Tag Archives: China

China says U.S.-Philippines base deal raises questions over South China Sea

BEIJING (Reuters) – China said on Monday agreements like the one reached last week by the United States and the Philippines allowing for a U.S. military presence at five Philippine bases raised questions about militarization in the South China Sea.

The United States is keen to boost the military capabilities of East Asian countries and its own regional presence in the face of China’s assertive pursuit of territorial claims in the South China Sea, one of the world’s busiest trade routes.

The United States and its regional allies have expressed concern that China is militarizing the South China Sea with moves to build airfields and other military facilities on the islands it occupies.

Asked about the base deal, Chinese Foreign Ministry spokeswoman Hua Chunying said that U.S.-Philippine cooperation should not be targeted at any third party nor harm other nations’ sovereignty or security interests.

“I also want to point out that recently the U.S. military likes to talk about the so-called militarization of the South China Sea,” Hua told a daily news conference.

“Can they then explain, isn’t this kind of continued strengthening of military deployments in the South China Sea and areas surrounding it considered militarization?”

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

The United States says it takes no sides in the disputes but wants to ensure free navigation through the sea. It has said it will increase what it calls freedom-of-navigation operations by its navy ships through the waters.

U.S. allies Malaysia and Australia both reiterated on Monday calls for freedom of navigation through the South China Sea.

“We’ve been extremely consistent in saying that our activities will continue, that we will send our ships and our planes to that part of the world as we require, as it is necessary in accordance to international law,” Australian Defense Minister Marise Payne said after meeting her counterpart in Malaysia.

Malaysian Defense Minister Hishammuddin Hussein said that free movement in the air and waters should continue.

China has never interfered with freedom of navigation and has stressed that some of the equipment it is installing on small islands and reefs will facilitate navigation.

(Reporting by Ben Blanchard, addtional reporting by Rozanna Latiff in Kuala Lumpur; Editing by Nick Macfie, Robert Birsel)

U.S., Philippines agree on five base locations under defense deal

WASHINGTON (Reuters) – The United States and the Philippines have agreed on five locations for U.S. military bases in the Philippines under a security agreement inked amid rising tensions with China in the South China Sea, U.S. officials said on Friday.

The U.S. State Department named the five as Antonio Bautista Air Base, Basa Air Base, Fort Magsaysay, Lumbia Air Base, and Mactan-Benito Ebuen Air Base.

U.S. Deputy Assistant Secretary of Defense Amy Searight said the deal was reached under the Enhanced Defense Cooperation Agreement (EDCA) signed last year that grants Washington increased military presence in its former colony through rotation of ships and planes for humanitarian and maritime security operations.

Searight told the opening of the annual U.S.-Philippines Bilateral Strategic Dialogue in Washington that Manila was a “critical U.S. ally” and ties had never been stronger.

U.S. Defense Secretary Ash Carter is set to visit the Philippines in April.

Searight also said the Pentagon had told the U.S. Congress of its intention to provide $50 million to help build maritime security in the region and that the Philippines would get “the lion’s share.”

The funds are expected to go toward improving radar and other monitoring capabilities in the South China Sea, where China’s pursuit of territorial claims has raised U.S. concerns and those of rival claimants, including the Philippines.

In January, the Philippines said it had offered eights bases for U.S. use, including the former U.S. air force base of Clark and the former U.S. Navy base at Subic Bay, and two sites on Palawan island near the South China Sea.

Philippines Defense Undersecretary Pio Lorenzo Batino said Manila was pleased with the finalization of the locations.

U.S. Assistant Secretary of State Daniel Russel said the deal would speed U.S. help in response to natural disasters and facilitate modernization of the Philippines armed forces.

He said it came at an important time ahead of a ruling in a case the Philippines has brought against China over its South China Sea claims in the International Court of Arbitration in the Hague.

On Thursday, the U.S. Navy said it had seen activity around a reef China seized from the Philippines nearly four years ago that could be a precursor to more Chinese land reclamation in the South China Sea.

Admiral John Richardson also expressed concern that the Hague ruling, which is expected in late May, could prompt Beijing to declare an exclusion zone in what is one of the world’s busiest trade routes.

(Reporting by David Brunnstrom and Lesley Wroughton in Washington; Editing by James Dalgleish and Grant McCool)

U.S. sees new Chinese activity around South China Sea shoal

WASHINGTON (Reuters) – The United States has seen Chinese activity around a reef China seized from the Philippines nearly four years ago that could be a precursor to more land reclamation in the disputed South China Sea, the U.S. Navy chief said on Thursday.

The head of U.S. naval operations, Admiral John Richardson, expressed concern that an international court ruling expected in coming weeks on a case brought by the Philippines against China over its South China Sea claims could be a trigger for Beijing to declare an exclusion zone in the busy trade route.

Richardson told Reuters the United States was weighing responses to such a move.

China claims most of the South China Sea, through which more than $5 trillion in global trade passes every year. Vietnam, Malaysia, Brunei, the Philippines and Taiwan have rival claims.

Richardson said the U.S. military had seen Chinese activity around Scarborough Shoal in the northern part of the Spratly archipelago, about 125 miles west of the Philippine base of Subic Bay.

“I think we see some surface ship activity and those sorts of things, survey type of activity, going on. That’s an area of concern … a next possible area of reclamation,” he said.

Richardson said it was unclear if the activity near the reef, which China seized in 2012, was related to the pending arbitration decision.

Asked about Richardson’s statement, Lu Kang, a spokesman for China’s Ministry of Foreign Affairs, said it was hypocritical for the United States to criticize China for militarizing the region when it carries out its own naval patrols there.

“This is really laughable and preposterous,” he said.

The Philippine foreign ministry said it had yet to receive a report about Chinese activity in Scarborough Shoal.

A Philippine military official who declined to be identified because he is not authorized to speak to the media said he was unaware of a Chinese survey ship in the area.

“China already has de facto control over the shoal since 2012 and they always have two to three coastguard ships there. We are also monitoring their activities and movements,” the official told reporters.

Richardson said China’s pursuit of South China Sea territory, which has included massive land reclamation to create artificial islands elsewhere in the Spratlys, threatened to reverse decades of open access and introduce new “rules” that required countries to obtain permission before transiting those waters.

He said that was a worry given that 30 percent of the world’s trade passes through the region.

Asked whether China could respond to the ruling by the court of arbitration in The Hague by declaring an air defense identification zone, or ADIZ, as it did to the north, in the East China Sea, in 2013, Richardson said: “It’s definitely a concern.

“We will just have to see what happens,” he said. “We think about contingencies and … responses.”

Richardson said the United States planned to continue carrying out freedom-of-navigation exercises within 12 nautical miles of disputed South China Sea geographical features to underscore its concerns about keeping sea lanes open.

JOINT PATROLS?

The United States responded to the East China Sea ADIZ by flying B-52 bombers through the zone in a show of force in November 2013.

Richardson said he was struck by how China’s increasing militarization of the South China Sea had increased the willingness of other countries in the region to work together.

India and Japan have joined the U.S. Navy in the Malabar naval exercise since 2014, and were due to take part again this year in an even more complex exercise that will take place in an area close to the East and South China Seas.

South Korea, Japan and the United States were also working together more closely than ever before, he said.

Richardson said the United States would welcome the participation of other countries in joint patrols in the South China Sea, but those decisions needed to be made by the countries in question.

He said the U.S. military saw good opportunities to build and rebuild relationships with countries such as Vietnam, the Philippines and India, which have all realized the importance of safeguarding the freedom of the seas.

He cited India’s recent hosting of an international fleet review that included 75 ships from 50 navies, and said the United States was exploring opportunities to increase its use of ports in the Philippines and Vietnam, among others – including the former U.S. naval base at Vietnam’s Cam Ranh Bay.

But he said Washington needed to proceed judiciously rather than charging in “very fast and very heavy,” given the enormous influence and importance of the Chinese economy in the region.

“We have to be sophisticated in how we approach this so that we don’t force any of our partners into an uncomfortable position where they have to make tradeoffs that are not in their best interest,” he said.

“We would hope to have an approach that would … include us a primary partner but not necessarily to the exclusion of other partners in the region.”

(Additional reporting by Neil Jerome Morales in Manila and Megha Rajagopalan in Beijing; Editing by Peter Cooney and Nick Macfie)

U.S. military leaders voice concern about readiness of forces

WASHINGTON (Reuters) – U.S. military leaders voiced concern on Wednesday about their ability to fight a war with global powers like Russia, telling a congressional hearing that a lack of resources and training was weighing on America’s combat readiness.

U.S. Army Chief of Staff General Mark Milley told a House Armed Services Committee hearing that if the Army were to fight a “great power war” with China, Russia, Iran or North Korea, he had “grave concerns” about the readiness of his forces.

“(The Army) is not at the levels that can execute satisfactorily … in terms of time, cost in terms of casualties or cost in terms of military objectives,” Milley said.

Also speaking at the hearing, about the Fiscal 2017 budget request for the military, Air Force Secretary Deborah James said half of her combat forces were not “sufficiently ready” for fighting against a country like Russia.

“Money is helpful for readiness but freeing up the time of our people to go and do this training is equally important,” James said.

Earlier this month Air Force officials said they were facing a shortage of more than 500 fighter pilots, a gap expected to widen to more than 800 by 2022.

U.S. military spending has increased sharply since the Sept. 11, 2001, attacks and the country has by far the largest military budget in the world.

The Army requested $148 billion in the fiscal 2017 budget, a slight increase from the $146.9 billion Army budget for 2016.

However, the 2017 Army budget would continue to shrink the size of the U.S. Army, which will drop to 460,000 active duty soldiers in 2017 from the current 475,000.

Concern over a more assertive Russia was highlighted earlier this month by Air Force General Philip Breedlove, the NATO supreme allied commander and head of U.S. European Command, when he said Russia posed a “long-term existential threat to the United States.”

(Reporting by Idrees Ali; Editing by Tom Brown)

Chinese hackers behind U.S. ransomware attacks, security firms say

(Reuters) – Hackers using tactics and tools previously associated with Chinese government-supported computer network intrusions have joined the booming cyber crime industry of ransomware, four security firms that investigated attacks on U.S. companies said.

Ransomware, which involves encrypting a target’s computer files and then demanding payment to unlock them, has generally been considered the domain of run-of-the-mill cyber criminals.

But executives of the security firms have seen a level of sophistication in at least a half dozen cases over the last three months akin to those used in state-sponsored attacks, including techniques to gain entry and move around the networks, as well as the software used to manage intrusions.

“It is obviously a group of skilled of operators that have some amount of experience conducting intrusions,” said Phil Burdette, who heads an incident response team at Dell SecureWorks.

Burdette said his team was called in on three cases in as many months where hackers spread ransomware after exploiting known vulnerabilities in application servers. From there, the hackers tricked more than 100 computers in each of the companies into installing the malicious programs.

The victims included a transportation company and a technology firm that had 30 percent of its machines captured.

Security firms Attack Research, InGuardians and G-C Partners, said they had separately investigated three other similar ransomware attacks since December.

Although they cannot be positive, the companies concluded that all were the work of a known advanced threat group from China, Attack Research Chief Executive Val Smith told Reuters.

The ransomware attacks have not previously been reported. None of the companies that were victims of the hackers agreed to be identified publicly.

Asked about the allegations, China’s Foreign Ministry said on Tuesday that if they were made with a “serious attitude” and reliable proof, China would treat the matter seriously.

But ministry spokesman Lu Kang said China did not have time to respond to what he called “rumors and speculation” about the country’s online activities.

The security companies investigating the advanced ransomware intrusions have various theories about what is behind them, but they do not have proof and they have not come to any firm conclusions.

Most of the theories flow from the possibility that the Chinese government has reduced its support for economic espionage, which it pledged to oppose in an agreement with the United States late last year. Some U.S. companies have reported a decline in Chinese hacking since the agreement.

Smith said some government hackers or contractors could be out of work or with reduced work and looking to supplement their income via ransomware.

It is also possible, Burdette said, that companies which had been penetrated for trade secrets or other reasons in the past were now being abandoned as China backs away, and that spies or their associates were taking as much as they could on the way out. In one of Dell’s cases, the means of access by the team spreading ransomware was established in 2013.

The cyber security experts could not completely rule out more prosaic explanations, such as the possibility that ordinary criminals had improved their skills and bought tools previously used only by governments.

Dell said that some of the malicious software had been associated by other security firms with a group dubbed Codoso, which has a record of years of attacks of interest to the Chinese government, including those on U.S. defense companies and sites that draw Chinese minorities.

PAYMENT IN BITCOIN

Ransomware has been around for years, spread by some of the same people that previously installed fake antivirus programs on home computers and badgered the victims into paying to remove imaginary threats.

In the past two years, better encryption techniques have often made it impossible for victims to regain access to their files without cooperation from the hackers. Many ransomware payments are made in the virtual currency Bitcoin and remain secret, but institutions including a Los Angeles hospital have gone public about ransomware attacks.

Ransomware operators generally set modest prices that many victims are willing to pay, and they usually do decrypt the files, which ensures that victims will post positively online about the transaction, making the next victims who research their predicament more willing to pay.

Security software companies have warned that because the aggregate payoffs for ransomware gangs are increasing, more criminals will shift to it from credit card theft and other complicated scams.

The involvement of more sophisticated hackers also promises to intensify the threat.

InGuardians CEO Jimmy Alderson said one of the cases his company investigated appeared to have been launched with online credentials stolen six months earlier in a suspected espionage hack of the sort typically called an Advanced Persistent Threat, or APT.

“The tactics of getting access to these networks are APT tactics, but instead of going further in to sit and listen stealthily, they are used for smash-and-grab,” Alderson said.

(Reporting by Joseph Menn in San Francisco; Additional reporting by Megha Rajagopalan in Beijing; Editing by Jonathan Weber and Clarence Fernandez)

Kim Jong Un says North Korea will soon test nuclear warhead

SEOUL (Reuters) – North Korean leader Kim Jong Un said his country would soon test a nuclear warhead and ballistic missiles capable of carrying nuclear warheads, the North’s KCNA news agency reported, in what would be a direct violation of U.N. resolutions which have the backing of the North’s chief ally, China.

Kim made the comments as he supervised a successful simulated test of atmospheric re-entry of a ballistic missile that measured the “thermodynamic structural stability of newly developed heat-resisting materials”, KCNA said.

“Declaring that a nuclear warhead explosion test and a test-fire of several kinds of ballistic rockets able to carry nuclear warheads will be conducted in a short time to further enhance the reliance of nuclear attack capability, he (Kim) instructed the relevant section to make prearrangement for them to the last detail,” the agency said.

South Korea’s defense ministry said there were no indications of activities at the North’s nuclear test site or its long-range rocket station, but that North Korea continues to maintain readiness to conduct nuclear tests.

South Korean President Park Geun-hye said the North would lead itself to self-destruction if it did not change and continued the confrontation with the international community.

The North’s report comes amid heightened tension on the Korean peninsula as South Korean and U.S. troops stage annual military exercises that Seoul has described as the largest ever.

In the apparent re-entry simulation, the official newspaper of North Korea’s ruling Workers’ Party carried pictures on Tuesday of a dome-shaped object placed under what appeared to be a rocket engine and being blasted with flaming exhaust. In separate images, Kim observed the object described by KCNA as a warhead tip.

The North has issued belligerent statements almost daily since coming under a new U.N. resolution adopted this month to tighten sanctions against it after a nuclear test in January and the launch of a long-range rocket last month.

In 1962, the United States launched a ballistic missile with a live warhead in what was known as the Frigate Bird test. China conducted a similar test in 1966.

“What would be terrible is if the DPRK (North Korea) re-enacted Operation Frigate Bird or the fourth Chinese nuclear test and did a two-in-one,” said Jeffrey Lewis of the California-based Middlebury Institute of International Studies.

“For now, though, it looks like a nuclear test and several missile tests in close succession.”

TECHNOLOGY DOUBTS

South Korea’s defense ministry said after the North’s report that it still does not believe the North has acquired missile re-entry technology.

U.S. and South Korean experts have said the general consensus is that North Korea has not yet successfully miniaturized a nuclear warhead to be mounted on an intercontinental ballistic missile.

More crucially, the consensus is that there have been no tests to prove it has mastered the re-entry technology needed to bring a payload back into the atmosphere.

Kim said last week his country had miniaturized a nuclear warhead.

The North, which has conducted four nuclear tests, also claims that its January nuclear test was of a hydrogen bomb, although most experts said the blast was too small for it to have been from a full-fledged hydrogen bomb.

The North also says the satellites it has launched into orbit are functioning successfully, although that has not been verified independently.

North Korea rejects criticism of its nuclear and missile programs, even from old ally China, saying it has a sovereign right to defend itself from threats and to run a space program putting satellites into orbit.

China’s Foreign Ministry on Tuesday urged prudence.

“We urge all the relevant sides to conscientiously carry out what is required by the U.N. Security Council, speak and act cautiously, and all relevant sides must not take any action that would exacerbate tensions on the Korean peninsula,” said ministry spokesman Lu Kang at a regular briefing.

The new U.N. Security Council resolution sharply expanded existing sanctions by requiring member states to inspect all cargo to and from North Korea and banning the North’s trade of coal when it is seen as funding its arms program.

The foreign ministers of South Korea and China discussed the new sanctions against North Korea by telephone late on Monday and agreed it was important to implement them “in a complete and comprehensive manner”, China said on Tuesday.

(Additional reporting by Ju-min Park in Seoul, John Ruwitch in Shanghai and Megha Rajagopalan in Beijing; Editing by Tony Munroe and Nick Macfie)

China able to project ‘substantial offensive power’ in South China Sea in months

WASHINGTON (Reuters) – China will be able to project “substantial offensive military power” from artificial islands it has built in the South China Sea’s disputed Spratly Islands within months, the director of U.S. national intelligence said.

In a Feb. 23 letter to John McCain, chair of the U.S. Senate Armed Services Committee, James Clapper said Chinese land reclamation and construction work in the Spratlys had established infrastructure needed “to project military capabilities in the South China Sea beyond that which is required for point defense of its outposts.”

“Based on the pace and scope of construction at these outposts, China will be able to deploy a range of offensive and defensive military capabilities and support increased PLAN and CCG presence beginning in 2016,” Clapper said in the letter released this week, using acronyms for the Chinese navy and coastguard.

“Once these facilities are completed by the end of 2016 or early 2017, China will have significant capacity to quickly project substantial offensive military power to the region,” Clapper added.

The United States has voiced concerns about China’s assertive pursuit of territory in the South China Sea. The sea is one of the world’s busiest trade routes and regional countries have rival claims, creating a potential flashpoint.

Visiting Washington in September, Chinese President Xi Jinping responded to U.S. worries by saying that China had no intention to militarize its outposts in the Spratlys.

Beijing has said their military roles will be defensive, but the head of the U.S. Pacific Command said last month China was “clearly militarizing” the South China Sea with the aim of achieving East Asian hegemony.

The text of Clapper’s letter in response to questions from McCain was published on the news portal of the U.S. Naval Institute. U.S. officials confirmed the content.

Clapper said that while the United States had yet to observe deployment of significant Chinese military capabilities in the Spratlys, it had built facilities able to support them, including modern fighter aircraft.

China had already installed military radars at Cuarteron and Fiery Cross Reefs, and the infrastructure could also allow for the deployment surface-to-air missiles, coastal defense cruise missiles and an increased presence of warships, he said.

The United States had not seen Chinese air force activity in the Spratlys, but warships had stopped at its outposts including a guided-missile frigate and a guided-missile destroyer in December and January, Clapper said.

He said tank-landing ships had been employed widely in construction work and the landing of civil aircraft at Fiery Cross Reef in January showed the airstrip there was operational and able to accommodate all Chinese military aircraft.

Clapper said China continued its land reclamation in the Spratlys after Aug. 5, when its foreign minister claimed that it had been halted.

While there was no evidence that China has plans for any significant additional land reclamation in the Spratlys, Clapper said there was sufficient reef area in the Spratlys for it to reclaim more than 1,000 additional acres (400 hectares).

The Pentagon has said that Beijing has sought to bolster its claim to nearly all of the South China Sea with island building projects in the Spratlys that have reclaimed more than 2,900 acres (1,170 hectares) of land since 2013.

(Reporting by David Brunnstrom; addtional reportng by Mark Hosenball; Editing by Alan Crosby)

U.S. plans naval exercises with India and Japan near South China Sea

NEW DELHI (Reuters) – India, the United States and Japan will hold naval exercises in waters off the northern Philippines near the South China Sea this year, the U.S. military said on Wednesday, a move likely to further raise tensions with China.

The announcement comes a day after the United States warned China against militarization of the South China Sea, where Beijing is locked in a territorial dispute with several countries, saying there would be consequences.

Last year, India and the United States expanded their annual naval drills in the Bay of Bengal to include Japan after a gap of eight years, in a move seen as a response to China’s growing assertiveness in the region.

Admiral Harry B. Harris, head of the U.S. Pacific Command, said the naval exercise will be held in the northern Philippine Sea and that Japan will take part.

Freedom of the seas was a fundamental right of all nations, he told a security conference in New Delhi, adding some thinly veiled criticism of Beijing.

“While some countries seek to bully smaller nations through intimidation and coercion, I note with admiration India’s example of peaceful resolution of disputes with your neighbors in the waters of the Indian Ocean, ” he said.

Asked about the drills, Chinese Foreign Ministry spokesman Hong Lei said: “We hope the cooperation of relevant countries will benefit regional peace and security, and not harm the interests of third parties”.

Tensions in the South China Sea have risen recently, with the United States and others protesting against Beijing’s land reclamations in the Spratly islands, along with the recent deployment of surface-to-air missiles and fighter jets in the Paracel Islands.

Along with China and the Philippines, Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims on the waters, through which about $5 trillion in trade is shipped every year.

Harris said the United States wished to expand the naval exercises it held with India each year into joint operations across the Asia-Pacific, which could draw India into the row in the South China Sea.

The two countries have held talks on joint naval patrols and last month a U.S. defense official told Reuters that these could include the South China Sea.

Both India and the United States later said these patrols were not imminent after Beijing warned that interference from countries outside the region threatens peace and stability.

Harris said it was up to the leaders of India and the United States to decide where to hold the joint operations.

(Additional reporting by Jessice Macy Yu in BEIJING; Editing by Dominic Evans and Simon Cameron-Moore)

Philippine officials say China blocked access to disputed South China Sea atoll

By Manuel Mogato

MANILA (Reuters) – China sent several ships to a disputed atoll in the South China Sea, preventing Filipino fishermen from accessing traditional fishing grounds and raising tensions in the volatile region, Philippine officials said on Wednesday.

China had sent as many as seven ships to Quirino Atoll, also known as Jackson Atoll, in recent weeks, said Eugenio Bito-onon Jr, the mayor of nearby Pagasa Island in the Spratly Islands.

The Spratlys are the most contested archipelago in the South China Sea, a resource-rich region and critical shipping lane linking North Asia to Europe, South Asia and the Middle East.

“This is very alarming, Quirino is on our path when we travel from Palawan to Pagasa. It is halfway and we normally stop there to rest,” Bito-onon told Reuters.

“I feel something different. The Chinese are trying to choke us by putting an imaginary checkpoint there. It is a clear violation of our right to travel, impeding freedom of navigation,” he said.

In Beijing, Foreign Ministry spokesman Hong Lei said China’s Ministry of Transport had sent vessels to tow a grounded foreign ship and they had since left the surrounding waters.

“To guarantee safety of navigation and of work conditions, China urged fishing vessels near the site to leave,” Hong said, adding that China had indisputable sovereignty over the atoll.

The Philippines Foreign Ministry said Chinese coast guard vessels had been seen at the atoll two weeks ago but were not in the area on Wednesday.

“The Department is monitoring reports on the situation on the ground and reiterates its call for China to exercise self-restraint from the conduct of activities that could complicate or escalate disputes in the South China Sea and affect peace and stability in the region,” the ministry said in a statement.

TENSIONS ON THE RISE

Earlier, the Philippine military said it was looking into the situation around Jackson Atoll, where a Chinese warship allegedly fired warning shots at Filipino fishermen in 2011.

“We know there are Chinese ships moving around the Spratly area,” spokesman Brigadier-General Restituto Padilla told Reuters. “There are also ships around Second Thomas Shoal, so we want to make sure if the presence is permanent.”

A spokesman for the U.S. State Department said it was trying to confirm the latest reported incident.

Mark Toner told a regular news briefing that the United States, a treaty ally of the Philippines that has repeatedly expressed concerns about Beijing’s methods in pursuit of maritime claims, did not want to China using its ships “to intimidate … fishing vessels in that region.”

Second Thomas Shoal is where the Philippine navy has been occupying and reinforcing a rusting ship it ran aground in 1999 to bolster its claims to the disputed reef.

A military source from Palawan said a surveillance plane had seen four to five ships in the vicinity of Jackson Atoll last week.

“There are no indications China will build structures or develop it into an island,” said the source, who was not authorized to speak to the media about the South China Sea.

The Philippines Star newspaper, which earlier reported the story, quoted an unidentified fisherman as saying Chinese boats chased them away when they tried to enter the area last week.

Along with China and the Philippines, Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims on the waters, through which about $5 trillion in trade is shipped every year.

Tensions have been building recently, with the United States and others expressing concerns about China’s land reclamation in the Spratly Islands and deployment of surface-to-air missiles and fighter jets in the Paracel Islands.

U.S. Defense Secretary Ash Carter warned China on Tuesday against what he called “aggressive” actions in the region, saying there would be “specific consequences” to militarization of the South China Sea.

In response, Hong urged Washington on Wednesday to “stop exaggerating and sensationalizing” the issue.

For its part, Beijing has been angered by “freedom of navigation” air and sea patrols the United States has conducted near the islands it claims in the South China Sea and says it needs military facilities for its self defense.

(Additional reporting by Michael Martina and Adam Rose in Beijing and David Brunnstrom in Washington; Writing by Lincoln Feast and John Chalmers; Editing by Clarence Fernandez and Peter Cooney)

U.N. imposes harsh new sanctions on North Korea over its nuclear program

By Louis Charbonneau and Michelle Nichols

UNITED NATIONS (Reuters) – North Korea faces harsh new U.N. sanctions to starve it of money for its nuclear weapons program following a unanimous Security Council vote on Wednesday on a resolution drafted by the United States and Pyongyang’s ally China.

The resolution, which dramatically expands existing sanctions, follows North Korea’s latest nuclear test on Jan. 6 and a Feb. 7 rocket launch that Washington and its allies said used banned ballistic missile technology. Pyongyang said it was a peaceful satellite launch.

U.S. Ambassador Samantha Power said the sanctions go further than any U.N. sanctions regime in two decades and aim to cut off funds for North Korea’s nuclear and other banned weapons programs.

All cargo going to and from North Korea must now be inspected and North Korean trade representatives in Syria, Iran and Vietnam are among 16 individuals added to a U.N. blacklist, along with 12 North Korean entities.

Previously states only had to inspect such shipments if they had reasonable grounds to believe they contained illicit goods.

“Virtually all of the DPRK’s (North Korea) resources are channeled into its reckless and relentless pursuit of weapons of mass destruction,” Power told the council after the vote, adding that the cargo inspection provisions are “hugely significant.”

U.N. Secretary-General Ban Ki-moon welcomed the 15-nation council’s move, saying in a statement that Pyongyang “must return to full compliance with its international obligations.”

North Korea has been under U.N. sanctions since 2006 because of its four nuclear tests and multiple rocket launches.

After nearly two months of bilateral negotiations that at one point involved U.S. President Barack Obama and his Chinese counterpart, Xi Jinping, China agreed to support the unusually tough measures intended to persuade its close ally to abandon its atomic weapons program.

China’s Ambassador Liu Jieyi called for a return to dialogue, saying: “Today’s adoption should be a new starting point and a paving stone for political settlement of the nuclear issue on the Korean Peninsula.”

However, he reiterated Beijing’s concerns about the possible deployment of an advanced U.S. missile system in South Korea.

“At this moment all parties concerned should avoid actions that will further aggravate tension on the ground,” he said. “China opposes the deployment of the THAAD anti-missile system … because such an action harms the strategic and security interests of China and other countries of the region.”

He was referring to the U.S. Terminal High Altitude Area Defense (THAAD) system.

There was no immediate reaction from the North Korean U.N. mission. The official North Korean news agency KCNA said on Monday the proposed sanctions were “a wanton infringement on (North Korea’s) sovereignty and grave challenge to it.”

Shortly after the U.N. move, the U.S. Treasury Department said it was blacklisting two entities and 10 individuals for ties to North Korea’s government and its banned weapons programs, and said the State Department was also blacklisting three entities and two individuals for similar reasons.

The new U.N. sanctions close a gap in the U.N. arms embargo on Pyongyang by banning all weapons imports and exports.

The Security Council’s list of explicitly banned luxury goods has been expanded to include luxury watches, aquatic recreational vehicles, snowmobiles worth more than $2,000, lead crystal items and recreational sports equipment.

There is also an unprecedented ban on the transfer to North Korea of any item that could directly contribute to the operational capabilities of its armed forces, such as trucks that could be modified for military purposes.

The new U.N. measures also blacklist 31 ships owned by North Korean shipping firm Ocean Maritime Management Company (OMM).

Added to the U.N. sanctions list was the National Aerospace Development Agency, or NADA, the body responsible for February’s rocket launch.

Newly blacklisted individuals include a senior official in North Korea’s long-range missile program, senior officials at NADA, officials for Tanchon Commercial Bank in Syria and Vietnam, and Korea Mining Development Trading Corporation (KOMID) representatives in Iran and Syria.

An earlier draft would have blacklisted 17 individuals but the proposed designation of a KOMID representative in Russia was dropped from the final version of the resolution.

(Reporting by Louis Charbonneau and Michelle Nichols; Editing by James Dalgleish)