Dragon Strike: The Millennium War

THREE

The master slumped to the floor, bleeding. In the pitch black of night a lookout on the starboard side of the New World had failed to notice the two dinghies speeding towards the tanker. They had been launched by the Chinese submarine moments before. By the time he was aware of the dinghies' presence they were about to come alongside. Each carried six commandos. He froze. The twelve men were dressed in Chinese military uniforms. They carried assault rifles, handguns, and stun grenades. All wore steel helmets which partially covered their faces. The Master had regained his composure and was on his feet once again. The bullet had grazed his forehead. He had a minor flesh wound. Nothing more. He turned to the starboard side of the bridge and peered into the chartroom, where his First Officer had been examining charts a few moments before. But instead of a man bent over a chart table, the master saw his First Officer standing with his hands in the air. In front of him was a Chinese soldier who was pointing a pistol at his head. Before the master could react another Chinese soldier appeared and began pushing him back. With his free hand the soldier opened fire on the ship's communications systems. `Officer? Officer?' he yelled, waving the pistol at the Master. `Me!' screamed the Master. The intruder turned to bundle the Master, still bleeding, down the bridge stairway and past a group of frightened seamen, the last time any of them would see him alive. The soldiers, who had since been joined by others, herded the remaining crew-members at gunpoint into a cabin on C deck. From there, the crew of the New World could only hear what was going on. There was the distant sound of shouting. Then the sound of a scuffle followed by running. A gun shot. Silence. The Master had been murdered.

On the bridge, a man in the uniform of Communist China was at the helm.

Jamie Song stood just outside the perimeter of real power, but to the world's television audience he was the face of modern China. He cut an impressive figure. His command of idiomatic American English reflected his years at Harvard, first as a student then as a visiting fellow in the late eighties. Before the Communist Party recognized the worth of his unflustered urbanity, he became a millionaire software tycoon. He counted among his friends the chief executives of many of America's blue-chip companies whom he had guided over the bumpy path of making money in China. He knew they would be watching his interviews. He had turned down the BBC, France's TF1, Germany's ARD, and the other American networks. The televisions in the Pentagon, the White House, the State Department, and in the executive offices of the men who ran corporate America would be tuned to only one channel N. That's why he had allowed CNN to install a satellite dish in the Foreign Ministry compound.

Song was a spiritual child of Deng Xiaoping. One of the sayings that made Deng famous throughout the China of the late 1980s and early 1990s was his injunction to Communist Party officials to `Be bold'. By this Deng meant they should be imaginative in solving the problems of economic development. If this entailed being entrepreneurial then so much the better. After all, it was he who had also said `to get rich is glorious'. Independently wealthy, Song's boldness was displayed for all to see in his television appearances during the crisis. The American government was his enemy. Through CNN the American people could be his allies. Wires trailed through his office. The camera picked up his library in the background with volumes of Mao, Deng, Adam Smith, Thatcher, Churchill, and others. A carved glass model of a golfer was on the window sill. His desk was busy enough to look as if he had been working. And it was getting close to peak lunchtime viewing on the American east coast…

Anchor: On today's show live from Beijing we have the first, exclusive interview with a Chinese leader since the beginning of the South China Sea crisis. He's one of the masterminds of Operation Dragonstrike and he's here to tell why China's doing what none us can understand. Jamie Song, the Chinese Foreign Minister, is going to tell us why China is attacking Vietnam. Why its troops have occupied the atolls and reefs of the Spratly and Paracel Islands places most of us had not heard of a couple of days ago. You can talk soon enough, Jamie. And with me in the studio is Chris Bronowski, a China expert from the Rand Corporation. Chris is a specialist in the Chinese military. He'll tell us if Americans should be afraid of China. It's certainly a lot richer than it used to be. Welcome, Chris.

COMMENTATOR: Thank you.

ANCHOR: The first quick question for you, Chris. Should we stock up for war with China. A Communist state, we know. But surely not?

COMMENTATOR: I'd say not this month, Mike.

ANCHOR: Jamie. War or not?

JAMIE SONG: I hope not, Mike. Who wants war when we're all making so much money?

ANCHOR: You're not saying no, though. So why? An unprovoked attack on Vietnam? What is the point?

JAMIE SONG: Mike, as you Americans say, let's cut the bull. Vietnam is exploring oil reserves in what it calls the Nam Con Son Basin, in a joint venture with an American company, Conoco. There is a long-standing agreement among governments in this region to develop the resources of the South China Sea jointly. We have repeatedly said that we will not tolerate Vietnam's breach of the agreement. President Tai has put a Washington law firm, Covington and Burling, on retainer to act for Vietnam…

ANCHOR: And they say Vietnam is within its rights.

JAMIE SONG: That's what they're paid to say. Vietnam was not within its rights to start work without regional agreement. So we stopped them.

ANCHOR: You bombed Haiphong, Ho Chi Minh City, Cam Ranh Bay, and Da Nang.

JAMIE SONG: As you know, in any military action a government has a responsibility to safeguard the lives of its troops. To take the area back, we had to neutralize Vietnamese air and sea power.

ANCHOR: Chris, isn't that over the top?

COMMENTATOR: The Foreign Minister is a skilled advocate for his government. Technically, he is right about the regional agreement. He's reiterating a policy which has been in place for many years. You know, Mike, I hear many times people talking about the unpredictability of China. But China is about the most predictable country in the world. If it's going to attack Vietnam, it'll tell us some time beforehand. And there has been a lot of sabre rattling.

ANCHOR: But Jamie says, apart from Vietnam, no war for the moment. Our first caller is from Europe, the German capital, Berlin. Go ahead, Germany.

GERMANY: Good evening, Foreign Minister.

JAMIE SONG: Good evening.

GERMANY: The definition of Fascism is authoritarian nationalism. Given the almost absolute control by the Communist Party, would you describe China as a Fascist country?

ANCHOR: An apt question from Germany. Jamie Song, are you a Fascist?

JAMIE SONG: We prefer the words disciplined to authoritarian and patriotism to nationalism. But Mike would be unhappy if I became semantically technical. Fascism like Marxism was or is rooted in Europe. In Asia, there is a cultural tendency to respect our elders, our parents, and our government. We tend not to question so much. We don't have political shouting matches like in your elected parliaments.

ANCHOR: Fascist or not, Jamie?

JAMIE SONG: I am the wrong generation. I am a Socialist and a Confucianist.

ANCHOR: Chris. Is Jamie a Fascist?

COMMENTATOR: Jamie's right when he says that Fascism is too European to have that label tagged to him. But the main difference is that Hitler destroyed Germany by overambitious territorial expansion. China isn't an empire builder in that style.

ANCHOR: Hanoi, Vietnam. You're live with the Chinese Foreign Minister, Jamie Song.

HANOI: Foreign Minister, while your aircraft are bombing Vietnamese people will you admit honestly that the assault has nothing to do with Conoco but that China is frightened of a newly democratized Vietnam?

JAMIE SONG: Absolutely not.

ANCHOR: Then what's the problem?

JAMIE SONG: Your anger should be against President Tai, who has misled the Vietnamese people into thinking they have sovereign right over territory which is not theirs d for making them believe that China would not respond.

ANCHOR: What does that mean, Chris?

COMMENTATOR: This has happened before. There have been small naval battles over the past twenty or thirty years between China and Vietnam and China and the Philippines.

Anchor: Texas, you have a question?

Texas: I'm in the oil business, Foreign Minister. Our own surveys show d excuse me for being blunt at your northern oilfields are garbage. Fifty barrels a day per well. Your offshore fields are OK. But soon your country will need to import eight million barrels a day just to keep up with development.

ANCHOR: And your question?

TEXAS: You've taken the Spratly and Paracels because you're facing an oil crisis. Yes or no?

ANCHOR: Jamie, are you short of oil as well as grain?

JAMIE SONG: We're not self-sufficient. But neither is the United States. Your caller is quite right about our need to import eight million barrels a day. And we'll do that by securing our supply bases and diversifying.

COMMENTATOR: If I could clarify, Mike. Foreign Minister, is that why you've now implemented your claim to the South China Sea?

JAMIE SONG: We still intend to develop jointly with our neighbours. However, the threat posed by Vietnam which also has a shortage of oil s forced us to clarify the position. But I can assure all your viewers, wherever they are in the world, the trade routes to and from the Pacific will remain open. This is an isolated regional dispute about which there is nothing to fear. China's business is trade and development. Nothing will deter us from that course.

The unprotected convoy of twelve Toyota Hi-Ace vans moved slowly west through the potholes in the appallingly unmaintained surface of Vietnam's main highway. The passengers, a mixture of Europeans, Japanese, Koreans, Americans, Canadians, and Australians, were used to the uncomfortable five-hour journey between the port city of Haiphong and Hanoi. There were three teachers of English, a banker from the European Union sent to advise on the setting up of small businesses, a doctor and nurse from Me´dicins Sans Frontie`res, two representatives from the UN's World Food Programme and UN Development Programme, a diplomat from the Australian embassy, seven Scandinavian aid workers, a Korean delegation examining bridge-building contracts, and, ironically, a Japanese team from Toyota, which was expanding its distribution network in northern Vietnam. Many of the passengers had been attracted by the backwardness of Vietnam. Haiphong, with its dilapidated French Colonial buildings, ugly Communist apartment blocks, and archaic, Soviet-style shipyard, instilled an even greater affection for this brave and battered country than the tourist stopovers of Ho Chi Minh City and Hanoi.

Rain fell in sheets. The driver of one van had to lean out and clear the windscreen with a rag because the wiper had broken. Often the convoy stopped, one of the vehicles trapped in a huge crater, its back wheels spinning, spewing up waterlogged filth, while dozens of people pushed from behind to get it out. The discussion among the foreigners was mainly whether they would take the French evacuation flight out of Hanoi that evening. Civilian flights had been stopped. Air Vietnam had flown its own airliners to Bangkok.

The swelling of the tributaries of the Red River made the ferry journeys more hazardous. The convoy was given priority, but that meant shifting other vehicles out of the queue, which stretched bumper to bumper from the riverbank. Out of the twelve vans, only nine made it on to the first ferry and three were waiting behind at the crossing when the tragedy happened.

Some of the passengers were having tea at the little stalls set up on the muddy roadside. Tiny cassette players blared out Western pop music. Hawkers attracted attention to themselves by banging their wooden boxes and yelling. The ferry arrived at the riverside with the clanking of its sides and shouts from the ferry boys who caught and threw ropes. Drivers started their engines. They revved and screamed as the wheels battled with the mud. Horns blared. All this sound drowned the first warning sounds of fighter aircraft overhead and low. Visibility was poor. Clouds came and went. The wind blew heavy thick gusts of rain into the river settlement. It wasn't until the clouds moved away for a moment that those on the ground were able to see clearly the dogfight going on above between one Vietnamese and two Chinese fighter planes.

In a computer-simulated battle the Vietnamese MiG-21 Fishbeds would have been no match for the two Chinese Su-27s. But computers rarely take into account human initiative and training. The Vietnamese pilot was forcing his aircraft to the limit, trying to throw off his pursuers, while, it was thought, escaping to the safety of Laotian airspace 200 kilometres due west. The Vietnamese took his MiG straight up, above the clouds. He straightened out for less than three seconds, then took the aircraft down to the predicted enemy position. On breaking cloud cover, he scanned for and found his target, quickly manoeuvring into a firing position and hitting one of the Chinese aircraft in the tail, rendering it out of control. It crashed and the pilot had no chance of survival.

But in his enthusiasm the MiG pilot had continued too close and his wingtip was damaged by debris. His aircraft went into an uncontrollable roll, and as it did so, tracer bullets struck it. The young surviving Chinese pilot kept firing short bursts from his 25mm nose gun until the MiG exploded in a fireball on the western side of the riverbank. The flames reached a petrol tanker, then in an inferno roared skywards. Vehicles all around the ferry jetty caught light. Those foreigners who had made it across in the first journey were burnt alive within seconds.

Even then, the Chinese pilot brought his aircraft around again, and opened fire with his gun, strafing the ground in short bursts until his ammunition was exhausted, before turning and heading back across the border into China. Many more vehicles burned. Petrol ignited. His act of vengeance killed 378 people. Of the 87 foreign nationals being evacuated from Haiphong, only 9 survived. One, from UNDP, videotaped the whole catastrophe. Within hours his pictures were shown on television news channels throughout the world.

The Japanese cabinet was reasonably comfortable with Japan's stockpiles of oil. The government maintained a stockpile equal to eighty days' consumption, and industry a stockpile equal to seventy-five days' consumption. With the storage facilities dotted around the coastline, Japan could hold out for quite a while. There was no immediate cause for concern. However, the hijack of the Shell New World had raised the stakes dramatically.

The cabinet's Defence Committee meeting had been in progress for ten minutes when there was a knock on the door and an army officer walked into the room carrying a large envelope, requesting to see General Ogawa. General Ogawa rose, excused himself, and motioned to a younger officer to leave the room. The Prime Minister spoke.

`While the General is out of the room, I think it is very important that all of us when meeting Chinese officials in the coming days underline to them in the strongest terms our concern about their action in the South China Sea.' Just then General Ogawa came back in. Hyashi looked up and said: `General, what news?'

`Bad news, I'm afraid, Prime Minister,' General Ogawa said. `I have just had it confirmed that the Shell New World, a 296,000 tonne oil tanker bound for Yokohama, was indeed commandeered by the Chinese navy, as we thought. It's not wholly clear yet but it appears to be making for Zhangjiang e home port of China's southern fleet.'

`Are you sure of this, General?' the Prime Minister asked.

`Absolutely sure, Prime Minister. We have infra-red photographic evidence of the seizure and the Shell New World's subsequent course change. As you can see from the photographs I am passing to ministers which for reasons of security are not allowed to leave this room group of twelve Chinese commandos boarded the ship; they fired what appear to be automatic weapons and took a crew-member prisoner. The fourth photograph, which is an enlargement using the latest enhancement techniques, we believe shows the uniform of a Chinese Marine commando unit. The second series of photographs was taken on a subsequent pass over the area. As you can see the New World, which had been on a north-north-east heading, has changed course and is now on a north-north-west heading.'

`Was this operation sanctioned by Beijing, or is it a freelance operation by the Chinese navy?' Hyashi asked.

`We are not sure. Piracy — under cover of PLA Navy operations — has been a fact of maritime life since China opened its doors fully to foreign trade during the Deng era. This operation bears some similarities with previous freelance operations by the PLA Navy but given what happened in the South China Sea yesterday, I would doubt it.'

`Right. I think we treat it as part of the conflict. Kimurasan, I think you should have another talk to Ambassador Bo. Tell him that the government of Japan will not sit idly by and see its vital national interests violated in this way.'

`Prime Minister, may I suggest that Tanaka in Beijing also seek a meeting with Foreign Minister Song to reinforce the message I give Ambassador Bo?' the Foreign Minister said.

`Agreed. Ishihara-san, I would also like you to prepare some recommendations for us concerning the sort of action, or demonstration, our military forces might be able to manage. I'm thinking here, Ishihara-san, particularly of the project in Ogasawara. Gentlemen, I think we have to consider all our options at this stage. I suggest we reconvene here at 2 p.m.'

Jamie Song squinted as the American technician turned the lights up full. A make-up assistant dabbed sweat off his forehead as he watched the second hand of CNN's clock move towards the hour for the beginning of another live interview.

`We are not looking for confrontation, Foreign Minister,' said the television producer. `We covered your invasion earlier. We are now looking for you to explain China to our viewers — to sell them your style of government. Thirty seconds to airtime.'

ANCHOR: On this evening's show live from Beijing we are talking exclusively for the second time running to the Chinese Foreign Minister, Jamie Song. You're going to get to ask your questions direct. You're all familiar now with the news developments in the South China Sea. Jamie has agreed to come on this show to tell us about China, its value system, and what it's hoping to achieve in the long term. And with me in the studio again is China affairs specialist, Chris Bronowski. Seattle, you're on.

SEATTLE: Could Mr Song confirm that parts for the Boeing 757 and 737 are being made in the same factory in Xian as makes the H-6 bombers which attacked Vietnam? And that many of the workers there are in fact prisoners serving long-term sentences in your gaols? And if so, is that ethical?

ANCHOR: Let's get the facts before we move on to morality. Prison labour to make American airliners?

JAMIE SONG: This is a question for my colleague who deals with trade.

ANCHOR: Since she's not here, let's put it another way. If prison or military labour was being used to make American aeroplanes would you condemn it?

JAMIE SONG: Why should I? Some of America's best denim jeans come from prison labour. Do you condemn it?

ANCHOR: Do we, Chris Bronowski?

Commentator: On military labour, I guess that's one for Boeing. They know what deals they have struck. The other wider prison issue is that thousands of people in Chinese gaols are not muggers and rapists, but political prisoners. Many of them are in labour camps only because they have tried to exercise the freedoms that you and I take for granted.

ANCHOR: Is he right, Foreign Minister?

JAMIE SONG: You have in American gaols black kids, many of whom were born into broken families. They grew up in an environment of crime and drugs. Your social and political system doesn't allow for them. If it did, they wouldn't be gaoled as outcasts, they would be helped.

ANCHOR: But isn't it the-

JAMIE SONG: No, Mike, let me finish. This is a very important point. We don't have that problem. We have a handful, and I stress a handful, of people who we believe are a threat to the stability of our country. They are advocating the collapse of the Communist Party and multi-party elections. We in the Chinese government believe that if they had their way our country would fragment into warlordism, separatism, and possibly civil war. That handful of people is being confined so that 1.3 billion people have a chance of the best life we can give them. And I'm not talking about the vote. They have that in Russia and India, and I'm not seeing great hospitals, schools, roads, housing. We are seeing dead bodies in provinces like Chechnya and Kashmir which the central government is failing to control. There is instability, violence, and economic quagmire. And one final point. We don't seek to interfere in the internal affairs of the United States. May I respectfully suggest that you butt out of ours?

ANCHOR: Chris Bronowski, civil war if there are elections?

COMMENTATOR: The Foreign Minister is expressing a view which is prevalent throughout China. And he has got some plausible evidence, say from Russia or even Yugoslavia in the nineties, to back him up.

ANCHOR: So you're arguing that the Chinese one-party system is the most suitable for that country.

COMMENTATOR: I don't advocate, Mike. I explain.

ANCHOR: Bombay, India, your turn for Foreign Minister Song.

BOMBAY: Mr Song, why are you afraid of democracy?

ANCHOR: Have you answered that, Jamie?

JAMIE SONG: I think I did.

BOMBAY: You're talking absolute rubbish if I might say so. Our stock market capitalization is far higher than yours in Shanghai and Shenzhen. The fund managers in Schroders and Merrill Lynch attract American pension money to India far more than to China. It takes an average of three months to sign a joint venture in my country. Two years in yours. Our courts are not beholden to the ruling party. They are impartial. Both our countries are corrupt and you talk about Kashmir and war. Yes, we have problems, but our people know about them. You keep secret the body bags coming out of Tibet and Xinjiang.

ANCHOR: And your question?

BOMBAY: What is the point? The man is a bloody liar.

ANCHOR: Foreign Minister?

JAMIE SONG: Rivalry between India and China is traditional. It will be a hundred years before anyone can say for certainty which system is right.

ANCHOR: Bangkok, Thailand. Do you have a question?

BANGKOK: Yes. We in South-East Asia are worried about the attacks in the South China Sea. I would like to ask Mr Song, why was it necessary? Why is China destabilizing our region?

ANCHOR: That's back to lunchtime's session, Jamie?

JAMIE SONG: I know there is concern. But China is a superpower. Our defence forces will have to reflect that. You have the word of my government that trade which is the business of the Pacific Rim countries will not suffer. But as we have stated many times, we are only reclaiming sovereign territory which is rightfully ours.

ANCHOR: Gansu, China. You want to talk to your Foreign Minister.

GANSU: [Inaudible]

ANCHOR: You're live with the Chinese Foreign Minister.

GANSU: Why can't my government feed its people? [disconnect]

ANCHOR: Did you get that, Jamie? Why can't you feed your own people?

JAMIE SONG: The agreement for me to speak on your show was that I did not take calls from Chinese citizens.

ANCHOR: It slipped through, Jamie. I'll ask it. Are people starving in China?

JAMIE SONG: No.

ANCHOR: Are there food shortages?

JAMIE SONG: Absolutely not.

ANCHOR: Iowa, you have a question for Jamie Song.

MADISON COUNTY: Foreign Minister, I'm a grain farmer. Eighty per cent of my crop is sold to your country. To be frank, I'm scared. If things get really bad, will you stop buying my grain?

ANCHOR: Are you going to honour your grain contracts?

JAMIE SONG: We have never initiated a threat of sanctions against the United States. We have only ever said that if America starts a trade war we will retaliate.

ANCHOR: Is that going to hit grain?

JAMIE SONG: How can I say? Why don't you ask the President what sanctions he has in mind?

ANCHOR: Can China survive without American grain?

JAMIE SONG: Absolutely.

ANCHOR: Iowa, if all your grain sales to China stop, what happens?

MADISON COUNTY: I go bankrupt. The banks will recall the loans. I reckon that would be for most of the farms around here. That's why we need things sorted…

ANCHOR: Foreign Minister, how much can you hurt America in a trade war?

JAMIE SONG: I haven't sat counting, Mike. But it's going to be bad.

ANCHOR: [pausing and adjusting his glasses to read a report put in front of him] Now we have some horrifying news just in. Jamie Song, please stay with us for your comment. All we know so far is that Chinese aircraft attacked a civilian convoy leaving Haiphong. Dozens of people have been killed, many of them Americans.

Hidei Kobayashi, Nomura Securities' Head of Strategy and Trading, hated public speaking. But on the morning of Tuesday 20 February he was asked to make a presentation to Nomura's board of directors about the crisis in the South China Sea.

He began by explaining that Dragonstrike was only partly about territory, and partly about teaching a lesson in real-politik to the lesser powers that shared a border with or harboured a claim to the South China Sea. Always at the forefront of concerns of China's leaders was the need to secure the oil and gas below the sea. By the end of the twentieth century there had been a fundamental change in the world oil market and a redirection of the market towards East Asia and away from Europe and North America. First of all there had been an important change in the relative power of the Organization of Petroleum Exporting Countries (OPEC) to influence oil prices. The mid-1980s were the nadir of OPEC's power, and its share of the market for oil fell to just 30 per cent in 1985 — down from 50 per cent in the mid-1970s, when it was at its peak of power and influence. But during the 1990s it rebuilt its position. This was not because of anything it did in particular but because of the rapid growth in the East Asian economies. As former exporters of oil — like China and Indonesia — began to grow rapidly domestic consumption absorbed more and more of their oil production. Discoveries of fresh oilfields could not keep pace with the speed of their industrialization.

For China the problem was particularly acute: by the turn of the century, after years of an average growth of 7 per cent in demand, it was facing a shortfall in oil of 3,500,000 tonnes a year and this had to be met by imports. Its efforts to find oil in home waters had been to little avail: the East China Sea produced some modest gas finds but no oil to speak of. The best find was a huge gas reservoir off the south coast of Hainan Island at the northern end of the South China Sea, and an 800 kilometre submarine pipeline had been constructed to pipe 2,900,000 cubic metres of gas a day to fire a power station in Hong Kong. Onshore, the application of new drilling techniques succeeded in extracting more oil from the Daqing field in the north-east, China's most productive deed the north-eastern oil-fields accounted for 70 per cent of onshore production. The Tarim basin in the far north-west proved prospective, but it was just about as far as you could get from where it was needed on the coast and transportation costs added $3 a barrel. Against that background, Kobayashi told Nomura's directors, it was not difficult to understand the attraction to the leadership of seizing the South China Sea, especially when briefing papers were telling them of the untold riches of the sea. `According to estimates,' one official document opined, `Nansha's oil reserves total over 10,000,000,000 tonnes. Geologists believe that the area of the Zengmu Reef belongs to a shallow continental shelf, with sedimentary rock thickness of around 15,000 metres, and is one of the zones with abundant oil and gas resources. It is very likely to become the second Persian Gulf.' By way of comparison, in its heyday Daqing produced 1,490,000,000 tonnes of oil during the thirty-five years to the end of 1995. With estimated reserves of 10,000,000,000 tonnes available for exploitation China would not need to import a drop of oil for the foreseeable future.

This was not lost on China's neighbours, least of all Vietnam. Since 1987, when it pulled its door ajar and allowed in foreign investment, Vietnam made the development of its offshore oil and gas industry its top priority. Fully one quarter of all foreign investment was channelled into the industry. Hanoi had big plans. It set a target of annual production of 20,000,000 tonnes of oil by 2000 target which it met with ease. It now set its sights higher and was aiming to extract 25,000,000 tonnes a year by 2005. This was not to say that to find oil in the South China Sea all one had to do was sink a well and hook it up to a tanker. Environmentally, the South China Sea was a difficult area to work in. Typhoons made drilling hazardous while strong currents led to the loss of many unmanned underwater vehicles. Adding to oilmen's difficulties the geology of the terrain under the sea was also complex and difficult to assess. Indeed the reserves for an early find at Dai Hung, in waters adjacent to the Spratlys, had been downgraded to around 200,000,000 barrels from more than 500,000,000 barrels. However, the Vietnamese authorities had encouraged the world's leading oil explorers to try their luck in the region, and it had paid off. British Petroleum had made major gas discoveries some 360 kilometres off the south coast of Vietnam, sufficient to power Ho Chi Minh City for twenty-five years, at least. BP was also a partner with Nippon Oil in a major oil-production facility in the Paracel Islands.

The Japanese interest in the South China Sea was two-fold. There were companies like Nippon Oil, Mitsubishi, and Mitsui, which were exploring for oil. Their investments were sizeable. But the greater interest was in the South China Sea's role as a thoroughfare for trade with Europe and the Middle East. The South China Sea was arguably the most important stretch of water for Japan, bar none. It was the lifeline along which travelled more than 90 per cent of the oil and liquefied natural gas (LNG) together with at least 70 per cent of the coal it used. The trade in oil was a $500 billion a year business. Asia accounted for more than a third of it and Japan in turn accounted for half of Asia's consumption. Virtually all of the trade passed through the South China Sea. The economic significance of the South China Sea was not just confined to the trade in energy, important as that was. There were other cargoes to consider — agriculture and manufactured goods — and when these were added to the equation it became apparent that more than a quarter of the world's seaborne trade passed through this waterway.

Kobayashi reported to the meeting that the price of oil had risen $5 a barrel on Monday. With the South China Sea fields shut down and Brunei and Indonesia out of the supply chain, he said the price of oil in the short term was bound to rise further. Although Japan had ample stockpiles currently there was no telling what damage could be done to production facilities now under Chinese control. He reminded directors that Saddam's retreating armies had put every oil well in Kuwait to the torch. Against such an uncertain background he said he thought the yen and the Tokyo stock market had nowhere to go but down. It had opened down 1,267 points at 38,033. US funds were big sellers of the market, as were Japanese investors who were switching into the US dollar en masse. The yen had continued to come under speculative attack as well. It had fallen 10 per cent on Monday and had lost a further (5 per cent) to .2 in early Tokyo trading.

Kobayashi concluded gloomily. The big expansion in markets was over. Inflation was on a rising trend before the Chinese took their action. If the price of oil stayed high for long enough it would feed through to prices throughout the world economy. Stock markets were at their most vulnerable since 1987. New York, London, and Tokyo had all set all-time highs in January. Interest rates would be sure to rise as central banks sought to dampen the inflationary impulse from oil with dearer money. Already the Bank of Japan was tightening money to try to support the yen, though to little avail. `In times of such uncertainty, gentlemen, it is hard to escape the conclusion that "cash is king",' he said.

Jamie Song had pleaded genuine ignorance of the attack on the Haiphong convoy during the CNN interview, but he noticed the red light on the studio camera go out as his voice was run over the graphic video of the cannon fire slamming into the vehicles by the river. It would not make his job at Zhongnanhai any easier. The Chinese President had little interest in the nuances of international relations unless they had a direct influence on his stature within the country. The issue he faced was the strength of the AmericanJapanese security treaty and whether China had the nerve and military strength to stand up to it. If Dragonstrike was to be a propaganda success, Song would have to persuade the generals to rein in their troops' excesses against civilians.

The new spending policy had been in place for enough years for its effects to be felt. The sudden switch of funding from development to the military had created a confident and more streamlined fighting machine. China's missile capability and submarine force gave her a power projection which would have been unimaginable ten years earlier. This was one of the most guarded secrets of China's long-term planning. After President Clinton sent two carrier groups to protect Taiwan in March 1996, the PLA high command insisted that they be allowed to defend China's sovereignty and dignity.

`If we continue to chase blindly the dollar ideology,' concluded the then President, Jiang Zemin, `we will become no better than the corrupt governments of the nineteenthcentury. We will be beholden to foreign trading companies and bullied by imperialist powers. Never again will the motherland exchange her freedom for wealth.'

The ravaging effects of the policy were kept away from public scrutiny. The suffering, the starvation, the riots, the mutinies, the summary executions, the hoarding of grain, were confined as much as possible to the remote areas, where access was difficult and the Communist Party could use force without repercussions. Money which should have gone towards irrigation had been spent on submarine training. A road was forfeited for thermal-imagery research. A province was short of medical supplies because the money was needed for aviation fuel.

China may end up with nothing except the divisions of its own pride, shared between warlords, Jamie Song jotted in his diary. On the way to meet the Central Committee in Zhongnanhai, he read cuttings from the Western press to remind him of the fragmentation within modern China.

For hundreds of kilometres, the arid brown wastelands stretched in an inhospitable vista of hills and sky. Occasionally, there were clusters of peasants. Their grubby but colourful red or blue scarves stood out against the back-drop of the barren environment. The fields had been carved out of the hillsides by hand and sloped down the hills in terraces. The earth crumbled under the plough. Sometimes when rain fell it was too much. The land was parched and unprepared for moisture and the crops were washed away. But on most days the sky was cloudless. The sun drew up all life and the crops slowly died. For years the peasants had kept ploughing. Their faith lay in the motherland, the Chinese Communist Party, and its founding father Mao Zedong. Mao had made them the heroes of his Chinese revolution, and here, 3,000 kilometres away from Beijing, they believed it.

That was until just outside the small town of Dingxi a wiry, ill-fed horse collapsed while ploughing and died. The farmer walked to the town and asked for help to remove the carcass. He also needed another horse. He walked back to his farm and waited. A week later, the carcass was rotting on his only field. The corn crop was being destroyed. No official from the government had visited. The farmer returned to Dingxi. Outside the city hall was a banner of bright red Chinese characters, praising Chinese Socialism and Spiritual Civilization. The official who met the farmer didn't even offer him tea. Instead, the farmer was told that he was out of touch with developments in China. The official was from Beijing and in his late twenties. Although only a few years younger than the farmer, with his smooth features, fast way of speaking, and fashionable suit he was a generation apart. He explained to the farmer that there would be no new horse from the government. In modern China, everyone had to look after themselves. Only the fittest survived. Some people suffered, yes, but it was the only way to make China rich so that it could stand up to Western hegemony.

The farmer had heard of the changes. He could now sell his crop to whomever he wished. But he had never been told that the Party would not provide if he was in trouble. The farmer asked if the government would help him change his crop from corn to sorghum. He had heard that sorghum needed less water so he might be able to plough the field by hand. But he needed to be told how. He would even try soya beans to harvest as an oil crop, because that would need only three-quarters of the water he needed now. But the official didn't know what the farmer was talking about. `You can do what you like, but we can no longer subsidize you.'

On leaving the city hall, the farmer did an extraordinary thing. He acted not because of the loss of his horse, or even the prospect of having a spoiled crop that year. All those things were acceptable. They had been the fate of the peasant for centuries in China. And the peasant had always overcome the challenge to make the country great. He acted because the teachings of Mao Zedong were being betrayed. As he walked down the steps, he saw three government officials, laughing, like powerful men do when they are together. They got into a large black car and drove away so fast that a woman, carrying a baby on her back, lost her balance and fell over. The car didn't stop, but many of the hawkers left their stalls to help the woman. The farmer, who became quite famous after that day, remembered a passage from Mao Zedong's writings. Several hundred million peasants will rise like a mighty storm, like a hurricane, a force so swift and violent that no power, however great, will be able to hold it back. They will smash all the trammels that bind them and rush forward along the road to liberation. They will sweep all the imperialists, warlords, corrupt officials, local tyrants, and evil gentry to their graves.

As the car sped away the woman was helped to her feet, and the farmer let out a furious cry. He tore down the banner which stretched across the entrance of the municipal compound. He spread it on the ground and spat on it. Taken aback by his own audacity, he stood bewildered. But soon more and more people were showing their support for him. Some spat. Others trod. Some emptied jars of tea they were carrying over the cloth. Then three young men arrived on motorbikes. They picked up the now soiled and grubby banner, doused one end with diesel, and set it alight. A crowd gathered and watched. It didn't cheer. As the embers broke off and were blown away in the wind, the young men handed out leaflets.

They were written by the New Communist Party of China. They asked people to tick which category they believed they belonged to: the bourgeoisie; the semi-proletariat of peasants, craftsmen, hawkers, and shop assistants; the proletariat of farmers and unskilled labourers; and the lumpenproletariat or e´le´ments de´classe´s, the group which Mao Zedong had believed was one of the greatest problems faced by China: peasants who have lost their land, handicraftsmen who have lost all opportunity of employment as a result of oppression and exploitation… they lead the most precarious existence of any human being.

In Mao's time there had been twenty million. Today there were two hundred million. The farmer had just become one of them. That night, he didn't walk back to his house. After the burning of the banner, he found new friends who took him to a cafe and bought him beer. He explained the problem about his horse. He listened to the problems of others. Clearly, great injustices were being carried out throughout China. Later, about a hundred people returned to the municipal compound. They hurled rocks and smashed the windows. Then they broke in and ransacked the offices. They were about to set it alight when the People's Armed Police opened fire. Ten people were injured. Five died. The farmer was arrested and sentenced to fifteen years' hard labour. The young men who had given out the leaflets had left Dingxi long ago. They have secret organizations in many places, wrote Mao.

Damian Phillips, Chairman of First China Securities, was preparing the first of what would become regular reports for General Zhao. The result of trading on the International Petroleum Exchange (IPE) in London had been beyond his wildest expectations. The beauty of the IPE was that unlike the New York Mercantile Exchange there were no limits. Also, unlike the Americans, London asked no questions about the nationality of the investor; in New York the authorities want to know the identity of anyone who buys more than 20,000 oil futures contracts on the New York exchange. So on the eve of the war the previous Friday, First China had cornered 20 per cent of the futures market. The IPE's only concern was that First China topped up its margin every so often, which it did courtesy of the bottomless pockets of General Zhao and Multitechnologies. In his report to Zhao, which would be flown to Beijing by special air force jet, Phillips gave a precise accounting of profits to date. The $400 million from the first day of oil trading had been placed on the New York money market. That market was big, liquid, and anonymous. With the `flight to quality' that also happened it was an astute investment decision. None of the currency gains had yet been booked. The further the yen fell the better their position looked. Book profits on Monday of $181.95 million had grown to $261.6 million. He warned the General, however, of the need to act quickly if there was a major change in currency direction and requested approval to act at will if he saw an opportunity.

Jamie Song drove through the gates of Zhongnanhai. The driver was his own, but the bodyguard who had been assigned to him two weeks earlier was seconded from the Central Guards Regiment. His assignment was to protect the Foreign Minister's life and report back on his activities. Being spied upon was one of the burdens of high office in the Communist Party.

A soldier escorted the minister and bodyguard up the stairs past portraits of former Chinese leaders. The President of China was waiting for him in a suite of offices at the south end of the building, with him were the four other members of the Politburo Standing Committee. Song was not a member, but as the only Chinese minister who could talk like an American the leadership both needed him and mistrusted him. Song had been summoned to address the Standing Committee only on the issue of the United States. Clearly, the meeting had been going on for some time. After Song took his seat, President Wang made no immediate mention of Dragonstrike.

`Our northern comrades are short of food, water, and oil. There is malnutrition. There are diseases which have never afflicted our people so widely before. Peasants who come from the womb of our Party are disillusioned. They are rebelling against us. They are organized. They have created their own institutions and they call themselves the New Communists. Our duty is to repair the bond between people and party. But look at us. The barbarian winds of Central Asia are sweeping across our deserts where nothing grows. Our oilfields are barren. Our harvests inadequate. If the Communist Party fails to feed, house, and guide our 1.3 billion people the Party itself will be destroyed. And without the Party there will be no motherland. We will once again be invaded by Western traders. Our rulers will be Boeing, Motorola, Toyota.

`Comrades, in unity is strength; in division there is only defeat and chaos.'

President Wang paused, then addressed Jamie Song directly.

`Foreign Minister, earlier this morning you made another live broadcast. Our embassies report that your first one was a success while our Ambassador to Paris was made to look like a fool by Tai. We have concluded that it's better to fight this propaganda campaign here in Beijing while liaising with our consultants in Washington and Europe. We would like to know how you will focus the next interview.'

`On sanctions, Comrade President. I believe it is possible to use American sanctions to resolve the internal problems you have been describing. In order to do that, we must ensure that apart from Dragonstrike China receives only a minimum of bad international press, which is inevitable.

`I have been studying reports of dissent among our peasants and of the growing popularity of the New Communists, which even the Western media has picked. It is remarkable that they were able to smuggle a statement about the incident in Dingxi out of the Lanzhou Number One prison and get it published in the Washington Post. I suggest that the Ministry of State Security transfers surveillance resources currently used on foreign businessmen, who we should regard as allies, back to Western reporters, who are traditionally hostile. Any Westerner with a video or stills camera found in the provinces should be picked up for questioning, the film taken, and if they are under suspicion of acting for a foreign news organization they must be expelled. But under no circumstances must they be treated badly.'

`What about tourists, Comrade?'

`Watch them. Now. There has been very little problem in the transport of grain between provinces, but due to the southern floods last year we estimated a shortfall of more than 30,000,000 tonnes, which we will have to import. The provinces most affected are the southern coastal regions of Guangzhou, Fujian, Yunnan, and the Yangtze River Delta around Shanghai. These are the areas which are being most troublesome in ignoring directives from Beijing. History may come to regard them as the cause of the fragmentation of China. They are rich. They buy much of their grain directly from America.

`I suggest, comrades, that as soon as Washington announces sanctions we retaliate with the cancellation of our grain contracts. Shipments on their way should be turned back. The American sanctions will target our manufacturing exports, for which most factories are based in the same southern provinces. The jobs of tens of thousands of people will be at risk. There is bound to be social unrest, particularly in the Pearl River Delta around Guangdong, Hong Kong, Shenzhen, and Zhuhai.'

`What exactly are you proposing, Foreign Minister?' interrupted the President.

`The art of war is to turn the inevitable attack of our enemy to our advantage. By ending the grain contracts, the American farmer will suffer. And the troublesome south will need our help to bring in supplies from elsewhere in China. As workers in the Special Economic Zones protest we will send in troops from other provinces to take control. In a very short time, Comrades, we can restore the power of Beijing in governing China. Provincial China will realize it needs us in the power from the centre.'

`And the grain shortages?'

`At the most the stand-off will last a few months. Then it will be business as usual. The Americans will renegotiate. If they don't we'll expel their multinationals, give the business to the Europeans, and buy our grain from Australia and Latin America.'

The PLA Dragonstrike commander interjected with a question about American military plans. Jamie Song was deliberately deferential. In modern China, the soldier, not the academic, had the power. `I believe, comrade, that the American alliance with Japan is being severely tested. American businessmen are insisting on a quick diplomatic settlement. The Pentagon is not convinced it can commit forces to a protracted conflict in the South China Sea. I believe retaliatory sanctions together with the worst case scenario small number of American casualties would see the end of American involvement.'

Prime Minister Hyashi's moment of truth came in the afternoon meeting of the cabinet's Defence Committee. He had been preparing for this for many years. During his time as Defence Minister he had immersed himself in defence issues — the state of Japan's readiness, the likelihood of a war with China, missile development, and the greatest taboo of all, nuclear rearmament. In choosing his cabinet Hyashi had paid heed to the wishes of the political barons who led competing factions. But Hyashi — whose faction was small — believed in the art of balance, not dominance. He had spent nights drinking with up and coming members of other factions, not to try to win them over to his group but so that when the time came some of them might serve with him in cabinet. His patience and perseverance had paid off. In Ishihara and Kimura s Defence and Foreign Ministers respectively ashi had two stout allies, men who were apprised of Japan's military position and men who, like himself, were prepared to think the hitherto unthinkable. The Defence Committee reconvened at Hyashi's official residence.

`Gentlemen, I hope you have all had time to read the telegram from Ambassador Katayama in Washington,' Hyashi opened. `I think you will agree with me that it makes sorry reading and requires of us to take decisions today of far-reaching importance to Japan and the Japanese people.

`I want to say at the outset that I expected, when pushed, the Americans would not honour their treaty with us.

When the Nye initiative failed some years ago and was followed eight years later by American withdrawal from Okinawa I knew it was only a matter of time before the 1960 Security Treaty would either lapse or fall at the first hurdle. Bradlay's equivocation with me and subsequently our Ambassador as well leaves me in no doubt that the time has come for us to act.

`We Japanese have always been alone. The security treaty was never much more than a fig leaf, at least since the end of the Cold War with the Soviet Union. And racial considerations, or more directly racial prejudice, have always been the cancer at the core of USJapanese relations. It is my firm conviction that the roots of USJapanese friction lie in the soil of racial prejudice. American racial prejudice is based upon the cultural belief that the modern era is the creation of the white race.

`When I was Defence Minister I had the opportunity to talk to the Secretary of the US Navy about the Amber System. Amber is supposed to be the colour of caution and this system is named for this concept. Under the Amber System, ordinary vessels such as tankers and container ships are equipped with sonar on their bows. The sonar can detect underwater objects. Some are rocks, et cetera, which navigational charts will show. What the system is looking for is nuclear submarines.

`The Amber System alone cannot detect the nationality of the submarine; it cannot tell if they are American, Russian, or whatever. It simply detects the presence of some foreign object and this information is relayed directly to the Pentagon, which knows what is on the navigational charts and also whether the particular sub is American or not.

`I suggested that the US Navy equip all Japanese commercial vessels with this system. Japanese seamen are reliable and the Japanese merchant marine travels all the oceans and seas of the world. Japanese ships, including our oil tankers, could gather information along vital cargo routes and the US could analyse the information received from the Japanese ships.

`To my surprise, the Americans said that it was none of Japan's business. I asked how, in light of the very limited number of US ships, they could deny the need for such assistance. The answer: "We cannot leave such a critical matter with Japan." I asked whether it was appropriate to involve the British and the Germans, and he said it would be.

`The fact of the matter is that the Americans do not trust Japan. Japan would have no expertise with which to analyse the information provided by the Amber System, yet they were still worried about Japanese reliability in collecting it. American racial prejudice towards Japan is fundamental and we should always keep it in mind when dealing with the Americans. During the Second World War, Americans bombed civilian targets in Germany, but only on Japan did they use the atomic bomb. While they refuse to admit it, the only reason why they could use the atomic bomb at all was because of their racial attitude towards Japan.

`We Japanese now face choices on whether we can boldly proceed, or stand back quietly. It may be possible that Japan can secure a new future for itself based upon a truly independent posture in our region and in the world. We must not restrain ourselves to what we have done up to this point.'

`What sort of action does the Prime Minister have in mind?' Mr Naito, the Trade Minister, asked.

`I will come to that later, but I would have thought at the very least we ought to make it plain to the US and the world that the security treaty no longer exists. I think we should also give consideration to a demonstration of our military power so that China, in particular, recognizes our legitimate rights and interests in the South China Sea. You more than most, Naito-san, recognize the importance to our economy of free and unfettered access to that particular waterway.'

`Indeed, as I am also aware of our investment in China that might be put at risk if we were to take precipitate action against Beijing in the South China Sea,' Naito said. `A shipment of oil is by no means a trivial thing, but is it worth risking what we have in China? Of the top thirty joint ventures in China, we are the leader with seven. We are the biggest importers from China in a trade that profits us greatly. I'm concerned about expropriation. I know industry is as well. Some leaders have called to say they are worried by this talk of military action.'

`The inevitable cannot be put off simply by hoping so,' Foreign Minister Kimura said. `Besides, we are all Asians. I am sure we can reach an accommodation with China. Businessmen should do what they do best and keep out of politics.'

`I would now like Ishihara-san to give us a briefing on the state of readiness of our forces and the project on Ogasarawa,' Hyashi said. `Ishihara-san.'

`Japan's military forces are at a high state of readiness, Prime Minister. Our southern fleet, which occupies the former US facilities on Okinawa, is at sea. It consists of a small carrier, three guided-missile cruisers, and associated support ships. We also have a submarine in the vicinity. Given the state of our technology, it is unlikely that the Chinese could inflict much damage upon us. But, of course, it does not pay to be complacent. Admiral Yamashita is in command.

`The facility at Ogasawara is, as you know, spread over a number of small islands. The smallest is a test facility and, 22 kilometres south, the largest houses Defence Research Facility 317 and the some 165 or so scientists and soldiers working there. It too is in a high state of readiness. Indeed, all is prepared and awaits only the authorization of the Prime Minister.'

`I am aware of this secret facility,' Finance Minister Wada said. `Its budget is hidden in the Agriculture Ministry's annual budget for research into rice. But I've never been told what 317 does and I'm bound to say, Ishiharasan, you've not enlightened me at all.'

`317 is a nuclear weapons research facility,' Ishihara said. `It exists to pool and develop the government's efforts in the nuclear field. It was decided by the government of the day and has been upheld by subsequent governments that Japan should acquire the ability to manufacture a small number of nuclear weapons. It has never been the government's intention to compete with the United States, Russia, or China in the quantity of nuclear weapons the nation possesses. Instead we have gone for quality and deliverability. Given our own tragic experience as the only nation on earth to receive a nuclear explosion at a time of war we set out with the aim of making the cleanest possible device. The warheads we have made if used in anger would cause considerable initial damage but very little of the ongoing health problems that come from bombs which create a lot of radioactivity.'

The silence in the cabinet room was deafening. The Prime Minister decided to bring the meeting to an end.

`Although I was an early sceptic I believe the developments so far this week fully justify the decision to establish the 317 project. The proposal I wish to put before you is this. We need to be seen to be doing something; to be a part of this crisis not just an impotent onlooker. To achieve this I plan to authorize a test of one of our smallest devices, a 50 kiloton bomb to be detonated underground. I believe this modest explosion would announce to the world our coming of age as a nuclear power and simultaneously put China on notice that we will not tolerate its actions in the South China Sea.'

The Indian Ambassador's car drew up outside the new Foreign Ministry building in Beijing five minutes before the meeting with Jamie Song. He was shown straight in. The two men shook hands and spoke on first-name terms. Later the Ambassador told the Press Trust of India that the talks had been businesslike, but friendly.

`Hardeep, the Ministry of State Security tell me you are moving extra troops into the border area with Tibet,' began the Foreign Minister.

`If that is so, Jamie, it is a mystery to me. I enquired this very morning with Delhi and they tell me we are watching, but doing nothing.'

`Can you check again?'

`I can, but I was also going to mention that RAW [the Research and Analysis Wing of the Indian security forces] is reporting increased dissident activities in Lhasa and other cities. I mention this privately, of course.'

`Of course.'

`And it believes there is a possibility of the dissident groups taking advantage of your military concentration in the South China Sea.'

`I trust India will do nothing to encourage this.'

`We give sanctuary, as you know. Nothing else. But I have been instructed by my Prime Minister to mention the following points officially.'

`Go on, Hardeep.'

`We are considering taking up a long-standing offer to expand our military training programmes with the Americans. As you know they began in 1991. Among other things, the Americans enjoy the high-altitude Himalayan training. I've been instructed to tell you that India is concerned about Chinese military expansion and we are seeking assurances.'

`Such as?'

`A halt in your sale of nuclear technology to Pakistan. A slowdown of your weapons sales to Pakistan. A removal or sharing with us of your military base on Hangyi Island in Burma which, as you know, strategically flanks the Bay of Bengal. And the same for the monitoring station on Burma's Great Coco Island north of our Andaman Islands.'

`You are forthright, Ambassador.'

`It must be our British colonial training. It is better for you to share what is not yours and keep my government happy.'

`If we don't?'

`If the fears of my government are not allayed about Chinese territorial expansion, we will display our nuclear arsenal.'

`A dangerous move, Hardeep.'

`The world is becoming a more dangerous place.'

`And if we comply?'

`We won't interfere in Tibet.'

The Chinese Ambassador to Moscow was summoned to the Kremlin at less than an hour's notice. The time-span had acute diplomatic significance, as did the rank of his host, the Deputy Foreign Minister. The Foreign Minister was otherwise engaged.

`Ambassador, my government is concerned about the civilian casualties caused by your attacks on Vietnam. We don't want to see any more.'

`This is an internal matter between China and-'

The Deputy Foreign Minister cut in: `Not when Russian aircraft are involved.'

`What are you suggesting, Deputy Foreign Minister?'

`I will be frank. We are under pressure from the Americans to withdraw our technical support. If you can keep your campaign free of civilian bloodshed, preferably all bloodshed, then we will have no reason to comply. But the spectre of Russian aircraft bombing residential areas in Vietnam is one my government will not tolerate.'

Jamie Song arranged his afternoon meetings with the French, German, and British Ambassadors at half-hourly intervals. He didn't want them to bump into each other, but he intended them to have reported back to their capitals and to have a response by early the next day.

He deliberately kept the French Ambassador waiting for seven minutes and was standing as he was shown in. Neither man sat down during the meeting.

`Ambassador, my government is surprised and saddened at the open support you are showing at this time for an enemy of China. I understand that French military personnel have been used against the People's Liberation Army.'

`We have, as you know, treaty obligations towards Vietnam.'

`These do not interest my government. In good faith, China allowed France to open a diplomatic mission in Beijing a full ten years before the Americans. We had regarded you as an old and trusted friend. There have been difficult times, such as your sale of warships and aircraft to Taiwan in the nineties. But nothing to equal the level of betrayal you have exercised in the past two days.'

`I will pass the Foreign Minister's comments on to my government.'

`You will do more than that, Ambassador. You will tell them that unless we hear an immediate declaration of neutrality from France, we will strike all French companies from tendering for new Chinese contracts and as from next week we will close your Citroe¨n plant in Wuhan. That is all.'

Jamie Song was more cordial with the British Ambassador. The two men sat in the comfortable leather chairs in a corner of his office. `We appreciate Britain's neutrality in this difficult regional dispute,' he began. `Your deep knowledge of the Chinese people and their culture has helped you understand that these problems are much better solved without outside interference. After all, us Asians have to stand on our own two feet at some time or another, without American aircraft carriers smacking us over the bottoms.'

`Yes it is difficult, Foreign Minister. I am only instructed to say at this time, that we are concerned about British nationals at risk both in Vietnam and on the Spratly Island oil rigs which have been seized. The House of Commons is restless. As you know, democracies like easy solutions and quick action. If the Prime Minister could report their safety to the House this afternoon, our neutrality would be much easier to maintain. At the same time, the television pictures of the attacks on Vietnam are doing nothing to help China's international image. For the same reason, these will need to stop if Britain is to continue to argue your case.'

`That is an internal affair between China and Vietnam. Frankly, Ambassador, it is none of your business.'

`I'm afraid the world being as small as it is it will become an internal affair of Great Britain. When we sacked the Summer Palace in 1860, there were no television cameras to record the behaviour of the British troops. If the British people are outraged by your actions in Vietnam, British politicians, albeit reluctantly, have to reflect that outrage.'

Jamie Song stood up to signal that the meeting was over. He extended his hand and held the grip of the Ambassador as he said: `I wanted to talk to you over the next few days about the airport contracts. There is a chance that they could all go to British companies, if we all play our cards rights. None would be more pleased than I.' Jamie Song walked the Ambassador down the long corridor to the waiting lift which even in modern Chinese culture was a sign of great respect. But not greater than the figure of Jamie Song waiting at the top of the steps as the car of the German Ambassador drew up, or clasping the diplomat's arm and guiding him the lift and then to his office. A waiter bought a ready mixed Smirnoff vodka with fresh orange, which Jamie Song knew was his favourite afternoon drink. They sat in the same comfortable chairs. Mahler's Fifth Symphony drifted through the large room as background music. They spoke on first name terms.

`We are trying to account for all foreign nationals, Helmut. I spoke to the President just a few minutes ago. He tells me the military operations against Vietnam will be halted by the end of the day. The shipping routes are reopening. By the end of the week everyone will have forgotten about it.'

`The Chancellor has urged the international community to be restrained.'

`The President asked me to pass on his appreciation of Germany's mature approach to this difficult regional problem. Believe me, Helmut, once this settles down, there'll be no more talk of Asian flashpoints any more.'

`And the sea-routes?'

`We have only been worried about shipping getting caught in the cross-fire. I think the routes are opening even as we speak.'

`I'll tell the Chancellor.'

`Yes, and you might mention that we are very interested in the latest Siemens, Mercedes, and Volkswagen joint-venture applications. I understand there's been some delays in the negotiations, but I think you'll find they'll be cleared up in the next few days.'

The picket line stretched for more than a kilometre and would stay there through the night. Reece Overhalt, Chief Executive Officer of Boeing, looked down on the demonstrators from his executive suite: he knew he had no alternative but to tough it out. The demonstrators' placards denounced China and denounced Boeing. `Stop the export of US jobs to China!'; `Boeing supports Chinese Killers!'; `Overhalt, Overdone, Throw him OUT!'. At the head of the demonstration was an official from the International Association of Machinists (IAM). The IAM had led a bitter seven-week strike in 1995 against Boeing, where the export of jobs to China was a key issue. To win Chinese aircraft orders Boeing agreed to export part of the aircraft's manufacture to China. The union's magazine, IAM Journal, said these `offsets' were `a thuggish game of job blackmail… US aerospace giants don't seem concerned about giving it all away. They feed the Asian tiger, and the competitor grows.' The Chinese attack on Vietnam and its blockage of the South China Sea acted as a lightning conductor for union grievances. The IAM accused Boeing of selling the American birthright by agreeing that as much as 20 per cent of the value of Boeing's new 777 wide-body jet could be manufactured in Japan. One union official noted that China was building Boeing 737 tail sections in a military-run plant that made the same bombers which were attacking Vietnam. `It is unlawful and ludicrous to expect American business and labour to compete with Chinese labour under military discipline.'

Overhalt's more pressing concern was Boeing's share price. It had taken a battering, falling $3 to $67.50. It was also depreciating at a faster rate than the market as a whole. The Dow Jones Industrial average had fallen 2.76 per cent while Boeing's price was off 4.4 per cent. There had been large sales of the company's shares in Hong Kong. He called Boeing's financial advisers, Goldman Sachs, the Wall Street investment bank, and asked them to find out who or what was behind the selling in Hong Kong.

The appeal from an American oil worker was picked up and rebroadcast by the BBC and CNN. Both networks broke into their scheduled programmes and ran a ticker wire under the picture to explain what was happening. It had been the second item of the national Chinese television news. The first had been President Wang Feng meeting the visiting Foreign Minister of Iran in a villa in Zhongnanhai. The newsreader's commentary over the pictures of the two men shaking hands, then gripping each other by the elbow, spoke of the warm friendship between the two governments: `Comrade Wang Feng said the people of China and Iran had set an example for others in the developing world to follow. We can unite, and together stand up to the so-called Western powers who not only have no respect for Asian cultures but want to stop them from prospering.'

Then, against a backdrop of a map of the South China Sea, the newsreader reiterated Beijing's territorial claim. As she was speaking, the picture cut jerkily to a videotape of the oil worker, who identified himself as Jake Walker from Minnesota. His black T-shirt was torn on the right shoulder. His face was peeling from untreated sunburn. His hair was knotted and uncombed. He looked haggard and tired. He began by explaining his appearance, saying that they had had little to eat since Sunday when Chinese troops took over Discovery Reef. The food was needed for the soldiers involved in the liberation of territory.

It was that phrase ‘liberation of territory’ which set alarm bells ringing in the operation rooms in Europe and America. The background was evidence that the men were still being held on the reef. The tone of Jake Walker's message was one of humiliation for America. Here were shades of Tehran in 1979, the Beirut hostages in the 1980s, the Somalia debacle of the 1990s.

`We have made many friends among the Chinese soldiers,' Walker said. `They have explained their position, which we understand and now support. This whole problem could be solved if America, the country I love, withdraws and allows China, a country I respect and am coming to love, to recover its historical right.'

The President snapped down the volume of the television set. He called through to his Private Secretary: `Get the Chinese Ambassador round here, right now. Then get the National Security Adviser, Secretary of State, Defense Secretary, and the Chairman of the Joint Chiefs.'