What it’s like to be attacked by Beijing in the South China Sea I Battle Lines, Podcast

What it’s like to be attacked by Beijing in the South China Sea I Battle Lines, Podcast

[Music] we order you have your C to leave this area immediately right now I’m venisha rainy and this is Battle lines regardless of who stands with Israel Israel will fight until this battle is one I made wartime decisions I know the choices are never clear or easy for the leadership I just find bombs and I find dead people but it’s a really scary thing for me in this episode of battle lines we joined the telegraph’s Asia correspondent Nicholas Smith for a special dispatch on board a Filipino ship patrolling the front line of a simmering conflict in the South China Sea then we speak to economics reporter Melissa Lawford about China’s gold buying binge and why it means tensions in East Asia could be on the cusp of heating up even further it’s Friday May 3rd 2024 We Begin this episode with a special report from Nicola from the South China Sea she joined the Filipino Coast Guard on an expedition to give supplies to fishermen out in the scarra Sha an area claimed by both China and the Philippines over to Nicola it’s early morning on Monday the 29th of April shortly before 6 a.m. and we have arrived at the main Port of Manila the capital of the Philippines we’ve just boarded a Coast Guard ship the BRP bakai and we’re going to be spending several days on board this ship which I’m a little bit apprehensive about that’s a long time at Sea and we are heading out towards the scar brol which is one of several disputed features in the South China Sea China claims the sh as its own territory and so does the Philippines and it does in fact lie within the Philippines exclusive economic zone the show has been the scene of several confrontations between the Chinese Coast Guard and the Philippine Coast Guard and also fishermen Filipino fishermen say that they have been denied access to the sh by by the Chinese Coast Guard and this was once very rich fishing waters for them and they say that they’ve really lost a lot of their livelihoods because now they’ve been denied access ESS so that’s it we have loaded up the ship with supplies with food and water and extra toilet paper and we’re now sailing out of the port we’re leaving the high rises and the traffic jams of Manila behind and heading out to the Open Sea it’s about 300 p.m. now on Monday the 29th of April and we’ve been joined by a second ship it’s the BRP datu Bankok and and this is a ship that’s owned by the Bureau of fisheries and Aquatic resources and so our ship’s job is to protect this one it’s carrying humanitarian supplies like food and fuel for the fishermen who are out near the scarber sh and so our Coast guardship will be accompanying it to make sure that it can do so without any problems and we’re just sailing past marelas and in the distance is Mount samal it’s very beautiful it’s a hot sunny day it’s really hot the Philippines is having a bit of a heat wave just now and it’s beautiful scenery so far I’m standing on the bridge of the ship now the stars are lovely and we had a gorgeous golden Sunset a couple of hours ago it’s all very peaceful the the waves are lapping against the side of the boat and we been told that we’re likely to arrive in the waters near the scarber Sha around 8 or 9:00 a.m. in the morning as we come closer to the scarber sh then obviously the Chinese Coast Guard vessels operating in that area will know that we are coming and the crew on our ship say that their reaction is entirely unpredictable there have been confrontations in the recent past Chinese vessels have opened fire with water cannons on the Filipinos they have encircled them they have harassed their boats fishermen have said that they’ve been blocked from entering fishing grounds there there was a recent incident where the Chinese actually built a floating barrier around the reef using boys and rope and then the Filipinos cut that barrier away so there is a history of Confrontation of clashes of diplomatic rouss over the scarber show and both sides accuse each other of provocation it’s 5:20 a.m. on Tuesday the 30th of April and Dawn is just breaking everyone’s starting to stir from their sleep uh it wasn’t uh too Rocky it was it was relatively Pleasant and uh I woke up to see the crew kind of looking out the side of the boat and on the horizon there is a gray ship and they’ve said that it is a Chinese ship but that they can’t identify it because it’s turned off its automatic identification system so it’s it’s still relatively far away a short update now it’s about 6 10:00 a.m. and the ship is now closer it’s visibly white not gray it’s definitely a Coast Guard ship a Chinese Coast Guard ship its number is 3105 the crew have discovered it hasn’t communicated yet with our ship they say that normally happens about 24 nautical miles from the scorbus sh it’s currently we’re currently about 38 nautical miles from the sh and it seems to just be observing us we’re observing it we’re looking at each other but still relatively far out uh you can almost see the writing on the side of their ship can’t quite read it and there’s still a plum of smoke coming out and that’s it for now really feels tense it’s gone very quiet everyone in the bridge is just staring intently at the ship feels a little bit tense now we’re just very close to the Chinese coast guardship and we’re just still watching each other uh we’re been separated from the boat that we have been accompanying it’s now got about three Coast Guard ships very close to it we’re a little bit back um going slow we’ve just all seem to have come to a bit of a standstill China and India fa soty over the islands including H island in the South China Sea and the adjusted Waters we order you help your C to leave this sea area immediately right now over China poar vessel 3305 is Bureau of fisheries and Aquatic resources and 304 bp. based on the 1982 United Nations convention on the law of the sea where in China is part2 relevant countries were awarded a 200 naal mile e you are Way Beyond 200 naal m e of your country please a your charge okay this is pretty aggressive uh so Chinese boat 21558 which has been trailing us also since 5:00 a.m. they are now trying to come between us and our supply boat the be far boat they’re close enough that they’re really close I would say maybe about I don’t know 75 M or so at the moment we’re just literally surrounded by Chinese Coast Guard ships they are trying to cut us off speeding up and just splicing across the water in front of us and last the last maneuver almost caused us to bump into their ship all of the phili you know crew members were getting ready to to draw D protective measures so we’re very close to the show but you can hear in the backgrounds radio communications between the crew members at the bow and the bridge and there’s what appears to be a barrier in front of us our has sent out a drone to inspect but looks from a distance like it’s a floating barrier with maybe white boys and there is one ship to my right which I’ve been told as a maritime militia ship not the Coast Guard and then a Chinese fishing vessel it’s very quiet just now we’ve just switched off or turned down the engine and we’re just approaching very slowly trying to work out what this barrier is that’s been erected between us and the show the supply boat is some some way behind us but they’ve been putting out a call to Filipino fishermen in in the area to come and pick up food and fuel that they’ve been carrying from from the coast so after pulling back about half an hour ago from cat and mouse Maneuvers and from constantly trying to block us and cut us off the Chinese card have pulled up alongside and if you see behind me they’ve been firing this water cannon for about 5 minutes this is a a fresh tactic that they have deployed in the past 5 minutes or so um it’s one of several tactics that they use to try and block Filipino vessels the Coast Guard from getting close to scarb which they are claiming as own territory even though that’s been challenged in an international court of law challenged successfully so the the Filipino coolship that we’re on just now is calmly waiting um not going back but he calmly waiting for now have one boat Penning Us in with a water cannon and we have another which is in front of us and it’s blocking us off so the water cannon is getting closer and I think we’re going to have to retreat [Music] back so it’s just dripping on the canopy above us and you just keep going it’s PR strong just shielding my phone here so it doesn’t get too wet but you can really hear oh Bo yeah that’s quite a Bound for Real’s coming in is getting too aggressive everyone’s coming in door from the can hear we’re just Sheltering in the corridor right next to the deck as the water comes down cre coming in their hard hats on rushing through the door the Cannons can get really powerful they can really injury we’re just we’re just Sheltering now under a canopy that’s being completely destroyed this is um an area of the ship where we’ve been sitting chatting working resting and there’s some serious damage has been done it’s very significant damage got soaked we’re all a bit wet now uh the the water CN was out very fiercely for at least five minutes we had to rush inside the coat uh we were Sheltering shelter inside a little Corridor and it’s a very powerful wash Cannon and it’s so powerful that it’s actually destroyed the canopy that was above the deck where we’ve been sitting for the past Day come down plastic everywhere and a light so this is Rage here that’s how powerful these water cannons are and you don’t want to get caught them because they they can hold serious injuries what to the Filipino po they were they were they were telling the Chinese to stop the water cannon okay yeah they were endangering the V vessel and the the Personnel right well there’s a lot of damage out there isn’t there the railing the railing here is damaged also the railing the railing of the of the ship on the on the left side it’s it’s it’s damaged heav damage actually you you can’t pass through here any more I think reflecting on this encounter with the Chinese Coast Guard I would say that it’s while it’s rare to attack a Philippine Coast Guard ship with water cannons at this particular location in the South China Sea and at this garbar sh and and we went very close to the sh that overall encounters like this Are Not Unusual at all in the South China Sea China is acting with increasing Swagger to assert its claims to this part of the world and this incident shows that it’s prepared to use aggression and dangerous moves to control access to what it believes to be its territory really this was a stark reminder of how this kind of brinkmanship really puts the South China Sea in danger of being of becoming a global flasho really raises the risk of conflict and of accelerating tensions with accidentally or deliberately but the Philippines also has another purpose in going on these missions and that is that they want to show that they’re not going to back down that they’re not going to be bullied by China and pushed out of waters that that they say are their own they want to challenge China’s claims and and they really portray themselves as as David against this Goliath if you ask why is the South China Sea relevant to somewhere like the UK first of all it’s a resourcer area which has vast reserves of untapped oil and gas but it’s also the location of a huge network of trade routes through which trillions of dollars of goods travel every year it’s crucial to supply chains and the global impact would be huge if any country were to try and exert economic coercion tactics here this region is now on a hair trigger if there a major escalation that begins with a maritime confrontation then it has potential to to join the United States and its allies which would include Britain and frankly nobody wants conflict and Filipinos here that I’ve spoken to they just want peace and and it’s the same around this region where there are potential flash points he really just wants to live a peaceful life thanks so much for that dispatch Nikki it was absolutely fascinating to hear you out on the high seas before we dive into your sort of Reflections about what this means geopolitically and all of that can you tell me a bit about what life was like on board a boat for five days overall it it was a really unique experience and the crew on the ship could not have been more accommodating and welcoming and they did everything to make her uh passage as comfortable as possible it was quite a small ship it was 44 MERS in length and there were 12 journalists in addition to the crew and they very kindly let us use their mess we had know our equipment all over their mess table we were working there uh one of the officers gave up his room for the female journalists so there were four women and he very kindly gave us his room which meant that we had two bathrooms between 12 of us which was absolutely fine it just felt like being on a unusual camping trip and this being out at Sea was very camming most of the time we saw some beautiful sunsets some amazing Stars uh we slept under them for a couple of nights and it was actually quite soothing to to go to sleep now that you’re back on dry land and Manila and you’re reflecting on it a bit how significant was that attack does this kind of thing happen all the time yes and no China is acting with increasing aggression across the South China Sea and so there have been multiple incidents because there are multiple areas of the the South China Sea that are contested by many countries and China claims sovereignty over almost the whole of the sea but they’re are competing claims from different Southeast Asian countries among them the Philippines and so there are often confrontations in different forms between Chinese vessels and vessels of other countries including the United States we’ve seen we’ve also seen some confrontations between uh military aircraft from the US Australia Canada uh and Chinese over this area but at the scarber show the Philippine Coast Guard told us that at this particular show that they were very surprised at how aggressive the Chinese Coast Guard had been towards the Philippine Coast Guard that this was the first time they had seen such Brute Force use against a coast guard vessel there have been other Supply vessels who have been water canon in that area but they were very taken back that China had turned on a Philippine Coast Guard vessel and they saw this is a a serious escalation that they saw this is an escalation that this water jet was potentially lethal so they have strongly protested against China China’s very aggressive actions against them and what do we know about the Chinese boats that were harassing you and water cannoning you are they State boats is this the Coast Guard you mentioned Maritime militia who exactly are these people and what kind of authority do they have from the from the main government so when we first spotted them it was about 5:00 a.m. in the morning there were two Coast Guard ships on the horizon and this then grew within an hour or so to about five Coast Guard ships there was also a Chinese naval ship in the background it didn’t engage with the Philippine Coast Guard it was only the Chinese Coast Guard that did when we got to the scarber Sha within sight was also a ship that the Philippine the Filipino crew identified as a Chinese Maritime militia boat as well and they said that others were in the region so we can safely assume this is State sanctioned harassment absolutely yes I mean China has been very clear that it it wants to assert its sovereignty in this area and in many other areas of the South China Sea and this is the way that it’s doing it and it’s doing it with Brute Force it’s what we saw out there were some very dangerous Maneuvers on behalf of the that were carried out by the Chinese the the Filipinos were only taking evasive action they were trying not to collide with the Chinese Coast Guard ships which were cutting in front of us at one point one Chinese Coast Guard chip was within 5 M of our bow our the captain of of the ship we were on he took evasive action he slowed down he was doing u-turns he was weaving in and out of these Chinese Coast Guard ships they were speeding up beside us they were veering in towards us they were making it look like they were about to Ram us the a ship that was accompanying us was actually rammed we weren’t but we came very close to Collision on several occasions the water cannon that they then used against the ship was fired with it could have been potentially lethal somebody could have been killed or seriously injured when we saw the damage that it made to the ship after just a few minutes the awning a plastic awning on the the deck of the stern had to collaps there were Jagged pieces of plastic everywhere a steel barrier on a passageway a walkway that we’ve been using was had just been rammed into the Hall of the ship and you can imagine what that would do to a human body and it was you know our crew were very skilled our captain was extremely skilled and managed to avert any kind of disaster but if it had not been for the professional behavior of the crew somebody could have been very seriously hurt or Worse what has China said about this event so they gave their own version of events they didn’t make any comment about their own provocative Behavior China always blames the Filipinos for provocative action and the Filipinos likewise accused China of provocation but from what I saw with my own eyes there was only one side that was doing the provoking and that was turning to very dangerous and violent actions to enforce its will and to enforce its claims on that area both sides are contesting the sovereignty of the area but that’s not something that should be solved by brute force one final question it’s really interesting that the Filipinos are running these sorts of trips because it was essentially a press trip and the Filipino Administration have changed their stance on this haven’t they the Filipinos want to take journalists out because they want journalists to be eyewitnesses to China’s actions in the South China Sea and to report on China’s aggressive behavior and they basically want to counter Chinese propaganda on what happens between the two sides when there is a confrontation they want to be transparent they want the world to know what’s happening in this part of the South China Sea thank you so much Nicholas Smith our Asia correspondent in Manila now the South China Sea is not the only place where Beijing is Making Waves amid a major gold buying Drive they’re also setting off alarm bells in the markets I spoke to Melissa Lawford to find out more my eye was caught this week by a story you did about China buying lots of gold do you want to start me off by telling me what alerted you to this trend thank you well there’s quite a lot going on here with this story but the thing that ultimately alerted me to it this week is we had a report from the World gold Council which came out earlier this week and that showed the People’s Bank of China has bought 27 tons of gold in the first three months of the year now China’s Central Bank has been buying gold for quite some time but this data at the start of the Year means their spree is now 17 months long and that’s a record for China since at least 2000 and that I think is quite a big alarm Bell and you say alarm Bel how does that amount of gold compare to what other countries buy in you know a year so China central banks started buying gold in October 22 and that means they’ve now been buying for 17 months long and they’ve amassed they now have total reserves of 2,626 tons that’s worth about1 170 billion dollar and that’s 16% more than when they started and it’s also a record high for the People’s Bank of China they have never had this amount of gold in reserve to put that into context you know I think China now has the sixth largest gold stockpile in the world it’s quite a long way behind the US which holds about 8,000 tons which is around $600 billion doar you can see that’s quite a lot more but the US has has the dollar it’s the world’s Reserve currency so that’s to be expected the UK we’re looking a little bit small on this front we’ve got around 310 tons so that’s about 23 billion so you can see where China sits within that what’s remarkable about this they’ve been going for 17 months that’s their longest ever previously I think their their last longest gold buying spree was in 2015 and it was about 15 or 16 months but here there is just no sign that they slowing down and what’s really crazy is that they’re doing this at a time when gold prices are are close to record highs the price of gold hit a record high earlier in April and it’s now around $2,299 per Troy an that’s up about 14% compared to a year ago basically they are on this spree at at the most expensive time that they could be trying to do this it is costing them a lot of money and that really Paints the picture of the sense of urgency here they are worried about something and they’re racing to build up these stocks well let’s get straight into what they’re worried about then our listeners will obviously know that gold is one of those Safe Haven Commodities and when things go A bit Haywire that’s what people flock to what’s China worried about there’s sort of two things happening here everyone’s probably been reading in the Press about how China has this long-term aim to challenge and the dominance the total hedony of the US dollar in the world as the global Reserve currency it’s what central banks hold cash in and that’s an incredibly powerful thing China’s got a long-term aim to challenge that it’s got a very very very long way to go with the ren MBE but there’s a kind of argument that if you want to move away from the dollar the dominance of the dollar the kind of segue to do that is move into gold first so maybe that’s a kind of long-term aim but before that there’s a much bigger short-term issue here and we can see this very clearly this is a response to uh the sanctions imposed on Russia in the wake of the war in Ukraine so when Russia launched its full-scale invasion of Ukraine in February 22 that the West the US responded by Massive sanctions massive Financial sanctions which wiped out moscow’s dollar reserves that’s about 350 billion dollars of moscow’s dollar reserves that just got frozen were sanctioned and that was a real watershed moment that hadn’t been done on that scale before and you know what analysts are saying is policy makers in China president Xi Jinping sees this and thinks well we’re pretty vulnerable to this China is actually more vulnerable to this than Russia because China’s a lot more dependent on World Trade Russia’s a bit more isolated China’s doing a lot of trade in dollars what we’ve seen is this real effort from policy makers in China to try and insulate China from sanctions like that so would they’re doing is at the same time that they’re buying up gold the central bank is buying up gold it’s also reducing its Holdings of us treasuries and that means it’s on a it’s on a trajectory it’s still quite exposed to the dollar system it’s still partaking a lot in this but its aim is to kind of build a degree of insulation so if the West were to impose a freeze on its Global Currency reserves it wouldn’t hurt it so much it’s hard isn’t it because it all feels hypothetical and tied up very much in a lot of Bell Co rhetoric frankly and we hear a lot of it from China repeatedly often with the same words and the same formulations and you become in a sense particularly I think working in the media a little bit inured to it um you start to sort of shrug it off oh that’s how China would respond that’s what China would do so it’s interesting to look at some of the sort of I think what some people might consider the sort of background workings in terms of them buying gold protecting their trade those are the sort of concrete signs that perhaps don’t always make headlines although they did this week that maybe we should be focusing more on that might give us a bit more of a concrete sign as to where things are going because the rhetoric can be hard to pass sometimes definitely China’s really putting its money where its mouth is buying gold like this I really do think it is an alarm Bell and I really do think we should be paying attention I suppose another conversation alongside this is what does it tell us about the effectiveness of sanctions and what are we going to have left to do if China does build up a degree of immunity it’s a limited number of levers that the West can pull and if the they’re already Limited in their capabilities already as we see with Russia if they become more limited I don’t know where that leaves us it’s quite scary when you reflect on the impact that sanctions have had compared to what we probably wanted them to have on Russia what lessons can we take from that in the West in terms if we wanted to try and deter or punish China from doing something that we felt broke international law and order it’s a very difficult question in a lot of ways the sanctions against Russia have been effective they are squeezing their economy their war machine but they haven’t stopped anything and and Russia is finding a lot of ways to get around the oil price cap and yeah and then what the West has done has been a big warning sign a big wakeup call for everyone else they’ve shown what we do and uh I don’t know if that is necessarily clearly acting as an effective deterrent or if it’s just acting as a kind of here’s what could happen to you now you’ve got a lot of time to to prepare for it you know I mean it’s going going on for two years now so more than that it’s a lot of waiting time earlier in the our listeners will have heard a report from the South China Sea where our reporter was out on a Philippines Coast Guard boat being confronted by a Chinese Coast Guard boat aggressively to be warned off their territories how have you seen other countries in Asia other markets in Asia react to this news about the gold buying do we see shifts to protect themselves as well from some kind of potential upcoming conflict well yeah it’s very interesting the world gold Council data shows that Central Banks globally are on a record gold buying spree China is having its own record but central banks are also buying up huge amounts and the largest chunk of growth is in Emerging Markets so I think actually turkey bought the most turkey Central Bank bought the the largest amount of gold at the start of the year and you know on the one hand you can say well that’s a country that is you know obviously in the certainly in the middle I don’t know if I should say Allied but it it’s in the middle it is still training with Russia and and things like that but also in Turkey there’s this you know that they’re grappling with massive inflation and that is another reason why central banks buy gold it’s not always uh just about skirting sanctions so I think T turkey bought the most then it was China then I think it was India and there is a a big story as well here about Emerging Markets central banks and emerging economies buying up a lot of gold and I think that is I think when I was talking to the world gold Council they were saying that’s much more about this challenging the dominance of the dollar story if you want to move away from using US dollars as as a global Reserve currency as a kind of currency and that you trade in the interim there is is you you you move into gold because they’re comparable things right and one can sort of be a substitute for another think if you’re in the mindset of of Central Bank planning now when we talk about moving dollarization it’s it’s in very sort of soft early stages at the moment I mean the the the Monopoly the kind of hedg money of of the dollar globally is just enormous so for example outside of what central banks do we could talk about US currency is used in half of Global Payments according to Swift data and the r m is used in less than 4% so even though REM Mimi is on the stratospheric rise it’s use in trade Finance is tripled in the last three years the the Dollar’s really dominant by so many multiples but but this kind of feeling of wanting to move away from that I think it goes through gold first and then maybe it’s going to be quite a long time before central banks start buying large amounts of Ren MiMi because it’s not easily invertible in China has a lot of capital controls there is yeah the gold data does show also this story about um Emerging Markets moving away from the beginnings of moving away from the dollar it’s in the very nent stages great thank you so much this Melissa Lawford economics reporter that’s all for battle lines this time please join us again next 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is produced by David deari and the executive producers are David nuls and Louisa Wells

In this episode of Battle Lines, we join The Telegraph’s Asia correspondent, Nicola Smith, for a special dispatch on board a Filipino ship patrolling the simmering conflict in the South China Sea. Then we speak to economics reporter Melissa Lawford about China’s gold buying binge and why it means tensions in East Asia could be on the cusp of heating up even further.

Contributors
Venetia Rainey (Host, Weekend Foreign Editor) @venetiarainey on X
Nicola Smith (Asia correspondent) @niccijsmith on X
Melissa Lawford (Economics Reporter) @melissalawford on X

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Email: battlelines@telegraph.co.uk