China has totally silenced its ASEAN (Association of Southeast Asian Nations) opponents in the South China Sea - except for one…
Vietnam.
The developing nation has emerged as the lone, vocal challenger to Beijing’s claims that the entire South China Sea - through which more than $3 trillion worth of cargo passes every year – belongs to the Red Dragon.
But there’s a specific reason for Vietnam’s continued, outspoken defiance against China.
You see, the former U.S. enemy recently received unexpected support for its cause from three new friends in particularly high places.
There’s an explanation for why Vietnam’s peers are suddenly silent about the South Pacific, as well.
Here’s what we mean…
Nations in the South China Sea “Knuckle” Under Chinese Bully Tactics
“Most of the other, bigger members in the South China Sea dispute – the Philippines, Malaysia, Indonesia, and Singapore – have already ‘knuckled’ under Beijing’s bullying,” says Money Morning’s Executive Editor Bill Patalon, who’s been covering developments in the contested waters since 2013 – two full years before the mainstream media picked up on the rising tensions there.
Indeed, these countries have abandoned their causes – about which they had once been just as adamant as Vietnam – for varying reasons in recent months...
Malaysia, for example, is rife with ongoing government corruption allegations at the moment. Violence broke out in Kuala Lampur on Monday (Aug. 14) over the voluminous differences between the country’s current ruling party and its increasingly violent opposition. That very ruling party considers China a major benefactor – especially since China is Malaysia’s largest trading partner. So it may have given up the fight in the South China Sea out of fear of losing China’s economic support.
Then there is the Philippines…
After pushing back against Chinese intimidation over the Spratly Islands for years, the Philippines has done a complete reversal under the one-year-old government of President Rodrigo Duterte. The new leader could very well be swapping the country’s silence in exchange for economic carrots from Beijing.
Even Taiwan - arguably the most democratic ASEAN nation involved in the South China Sea conflict – has stopped publically rebuking China’s sovereignty claims. Taiwan has three decades of democratic rule under its belt - an ongoing rebuke of the communist Beijing if ever there was one – but apparently it’s given up countering the Red Dragon’s regional claims, too. One likely cause for Taiwan’s silence: its new, independence-leaning leader, President Tsai Ing-wen. Her election alone resulted in a series of setbacks for the country – including a loss of diplomatic ties to both Panama and Beijing. So Tsai may be trying to stall the bleeding at this point by choosing not to criticize China outright.
All of which leaves Vietnam as the lone critic of China.
And in response to that criticism, China recently upped its supportive rhetoric for Hanoi’s ASEAN counterparts to isolate Vietnam.
“The China Daily referred to [this rhetoric] as ‘the dedicated efforts of China and ASEAN to resolve their differences through dialogue,’” Bill says.
Yet Vietnam remains as outspoken and assertive as ever - in spite of its most recent loss to the Red Dragon over a gas drilling project in the South China Sea...
Vietnam Just Lost Billions to China in the South China Sea
The maritime drilling project in question, conducted by a subsidiary of the Spanish energy company Repsol, had started in June off the southern Vietnamese coast – within a 200-nautical-mile exclusive economic zone, in particular. Vietnam claims – as it has since 1996 – that the zone is its own sovereign property.
“In July, Repsol confirmed the existence of what news reports described as ‘a major gas field,’” Bill says. “Beijing then demanded that Hanoi order a stop to the drilling.”
Vietnam, however, refused to comply.
“So then China allegedly threatened to attack Vietnamese bases in the Spratly Islands if the drilling didn’t cease,” Bill continues.
And that’s how China won its most recent battle with Vietnam.
And though Hanoi stopped its drilling, it didn’t stay silent in the wake of this huge economic loss. In fact, it took its qualms with China’s injudicious behavior to the international stage - the 50th ASEAN ministerial meeting on Aug. 7.
Members from each of Vietnam’s neighbor nations were there.
And that’s where the tiny country found some unexpected support…
Vietnam Finds Friends in High Places at ASEAN
Tensions between Hanoi and Beijing flared up once again at the recent ASEAN conference – this time over Vietnam’s request to make a “South China Sea code of conduct” a legitimate talking point at the conference.
Vietnam’s attending foreign minister, Pham Binh Minh, said that he not only believes that such a code should exist, but that it should be legally binding as well.
China’s foreign minister Wang Yi was quick to rebut the proposal. Predictably, the other ASEAN members in attendance swiftly fell in line, with none of them supporting Minh’s suggestion, reported The South China Morning Post on Aug. 8.
Despite this lack of support from its peers, Vietnam did get backing from a few new allies at the powwow – powerful ones, at that…
ASEAN Summit attendees from the United States, Australia, and Japan stepped in to challenge Beijing over the concept of a South China Sea code of conduct.
The triad called on China and the Philippines to abide by The Hague Arbitral Tribunal’s 2016 award in the Philippines-China arbitration case. That finding gave the Philippines sovereignty over the regional waters it had at one point been fighting China for.
The ministers also urged ASEAN member states and China to fully and effectively implement the 2002 Declaration on the Conduct of Parties in the South China Sea (DOC) – a declaration that was established 15 years ago but never employed.
Their efforts met with some success: China agreed afterward to cooperatively draft and implement a new code in the future. But the Red Dragon was quick to belittle Vietnam once the summit was over…
“Following Vietnam’s ‘aggressive’ stance at the summit, the state-run China Daily singled out the tiny country for ‘hypocritically trying to insert tough language criticizing China’s island-building into the discussions,’” Bill writes, before adding, “What a bunch of malarkey.”
Vietnam got bashed by its neighbors, too…
“On Monday (Aug. 14), Philippine Foreign Secretary Alan Peter Cayetano – ASEAN’s chair – publically sided with China,” Bill explains, pointing out statements Cayetano made at the start of this week.
In fact, the foreign secretary actually explained away threats of war that China had made on his home country in May…
“Our friend China was just being frank,” Cayetano told members of the press Monday, according to The Nation. “There was no bullying or pushing around, it was not a threat.”
Furthermore, Cayetano explained that the summit outline had been scrubbed of its usual “anti-Beijing language” because, he claimed, China was no longer engaging in aggressive tactics.
“They’re not reclaiming land anymore, so why will you put [that language in] again this year?” Cayetano asked of the crowd, apparently forgetting China’s threats to Hanoi just last month over the “massive gas field” and threats of imminent war with the Philippines in May.
“In diplomatic circles, this is a stunner,” Bill says. “ASEAN pushes hard to show a united front, so it can claim consensus. But here, Cayetano not only breaks with that usual practice – by publicly admitting that there’s discord – but he also throws his support behind China and hangs a fellow ASEAN member out to dry.”
“And Cayetano’s comment that China is ‘not reclaiming land anymore?’ Well, that’s one of the most disingenuous statements you’ll see,” Bill adds. “Of course Beijing isn’t building new islands – they’re already built, as are the military bases that sit on them. It’s already militarized the South China Sea.”
Indeed, these islands – strategically positioned throughout the region – contain bunkers, weapons, aircraft, and all of wartime’s various detritus.
And with such economic powerhouses as Japan and the United States trying to dictate policy and backing China’s opponents in the region, tensions will only grow…
In fact, the U.S. military is preparing for battle in the contested waters right now.
And a particular new technology could give America all the leverage it would need to win – and win fast…
Working alongside DARPA – the United States’ top-secret weapons manufacturer — small defense firms have been hunting for a way to obliterate the "carrier killer" missile – a Chinese weapon with the capacity to destroy U.S. military aircraft carriers.
And one of these defense contractors may have managed to crack that code.
In fact, the company has developed something that looks like it comes straight from the pages of a science fiction novel.
And if you play your cards right, this one defense contractor might just hand you a massive windfall.
Enough to potentially turn every small stake you invest into $19,690. Check it out…
Meet the American-Made "Chinese Carrier Killer"
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
Right now, this defense contractor is small and agile – 1/100th the size of the General Dynamics, the Lockheed Martins, the Boeings, and the other huge players in this space.
So it’s completely off the radar. But that could change at any minute.
Because we believe this firm’s technology is on the verge of creating $45 billion in new wealth for American patriots who invest right now.
For some context, let’s turn back to China. What would cause China to do the unthinkable? To launch an attack that would inevitably start WWIII?
China’s endgame is as old as the industrial age itself.
It’s the same reason the Japanese attacked Pearl Harbor.
Oil.
The South China Sea could contain as much as 130 billion barrels of oil and 900 trillion cubic feet of natural gas.
These untapped reserves are so large it is being called the “Second Persian Gulf.”
This massive treasure – potentially worth as much as $9.2 trillion – is being claimed, in parts, by Taiwan, Vietnam, the Philippines, Malaysia, Brunei, Japan, and, of course, China.
As you know, China thinks almost all of it belongs to them.
And their top military brass is itching to take down one of these countries to make the rest cower in fear and give up their claims.
Here’s where it gets even messier.
The United States has mutual defense treaties, bilateral defense pacts, or sensitive alliances with each of these countries.
So now...
The only thing that stands between China and all of that oil is the U.S. Navy.
And China knows it. That’s why they have been constructing artificial islands at strategic locations all across the East and South China Seas.
Now they are rapidly turning all of this new “territory” into military bases.
The biggest is in a desolate place called Fiery Cross Reef.
China has constructed a 10,800-foot airstrip here so their fighters, bombers, and missiles can threaten the entire region.
They’ve also militarized Subi Reef, Woody Island, and Mischief Reef.
Now the stage has been set for a violent showdown.
Today, the Pentagon is fast-tracking billions into a series of top-secret weapons programs to defeat the Chinese.
They’re being run through the Strategic Capabilities Office, or SCO. This new unit is the action arm of DARPA, the Defense Advanced Research Projects Agency. It’s been secretly funneling billions of dollars to the next generation of defense contractors.
Together they are part of a modern-day Manhattan Project to prevent World War III.
We’re talking about great American companies with revenue in the hundreds of millions. Or a tiny fraction of the $96 billion Boeing took in last year. That’s why these companies have been able to stay under the radar for so long.
Now, for one of them, we believe that’s about to change - and FAST.
It’s developed a superweapon that can obliterate the Chinese “carrier killer” missile.
Off the coast of Florida, on board the U.S.S. Trenton, the Navy is field-testing an astonishing new “super gun.”
It’s called the “Mach 7 Cannon.”
The Mach 7 Cannon Is a Superweapon Unlike Anything You’ve Ever Seen
Frankly, the physics involved is mind-boggling.
Instead of gun powder, the Mach 7 Cannon works using electricity. On the order of 25 megawatts. All discharged in 10 milliseconds.
That’s enough power to accelerate a round to Mach 7 in less time than it takes you to blink.
It’s so fast, it can take out a target 100 miles away in a mere 67 seconds… and the Chinese would never be able to hear or see it coming.
Early versions of the Mach 7 Cannon generated so much heat when fired that sections of the gun barrel melted. However, after thousands of test shots, it’s ready to unleash all hell downrange.
Now, what makes this weapon so deadly are the game-changing rounds it uses.
Inventing a bullet like this – one reliable enough to be classified as “military grade” – has been nothing less than an amazing feat of American ingenuity.
In order to survive the extreme temperatures and forces generated at launch, each bullet is made of classified, high-tech composites and comes equipped with the most rugged electronics package ever invented.
These aren’t your average “dumb” rounds, either.
Unlike the shells fired by today’s five-inch Naval guns...
These “smart bullets” change direction in flight.
I know that sounds crazy... but it’s true.
And if you were to open up one of these smart bullets, you’d find a tactical data link and a sophisticated guidance package embedded inside of it.
So it can receive real-time instructions on a target’s location and intercept it. And it works without fail, even under the toughest conditions.
Per military specs, this smart bullet’s guidance system is engineered to withstand 30,000 g’s of force in less than a second.
That’s 4,172 times the g-force experienced by Apollo 16 on reentry.
This new superweapon comes with an unprecedented combination of precision and power. It can blast ballistic missiles out of the sky at seven times the speed of sound.
It is virtually unstoppable.
This is the very definition of a battlefield game changer.
And it’s thanks to the efforts of this small U.S. defense contractor and the thousands of Americans it employs.
To defend our brave men and women, they’ve invented the new arsenal of democracy.
This Mach 7 Cannon and the smart bullets it fires are the future of the Navy, folks. Right here. Right now.
And one American company less than 1/100th the size of Lockheed Martin is at the forefront of both. Right now its market cap is $382 million. And shares are trading for around $6 apiece.
To give that even more context, General Dynamics’ market cap is $59.74 BILLION.
And its shares are trading for north of $190.
So as far as defense contractors go, the one that’s developed the Mach 7 Cannon and these smart bullets is not even a blip on the radar.
But that could be about to change real fast...
Over the last two years, this defense contractor initially received multiple contracts totaling $29 million. One was labeled as a “mystery contract,” obviously due to the sensitive nature of the technology.
It was awarded for the specific purpose of servicing a gun that uses electricity to propel projectiles at high rates of speed.
In other words, the Mach 7 Cannon.
They also received funding to design, engineer, and manufacture the guidance system, as well as the prototype for smart bullets.
So it’s not hard to follow the breadcrumbs here.
That small starter funding was just to prove this superweapon system was viable – this cash was just a drop in the bucket.
Now, after successful tests, the size of these contracts is set to explode...
The SCO is planning to spend another $800 million on this technology. But they aren’t the only ones at the Pentagon interested in this superweapon system.
There could quickly be tens of billions of dollars in play. Some simple math will make this very clear. I can’t tell you what the Pentagon is going to pay for the Mach 7 Cannon.
But I can talk about the smart bullets.
The Value of Smart Bullets Is Not Hard to Calculate
For sake of discussion, imagine one U.S. carrier group outfitted with 15 Mach 7 Cannons. That’s three cannons mounted on five ships.
To be conservative, let’s assume each cannon is armed with 1,000 smart bullets...
And each smart bullet costs $25,000.
That’s $375 million right there - or, almost as much as the entire market cap of this defense contractor.
Let that number sink in for a moment.
Now multiply it by 10, because that’s how many carrier groups we have.
So conservatively speaking, that’s an estimated $3.75 billion opportunity.
Not bad.
However, those smart bullets aren’t just for Mach 7 Cannons.
They’re so effective, the Navy is also going to use them in its deck-mounted, five-inch guns.
The Navy has 113 of them. And if each is equipped with 1,000 smart bullets, that means there’s another 113,000 smart bullets at $25,000 a pop.
So we can potentially add another $2.825 billion to the running tally.
Now you’re looking at a $6.575 billion opportunity.
That alone would represent a more than 16-fold boost in this defense contractor’s market cap.
But we aren’t just talking about naval applications.
The U.S. Army has demonstrated the ability to fire these smart bullets from their 155-millimeter Paladin self-propelled howitzers. That opens the door to arming 900 Paladin howitzers with hundreds of thousands of additional new smart bullets.
That could be another $22.5 billion right there.
In fact, tests were so successful that Adm. Harry Harris, the commander of the U.S. Pacific Fleet, believes we should think about using shore-based Army howitzers on our bases to defend against missiles in the South China Sea.
Add in the estimated cost of the Mach 7 Cannon and every application of these smart bullets.
And I believe this $382 million defense contractor is in a position to control a $45 billion opportunity.
That’s the equivalent of it growing 111-fold in size.
To learn how you can take advantage of this intense moneymaking opportunity, click here…
Follow Money Morning on Facebook, Twitter, and LinkedIn.
Related Articles:
- The Economic Times: China Asks India, U.S. Not to Disturb Peace in South China Sea
- Money Morning: Theory: China Is Preparing for Another Korean War
- Money Morning: The Pentagon Won't Tell You How Dangerous North Korea Is – but Trump Will
- Money Morning: 10 Times We Narrowly Avoided World War 3