Saturday, February 28, 2015

Death by china


Stolen iPhone Turns Up In China


Hong Kong tycoon expands his U.K. holdings


Hong Kong tycoon expands his U.K. holdings

Several weeks after putting a succession plan in place, Li Ka-shing, who turned 84 in June, might have been expected to perform his swansong. Not a bit of it.
At a press conference in Hong Kong to discuss his companies’ half-year results last week, he made it clear he would not be contemplating retirement. “I am still the big shareholder. Hutchison and Cheung Kong will be [eldest son] Victor’s one day,” said one of the world’s richest men, with a net worth of $25.5-billion (U.S.), before adding emphatically: “I haven’t retired.”


In fact, if the past couple of weeks are any indication, another chapter in the long story of Mr. Li’s career is about to be written. Already one of the biggest foreign investors in the U.K., Mr. Li’s flagship, Hutchison Whampoa, has cash and cash equivalents of $12-billion as of June 30.
Having acquired UK Power Networks in 2010 for $9.1-billion and Northumbrian Waterfor $4-billion last year, Mr. Li’s companies bought Wales and West Utilities in late July.
His companies now provide millions of Britons with everything from gas – Mr. Li’s companies have a market share of about 25 per cent in the U.K. – to electricity, sewage and water services.
An old joke in Hong Kong is that of every $10 a citizen spends, $1 goes to Mr. Li. Although he is unlikely to become so dominant in the U.K., Mr. Li already owns the large British port of Felixstowe, mobile phone company Three and health and beauty retailer Superdrug, in addition to his various utilities holdings. He is also one of the bidders for the Manchester airport group. “The U.K. has become another Hong Kong for the group,” says Cusson Leung, an analyst at Credit Suisse.
To understand why someone who constantly professes his love for China – he did so a couple of times at his recent results briefing – invests so heavily in U.K. infrastructure, one needs to understand Mr. Li. He is a value investor who believes Europe’s troubles have created good buying opportunities. As a Hong Kong tycoon who rose from rags to riches in the former British colony, he is also attracted to common law jurisdictions and the stable regulatory environment of utilities in the U.K.
Mr. Li arrived in Hong Kong as a refugee during the Sino-Japanese war at the age of 12. His father died of tuberculosis, leaving the teenage Mr Li to take care of his family. The tragedy “branded on my heart forever the questions that still drive me,” Mr Li told Forbes magazine earlier this year. “Is it possible to reshape one’s destiny? … And is it possible to enhance chances for success through meticulous planning?”
He has done both in equal measure. He opened a plastic flowers factory in 1950, then bought up lots of Hong Kong property when anti-British riots in 1967 sent prices plummeting. Property development has been a constant investment theme since, and even on Friday, Cheung Kong won a $1.2-billion bid to build a residential and commercial complex on the island – the highest amount paid for a site in Hong Kong for more than a year.
Mr. Li shot to prominence when Hong Kong and Shanghai Bank sold him a controlling share in Hutchison, one of the city’s largest conglomerates, in 1979. The takeover was referred to as the first handover of Hong Kong because it marked the first time a Chinese tycoon had achieved such stature – the former British colony was returned to Chinese sovereignty in 1997.
Hong Kong may be where the company’s headquarters are, but Europe accounted for just under a third of Hutchison’s earnings before interest and taxes of HK$26-billion ($3.3-billion U.S.) for the half-year ended June – with the U.K. accounting for 22 per cent of the total global earnings before interest and tax. Mainland China, by contrast, accounted for 22 per cent of EBIT. Canning Fok, managing director of Hutchison, says: “[Our investments] depend on where the opportunities are. Today, the best opportunities are in Europe.”
This contrarian view is vintage Mr. Fok, who has been Mr. Li’s point man through the ups and downs of the company’s early investment in 3G phone services, which took more than eight years to turn an operating profit. Mr. Li’s companies have been raising cheap, long-term capital over the past few months. To pick just a couple of examples: in January and February Hutchison issued a total of $2.5-billion of five and 10-year bonds. In June the company was at it again, this time in euros, issuing a total of €2.25-billion.
Along the way, the company has repaid loans that would have fallen due in 2013. Frank Sixt, the company’s chief financial officer, jokes that the company need not borrow another penny from a bank through 2013, 2014 and much of 2015. “We’re not taking a chance that significant maturities will come due at a difficult financial time,” Mr. Sixt says. According to the company, net debt to total capital is now 22.8 per cent, down from 31 per cent in June 2010.
When he bought Hutchison in 1979, the Financial Times observed that Mr. Li had become “the most talked about businessman in a town where most of the talk is about business.” Mr. Li is unlikely to reach the same celebrity status in the U.K. that he enjoys in Hong Kong. At the results briefing on Aug. 2, a staccato burst of cameras clicking greeted his lifting a glass of tea or even raising his hand.
But Mr. Li’s decision to spend billions buying businesses such as water, electricity and mobile communications that offer a stable return in these uncertain times promises to be an interesting postscript to Britain’s acquisition of Hong Kong in the 19th century.

How the disgraced James Riady, barred from travel to the U.S., made it back

How the disgraced James Riady, barred from travel to the U.S., made it back

 NETWORKING: In 1985 Gov. Bill Clinton of Arkansas and his wife, Hillary, met with Mochtar Riady, Lippo Group's founder. Riady's son, James, pleaded guilty in 2001 to a U.S. fraud charge.
NETWORKING: In 1985 Gov. Bill Clinton of Arkansas and his wife, Hillary, met with Mochtar Riady, Lippo Group's founder. Riady's son, James, pleaded guilty in 2001 to a U.S. fraud charge. 
By Andrew Higgins
Washington Post Foreign Service 
Tuesday, January 5, 2010
JAKARTA, INDONESIA -- In March 2004, James Riady, an Indonesian tycoon and devout Christian, received an honorary doctorate from Ouachita Baptist University in Arkansas. The university -- which has a scholarship program funded by the Indonesian -- didn't announce the honor. Nor did Riady pick up the diploma in person: He'd been barred from America after pleading guilty in 2001 to a "conspiracy to defraud the United States" through illegal contributions to the campaigns of Bill Clinton and other Democrats.
Last year, however, the Indonesian mogul finally made it to Arkansas. He traveled there during the first of two previously unreported trips he made in 2009 to the United States. He was allowed in only after receiving a waiver from a rule that forbids entry to foreigners guilty of "a crime involving moral turpitude," a term that government lawyers generally interpret to include fraud.
Riady's return to the United States poses a prickly question for Hillary Clinton's State Department: How and why did a foreign billionaire stained by Clinton-era scandals get a U.S. visa after being kept out for so long under the Bush administration?
The ethnic Chinese magnate's ties to the Clintons have been a source of heated controversy since the late 1990s, when Riady became embroiled in one of the murkiest episodes of the Clinton presidency -- a campaign fundraising scandal that caused a big political ruckus in Washington amid Republican Party allegations, never proved, of meddling by China'sintelligence services in American politics.
The saga brought Riady and his family-run conglomerate, Lippo Group, an $8.6 million fine, the biggest penalty in the history of U.S. campaign finance violations.
A close look at Riady's quiet American comeback, along with dramas back home in Indonesia that preceded it, reveals how one of Asia's best-known and most complicated businessmen has deployed a potent mix of faith, chutzpah and charity in a long quest for rehabilitation. It also reveals a man beset by contradictions -- a dedicated student of the Bible who has a reputation in Indonesia for showing scant forgiveness to those who cross him; a generous philanthropist whose Lippo Group is notorious in Jakarta business circles for its raw pursuit of profit; a proud man who was humiliated by his entanglement with the Clintons but who has now sought to reenter their world.
Riady, 52, declined to be interviewed but, in an e-mailed response to written questions, he said the teachings of Christ "inform all that I do." He said he hadn't seen the Clintons during his 2009 trips to America but did pay $20,000 to become a member of the Clinton Global Initiative, an annual gathering of prominent figures in politics, business and philanthropy sponsored by Bill Clinton.
A senior State Department official said Hillary Clinton had no knowledge of the decision to let Riady enter the United States. The tycoon's visa, he said, was issued by the U.S. Embassy in Jakarta after the Indonesian asked to travel to America so that he could attend family graduation ceremonies. Riady, added the official, was granted entry for a "very narrow purpose."
On his first visit in May, Riady watched his son, John, graduate from the University of Pennsylvania's Wharton School and his daughter, Stephanie, graduate from Wheaton College, a Christian school in Illinois. He also traveled to Arkansas to see Ouachita Baptist University's president, Rex Horne, the former pastor of the Clintons' Little Rock church. Riady, who has an educational foundation in Indonesia, said he visited about 15 American universities and schools and said he had made clear in his application to enter the United States that this was the main purpose of his travels. "I have a well documented passion for education," Riady said in his e-mail.
On his second visit, however, he reached out beyond American campuses. In September he went to a business forum in Boston of Indonesian and American executives. He also registered for a meeting in New York of the Clinton Global Initiative, along with a galaxy of big-name guests such as President Obama and Secretary of State Clinton. Riady, in his e-mail, said he wanted to attend because "educational issues were on the agenda" but, in the end, didn't "because I was unable to fit it into my schedule."
Riady's wide range of activities in America didn't violate the terms of his visa, American officials say, but they nonetheless caused consternation in the upper reaches of the State Department. The tycoon, one State Department official said, is free to apply to visit again but "the reality of his past remains a significant obstacle for future travel to the United States."
The Clinton connection
Riady, who trained as an investment banker in New York, met Bill Clinton in 1978 when the Indonesian spent four months in Little Rock, where Lippo bought a local bank, according to court documents. Returning to the United States in 1984, Riady stayed in Arkansas for two years before moving to California, and had frequent contacts with then-governor Clinton.
Riady, who obtained a green card that he later gave up, told prosecutors that he didn't make political contributions during his early years in Arkansas but that he did later get involved in Democratic fundraising. After a 1992 limousine ride with Clinton, he pledged to help raise $1 million for the governor's presidential campaign and visited the White House repeatedly during the Clinton presidency, according to court documents.
The relationship ended in disaster for Riady, who, before a Los Angeles court in 2001, pleaded guilty to a felony charge arising from his use of "dishonest and deceitful means" to funnel funds from Lippo companies overseas into the campaign coffers of Clinton and others. The money was not given directly by Riady or Lippo, but was used instead to reimburse other donors.
After the 2001 court appearance, Riady returned to Jakarta to run Lippo Group, a sprawling corporate empire founded by his father, Mochtar, with interests ranging from property and health care to finance and media. He since has mostly avoided talking about the scandal, but, in an interview posted in October on the Wharton School's Web site, he discussed it briefly, saying he has tried "to be wiser and remind myself that money and power are both a blessing and a curse." He said he "had to face the reality that business and politics do not mix."
But Riady still clearly relishes mixing with the rich and politically powerful. He has become a regular at events organized by the World Economic Forum, a Swiss-based club of global power brokers to which Lippo pays more than $40,000 per year in corporate membership fees.
The question of whether Riady would be able to return to the United States was first raised in 2000 during plea bargain negotiations. As part of the plea agreement, Riady agreed not to seek entry for two years. Riady, in his e-mail, said the lead prosecutor in the case, Daniel O'Brien, wrote a letter that "specifically stated that my crime was NOT moral turpitude." A copy of the letter on file with the Los Angeles court, however, includes no such statement by O'Brien. It notes only that the businessman might need a waiver if "the appropriate authorities determine that Riady has committed a crime of moral turpitude." The letter records that Riady had informed the U.S. government that he might seek to visit America in the future "for business or personal reasons" and says the businessman could use the letter to support an application for a waiver if he complies with the terms of the plea agreement.
The 2001 plea agreement, which Riady signed on Jan. 10, 2001 -- 10 days before George W. Bush became president -- infuriated many Republicans, who complained that the deal prevented a full accounting of Riady's fundraising activities for Clinton and other Democrats. The tycoon's already dim prospects of getting back into the United States under a Republican administration darkened further with the Sept. 11 attacks, which led to a general tightening of visa procedures.
Riady, in his e-mail, said the 2009 trips -- made on a six-month, multiple-entry visitor's visa issued in May -- were his first to this country since his 2001 guilty plea. He said the U.S. Embassy in Jakarta "recommended" that he be given a waiver from the Department of Homeland Security, which signs off on such matters. Riady said the department "concurred" at the end of October 2008. The department declined to comment.
A free spender
Riady has worked hard -- and spent lavishly -- to put the Clinton-era scandals behind him. He has donated large sums to charity, nurtured close ties with U.S. Christian groups and befriended U.S. diplomats and business people in Indonesia.
Ouachita Baptist University, which gave Riady the 2004 honorary degree, won't say how much he donates to a scholarship fund, or comment on whether he's provided other money. Biola University, a Christian school in Southern California visited by Riady in October, has also received money but won't say how much.
The businessman has also donated to Christian causes in Indonesia, a mostly Muslim nation with a small but influential community of Christians. A massive new church, seminary and concert hall complex in Jakarta was built with Riady's help, said its chief pastor, Stephen Tong. Riady also supports a Christian university and a high school. Forbes magazine last year named him a "hero of philanthropy."
"It is incumbent upon all businessmen who are Christians to try to seed the teachings of Christ in all that we do," Riady said in his e-mail.
All along, though, Riady's religiosity, generosity and elite networking have coexisted uneasily with what critics and admirers alike describe as a peculiarly unforgiving approach to those who challenge him in business or cast doubt on his oft-stated high moral standards.
"He is Jekyll and Hyde," said Bambang Harymurti, a friend of Riady and director of Tempo, a leading Indonesian magazine. He praised the mogul as a man of broad culture and sincere faith but also likened him to American robber barons such as John D. Rockefeller. "They were also good, God-fearing Christians," Harymurti said.
Riady's companies have a long record of disputes with business rivals and also partners, most recently with a Malaysian billionaire and the French hypermarket operator Carrefour. In February a Jakarta court jailed a close associate of Riady, Billy Sindoro, also a Christian, for trying to bribe a government antitrust regulator whose agency had issued a ruling that helped Lippo in a row with its estranged Malaysian partner.
Lippo's general counsel, responding to written questions, said Sindoro, the former director of a Lippo company called First Media, was no longer a Lippo executive when he handed a bag full of cash to the antitrust official. Lippo, said the lawyer, had no prior knowledge of Sindoro's "lone personal acts."

‘Invisible’ face seen, heard at WEF

‘Invisible’ face seen, heard at WEF



Co-Chairs of the World Economic Forum on East Asia 2014, World Wide Fund for Nature, Yolanda Kakabadse, (L), Chairman of the Board Toashiba Corporation, Atsutoshi Nishida (2nd L), Executive Director of Lippo Group, John Riady, (2nd R) and Chairman of Lawson Incorporated Takeshi Niinami (R) join hands at a press conference during the World Economic Forum in Manila on May 22, 2014. The forum, focusing on the fastest-growing region of the world, needs to look at ways to make growth more equitable and sustainable to bring more people out of poverty while also finding ways to minimize environmental damage brought on by the group.

A Filipino has become the face and voice of what is said to be an “invisible sector.” Rex Adivoso Bernardo, a Young Global Leader fellow from Camarines Norte province, asserted before delegates at the recently concluded World Economic Forum on East Asia (WEF-EA) the rights of people with disabilities, laying bare the hardships that people like him have faced in finding decent and quality jobs, amid the many misconceptions and outright discrimination. “Many businesses don’t give us opportunities to be included in their companies. Only 10 percent of the ‘employable’ persons with disabilities (PWDs) are able to find jobs. In the Philippines, it is harder for us to be accommodated in the workplace even if we have skills, as majority of us have been educated. But many companies prefer to hire those without college degrees,” Bernardo said in one of the sessions at the WEF-EA on Friday. Globally, only a fraction of some 470 million people with disabilities are employed. And the Philippines is no exception. “More than 80 percent of employable PWDs in the Philippines do not have jobs and for that 20 percent, most of them have menial jobs. The blind, for instance, are being stereotyped as masseurs. For the PWDs who were able to study and finish college, they would aspire for other, better jobs,” Bernardo said in an interview. Firsthand experience “As a person with disability myself, I experienced firsthand that even if we are talented and have [the] skills set, many employers would not give us the chance to prove our worth. And so, they will offer us low-end positions just to accommodate us and then announce that they are providing employment opportunities to the PWD sector. And we are supposed to be grateful and loyal for the opportunity given to us,” he said. Having been stricken with polio when he was 5, Bernardo was no stranger to the difficulties faced by PWDs. He never even got the chance to get any basic education and was 20 years old when he was finally given the opportunity to study, going straight to college at Trinity College of Quezon City where he completed his BS Psychology degree in five years. “The thing is, the only reason why I was able to go to college there was because they opened up this opportunity for PWDs. They allowed us, that’s why we are grateful to Trinity. Long before the term ‘inclusive education’ was coined, Trinity College was already implementing it. There was no special treatment. But they gave us accommodations, one measure at a time, until such time that we were able to institutionalize the programs for PWDs,” Bernardo said. Personal triumph Through scholarships, Bernardo went on to complete higher education degrees, including a Master in Management from  Trinity University of Asia in 1999, Master in Human Resources Management from Sydney University in 2001, Master in Development Management from Asian Institute of Management in 2002 and a doctorate in educational leadership and management in 2013 at Bicol University. Over the past decade, Bernardo has been recognized for his achievements, particularly his “personal triumph over his disability” and his strong advocacy for the rights of PWDs, specifically in the field of inclusive education. He was conferred the Apolinario Mabini Presidential Award by Malacañang in 2007 in recognition of services to the disabled sector and was also one of the Ten Outstanding Young Men awardees of 2008. Bernardo has also been involved with several development organizations, like Gawad Kalinga and Caritas Daet. At present, he is a consultant of the local government of Daet town and a board member of Alyansa ng may Kapansanang Pinoy. Project WIRED One of Bernardo’s more recent initiatives is Project WIRED (Work Innovation Through Resource-Enabled  Development).  This initiative, he explained before the WEF-EA, will allow companies to consider PWDs, provide them with the opportunities for higher quality jobs and give them a chance to prove their worth in society. The first phase of Project WIRED was funded under the 2013 Alumni Engagement Innovation Fund, he said. He received a grant of $18,477 for the project, which was meant to create awareness on how, through e-learning, PWDs can be trained to become skilled virtual assistants and online free-lancers. This funding allowed him to jump-start partnerships and collaborations among local governments, the academe and industries that can employ PWDs. “We want to create awareness, so that companies can give us the chance to be employed, and the government to create a platform to give them the necessary training and skills to be hired by local industries,” Bernardo said. Target companies “Industry players are very receptive and supportive. Our target initially is the online freelance companies, which can utilize the work-from-home model,” he said. The information technology (IT)-business process management industry is one area where PWDs can also be employed, as it does not also require visible or face-to-face interaction, which, he admitted, has largely affected the employability of many PWDs. According to Bernardo, the advancements in technology and the rise of the Internet have advanced social justice and equality. “Through the Internet, we can give more talented individuals, not only from the PWD sector but also from the underprivileged communities, the visibility that they deserve. This is where the online job marketplace can alleviate the plight of the PWD sector. The outsourcing platform is a great opportunity to kick-start their online freelancing career and find more professional opportunities,” he said. “A work-from-home model provides benefits to a person with disability…. [and] livelihood opportunities for persons with disability. We eliminate the two greatest barriers to their employment, which is the problem of mobility and work accessibility,” Bernardo said

Lippo founder: US/Canada property looks attractive

Lippo founder: US/Canada property looks attractive

The founder of major Indonesian conglomerate Lippo Group is eyeing the U.S. property market for its next investment.
Lippo Group, which controls more than $15 billion in assets, recently bought the 72-storey U.S. Bank Tower in Los Angeles for $368 million and launched a second real-estate investment trust (REIT) in Singapore - the Lippo Malls Indonesia Retail Trust - but said it will focus on the U.S. for its next purchase.
"I believe that the U.S. is in the stage of picking up," said founder Mochtar Riady who spoke to CNBC at the Credit Suisse Global Megatrends Conference.
The world's largest economy grew a meager 0.1 percent on year in the first quarter after a severe winter hampered exports and hurt investment spending, but most analysts say it will prove a temporary glitch and the economy is showing signs of a recovery.
"So at this moment, property prices in the U.S. are still considered quite reasonable - so it is a chance to move in," he said, adding that Los Angeles and New York would be their primary areas of focus.
Riady was also optimistic about growth in Indonesia, noting he expects the economy to get a boost following the upcoming presidential elections in July.
Indonesia is one of the fastest growing economies in the world, logging near 6 percent annual growth last year, but has suffered recently after the fallout from tapering by the U.S. Federal Reserve prompted a mass exodus from emerging market assets.
Indonesia's central bank was forced to hike interest rates five times since mid-2013 in an attempt to prop up the currency, which lost 26 percent last year.
The continued impact of Fed tapering, political uncertainty and a controversial mineral export ban are all seen as worry headwinds for the economy.
"After having the elections, you make people more confident about what will be going on in the future," said Riady.
"And so far I think (that) three big political parties have the same concept, same idea, so I believe they will work together and move forward to go in the right direction," he added.
Mochtar Riady, chairman of Lippo Group
Mochtar Riady, chairman of Lippo Group
The Indonesian parliamentary elections took place earlier this month, to determine the 560 members of parliament, and parties with at least 25 percent of the popular vote or 20 percent of parliamentary seats are able to field a presidential candidate in July.
The current governor of Jakarta, Joko Widodo, widely known as Jokowi, is believed to be the presidential favorite. But if Jokowa doesn't garner enough votes, he may need to form a coalition with another party, which could limit the ability to push through reforms.
Riady told CNBC he was optimistic that the new leadership would be successful in weeding out in corruption, which has long been a headwind to economic growth in Southeast Asia's largest economy.
Transparency International scores the country at 32 out of 100 on its corruption perception index, with 0 signaling highly corrupt and 100 as very clean, which gives it a ranking of 114 out of 177 countries.
"They're all [all the major candidates] very keen to show off [to] the new generation and have their new ideas to move our nation into the right direction," he added.
Rumors have circulated recently that the Lippo Group conglomerate was in talks with Caesar Entertainment regarding building a casino resort in South Korea, but Riady flat out denied these reports to CNBC.
"We are not interested in the casino business. My father always [taught] me that I have to work hard to [make] money, not [get it] from [a] casino," he said.

Former SMRT chief Saw Phaik Hwa to retire as Auric Pacific CEO

Ms Saw Phaik Hwa remains
as consultant with at Lippo

JAN 28, 2015 12:54 PM

Ms Saw Phaik Hwa will remain as a consultant with the Lippo Group of companies, and will continue to advise Auric Pacific on various matters.
SINGAPORE - Auric Pacific Group has announced that former SMRT head Saw Phaik Hwa will retire as its chief executive officer and executive director, effective from May 1 this year.
She will remain as a consultant with the Lippo Group of companies, and will continue to advise Auric Pacific on various matters, the mainboard-listed company said in a filing with the Singapore Exchange on Tuesday night.
Auric, a diversified unit of the Indonesian conglomerate, has a varied portfolio in food manufacturing, distribution and retail. It produces Sunshine bread and also owns Food Junction foodcourts and the Delifrance Asia café chain.
Auric's board of directors said they wished to thank Ms Saw for her leadership and contributions to Auric Pacific during her tenure of service since her appointment on May 1, 2012.
Said executive director Stephen Riady: "In her time with us, Ms Saw has turned Auric Pacific from a sales-led to a marketing-led business. She has raised the profile of our brands and turned many of them into household names, and also refreshed the look of many of our established brands."
Dr Riady added that Ms Saw had also strengthened the Auric Pacific's operational strength, and re-organised the group's IT and infrastructure framework.
Ms Saw said in the statement that she was grateful to management and staff for making her three years at Auric Pacific most exciting.
The board said it has a succession plan in place and will announce a new CEO in due course.

US says China aggressively expanding into South China Sea

Fri Feb 27, 2015
James Clapper, Director of National Intelligence and Lt. Gen. Vincent Stuart, Director of the Defense Intelligence Agency, testify during a Senate Armed Services Committee hearing on February 26, 2015 in Washington, DC. (AFP photo)
James Clapper, Director of National Intelligence and Lt. Gen. Vincent Stuart, Director of the Defense Intelligence Agency, testify during a Senate Armed Services Committee hearing on February 26, 2015 in Washington, DC. (AFP photo)
The US intelligence chief accuses China of expanding its outposts in the South China Sea in an “aggressive” effort to exert sovereignty.
Speaking at a Senate Armed Services Committee hearing on Thursday, Director of National Intelligence James Clapper voiced concern over land reclamation activities in the South China Sea that could further escalate tensions between China and its neighbors over disputed islands, The Associated Press reports.
“Although China is looking for stable ties with the United States it’s more willing to accept bilateral and regional tensions in pursuit of its interests, particularly on maritime sovereignty issues,” Clapper said.
Senator John McCain, Republican of Arizona and the committee’s chairman, displayed satellite imagery showing expansion of the Chinese occupation of Gaven Reef in the Spratly Islands, where China has had a troop and supply garrison since 2003.
McCain said China’s expansion there could allow it to employ weapons, including anti-air capabilities.
In response, Clapper characterized Chinese activities in the South Chinese Sea and its oil drilling near disputed islands as a “worrying trend,” but said China was still in a construction phase and it was unclear what weaponry and forces it would deploy there.
Chinese Foreign Ministry spokesman Hong Lei said Friday that the country’s activities in the South China Sea are “reasonable, legitimate and legal” and that Beijing has shown “restraint and responsibility.”
Beijing claims the South China Sea in its entirety, while other countries including the Philippines, Japan, Vietnam, Taiwan, Malaysia, and Brunei Darussalam also have claims to the area and are in dispute with China.
China strongly objects to what it considers US meddling, accusing the US of destabilizing the Asia Pacific by strengthening its military alliances and sending more ships, aircraft, and troops to the region.
Washington stresses it has a national interest in the peaceful resolution of the disputes in the region.
The US Navy announced Thursday that it had been flying its most advanced spy aircraft out of the Philippines to conduct a three-week surveillance mission over the South China Sea.
The P-8A Poseidon had been deployed in the Philippines until last week, making more than 180 flight hours over the South China Sea.
US military officials have grown increasingly concerned in recent months about China's military development. The Pentagon has begun a major push to maintain US military technology dominance amid rapid advances by China and Russia.