virginia, home to the world’s largest naval base and who before running for Congress had served two decades in the US Navy, points out, “the U.S. Navy is suffering a clear disadvantage in anti-ship weapons concerning China, which is fielding supersonic anti-ship weapons across its surface forces, bombers, land-based forces, and undersea forces in high numbers.

By comparison, almost all the anti-ship capability of the US armed forces reside in a limited number of surface and air-launched Harpoon missiles, whose fundamental design is 45 years old.

The surface fleet’s launch cells are mostly filled with defensive anti-air weapons, but newer weapons such as Naval Strike Missile, Long-Range Anti-Surface Missiles, Maritime Strike Tomahawks (MST), and SM-6 missiles”. Only procuring them in higher numbers in the near term could close the gap that currently exists between the PLAN and US Navy, she argues.

Of course, the fate of the latest blueprint for the next 30 years, that is, which ships to purchase and which ships to retire, rests ultimately with the members of US  Congress like  Elaine  Luria. Many in Congress, incidentally, have repeatedly criticized the service for decommissioning ships at a faster rate than it can build new ones. 

It seems that for adversaries like China, the Biden administration prefers the theory of “deterrence by punishment” to the theory of “deterrence by denial” that the Trump regime pursued. In a denial strategy, the adversary is deterred from aggression by introducing significant doubt in its mind about whether its ultimate military objective can be achieved.

Need For A Fresh Strategy

This doubt is based on the threat of overwhelming military force being brought to bear at a time early in the conflict that will make the goals of the aggressor unachievable. A denial strategy requires the will of the defending nation to back up its rhetoric with action when necessary.

This strategy is believed to be more expensive because it requires more ready deployed forces, and it may also require the will to potentially use these forces in pre-aggression phases of conflict.

On the other hand, a punishment strategy seeks to deter an aggressor by the threat of pain if they take aggressive action. This strategy does not reveal one’s strength fully and keeps the adversary guessing.

This strategy implies that a nation will not or cannot decisively foreclose objectives to the adversary, and instead hopes that an adversary’s pain threshold can be overwhelmed into submission.

In a sense, it is an ambiguous proposition. But this is said to be cheaper because it requires fewer forward-deployed forces, thus less force structure. It is also politically more palatable because popular support will be more forthcoming after adversaries initiate aggression.

Most importantly, this strategy facilitates what Chief of Naval Operations (CNO) Admiral Mike Gilday says “divest to invest” so that the US navy is more capable and more lethal. But the issue is that its eventual success rests on many “assumptions”, which the US Congress wants to be clarified.

Nanking Cargo: Riches From the Orient

Article HERE

It’s the kingdom of power and awe where the winds wail, the gulls cry and the sea surges. Only the bold will brave it. Gales may blast it, rains may flood it and tides may churn it, but it is and always will be…the South China Sea.

Ask Michael Hatcher and he’ll tell you about raging storms, dark waters and pirates that he faced in an unforgiving environment unwilling to give up its treasure even to the bravest of souls. Hatcher never considered himself brave. Lucky perhaps, but not the daring swashbuckler portrayed in Hollywood productions. His demeanor, quiet, cordial and determined, was a perfect match for his line of work: Professional Treasure Hunter.

The South China Sea wasn’t unfamiliar to the Yorkshire, UK, orphan who grew up on a farm in the Australian outback. He picked up various jobs on land until age 27 when he bought his first boat. It took a lot of time and hard work, but by 1977 he had formed his own company and was salvaging scrap metal from sunken WWII vessels. Avoiding monsoons and standing up to modern-day pirates was standard operating procedure for the adventurer called “Hatch” by friends and crew.

Hatch greeted Lady Luck with a smile in 1983 when he stumbled upon a 17th century Chinese junk that went down on Admiral Stellingwerf Reef in the South China Sea. He and his crew salvaged more than 20,000 pieces of late Ming and Traditional Period Chinese porcelain that netted $2 million at Christie’s Auction House in Amsterdam. Hatch was ecstatic. Money to operate the boat, pay the crew and purchase high tech equipment was always a concern, but now he had the resources. Now he could make a mighty push in trying to locate the big “G.”

The Geldermalsen, a Dutch East India company merchant vessel, sank in a storm in 1752. The 1,150 ton vessel was on a return voyage from Canton to Amsterdam laden with Chinese porcelain, tea, raw silk and gold. Accounts from the survivors verified the shipment along with records in Holland whose trade with Asia for two centuries was dubbed the Golden Age. Along with his partner, Max de Rham—an engineer skilled in high technology and marine surveys—Hatch researched the merchantman. Both agreed to begin the search in the area where the Chinese junk was found. Using satellite navigation, proton magnetometers and side-scan sonar, they swept a five mile perimeter, but came up empty handed. After two months of fruitless effort, Hatcher wanted to quit, but de Rham begged for one more day. Bingo! The very next day, May 11, 1985, the prize appeared on sonar—an image of a shipwreck showing mastheads, cannons and deck contours.

Hatch and de Rham were the first down and right off the bat found shards with the luster of cobalt blue beneath a ceramic glaze. Their expectations soared as pairs of dive teams uncovered crate upon crate of blue and white teacups, bowls, butter tubs, dinner plates, teapots and more. Serendipity kicked in when the divers realized the crates of porcelain had been cushioned upon impact by the bags of tea. More good fortune emerged when they recovered 127 gold bars in the captain’s cabin.

Diving conditions were hazardous. Silt swirled around as cargo was removed, forcing divers to work by feel. Large bags of tea leaves broke free from their containers prompting Hatch to declare, “It was like swimming around in a giant black teapot.” The 132-foot depth and dark waters were ominous. Using surface air supply, hoses had to be monitored and bottom time computed. Getting the bends was always possible, but the salvors were experienced divers who stressed safety first. Divers entered a decompression chamber after each turn on the wreck. Storms delayed progress and lookouts packing guns stood guard against interlopers. After 10 weeks of long hours and intense labor, a container ship arrived to haul off 1,400 cartons of the Hatch’s cache. Upon arrival in Holland, it took six people, working steadily for one month, to unpack, clean and stack more than 170,000 pieces of china.

The payoff came in April, 1986, when Christie’s of Amsterdam opened a five day auction of the “Nanking Cargo.” An official from Christie’s coined the name, Nanking, the main distribution center for Chinese porcelain shipped to Europe throughout the years. It had an appealing ring to it and helped prices soar beyond auction forecasts. More than 20,000 people attended the auction, many harboring a desperate desire to own a memento from this romantic treasure trove. An anonymous bidder paid $332,786 for a 144-place dinner setting, while a Swiss banker bought a pair of butter tubs for $15,275. A small stoneware jug went for $5,251. In all, the sale brought in $15.3 million, double the pre-auction estimates. Gold soared as well, netting a Midas touch that bordered on $2 million.

As for Hatch, the 45-year-old salvage entrepreneur, this was a happy moment, but one he never looked back upon. Like all steadfast adventurers, he went off searching for another wreck in the untamed South China Sea. When asked by a reporter to give up one of his secrets to success, he responded with one word: “experience.” His mantra throughout all of his exploits has been, “Experience is the best teacher.” That being the case, Hatch, the student, continues to earn straight A’s.

China and Singapore to resume military exercises, cooperate on defence education

Article HERE

• Analysts say the developments are a ‘natural progression’ of warming defence ties between China and the city state, which also has strong strategic ties with the US
• A question that will be raised is ‘the level of exposure both sides would have to each other’s doctrine and equipment’, one observer says

China and Singapore’s defence ministers on Thursday said joint military exercises suspended during the Covid-19 pandemic were set to resume, and pledged to deepen defence ties in their first face-to-face meeting since 2019.

Chinese Defence Minister Wei Fenghe and his Singaporean counterpart Ng Eng Hen held talks at the inaugural Singapore-China Defence Ministers’ Dialogue, where they discussed global security issues, a statement from the city’s defence ministry said.

The two defence ministers also shared their respective views on bolstering defence exchanges between China and Asean, the statement said.

A Survey Of Corporate Financial Officers Found That 100 Percent Of Them Expect A Recession To Start In The Months Ahead

According to the majority (68%) of CFOs responding to the survey, a recession will occur during the first half of 2023. No CFO forecast a recession any later than the second half of next year, and no CFO thinks the economy will avoid a recession.

The CNBC CFO Council Q2 survey is a sample of the current outlook among top financial officers. It was conducted among 22 chief financial officers at major organizations between May 12-June 6.

A downturn, if not a full-on recession, is clear in the transportation world. While the rest of the economy debates whether things are that bad, it’s been clear for months to logistics providers that the situation has worsened — and the velocity of that change is still stunning.

The cost to move a container from Asia to a major port in North America or Europe has sunk by 23% since the beginning of this year, according to maritime research firm Drewry. Spot rates have plummeted even faster; marketplace Freightos said rates from China to the West Coast are down 38% month-over-month. FreightWaves forecast this week that ocean shipping volumes will “drop off a cliff” by this summer, based on slumping bookings out of China.

This just keeps getting worse: Applications for mortgages to purchase a home dropped 7% for the week, and were down 21% from a year ago, the Mortgage Bankers Association reported today. An indicator of future home sales: Potential homebuyers try to get pre-approved for a mortgage, lock in a mortgage rate, and then start house-hunting.

Mortgage rates have soared this year, and home prices have soared for years to ridiculous levels, causing layers and layers of potential buyers to abandon the market, amid “worsening affordability challenges,” as the MBA called it.

The number of Americans filing for unemployment benefits unexpectedly jumped last week, spiking to the highest level since mid-January in a sign the hot labor market could be starting to cool.

Figures released Thursday by the Labor Department show that applications for the week ended June 4 rose to 229,000 from an upwardly revised 202,000 a week earlier, missing the 210,000 forecast by Refinitiv analysts. It marked the biggest one-week increase since last July. The four-week average of new claims, which smooths volatility in the weekly figures, also increased slightly to 215,000 last week.

At this point, the answer to what Americans are most worried about is pretty straightforward: inflation. In the first FiveThirtyEight/Ipsos poll, 52 percent of Americans said the most important issue facing the country was inflation. We asked Americans this question in a variety of ways, but regardless of how we asked it, the top answer was always the same: inflation.

Seven-in-ten Americans view inflation as a very big problem for the country, followed by the affordability of health care (55%) and violent crime (54%).

About half say gun violence and the federal budget deficit are very big problems (51% each), according to a Pew Research Center survey conducted April 25-May 1 among 5,074 U.S. adults.

The Federal Reserve, the Biden administration, and Wall Street’s economists are confident that inflation will be brought down over the coming year. The American public disagrees.

Two-thirds of Americans say they expect inflation to get worse over the next year, according to a poll conducted by The Washington Post and George Mason University’s Schar School of Policy and Government.