The Jim Bakker Show

Trump wants to make sure U.S. nuclear arsenal at ‘top of the pack’

U.S. President Donald Trump pauses during an an interview with Reuters in the Oval Office at the White House in Washington, U.S., February 23, 2017. REUTERS/Jonathan Ernst

By Steve Holland

WASHINGTON (Reuters) – President Donald Trump said on Thursday he wants to ensure the U.S. nuclear arsenal is at the “top of the pack,” saying the United States has fallen behind in its weapons capacity.

In a Reuters interview, Trump also said China could solve the national security challenge posed by North Korea “very easily if they want to,” ratcheting up pressure on Beijing to exert more influence to rein in Pyongyang’s increasingly bellicose actions.

Trump also expressed support for the European Union as a governing body, saying “I’m totally in favor of it,” and for the first time as president expressed a preference for a two-state solution to the Israeli-Palestinian conflict, but said he would be satisfied with whatever makes the two sides happy.

Trump also predicted his efforts to pressure NATO allies to pay more for their own defense and ease the burden on the U.S. budget would reap dividends. “They owe a lot of money,” he said.

In his first comments about the U.S. nuclear arsenal since taking office on Jan. 20, Trump was asked about a December tweet in which he said the United States must greatly strengthen and expand its nuclear capacity “until such time as the world comes to its senses regarding nukes.”

Trump said in the interview he would like to see a world with no nuclear weapons but expressed concern that the United States has “fallen behind on nuclear weapon capacity.”

“I am the first one that would like to see … nobody have nukes, but we’re never going to fall behind any country even if it’s a friendly country, we’re never going to fall behind on nuclear power.

“It would be wonderful, a dream would be that no country would have nukes, but if countries are going to have nukes, we’re going to be at the top of the pack,” Trump said.

Russia has 7,000 warheads and the United States, 6,800, according to the Ploughshares Fund, an anti-nuclear group.

“Russia and the United States have far more weapons than is necessary to deter nuclear attack by the other or by another nuclear-armed country,” said Daryl Kimball, executive director of the independent Arms Control Association non-profit group.

The new strategic arms limitation treaty, known as New START, between the United States and Russia requires that by February 5, 2018, both countries must limit their arsenals of strategic nuclear weapons to equal levels for 10 years.

The treaty permits both countries to have no more than 800 deployed and non-deployed land-based intercontinental and submarine-launched ballistic missile launchers and heavy bombers equipped to carry nuclear weapons, and contains equal limits on other nuclear weapons.

Analysts have questioned whether Trump wants to abrogate New START or would begin deploying other warheads.

In the interview, Trump called New START “a one-sided deal.”

“Just another bad deal that the country made, whether it’s START, whether it’s the Iran deal … We’re going to start making good deals,” he said.

“WE’RE VERY ANGRY”

The United States is in the midst of a $1 trillion, 30-year modernization of its aging ballistic missile submarines, bombers and land-based missiles.

Trump also complained that the Russian deployment of a ground-based cruise missile is in violation of a 1987 treaty that bans land-based American and Russian intermediate-range missiles.

“To me it’s a big deal,” said Trump, who has held out the possibility of warmer U.S. relations with Russia.

Asked if he would raise the issue with Putin, Trump said he would do so “if and when we meet.” He said he had no meetings scheduled as of yet with Putin.

Speaking from behind his desk in the Oval Office, Trump expressed concern about North Korea’s ballistic missile tests and said accelerating a missile defense system for U.S. allies Japan and South Korea was among many options available.

“There’s talks of a lot more than that,” Trump said, when asked about the missile defense system. “We’ll see what happens. But it’s a very dangerous situation, and China can end it very quickly in my opinion.”

China has made clear that it opposes North Korea’s nuclear and missile programs and has repeatedly called for denuclearization of the Korean peninsula and a return to negotiations between Pyongyang and world powers.

But efforts to change Pyongyang’s behavior through sanctions have historically failed, largely because of China’s fear that severe measures could trigger a collapse of the North Korean state and send refugees streaming across their border.

Trump’s meeting with Japanese Prime Minister Shinzo Abe earlier this month in Florida was interrupted by a ballistic missile launch by North Korea.

Trump did not completely rule out possibly meeting North Korean leader Kim Jong Un at some point in the future under certain circumstances but suggested it might be too late.

“It’s very late. We’re very angry at what he’s done, and frankly this should have been taken care of during the Obama administration,” he said.

According to Japanese news reports, the Japanese government plans to start debate over the deployment of a U.S. missile defense system known as the Terminal High Altitude Area Defense, or THAAD, and the land-based Aegis Ashore missile defense system to improve its capability to counter North Korean ballistic missiles.

The strength of Trump’s remarks in favor of the EU took some Brussels officials by surprise after his support for Britain’s vote last summer to exit from the EU.

“I’m totally in favor of it,” Trump said of the EU. “I think it’s wonderful. If they’re happy, I’m in favor of it.”

Statements by him and others in his administration have suggested to Europeans that he sees little value in the Union as such, which Trump last month called a “vehicle for Germany.”

(Additional reporting by Jeff Mason, Roberta Rampton, Emily Stephenson, John Walcott, Matt Spetalnick, Arshad Mohammed and David Brunnstrom in Washington and Alastair Macdonald in Brussels; editing by Ross Colvin)

China say North Korea’s nuclear plan is a problem between U.S. and North Korea

North Korean leader Kim Jong Un watches a performance given with splendor at the People's Theatre on Wednesday to mark the 70th anniversary of the founding of the State Merited Chorus in this photo released by North Korea's Korean Central News Agency (KCNA) in Pyongyang on February 23, 2017. KCNA/via REUTERS

BEIJING (Reuters) – China on Friday dismissed renewed pressure from U.S. President Donald Trump over its role in North Korea, saying the crux of the matter was a dispute between Washington and Pyongyang.

Trump told Reuters in an interview on Thursday that China could solve the national security challenge posed by North Korea “very easily if they want to”, turning up pressure on Beijing to exert more influence to rein in Pyongyang’s increasingly bellicose actions.

It has also insisted it is dedicated to enforcing U.N. sanctions against North Korea.

“We have said many times already that the crux of the North Korean nuclear issue is the problem between the United States and North Korea,” Chinese Foreign Ministry spokesman Geng Shuang told a daily news briefing, responding to Trump’s remarks.

“We hope the relevant parties can shoulder their responsibilities, play the role the should, and together with China play a constructive role for peace and stability on the Korean peninsula and for its denuclearization,” he added.

The official Xinhua news agency said China’s influence on North Korea had been exaggerated.

“The Trump White House needs to make the first move and talk to Pyongyang. The United States stands to lose nothing for trying this,” it said in an English-language commentary.

China announced on Saturday last week it was banning imports of coal from North Korea, after it tested an intermediate-range ballistic missile.

North Korean state media issued a rare reproach of China on Thursday saying its main diplomatic backer was “dancing to the tune” of the United States for halting its coal imports because of its nuclear and missile programs.

The North’s state-run KCNA news agency did not refer directly to China by name but in an unmistakable censure it accused a “neighboring country” of going along with North Korea’s enemies to “bring down its social system”.

Asked about the report, Geng said the U.N. sanctions were a clear signal of opposition from the international community about North Korea’s nuclear and missile programs and that China would enforce them.

However, he also described China and North Korea as being friendly neighbors.

“We are willing to work with North Korea to promote the stable and healthy development of relations,” Geng said, adding North Korea was well aware of China’s position on its nuclear program.

(Reporting by Ben Blanchard; Editing by Robert Birsel)

China military says aware of U.S. carrier in South China Sea

Sailors man the rails as the USS Carl Vinson aircraft carrier departs on deployment from Naval Station North Island in Coronado, California, U.S. January 5, 2017. REUTERS/Mike Blake

BEIJING (Reuters) – China’s defense ministry said on Thursday it was aware of the presence of a U.S. aircraft carrier strike group in the South China Sea and China respected freedom of navigation for all countries in the waters there.

The U.S. navy said the strike group, including the Nimitz-class aircraft carrier the USS Carl Vinson, began “routine operations” in the South China Sea on Saturday amid growing tension with China over control of the disputed waterway.

Defence ministry spokesman Ren Guoqiang said China had a “grasp” of the situation regarding the carrier group in the South China Sea.

“China hopes the U.S. earnestly respects the sovereignty and security concerns of countries in the region, and earnestly respects the efforts of countries in the region to maintain peace and stability in the South China Sea,” Ren told a regular monthly news briefing.

“Of course, we also respect freedom of navigation and overflight for all countries in the South China Sea in accordance with international law,” he added.

The situation in the South China Sea was generally stable, Ren said.

“We hope the actions of the U.S. side can contribute positive energy towards this good situation, and not the opposite.”

Good military relations between the two countries are in interests of both, and well as of the region and the world, and China hoped the United States could meet China half way, strengthen communication and avoid misjudgment, Ren said.

Friction between the United States and China over trade and territory under U.S. President Donald Trump have increased concern that the South China Sea could become a flashpoint.

China wrapped up its own naval exercises in the South China Sea late last week. War games involving its only aircraft carrier have unnerved neighbors with which it has long had rival claims in the waters.

China lays claim to almost all of the resource-rich South China Sea, through which about $5 trillion worth of trade passes each year.

Brunei, Malaysia, the Philippines, Taiwan and Vietnam also claim parts of the waters that have rich fishing grounds, along with oil and gas deposits.

The United States has criticized China’s construction of man-made islands and build-up of military facilities in the sea, and expressed concern they could be used to restrict free of movement.

(Reporting by Ben Blanchard; Editing by Robert Birsel)

Exclusive: China finishing South China Sea buildings that could house missiles – U.S. officials

File Photo: Chinese dredging vessels are purportedly seen in the waters around Mischief Reef in the disputed Spratly Islands in the South China Sea in this still image from video taken by a P-8A Poseidon surveillance aircraft provided by the United States Navy May 21, 2015. U.S. Navy/Handout via Reuters/File Photo

By Idrees Ali

WASHINGTON (Reuters) – China, in an early test of U.S. President Donald Trump, has nearly finished building almost two dozen structures on artificial islands in the South China Sea that appear designed to house long-range surface-to-air missiles, two U.S. officials told Reuters.

The development is likely to raise questions about whether and how the United States will respond, given its vows to take a tough line on China in the South China Sea.

China claims almost all the waters, which carry a third of the world’s maritime traffic. Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims. Trump’s administration has called China’s island building in the South China Sea illegal.

Building the concrete structures with retractable roofs on Subi, Mischief and Fiery Cross reefs, part of the Spratly Islands chain where China already has built military-length airstrips, could be considered a military escalation, the U.S. officials said in recent days, speaking on condition of anonymity.

“It is not like the Chinese to build anything in the South China Sea just to build it, and these structures resemble others that house SAM batteries, so the logical conclusion is that’s what they are for,” said a U.S. intelligence official, referring to surface-to-air missiles.

Another official said the structures appeared to be 20 meters (66 feet) long and 10 meters (33 feet) high.

A Pentagon spokesman said the United States remained committed to “non-militarization in the South China Sea” and urged all claimants to take actions consistent with international law.

In Beijing, Chinese Foreign Ministry spokesman Geng Shuang said on Wednesday he was aware of the report, though did not say if China was planning on placing missiles on the reefs.

“China carrying out normal construction activities on its own territory, including deploying necessary and appropriate territorial defense facilities, is a normal right under international law for sovereign nations,” he told reporters.

In his Senate confirmation hearing last month, U.S. Secretary of State Rex Tillerson raised China’s ire when he said Beijing should be denied access to the islands it is building in the South China Sea.

Tillerson subsequently softened his language, and Trump further reduced tensions by pledging to honor the long-standing U.S. “one China” policy in a Feb. 10 telephone call with Chinese President Xi Jinping.

LONGER RANGE

Greg Poling, a South China Sea expert at the Center for Strategic and International Studies in Washington, said in a December report that China apparently had installed weapons, including anti-aircraft and anti-missile systems, on all seven of the islands it has built in the South China Sea.

The officials said the new structures were likely to house surface-to-air missiles that would expand China’s air defense umbrella over the islands. They did not give a time line on when they believed China would deploy missiles on the islands.

“It certainly raises the tension,” Poling said. “The Chinese have gotten good at these steady increases in their capabilities.”

On Tuesday, the Philippines said Southeast Asian countries saw China’s installation of weapons in the South China Sea as “very unsettling” and have urged dialogue to stop an escalation of “recent developments.”

Philippine Foreign Secretary Perfecto Yasay did not say what provoked the concern but said the 10-member Association of South East Asian Nations, or ASEAN, hoped China and the United States would ensure peace and stability.

POLITICAL TEST

The U.S. intelligence official said the structures did not pose a significant military threat to U.S. forces in the region, given their visibility and vulnerability.

Building them appeared to be more of a political test of how the Trump administration would respond, he said.

“The logical response would also be political – something that should not lead to military escalation in a vital strategic area,” the official said.

Chas Freeman, a China expert and former assistant secretary of defense, said he was inclined to view such installations as serving a military purpose – bolstering China’s claims against those of other nations – rather than a political signal to the United States.

“There is a tendency here in Washington to imagine that it’s all about us, but we are not a claimant in the South China Sea,” Freeman said. “We are not going to challenge China’s possession of any of these land features in my judgment. If that’s going to happen, it’s going to be done by the Vietnamese, or … the Filipinos … or the Malaysians, who are the three counter-claimants of note.”

He said it was an “unfortunate, but not (an) unpredictable development.”

Tillerson told the Senate Foreign Relations Committee last month that China’s building of islands and putting military assets on them was “akin to Russia’s taking Crimea” from Ukraine.

In his written responses to follow-up questions, he softened his language, saying that in the event of an unspecified “contingency,” the United States and its allies “must be capable of limiting China’s access to and use of” those islands to pose a threat.

(Reporting by Idrees Ali; Additional reporting by Arshad Mohammed Arshad, David Brunnstrom and John Walcott, and Ben Blanchard in Beijing; Editing by John Walcott, Peter Cooney and Nick Macfie)

ASEAN unsettled by China weapon systems, tension in South China Sea

ASEAN leaders meeting to discuss China's actions

By Manuel Mogato

BORACAY, Philippines (Reuters) – Southeast Asian countries see China’s installation of weapons systems in the South China Sea as “very unsettling” and have urged dialogue to stop an escalation of “recent developments”, the Philippines said on Tuesday.

The region’s foreign ministers were unanimous in their concern over China’s militarization of its artificial islands, but were confident a framework for a code of maritime conduct could be agreed with Beijing by June, Philippine Foreign Secretary Perfecto Yasay said.

Yasay did not say what developments provoked the concern, but said the 10-member Association of South East Asian Nations (ASEAN) hoped China and the United States would ensure peace and stability.

He said demilitarisation would be a key component of any ASEAN-China code of conduct, but it was too soon to say whether Beijing’s dismantling of its weapons installations would be a prerequisite.

“The ASEAN members have been unanimous in their expression of concern about what they see as a militarization of the region,” Yasay told reporters after a ministers’ retreat on the Philippine island of Boracay.

Referring to China’s manmade islands in the Spratly archipelago, Yasay said ASEAN countries had “noticed, very unsettlingly, that China has installed weapons systems in these facilities that they have established, and they have expressed strong concern about this.”

With the Philippines chairing the bloc this year, Yasay’s comments signal a rare, firm position by a grouping that often struggles to achieve consensus, due to its contrasting opinions on how to respond to China’s assertiveness.

ASEAN’s statements of concern often avoid mentioning China by name. Much is at stake from upsetting China, as ASEAN members, to varying extents, are under its influence and need its trade, investment and tourists.

TRUMP UNCERTAINTY

Regional geopolitics has become more uncertain since the election of U.S. President Donald Trump, particularly over his administration’s role in a region strongly courted by Washington during the “pivot” of predecessor Barack Obama.

Friction between the United States and China over trade and territory under Trump has fueled worry that the South China Sea could become a flashpoint.

China claims most of the waters, through which about $5 trillion in ship-borne trade passes every year. Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims.

China on Friday completed war games with an aircraft carrier that unnerved neighbors. A day later the U.S. navy said its aircraft carrier strike group had started routine patrols in the South China Sea, a step China had warned against.

Yasay said ASEAN nations recognized policies under Trump were still evolving, but hoped they could be unveiled within a few months to provide a “more concrete and clearer picture”, especially regarding China.

“We do not know the complete picture of what this foreign policy might be, insofar as its relationship with China is concerned. We’re, however, hopeful that the policy that would come out will be positive.”

Asked if China was committed to a set of rules on the South China Sea, he said Beijing had shown it was keen.

But all parties should ensure that the code, which has made little progress since the idea was agreed in 2002, needed to be legally “binding and enforceable”, Yasay added.

(Additional reporting by Enrico Dela Cruz and Manolo Serapio Jr; Writing by Martin Petty; Editing by Clarence Fernandez)

Chinese investors find their cash is losing its cachet

By John Ruwitch and Dasha Afanasieva

SHANGHAI/LONDON (Reuters) – For years, cash-rich Chinese investors have been highly sought after the world over. Now, their cash is losing its cachet.

China’s increasing efforts to prevent capital from leaving the country are eroding the confidence of domestic and foreign investors about getting deals done inside and outside of the world’s second-biggest economy.

Chinese bidders had become ubiquitous in deals in the past two years and were welcomed, said Severin Brizay, head of Europe, the Middle East and Africa mergers and acquisitions for the investment bank UBS.

“Clients were asking if it would be possible to make sure they are involved. Now, we are seeing the reverse: some clients are asking if we can do it without Chinese bidders because of the domestic challenges they face,” he said.

Dealmakers said many Chinese firms are unable to close deals because they can not secure official permission to transfer yuan into foreign exchange.

This follows a series of measures by authorities since late last year to tighten restrictions on capital outflows and rein in what officials have called “irrational” outbound investment. The Institute of International Finance estimated capital outflows surged to a record $725 billion last year and it expects even higher outflows this year.

The yuan fell more than 6.5 percent last year against the dollar, its steepest decline since 1994, prompting the central bank to spend hundreds of billions of dollars in reserves to prevent the slide from turning into a slump.

China’s foreign exchange regulator, the State Administration of Foreign Exchange, did not respond to requests for comment.

IMPACT

The measures by authorities have had a dramatic impact.

Overseas direct investment (ODI) by Chinese in December fell almost 40 percent from a year earlier to $8.41 billion, the lowest monthly level in 2016. In January, overseas property purchases by Chinese corporations plunged.

Global stock index provider MSCI expressed concern about the capital outflow measures and China shelved plans for a new crude futures contract because potential foreign participants were worried they would not be able to take yuan profits out of the country.

Chinese conglomerate and cinema chain operator Dalian Wanda’s proposed $1 billion purchase of U.S. entertainment group Dick Clark Productions Inc collapsed over problems getting currency out of China and regulatory approval, online website The Wrap said on Monday.

In another case, a Chinese investor was unable to get permission from authorities to exchange yuan into $30 million to close a U.S. deal, a consultant involved in the project said. The planned $100 million investment in a U.S. residential property portfolio fell through.

“Sellers nowadays will request certain proof,” said Jeffrey Sun, a Shanghai-based partner at the legal practice of Orrick, Herrington and Sutcliffe. “From the sellers’ side, the worry is justified.”

Still, while Chinese regulators are putting proposed deals under greater scrutiny, it does not mean they are shutting the door on outbound investment, lawyers said.

Regulators will approve deals if they make economic sense, Sun said. For example, a steel manufacturer buying a soccer club “is unlikely” to be approved, he said.

“FREAKED OUT”

Fund managers that help Chinese invest abroad, such as China Orient Summit Capital, are changing tack. The firm had been raising money in China for funds to target U.S. and European real estate. It is now looking to raise money in offshore markets, an executive at the company said.

China Orient Summit Capital declined a request for a formal interview.

Companies are also looking to avoid the approval process for buying foreign exchange if they have access to funds outside of China, lawyers and bankers said.

“Every deal at this point is looking for some way to identify offshore funds rather than deal with the capital controls,” said an M&A lawyer in Shanghai, who declined to be identified.

Chinese companies raised a record $111 billion in offshore dollar bonds in 2016, according to data from Dealogic, up from $88 billion in 2015. Some of those funds would have been earmarked for overseas investments, said Ivan Chung, associate managing director at Moody’s ratings service.

Chinese conglomerate HNA Group <0521.HK> announced about $20 billion in outbound deals last year. Thomson Reuters data shows it raised at least $17.05 billion in loans abroad in 2016.

Overall, China’s outbound investment hit a record last year but could have been much higher, said the Rhodium Group, a consultancy that tracks direct investment from China. It said a record 30 deals worth $74 billion and involving Chinese companies were canceled in the United States and Europe in 2016.

“Right now everybody is thoroughly freaked out by capital controls,” Daniel Rosen, a Rhodium partner and adjunct professor at Columbia University, said.

Still, on Vancouver’s upscale West Side, a neighborhood popular with foreign buyers where the price of homes runs in the millions of dollars, realtor Tom Gradecak was less worried about Chinese demand.

In the past, Chinese investors have tended to find ways around capital controls, he said.

“It won’t take them long,” he said. “The people that really want to come here, I don’t think it’s going to stop them.”

(Reporting by John Ruwitch and Samuel Shen in SHANGHAI, Matt Miller in BEIJING, Dasha Afanasieva in LONDON, and Nicole Mordant in VANCOUVER; Editing by Neil Fullick)

China wraps up exercise with three warships in South China Sea

BEIJING (Reuters) – Three Chinese warships on Friday wrapped up a week of scheduled training exercises in the South China Sea, state media said, shortly after China’s sole aircraft carrier tested its weapons in the disputed region.

The flotilla of warships, including a destroyer that can launch guided missiles, had been conducting drills since Friday last week and were now sailing to the eastern India Ocean and the Western Pacific, the official Xinhua News Agency said.

Exercises by the Chinese ships, in particular the aircraft carrier Liaoning, in recent months have unnerved its neighbors, especially given long-running territorial disputes in the South China Sea.

The training included sudden attack drills and had been carried out successfully in poor sea conditions, Xinhua said.

The drills were “without an arranged script” and “as close as possible to real combat”, military affairs expert Yin Zhuo told the state broadcaster China Central Television.

Regular exercises by the Chinese navy in the high seas were an “unchangeable trend”, Yin said, though he added that China’s long-range naval capabilities were not sufficient to secure its interests in open waters. He did not elaborate.

China on Wednesday warned the United States against challenging its sovereignty in the South China Sea after reports that the United States was planning fresh naval patrols in the region.

The United States has criticized China’s construction of man-made islands and its build-up of military facilities in the sea, and expressed concern they could be used to restrict free movement. The U.S. navy has conducted several “freedom of navigation” patrols through the waters.

China claims most of the South China Sea, while Taiwan, Malaysia, Vietnam, the Philippines and Brunei claim a portion of the waters that command strategic sea lanes and have rich fishing grounds as well as with oil and gas deposits.

China says it is committed to freedom of navigation through the waters.

(Reporting by Christian Shepherd; Editing by Robert Birsel)

Hard to detect, China bird flu virus may be more widespread

quarantine researcher checking chickens on poultry farm for bird flu

By Dominique Patton

BEIJING (Reuters) – Bird flu infection rates on Chinese poultry farm

BEIJING (Reuters) – Bird flu infection rates on Chinese poultry farms may be far higher than previously thought, because the strain of the deadly virus that has killed more than 100 people this winter is hard to detect in chickens and geese, animal health experts say.

s may be far higher than previously thought, because the strain of the deadly virus that has killed more than 100 people this winter is hard to detect in chickens and geese, animal health experts say.

Poultry that have contracted the H7N9 strain of the avian flu virus show little or no sign of symptoms. That means any infection is only likely to be detected if farmers or health authorities carry out random tests on a flock, the experts said.

But in humans, it can be deadly.

That’s different to other strains, such as the highly pathogenic H5N6 that struck South Korean farms in December, prompting the government to call in the army to help cull some 26 million birds.

But that strain didn’t kill any people.

There have been multiple outbreaks of bird flu around the world in recent months, with at least half a dozen different strains circulating. The scale of the outbreaks and range of viral strains increases the chances of viruses mixing and mutating, with new versions that can spread more easily between people, experts say.

For now, H7N9 is thought to be relatively difficult to spread between people. China’s Center for Disease Control and Prevention has said the vast majority of people infected by H7N9 reported exposure to poultry, especially at live markets.

“There are very few, if any, clinical signs when this (H7N9) virus infects birds, and that’s the main reason we’re not seeing reporting coming from poultry farms in China,” said Matthew Stone, deputy director general for International Standards and Science at the World Organisation for Animal Health (OIE).

INTENSIVE OUTBREAK

As many as 79 people died from H7N9 bird flu in China in January alone, up to four times higher than the same month in past years.

While spikes in contamination rates are normal in January – the main influenza season – the high level of human infections has prompted fears the spread of the virus among people could be the highest on record – especially as the number of bird flu cases reported by farmers has been conspicuously low.

The high number of human infections points to a significant outbreak in the poultry population that is not being detected, says Guan Yi, director of the State Key Laboratory of Emerging Infectious Diseases and the Center of Influenza Research at the University of Hong Kong.

“If we have so many human infections, naturally it reflects activity, an intensive outbreak in chickens. They are highly associated,” he said.

China has the world’s largest flock of chickens, ducks and geese, and slaughtered more than 11 billion birds for meat in 2014, according to the United Nations’ Food and Agriculture Organisation (FAO).

The last major bird flu outbreak in China, in 2013, killed 36 people and cost the farming industry around $6.5 billion.

CONTROL CHALLENGE

The experts’ assessment underscores the challenge for China’s government and health ministry in monitoring and controlling the H7N9 outbreak in both people and poultry.

While, with few visible signs of infection in birds, it’s easier for farmers to flout the reporting rules and continue selling poultry at market, Stone at the OIE said China has a “very significant” surveillance program at live markets.

The government promised on Thursday to tighten controls on markets and poultry transport to help battle the virus.

The agriculture ministry last month collected more than 102,000 serum samples and 55,000 virological samples from birds in 26 provinces. Of the latter samples, only 26 tested positive for the virus, according to data on the ministry’s website.

But the rapid rise in human infections and spread to a wider geographic area is likely to increase pressure on Beijing to do more poultry testing at markets and on farms.

The ministry did not respond to faxed questions on its surveillance efforts.

The National Health and Family Planning Commission said on Thursday the spread of H7N9 among people was slowing.

Some Chinese netizens have called for more timely reports on infections, and some experts have said China has been slow to respond to the human outbreak. The authorities have warned the public to stay alert for the virus, cautioning against panic.

Others played down the threat to humans, as long as they stay away from live markets.

“As scientists, we should be watching this outbreak and the effectiveness of any control measures,” said Ian Mackay, a virologist and associate professor at the University of Queensland in Australia. “We don’t have a vaccine available for H7N9 in humans, but we do have effective antivirals.”

“So far, the virus does not spread well between humans,” he added. “As members of the public, who do not seek out live poultry from markets in China, we have almost nothing to worry about from H7N9 right now.”

(Reporting by Dominique Patton in BEIJING, with additional reporting by Ben Hirschler in LONDON; Editing by Josephine Mason and Ian Geoghegan)

Hong Kong police struggle to stop brokerage hacking spree

By Michelle Price

HONG KONG (Reuters) – Hong Kong police are struggling to deal with digital pump-and-dump schemes targeting brokerages – a little-known type of computer-generated fraud that surged in the Chinese territory last year.

Although the money involved was small – only about $20 million worth of shares – there were 81 such incidents reported in 2016, more than triple the number in 2015, according to police.

In the scheme, criminals invest in thinly traded penny stocks and then manipulate their share prices by ordering trades from hacked brokerage accounts. They earn profits by selling before the fraudulent trades are reported.

After last year’s cyber-heist of $81 million at Bangladesh’s central bank and a series of hacks of ATM’s around the world, authorities fear such pump-and-dump schemes could be increasingly used for electronic theft.

Hong Kong is a favored place for such attacks because of the number of thinly-traded penny stocks in the territory and because its securities industry has fallen behind other financial centers in defending against cyber fraud.

At least seven brokers and eight banks have been targeted in Hong Kong, including HSBC Holdings Plc and Bank of China International (BOCI) Securities, according to regulators and people familiar with confidential investigations.

A spokesman for HSBC declined to comment.

A spokeswoman for BOCI Securities said he could not comment on its case but the brokerage would continue to invest in IT security.

“If you ask regulators in the industry what is the number one threat, not surprisingly it’s all about cyber attacks,” Ashley Alder, CEO of the Hong Kong Securities and Futures Commission (SFC) and chairman of the International Organization of Securities Commissions, said in a speech to the local legislature last week.

“We’ve seen that happen not only in banking but also at brokers in Hong Kong, in particular recent attacks to do with basically hijacking share trading accounts.”

Such schemes surfaced more than a decade ago in the United States. Charles Schwab Corp, E*Trade Financial Corp and JP Morgan Chase & Co. were identified as victims of these schemes in a 2006 complaint filed by the Securities and Exchange Commission.

The pace of attacks reported in the United States has slowed in recent years after big brokerages implemented a variety of strategies to thwart the hacks, said John Reed Stark, a former chief of the Securities and Exchange Commission’s (SEC) Office of Internet Enforcement.

Some use algorithms to identify and halt unusual trading activity, others scrutinize Internet traffic for orders coming from suspicious servers and one stopped permitting customers to use its online trading platform from buying penny stocks, said Stark, who now runs cyber-security consulting firm John Reed Stark Consulting LLC.

But such protections are rare in Hong Kong, where the government has only recently started suggesting security improvements to banks and brokerages which have traditionally considered stock trading to be low-risk.

TWO-FACTOR AUTHENTICATION

The Hong Kong SFC last year told firms to increase surveillance of client transactions and data protection.

Authorities believe that hackers accessed brokerage accounts using stolen or guessed passwords, according to investigators. This might have been thwarted if they were protected with two-factor authentication, the Hong Kong Monetary Authority has said.

Two-factor authentication typically includes a password and a piece of information only the user has, for instance an electronic token with changing numbers.

“Hong Kong is being targeted because they have not instituted the same cyber protections that we see in the U.S. and certain parts of Europe,” said Jeff Cramer, a former U.S. prosecutor.

Cramer, who is managing director with cyber-security investigations firm Berkeley Research Group, said he expects to see more attacks in Hong Kong and perhaps other Asian nations, including China, Japan and South Korea that are also behind in cyber security.

FIGHTING BACK

Such pump and dump cases have proven tough to crack in the United States because the masterminds are typically overseas, using surrogates and pseudonyms to make investments.

Brokerages are typically not required to go public when they are hacked, so cases often only surface when the government files a complaint against suspected cyber criminals, or the hack results in litigation.

The attack involving BOCI Securities year became public after it was sued by a customer that claimed its account was breached.

Trading firm Fast Track Holdings Limited alleged in court documents that somebody hacked into its brokerage account on the afternoon of September 23 using a valid user ID and password. Within 18 minutes, the intruder had emptied the account by spending HK$38 million to buy 49 million shares of thinly traded Pa Shun Pharmaceutical, according to Fast Track.

The stock soared more than 30 percent after the purchase, which was made at a 36 percent premium to the previous day’s closing price, Reuters data shows.

BOCI alerted Fast Track of the suspicious activity an hour later, but it has said in court documents it should not be held financially responsible, saying it found no evidence its systems had been compromised.

Peter Pang, Pa Shun’s CFO, told Reuters the management “would keep an eye to the incident and report to the regulators and the public when necessary”.

One person familiar with the case said Fast Track’s management believes the incident was a pump and dump scam and that Pa Shun was targeted because it is thinly-traded, but it remained unclear who was responsible.

Fast Track’s directors did not respond to requests for comment.

(Additional reporting by Jim Finkle in Boston and Jessica Yu, Katy Wong and Donny Kwok in Hong Kong; Editing by Raju Gopalakrishnan)

China warns U.S. against fresh naval patrols in South China Sea

China's army in front of South China Sea

BEIJING (Reuters) – China’s Foreign Ministry on Wednesday warned Washington against challenging its sovereignty, responding to reports the United States was planning fresh naval patrols in the disputed South China Sea.

On Sunday, the Navy Times reported that U.S. Navy and Pacific Command leaders were considering freedom of navigation patrols in the busy waterway by the San Diego-based Carl Vinson carrier strike group, citing unnamed defense officials.

Chinese Foreign Ministry spokesman Geng Shuang said tension in the South China Sea had stabilized due to the hard work between China and Southeast Asia countries, and urged foreign nations including the U.S. to respect this.

“We urge the U.S. not to take any actions that challenge China’s sovereignty and security,” Geng told a regular news briefing on Wednesday.

The United States last conducted a freedom of navigation operation in the area in October, when it sailed the guided-missile destroyer USS Decatur near the Paracel Islands and within waters claimed by China.

Dave Bennett, a spokesman for Carrier Strike Group One, said it did not discuss future operations of its units.

“The Carl Vinson Strike Group is on a regularly scheduled Western Pacific deployment as part of the U.S. Pacific Fleet-led initiative to extend the command and control functions of the U.S. 3rd Fleet,” he said.

“U.S. Navy aircraft carrier strike groups have patrolled the Indo-Asia-Pacific regularly and routinely for more than 70 years,” he said.

China lays claim to almost all of the resource-rich South China Sea, through which about $5 trillion worth of trade passes each year.

Brunei, Malaysia, the Philippines, Taiwan and Vietnam also claim parts of the waters that command strategic sea lanes and have rich fishing grounds, along with oil and gas deposits.

The United States has criticized Beijing’s construction of man-made islands and build-up of military facilities in the sea, and expressed concern they could be used to restrict free movement.

(Reporting by Philip Wen in Beijing; Additional reporting by Matthew Tostevin in Bangkok; Editing by Ben Blanchard and Clarence Fernandez)

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