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Philippine-China brawl a ‘wag the dog’ diversion

MANILA, Philippines—Could China be blowing up its territorial brawl with the Philippines over Scarborough Shoal to divert the Chinese people’s attention from two major political scandals currently rocking Asia’s largest economy?

A research from leading online local stock brokerage COL Financial thinks so, suggesting that China – which is in the midst of potentially divisive scandals while in a transition to a new set of leaders – is never interested in going to war against the Philippines.

The recent talks in Beijing between Philex Petroleum chair Manuel Pangilinan and the state-owned China National Offshore Oil Corp (CNOOC), the COL Financial research said, showed China’s strong interest in doing business in the Philippines, particularly in a major oil and gas discovery along Recto Bank.

The commentary dated May 21 issued by COL Financial (formerly Citiseconline.com) to high net worth clients titled “Beyond the Sea : Smokes, Mirrors, Wags and Dogs” written by analyst Zerge Zandueta disagreed with some perception painting the Chinese as a nation prone to war mongering and bullying.

The research alluded to a 1997 American movie “Wag the Dog” (starring Dustin Hoffman and Robert de Niro) about how a Washington spin doctor concocted a fake war with Albania with the help of a Hollywood film producer in order to distract voters from a presidential sex scandal.

The COL Financial research noted that while absolute political, economic and military power would be transferred to the new leaders by November 2012, the Chinese political and propaganda machinery has been in full overdrive to promote the various virtues and strengths of the Communist Party.

“The Party is at work to project an image of stability and strength, with matching projection of Chinese political power, to assuage the Chinese public that they will all continue to be in good hands,” it said.

But it has not helped that two major scandals have been rocking China at the moment, the research said, referring to the Bo Xilai affair and the Chen Guangcheng affairs.

“Could it be that Scarborough was blown up to divert the attention of the public from these potentially divisive and anti-party scandals? Nothing rallies a nation more than a territorial dispute, and it seems the Philippines – small, ill-equipped, no chance of retaliating economically or militarily – is a good, convenient candidate for the diversion,” the research said.

COL Financial said the Bo Xilai affair has been striking at the heart of Communist Party leadership by exposing a vigorous power struggle and massive corruption within the Communist Party. It said the Chen affair, on the other hand, has been striking at the heart, and has been opening to doubt, the Party’s lifelong policies (such as one-child policy) in its drive towards economic prosperity.

The first scandal, which made it to the cover of Time Magazine earlier this month, referred to the downfall of Bo Xilai, a rising political star in China. This was after the politician’s right-hand man implicated Bo’s wife and a household aide in the killing of a British businessman. News reports also emerged implicating Bo and his family in corrupt activities.

The western media has described this dramatic downfall as the most serious threat to Chinese authorities since the Tiananmen Square upheavals in 1989.

On the other hand, Chen Guangcheng, one of China’s best known dissidents, dramatically fled from house arrest in China into the US. The blind activist made headlines in international media for exposing rights abuses in China, including forced sterilization and late-term abortions under China’s “one-child” family planning policy.

COL Financial said that gaining the full trust and confidence of the Chinese public would be crucial, for the sake of effecting a peaceful transition of power.

Another aspect worth analyzing, COL Financial said, was while the capture of Chinese fishermen in Philippine seas had been a regular event, the April 8 arrests triggered a different response. Later in April, Pangilinan-led Philex Mining Corp., together with its subsidiary Philex Petroleum Corp., disclosed for the first time, the results of the seismic data from the Sampaguita Gas Field, which suggested a resource much bigger than the Malampaya gas project.

“The analysis revealed what everyone had been speculating on for a long time – it is a major oil and gas discovery, revealing a potential elephant find and immense profit opportunity,” COL Financial said.

The research said it was also curious that at the peak of the diplomatic and nasty publicity fight between the Philippines and China (in the week of May 7 to 11), CNOOC invited Pangilinan for cordial meetings in Beijing to explore possible areas of cooperation between their companies.

“A case of the left hand not knowing what the right hand is doing? Don’t think so. Carrot and stick is more like it,” COL Financial said.

“We have a feeling where this all can possibly lead to. You and I know that China is not about to go to war. In the end the war will not be fought in the sea, but in the boardrooms and conference rooms of the various companies that have vested interests in these resource-rich areas,” the research said.

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