The Shanghai stock market plunged in late August, further unsettling global markets and shaking confidence in China’s handling of economic policy. Many investors took the devaluation as a sign that the Chinese economy was slowing down faster than reported and that Beijing was using its currency to try to reignite growth. Chinese officials said the move was intended to bring the yuan in line with its market value, something Western governments had been urging for years. China Devalues the Renminbi Amid an Economic Slowdownīeijing sent shock waves through global financial markets in August when it devalued its currency, variously called the yuan or renminbi, against the dollar. And then there is the question of whether China will supplant the United States as the dominant power in the region. More than $5 trillion in trade passes through the South China Sea each year, and its waters contain rich fisheries and potentially vast oil and mineral deposits. China protested the maneuver as “ a very serious provocation politically and militarily.” The stakes in the dispute are enormous. Navy destroyer sailed through waters China claims as its own in a freedom-of-naval-operations (FONOPS) mission. In October, after repeated official statements about how “ the United States will fly, sail, and operate wherever international law allows,” a U.S. Washington-and most governments in Southeast Asia-worry that Beijing will eventually use the new islands to choke off freedom of navigation in the area. insists China’s claim that the 12-mile zone around these new islands constitutes its territorial waters has no basis in international law. The United States takes no position on the merits of China’s claims in the South China Sea. It is in turn building airstrips and military installations on the newly formed islands. Beijing is trying to give substance to its claims, which the five countries with coastlines on the sea vigorously dispute, by creating artificial islands around reefs and submerged rocks. In a potentially positive development, a seven-day ceasefire went into effect this month so that peace talks could begin.Ĭhina claims much of the South China Sea-the bulk of which lies far from the Chinese mainland-through its so-called nine-dash line. As predicted, AQAP has used the fighting to its advantage, as has ISIS. The civilian toll in Yemen has nonetheless been substantial, as air strikes and a maritime blockade have intensified Yemen’s many existing problems. But the desire to prevent a rift with Riyadh prevailed, and Washington provided intelligence information, weapons, and aerial-refueling capabilities while urging the Saudi-led coalition to minimize civilian casualties.
Washington feared that the intervention could become a quagmire and worried that al-Qaeda in the Arabian Peninsula (AQAP), an enemy to the Houthis as well as the United States, would benefit from the ensuing chaos.
The Saudi-led intervention put the United States in a bind. The Houthis also have the support of forces loyal to former Yemeni President Ali Abdullah Saleh, who was ousted during the Arab Spring and who once had good relations with Riyadh. The Houthis, who belong to a minority Shiite sect, receive support from Iran, Saudi Arabia’s mortal enemy. The move came after Houthi rebels captured Yemen’s capital Sanaa and drove Yemeni President Abdu Rabbu Mansour Hadi into exile in Saudi Arabia. Saudi Arabia launched air strikes in late March against its neighbor Yemen with the help of nine other, mainly Arab, countries.
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