China continues to flex its wings, in this case literally. The FT reports that last month two Chinese Su-27 jets crossed the middle line in the Taiwan Strait to repel a US spy aircraft. "This marks the first known encounter between US and Chinese military aircraft in mid-air since a US reconnaissance aircraft collided with a Chinese fighter jet in 2001 and was forced to land on Hainan island, sparking a crisis that severely damaged bilateral relations." And while this is certainly not the first such incident, it is the first one disclosed publicly, with the sole purpose of humiliating the US. Furthermore, recent tensions in the South China seas (profiled previously here) have become a big sticking point for the US administration so it should not be surprising that China will do everything in its power to embarrass America before the global community, a task in which it has just succeeded.
More from the FT:
Highlighting the strategic rivalry between the two countries in the region and the security risks remaining between China and Taiwan despite the recent detente between the two, Taipei moved to downplay the incident.
Taiwan’s defence ministry confirmed that two Chinese Su-27 fighter jets had briefly crossed the so-called middle line on June 29 but added the incident was not a provocation.
“This was not between Taiwan and China, but between China and the US,” said a senior Taiwanese defence official. “The Chinese crossed the line to repel a perceived intrusion by a US reconnaissance aircraft.”
A Chinese defence source said: “This once again shows that US military activity very close to our territory is a destabilising factor in the region.”
What would be even more disturbing is if China uses US "regional intervention" to continue with its encroaching approach to demonstrate that Taiwan has always really been part of the fatherland.
Chinese military aircraft have not crossed that line since July 1999. That summer, the People’s Liberation Army Airforce, which normally rarely patrolled the area, flew hundreds of sorties over the Taiwan Strait. That incident came after Lee Teng-hui, then Taiwan’s president, described ties with China as special state-to-state relations, coming closer than ever to declaring the island’s independence.
The Taiwanese official said the island’s air force sent two of its fighters up in reaction to the intrusion of the Chinese jets. He said there had not been any direct contact with the Chinese military, and the aircraft had not come dangerously close to each other at any time during the incident.
US military surveillance missions close to China both at sea and in the air are a sore point in relations between the world’s military superpower and the nation believed to be its most likely challenger.
Lastly, "China’s Ministry of Defence could not be reached for comment." Understandable: at this point all China domestic resources are scrambled to contain (read censor) the fallout from this weekend's bullet train collision.
As for what happens next, we look forward to a statement from Clinton, who has yet to issue an official statement on an act many, on either side, would consider a provocation (and retaliation).
This means that, if you own a well-run muni-bond fund, you're in pretty good shape. These funds usually have bonds from a hundred or more issuers, so one default won't have much impact. And, of course, they do thorough credit research to steer clear of most, though not all, defaults. With some munis paying better tax-free yields than many high-quality taxable bonds, this isn't a bad time to get in. In fact, some taxable-bond managers are even buying munis because they look attractive even without the tax break factored in. That said, fewer new munis have been issued so far in 2011, so additional waves of new debt could drive prices lower in the short term.
