Pacific Weekly (2-8 September)

Weekly update of activity in the Indo-Pacific region

Author

Nick
September 08, 2024

Pacific Weekly

Good morning and happy Sunday,

This is Pacific Weekly, a special edition of The Intel Brief intended to keep you updated on events across the hotly contested Indo-Pacific region.

This one is a little shorter, and should take about 4 minutes and 30 seconds to get through.

Reporting Period: 2-8 September

Bottom Line Up Front:

1. China’s largest shipbuilders are being merged to create the world’s largest shipbuilding conglomerate. This news comes as the US Navy’s shipbuilding capacity remains at a 25-year low.

2. Japan’s Ministry of Defense has requested a record-setting budget of $59 billion for FY25. This is to modernize the Japanese Defense Force due to the growing Chinese threat.

3. Japan and Australia announced they will work closer on security. The two nations will look to participate in exercises the other hosts or partakes in.

4. Japan observed two separate patrols around its territory this week. One was a Russian Navy patrol near Hokkaido, and the other was a PLA Navy patrol near Miyako Island.

5. Germany confirmed that two of its warships will transit the Taiwan Strait this month. China condemns the decision and claims it is a violation of their sovereignty.

China’s Biggest Shipbuilders To Merge, Create Largest Builder Worldwide

On 3 September, a Shanghai Stock Exchange filing indicated that China CSSC Holdings will acquire China Shipbuilding Industry Company (CSIC). The shipbuilding companies are China’s largest, and the merger will make them the biggest shipbuilder in the world.

The merger will facilitate government oversight on operations, streamlined management, faster manufacturing, and expand access to resources. Both companies currently build ships for the PLA Navy.

Why This Matters

Both companies are subsidiaries of the state-owned China State Shipbuilding Corporation (CSSC). CSSC has one-third of the global markets shipbuilding orders. The merger allows the conglomerate to expand its production of warships, such as aircraft carriers and frigates, and commercial ships, such as cargo vessels and passenger ships.

A few weeks ago, China was observed manufacturing various military vessels to expand the size and capability of the PLA Navy. At the same time as those observations, American Navy shipbuilding was reported to be at a 25-year low.

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Japan’s Ministry Of Defense Requests Record-Setting Budget For FY25

The Japanese Ministry of Defense has requested a budget of $59 billion for fiscal year 2025. If approved, the budget would be Japan’s highest defense spending to date. Japan’s defense budget has increased every year since 2012. The regular increases are part of Japan’s plan to meet a spending goal of 2% of GDP on defense by 2027.

Here is what Japan is looking to spend their money on:

1. Standoff defense capabilities. Japan wants to spend $6.7 billion on new missiles and a satellite system for early warning.

2. Aegis defense systems. Japan wants to use $560 million for two Aegis destroyers for enhanced protection at sea.

3. Growing the Navy. Japan wants to spend around $3 billion for three new frigates and a new submarine.

4. Expeditionary Radar. Japan wants to procure a mobile radar system for Kita Daito Island (east of Okinawa) for around $54 million.

Why This Matters

Japan has committed to growing its defensive capabilities due to a growing Chinese threat. Last week, a Chinese aircraft violated Japanese airspace for the first time ever. A day later, a Chinese naval vessel entered Japanese waters.

Recent activity has indicated that China’s strategic ambitions are not limited to Taiwan, but include dominance over the entire South China Sea. Japan has become one of the most integral partners for the US-led alliance in the Pacific, which includes nations like Australia, South Korea, and the Philippines.

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Japan And Australia Enhance Security Ties

On 5 September, Japan and Australia agreed to increase the size and frequency of joint military exercises. Australia announced it will participate in the 2025 iteration of exercise Orient Shield, the largest annual field training exercise between the United States Army and Japan. For Japan, they intend to participate in the annual training rotation in Darwin, Australia alongside US Marines.

The Australian Foreign Minister cited China’s growing aggression over claims in the South and East China Seas as cause for the new agreement.

China said cooperation between nations should promote peace and enhance trust, not “target third parties.”

Why This Matters

The announcement comes just a week after Chinese PLA assets violated Japanese airspace and territorial waters. China’s air incursion against Japan was the first ever.

The incidents are the microcosm of a tense and uneasy 2024 which saw China’s aggression against Taiwan and the Philippines reach new heights. Japan and Australia’s new agreement highlights the American-led alliance’s commitment to a free Indo-Pacific. It also indicates a concern that China’s aggression are not bound exclusively to Taiwan.

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Chinese And Russian Vessels Skirt Japanese Waters

On 2 September, Japan announced it was tracking two Russian vessels sailing north of Hokkaido. At the same time, two PLA Navy vessels were observed 80 miles northeast of Miyako Island before they departed for the Philippine Sea.

The maneuvers were observed after China had violated Japan’s airspace for the first time ever on 26 August.

Why This Matters

China, Russia, and North Korea are Japan’s primary security concerns. This is well known to the growing alliance, and China’s increasing aggression against Japan indicate that the CCP’s aims in the region do not stop with Taiwan.

If China were to launch an operation to seize Taiwan, it is likely that the PLA would be ordered to strike Japanese territory. Japan is looking to increase their defense spending for this vey reason.

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German Warships To Transit Taiwan Strait Despite Warnings From Beijing

On 7 September, Spiegel magazine reported that German warships scheduled to transit the Taiwan Strait sometime this month will do so, despite warnings from Beijing. German naval vessels have not transited the Taiwan Strait since 2002.

Last month, China condemned the German’s planned transit, citing it as a violation of Chinese sovereignty. Germany said it will transit the strait without warning China due to it being an international waterway. The day of transit remains uncertain.

China has yet to comment on this update.

Why This Matters

China has a history of condemning unsanctioned transits of the Taiwan Strait. The most recent transit was by Canada. Germany’s planned movement indicates closer NATO involvement in the region.

Rear Admiral Axel Shulz, the German task group’s commander, said the transit will demonstrate Germany’s commitment to a “rules-based order.”

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End Brief

That concludes this edition of Pacific Weekly.

I’d like to point out that some of these changes reflect the rapidly deteriorating security environment in the Pacific. Some of these changes are good, like Japan working closer with Australia or boosting their defense spending. That being said, experts have speculated that a Chinese invasion of Taiwan could happen as early as 2027 - that would make some of these developments “too little, too late.”

Keep that in mind each week when we discuss what is going on in this region, big or small.

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See you tomorrow,

Nick