A History of the 2025 Sino–American War in the South China Sea By MICHAEL AUSLIN

The Arleigh Burke-class guided-missile destroyers USS Curtis Wilbur (foreground), USS Stethem, and USS Momsen steam in formation during Valiant Shield 2016 exercises in the Philippine Sea in 2016

How an accidental war could break out, leading to even greater Chinese hegemony.

ore than two decades after the fact, the reasons why the United States and the People’s Republic of China (PRC) avoided total war, let alone a nuclear exchange, during their armed conflict in the autumn of 2025 remain a source of dispute. What is clearer is why the Sino–American Littoral War broke out in the first place, and the course it took. Years of worsening U.S.–China relations, supercharged by the 2020 COVID-19 coronavirus pandemic that originated in Wuhan, China, and long fueled by endemic Chinese cyberattacks on American businesses and individuals, military jockeying in the South China Sea, and Beijing’s influence and propaganda campaigns, had created a deep reservoir of ill will and distrust of the other in each country.

When a series of accidents propelled Washington and Beijing into war, both sides were taken by surprise, but each saw the risk differently. The Chinese Communist Party (CCP) feared the domestic repercussions of losing a war but had long convinced itself that Americans were a weak and uncommitted people who would not endanger their comfortable lifestyle. As for American leaders, they were naturally risk-averse and unconvinced they could maintain a major military campaign so far from home against the world’s second-most-powerful military. Each, therefore, tripped into war without a full plan for how to dominate and win. The result of the conflict — the establishment of three geopolitical blocs in East Asia — continues to this day. The resulting cold war between the United States and China became the defining feature of geopolitics in the Asia-Pacific in the middle of the 21st century.

The Gray Rhino: September 8–9, 2025
The Littoral War began with a series of accidental encounters in the skies and waters near Scarborough Shoal, in the South China Sea. Beijing had effectively taken control of the shoal, long a point of contention between China and the Philippines, in 2012. After Philippines president Rodrigo Duterte, who had steadily moved Manila toward China during the late 2010s, was impeached and removed from office, the Philippines’ new president steadily moved to reassert Manila’s claim to the shoal, and by the summer of 2025 sent coastal-patrol boats into waters near the contested territory. When armed People’s Armed Forces Maritime Militia (PAFMM) vessels pushed out the Philippine forces in early July, Manila appealed to Washington under its security treaty for assistance.

Prior Philippine requests for U.S. help in dealing with China had been largely shunted aside by Washington, even during the Trump administration. However, new U.S. president Gavin Newsom, who had been dogged during the 2024 campaign by allegations that Chinese cyber operations had benefited his candidacy, saw the Philippine request as an opportunity to show his willingness to take a hard line against Beijing. Newsom increased U.S. Air Force flights over the contested territory, using air bases made available by Manila, and sent the carrier USS Gerald Ford, along with escort vessels, on a short transit. On two occasions in late July, U.S. and Chinese ships came close to running into each other due to aggressive maneuvering by the People’s Liberation Army Navy (PLAN), and a U.S. Navy FA-18 operating from the Gerald Ford was forced to take emergency evasive action to avoid colliding with a PLANAF J-15. Despite the increasing tensions, the U.S. Navy ships returned to Japan at the beginning of August, yet no diplomatic attempts were made to alter the trajectory of events. The fact that both sides knew some type of armed encounter was increasingly possible, if not probable, yet seemed to ignore the risk, led pundits to call the events surrounding the clash an example of a “gray rhino,” unlike the complete surprise represented by a “black swan” occurrence. Ironically, CCP general secretary Xi Jinping himself had warned about the dangers of “gray rhinos” back in 2018 and 2019.

In response to the brief uptick in U.S. Navy freedom-of-navigation operations near other Chinese-claimed territory in the Spratly and Paracel island chains, Beijing decided to fortify Scarborough Shoal, building airstrips and naval facilities as it had done in the Spratlys. As Scarborough lay only 140 miles from Manila, China’s announcement set off alarm bells in the Philippines. As Chinese naval construction ships approached Scarborough on September 4, dozens of small Philippine boats, many of them private, attempted to block them. On the second day of the maritime encounter, a Chinese frigate rammed a Philippine fishing boat, sinking it, with the loss of two Philippine fishermen. As news spread over the next several days, dozens more Philippine vessels, including the country’s entire coast guard, confronted the Chinese. Though no further ship collisions occurred, worldwide broadcast of video of the maritime confrontation further inflamed tensions.

At this point, on Saturday, September 6, U.S. Indo–Pacific Command, acting directly under orders from U.S. secretary of defense Michele Flournoy, dispatched one guided-missile destroyer, the USS Curtis Wilbur, and the Independence-class littoral combat ship USS Charleston (LCS-18) to the waters off Scarborough, and ordered the USS John C. Stennis aircraft carrier to head from its home port in Bremerton, Wash., to Pearl Harbor. In order not to inflame the high tensions, however, the White House and Pentagon decided not to send the Gerald Ford to the area. Instead, another U.S. guided-missile destroyer, USS Stethem (DDG 63), and a mine-countermeasures ship, the USS Patriot (MCM 7), were ordered to transit the Taiwan Strait. The next day, Beijing announced an air-defense identification zone over the entire South China Sea, demanding that all non-Chinese aircraft submit their flight plans to Chinese military authorities and receive clearance to proceed. While the U.S. Air Force and Navy immediately rejected China’s authority over the South China Sea, Chinese army and navy aerial patrols increased, and international civilian airliners complied with Beijing’s demands.

On Monday, September 8, at approximately 18:30 local time (10:30 Greenwich time; 00:30 Hawaii time; 05:30 Eastern time), a U.S. Navy EP-3 surveillance flight out of Japan over the Spratlys was intercepted by a PLAAF J-20 taking off from Fiery Cross Reef, in the same chain. After warning off the EP-3, the J-20 attempted a barrel roll over the American plane. The Chinese pilot sheared off most of the EP-3’s tail and left rear stabilizer; the Chinese plane lost a wing and went into an unrecoverable spin into the sea. The EP-3 also could not recover and plunged into the sea, killing all 22 Americans aboard. Tragically, the EP-3 was not even supposed to be flying, as the U.S. Navy had intended to replace the fleet with unmanned surveillance drones by 2020, but cost overruns and delays in the drone program led to occasional use of a limited number of aging manned aircraft in the region, especially when real-time interpretation of data was required.

Roughly 30 minutes later, before word of the EP-3’s downing had reached U.S. Indo–Pacific Command in Hawaii, let alone Washington or Beijing, 13 nautical miles northwest of Scarborough Shoal, the Bertholf (WMSL-750), a U.S. Coast Guard cutter returning from a training mission along with the Japan Coast Guard Kunigami-class patrol vessel Motobu, out of Naha in Okinawa, was approached by a cutter-class armed Chinese Coast Guard (CCG) ship. After broadcasting warnings for the Bertholf and the Motobu to leave the area, the Chinese ship attempted to maneuver in front of the American ship, to turn its bow. The CCG captain miscalculated and struck the Bertholf amidships, caving in the mess and one of its enlisted crew compartments. The Bertholf began taking on water and attempted to turn east toward the Philippines while emergency crews attempted to keep the ship afloat. The CCG ship immediately left the scene without rendering assistance. Six US sailors later were declared missing and presumed dead in the collision, while three Chinese CCG sailors were swept overboard and lost at sea.

Being the closest U.S. naval vessel to the downed EP-3 surveillance pland, the Curtis Wilbur raced toward the site of its crash, while the Charleston moved to assist the Bertholf. Nighttime darkness caused confusion for rescue and patrol operations on both sides. Two PLAN ships returned to the scene of the maritime collision to search for the lost Chinese seamen, coming in close quarters with the Motobu — which was helping in rescue operations to stabilize the American vessel — as well as with the littoral combat ship Charleston, which arrived several hours later. Mechanical trouble kept the Bertholf from making way under her own power, and she began to drift back toward PLAN vessels. In the darkness, U.S. ships and the Japanese attempted to disengage with the Chinese vessels, while continually warning the other side to stand down so rescue operations could continue.

After several close encounters, one Type 052D Luyang III class PLAN destroyer, the Taiyuan, activated its fire-control radar and locked on the Motobu. The captain of the thousand-ton Japanese patrol ship, knowing he could not survive a direct hit from the PLAN destroyer, radioed repeated demands that the radar be turned off. When no Chinese response was forthcoming, and with rescue operations ongoing, the Motobu’s commander fired one round from his Bushmaster II 30 mm chain gun across the bow of the Taiyuan. In response, a nearby Chinese frigate, thinking it was under attack from the Japanese Coast Guard ship, fired a torpedo in the direction of the Motobu. In the congested seas, however, the torpedo hit the Charleston, which was transiting between the Chinese and Japanese ships, ripping a hole below the waterline. The lightly armored littoral combat ship, with a complement of 50 officers and seamen, foundered in just 25 minutes, with an unknown loss of life, at 01:30 (17:30 Greenwich time; 07:30 Hawaii time; 10:30 Eastern time) on Tuesday, September 9. U.S. surveillance drones flying over the melee recorded parts of the encounter and flashed images back to U.S. commanders in the region.

With radio and electronic traffic flashing between Honolulu and Washington, America’s military leaders in the Pacific began to mobilize the U.S. fleet in Hawaii and Japan to steam into the South China Sea, and launched F-35 fighters from Okinawa to begin forcing Chinese air-force planes out of the skies. After more than a decade of rising tension and distrust between China and the United States, a series of accidents threw the two antagonists against each other. The Littoral War had begun.

China Keeps Flying Its Su-30 Fighters Over Taiwan, but How Do They Stack Up? by Kris Osborn

Chinese Su-30 fighters entered the Soutwestern airspace of Taiwan in early June as part of a rather transparent, deliberate warning to the U.S. and Taiwan that China was ready to attack if needed. The flights, as described in a report from the Global Times, were sent as a message following continued military-to-military cooperation between the U.S. and Taiwan, U.S. transport aircraft flights over Taiwan and the passage of a U.S. Destroyer through the Taiwan Straits. 

The People’s Liberation Army Su-30 fighter jets flew over Taiwan just one day after a U.S. military aircraft flew over the island to, as Chinese officials reportedly told the Global Times, “counter the provocative move by the U.S. military aircraft.” 

The Su-30s are Russian-built fighters in service with the PLA since the early 2000s, it’s described as having long-endurance, advanced passive electronically-scanned array radar systems, infrared search and track, a reconnaissance pod, targeting sensors and medium-range air-to-air-missiles. Interestingly, some have likened the Su-30 to the U.S, F-15, despite the fact that the Su-30 emerged roughly 15 years later. Despite its 1980s origins, there are many reasons why today’s upgraded F-15 may in fact be equivalent if not superior to the more modern Su-30s. While the original F-15 airframe may have emerged from the 1980s, the 2020 U.S. F-15 is essentially an entirely new airplane. 

The Air Force currently operates roughly 400 F-15C, D and E variants—and plans to keep the aircraft flying into the 2040s. In recent years, the F-15 has been in the process of receiving new weapons, electronic warfare systems, infrared search and track, radar and high-speed computing technology to massively improve the performance characteristics of the aircraft. Upgraded F-15 are in the process of operating with Active Electronically Scanned Array radar and an electronic warfare system called EPAWSS, the Eagle Passive Active Warning Survivability System. 

The weapons-carrying ability is being increased from 8 up to 16 weapons; this includes an ability to fire AIM-9x or AIM-120 missiles and drop the emerging high-tech Stormbreaker bomb. The Stormbreaker is an air-dropped all-weather bomb engineered with a tri-mode seeker able to track and destroy moving targets from ranges out to 40 miles, Raytheon developers say. 

The F-15 has also been getting a cutting-edge in-flight targeting technology called Infrared Search and Track (IRST); the system, also installed onto Navy F/A-18s, is engineered for air-to-air targeting technology and operating in high-threat jamming or electronic warfare environments, Navy developers say. 

Other upgrades to the aircraft equip the F-15 with the fastest jet-computer processor in the world, called the Advanced Display Core Processor, or ADCPII; the computer is capable of processing 87 billion instructions per second of computing throughput, Boeing developers say. The aircraft have also been getting a “fly-by-wire” automated flight control system, upgrades to the pilot’s digital helmet and some radar-signature reducing or stealthy characteristics. 

However, at the same time, the F-15 is not a stealthy aircraft and is expected to be used in combat environments in what is called “less contested” environments where the Air Force already has a margin of air superiority over advanced enemy air defenses. For this reason, the F-15 will also be increasingly networked so as to better support existing 5th-generation platforms such as the F-22 and F-35, Air Force officials said.

As for what this may mean in terms of possible air superiority over Taiwan, there are many seemingly unanswered questions. Some of the avionics, electrical systems, sensing and weapons systems of the Su-30 might still be unknown, and any kind of air dominance over the Taiwan Strait would likely hinge more fully on the quality of each countries’ 5th-Generation aircraft—such as U.S. F-35s and F-22s vs. Chinese J-20s and J-31s—and advanced air defenses. However, any kind of medium or large-scale engagement between China and a U.S.-Taiwanese coalition could very well involve 4th-generation air-to-air combat. 

Taiwan jets 'drive away' intruding Chinese fighter plane, third intrusion in days

Taiwan air force jets "drove away" a Chinese fighter plane that briefly entered Taiwan's air defence identification zone on Tuesday, the defence ministry said, reporting the third intrusion in a week.

The single J-10 fighter was given radio warnings to leave before the Taiwanese air force jets ushered the intruder out of the airspace southwest of the island, the ministry said.

On Tuesday last week, the ministry said several Su-30 fighters, some of China's most advanced jets, crossed into the same airspace and were also warned to leave.

On Friday, the ministry said a Chinese Y-8, a propeller aircraft based on a Soviet-era design some of which have been retrofitted as surveillance aircraft, was warned too by Taiwan's air force to leave the air space, again in the southwest.

The Y-8 flight came a few hours after Taiwan said it had carried out missile tests off its eastern coast.

Taiwan has complained that China, which claims the democratic island as its own, has stepped up military activities in recent months, menacing Taiwan even as the world deals with the coronavirus pandemic.

China has not commented publicly on the last week of Chinese air force activity near Taiwan. Beijing routinely says such exercises are nothing unusual and are designed to show the country's determination to defend its sovereignty.

China has never renounced the use of force to bring Taiwan under its control. One of China's most senior generals last month said China would attack if there was no other way of stopping Taiwan becoming independent.

China is deeply suspicious of Taiwanese President Tsai Ing-wen, whom it accuses of being a separatist intent on declaring formal independence. Tsai says Taiwan is already an independent country called the Republic of China, its official name.

The United States has stepped up its military activities near the island too, with semi-regular navy voyages through the narrow Taiwan Strait.

German intel report lays bare Iran's attempts to obtain nuclear proliferation technology

Iran remains hell-bent on developing the deadliest weapons on the planet, according to a damning German intelligence service report released Monday.

In a section titled “Proliferation,” the 181-page Baden-Württemberg state intelligence agency document reviewed by Fox News states that Iran, Pakistan, North Korea and Syria are "still pursuing" such efforts.

“They aim to complete existing arsenals, perfect the range, applicability and effectiveness of their weapons and develop new weapon systems,” the report said. “They try to obtain the necessary products and relevant know-how, among other things, through illegal procurement efforts in Germany.”

“The term ‘proliferation,’” the report continued, “refers to the further spread of atomic, biological, and chemical weapons of mass destruction –­ or the products and know-how required to manufacture them –­ and corresponding delivery systems.”

IRAN APPEARS TO BUILD FAKE AIRCRAFT CARRIER AS TENSIONS WITH US GROW

North Korea and Pakistan currently have nuclear arsenals. Tehran, in a 2015 deal with world powers, promised to curb its nuclear program in exchange for economic sanctions relief.

President Hassan Rouhani announced at the end of 2019 that his country "would no longer implement some agreements,” the German intelligence officials wrote. The report documented the mullah regime’s illicit activities during the year 2019.

The intelligence report covers security and terrorism threats to the heavily industrialized southern German state of Baden-Württemberg — a target-rich region for Iran’s network due to its numerous advanced engineering and high-tech firms.

Without revealing the names of the companies, the report cited specific data about illicit attempts to obtain weapons of mass destruction technology.

“Procurement attempts relevant to proliferation were also observed in 2019, which also affected companies in Baden-Württemberg. Since then, it has become even more difficult for affected companies to assess whether the business is still lawful or whether it is already violating sanctions regulations,” it said.

The report advised companies to “obtain precise information about the current [legal] situation before making a scheduled delivery to Iran.”

The intelligence agency of Baden-Württemberg noted its “aim is to prevent risk states from building and developing weapons of mass destruction and the corresponding delivery systems.”

In 2018, the United States withdrew from the 2015 Iran atomic deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), because the Trump administration said the agreement did not prevent the Islamic Republic from developing nuclear weapons. German intelligence documenting Iran’s subsequent illegal conduct adds force to the U.S. call to renegotiate an improved accord.

Rafael Grossi, the director general of the International Atomic Energy Agency (IAEA), again urged Iran’s rulers on Monday to allow its inspectors access to sites where the country is believed to have used or deposited undeclared nuclear material.

“[Iran] has not engaged in substantive discussions to clarify our questions related to possible undeclared nuclear material and nuclear-related activities,” Grossi told journalists in Vienna. “We need this cooperation.”

The German intelligence document, citing Iran’s strategy to circumvent export restrictions and embargoes, said the Islamic Republic “can procure goods in Germany and Europe with the help of specially established front companies, and in particular bring dual-use goods to the risk countries. Typical bypass countries include the United Arab Emirates, Turkey, and China.”

Dual-use goods can be used for both military and civilian purposes.

The intelligence officials warned of Iranian infiltration of colleges and research centers where proliferation know-how can be secured and learned.

Espionage is believed to be widely practiced by Iranian agents in Germany. The Islamic Republic of Iran “carried out spying activities” against its former citizens living in Germany who oppose the Tehran regime, the intelligence agency wrote.

The U.S. government under both the Obama and Trump administrations has designated Iran’s regime the worst state-sponsor of terrorism.

Last week, Germany’s Foreign Ministry reversed a policy that previously labeled the Iranian regime’s calls to exterminate the Jewish state as mere “anti-Israel rhetoric,” and said Tehran’s language is now anti-Semitic.

The pro-Syrian regime news outlet Al-Masdar News (AMN) reported last week that the commander in chief of Iran’s Islamic Revolutionary Guard Corps (IRGC), Maj.-Gen. Hossein Salami, urged the removal of “the cancerous gland [Israel] from the region.” Salami has repeatedly called for the destruction of Israel.

The West must step up now to help Iran transition to democracy BY MARIAM MEMARSADEGHI,

Iran is on a precipice. Crippling sanctions, the novel coronavirus, systemic corruption, violent repression and deep social distrust could make for an explosion of society, an implosion of the state, or both. The result is difficult to predict. Will the Iranian people finally break free from the Islamist totalitarian state that suffocates them to build a peaceful, democratic nation, or will they only plunge deeper into crisis? 

America has interest in preventing Iran from becoming unstable and an even more serious threat to global security. The Trump administration’s maximum pressure campaign has helped to significantly weaken the regime, but the long-term political effect of this weakening is far from certain. 

The linchpin of the Trump administration’s maximum pressure against the Islamic Republic of Iran is its list of 12 demands that, if met, would provide the regime relief from sanctions. These demands make for a fundamental shift away from the Joint Comprehensive Plan of Action’s (JCPOA) singular focus on nuclear compliance to more holistic treatment of ways the regime threatens U.S. national security: its nuclear program, but also its regional wars and terror, its ballistic missile program and its taking of citizens of the U.S. and U.S. allies as hostages. The demands do not include respect for the rights of the Iranian people, or their mounting demand for democracy, but the administration’s sanctions do specifically target rights abusers and its public diplomacy strategy has broken the Obama administration’s decided reticence on the regime’s repression to routinely scrutinize rights violations and amplify demands for freedom and justice.

A backdrop to maximum pressure and the Obama-era appeasement that preceded it is a program launched in 2004 by the George W. Bush administration to fund initiatives to promote a democratic Iran. Rejected by those closely associated with the regime, the program is now well-established and has been a constant through the Bush, Obama and Trump years, funding Iranian activists, human rights defenders, accountability efforts and civil society campaigns. 

In large part as a function of this democracy promotion program conceived by President Bush, Iranian civil society is today significantly more capable and demanding, aided also by improved connectivity, particularly via social media on smartphones.  Still, the regime did not hesitate to kill with impunity over 1,500 protestors in November 2019 or to shoot down a civilian airliner and deflect all attempts at a credible investigation of its wrongdoing, and has been far from responsive to the people’s inability to put food on the table. In fact, Iran already exhibits features of a failed state, with the regime still entrenched. Even before the COVID-19 outbreak and the regime’s grossly negligent response, protests, labor strikes and individual acts of civil disobedience had become all but ubiquitous, the anger and desperation more palpable than ever since the revolution. Collapse of the Islamic Republic or its overthrow are ready possibilities; even some of those closest to ruling elites now question the regime’s legitimacy.  

The lack of viable political alternatives to the status quo is felt, however, as is typical for totalitarian systems, even when in sharp decay. The democratic opposition has great latent support, but has yet to come together to not just assert vision but to build the practical components of transition to democracy. If Iran in its post-Islamic Republic life is to be stable, peaceful and democratic, the free world must come together with Iranian civic and political leaders now to build the future. Heavy sanctions and diplomatic rhetoric about the regime’s nefarious actions are not enough. Likewise, a democracy promotion program that holds back from bringing together leading voices of the democratic opposition, and refrains from consolidating the many disparate laborers striking and civic sectors protesting, is one that does not believe a fundamental breakthrough is close. America has provided such robust but discrete practical support to other struggles for democracy, such as the Solidarity movement in Poland.  Iranians are just as willing and capable to leverage such assistance.  

The collapse of other repressive regimes have caught the free world by surprise. Not surprisingly, it is when these regimes have been weakest that their lobbies and propaganda satellites in the West have been most active to convince about their strength, stability and legitimacy. This may be why we see more than ever before in the English language-media glowing commentary about the Islamic Revolutionary Guard Corps, even as resentment — from the Iranian people and people throughout the region — is most vocal about the evil cabal that has killed hundreds of thousands of innocents. 

The West must see disinformation from Supreme Leader Ayatollah Khamenei, Foreign Minister Javad Zarif and other regime officials about their power — and about American weakness — as signs of their growing desperation, and must act concertedly now to strategize Iran’s impending transition so that it is one toward human dignity and peace with the world, not chaos and instability. 

Chinese military scientist arrested at US airport, stole US lab research

Wang was bringing studies with him from the University of California 

lab to share with his PLA colleagues and had already sent research to 

China via email.

A researcher from China's People's Liberation Army (PLA) was arrested at Los Angeles International Airport earlier this month while attempting to depart from the US after he was found to have lied on his visa application.

Xin Wang, the researcher, entered the US in March 2019 on a multiple entry J1 non-immigrant visa in order to conduct scientific research at the University of California, San Francisco. While Wang had claimed on his visa application that he had been an Associate Professor in Medicine in the PLA, he told Customs and Border Protection (CBP) officers at the Los Angeles airport that he was still a "Level 9" technician in the PLA and employed at a military university lab.

Wang's position roughly corresponds with the rank of Major, according to a statement by the US Department of Justice.

While in the US, Wang received compensation from the PLA and the China Scholarship Council, in addition to compensation from the University of California.

Wang was still employed by the PLA while in the US, and he made false statements about his military service in his visa application in order to increase his chances of getting the J1 visa, according to court documents.

The researcher also told CBP that his supervisor had told him to observe the layout of the University of California lab and bring back information on how to replicate it in China.

Wang was bringing studies with him from the University of California lab to share with his PLA colleagues and had already sent research to China via email, according to the DOJ statement. He also told his supervising professor in California that he had duplicated some of that professor's work at the lab in China.

The researcher wiped WeChat messaging content from his phone on the morning that he arrived at the Los Angeles airport.

If convicted of visa fraud, Wang faces a maximum penalty of ten years in prison and a fine of $250,000.

Relations between the US and China have deteriorated in recent months, and US President Donald Trump has said he could even sever relations.

The US has taken action against Chinese companies such as Huawei, warning that such companies could be spying on customers for the Chinese government.

US Secretary of State Mike Pompeo will meet China's top diplomat Yang Jiechi in Hawaii, trying to ease tensions between the world's two largest economies over various issues, according to media reports.

Philippines casinos catering to illicit Chinese gamblers are causing kidnappings and chaos in Manila By Julie Zaugg,

 Dozens of scantily dressed Filipina croupiers stand in booths shuffling cards in front of a webcam, their faces softly illuminated by professional lighting.

Nearby, rows of Chinese nationals sit at desks chatting on cellphones with potential clients back in China.

This is what a typical POGO -- or a Philippine Offshore Gaming Operator -- looks like, according to descriptions provided to CNN by several gaming experts. Some are based in abandoned malls, while others are found in converted parking lots or cheap rented offices, they say.

In the past three years, the Philippines has emerged as a major hub for online gaming, according to Filipino officials, attracting more than 100,000 Chinese nationals who work in virtual casinos catering to players back in China where gambling is illegal.

They have been both a boon and a curse for the country.

The online casinos generate tax revenue and desperately needed jobs in Manila's crowded downtown area. But at the same time, they've pushed up rents and created new challenges for the Philippine National Police.

In the past year, Beijing has ratcheted up pressure on Manila to shut down the industry, following its success in convincing Cambodia to move toward doing the same last year.

Manila stopped taking applications for new POGO licences in August 2019, citing concerns about national security, but President Rodrigo Duterte said the next month that he would not ban the industry.

"We decide to benefit the interest of my country," he said. "I decide that we need it."

In May, Duterte allowed the POGOs to reopen, after two months of closure due to the Covid-19 pandemic, effectively endorsing them as essential businesses.

Philippines' casino boom

Online gaming platforms allow players to gamble remotely. They sign up, choose a game and it is played over a livestream in another jurisdiction.

"The games offered on these platforms are dictated by Asian tastes, where most of the demand comes from," said Brendan Bussmann from Global Market Advisors, a Las Vegas-based consulting firm specializing in the gaming, sports, entertainment and hospitality industries.

"There is a lot of baccarat, as well as some sic bo (a Chinese dice game) and blackjack," said Bussmann. The amounts wagered tend to be low, in the range of $5 to $100, he said.

Manila has become the number one hotspot worldwide for online gaming, in front of Malta, the Isle of Man and Curacao, according to David Lee, a lawyer at Taiwanese firm Lin & Partners who specializes in gaming laws.

"The Philippines pioneered online casinos in the early 2000s, when Cagayan, a province to the north of the country, started awarding licenses to a handful of operators," explains Ben Lee, the founder of IGamiX, a Macao-based consultancy firm focused on the gaming industry in Asia. "But they really took off in 2016, when President Rodrigo Duterte came into office."

Duterte handed the right to issue offshore gambling licenses to the Philippine Amusement and Gaming Corporation (PAGCOR), a government entity that operates casinos and regulates the industry. "It began to aggressively develop the industry by awarding dozens of licenses," said lawyer David Lee.

Chinese businessmen were quick to seize the opportunity and the number of POGOs mushroomed.

There are now 60 licensed offshore gaming operators in the Philippines, according to PAGCOR.

They are assisted by several hundred service providers, who help them build and maintain the infrastructure behind their platforms, according to Ben Lee, of IGamiX consultancy. Many of these service providers also act as an interface between the POGOs and their customers, renting a video feed from the officially licensed operators and overlaying their logo and visual identity onto it, he added.

"Some 90% to 95% of POGO customers are located in China," he said. This is illegal. Chinese laws ban any form of gambling by its citizens, including online and overseas.

Laws in the Philippines also ban online casinos from marketing their services to citizens of a country where gambling is illegal, according to lawyer David Lee. But this rule is ignored by most POGO operators and poorly enforced, according to several experts.

A spokeswoman for industry regulator PAGCOR said new regulations were introduced in August 2016 to curtail the proliferation of illegal online games and to ensure they are properly regulated.

She added that POGOs are supposed to only cater to foreign customers ages 21 and above situated outside the Philippines, in jurisdictions where online gaming is allowed.

Hidden payments

Managing the cross-border flow of money is a challenge. China limits the amount of money any individual can move out of the country to $50,000 per year. And since it doesn't allow its citizens to gamble online, they are also not allowed to send money abroad for this purpose.

"It is usually wired electronically, using services like Alipay or WeChat Pay, and disguised as a simple retail purchase," said consultant Ben Lee. "Chinese gamblers are also increasingly using crypto currencies like Bitcoin to avoid detection."

Chinese conglomerate Tencent, which owns messaging service WeChat, has set up a risk management team to combat abusive behavior, such as illegal gambling, by monitoring payments made via the app, a spokeswoman told CNN.

CNN also reached out to tech company Alibaba, founder of Alipay, for comment but did not receive a reply.

To recruit new customers in China, POGOs rely on a large contingent of Chinese workers. They employ at least 138,000 foreigners in the Philippines, most of them from China, according to the Philippine government.

"There might be as many as 250,000, if employees lacking the required work visas are included," said George Siy, of the Integrated Development Studies Institute (IDSI), a think tank in the Philippines, quoting estimates provided to him by industry insiders.

"Most of them come into the Philippines on tourist visas and overstay them," said Lucio Blanco Pitlo III, a fellow at the Asia-Pacific Pathways to Progress Foundation, who has researched the topic extensively. The Chinese embassy in the Philippines said in a statement in August 2019 that some of its nationals are "cheated to work illegally with only tourist visas."

Last November, Manila expelled hundreds of Chinese nationals who had been arrested in a series of raids against online gaming operations and other cyber crimes in Palawan province, for allegedly working illegally in the country, according to CNN Philippines.

Many Chinese nationals working in the Philippine casino industry are attracted by the promise of jobs not available at home, experts say.

"These are mostly young people, in their 20s, with little job prospects in China," said Ben Lee. Some are lured to the Philippines with the promise of high-paying jobs in prestigious tech companies, but upon arrival they discover they will be working for an online gambling platform and paid a fraction of what they were promised, he added.

"The workers frequently have their passports confiscated, are crammed 10 to a room meant for three to four people and have to work 12-hour shifts, with only one day off per month," said Pitlo.

On the job, they are expected to approach prospective players in social media chat groups and convince them to give online gaming a try, according to Lee. Once players are hooked, they are encouraged to wager increasing amounts of money, he added.

POGOs cater to foreign customers and thus employ foreign nationals as customer service representatives to "effectively invite players and attend to their needs and concerns," the PAGCOR spokeswoman said. Most of these foreigners are Chinese nationals, she said. "But we can't categorically say they are based in China or are targeting players in China," she added. "They might be catering to Mandarin speaking people in other countries."

Jobs and high rents

POGOs have been a boon to the Philippine economy.

"They have created thousands of jobs and driven up wages," said Siy, from the Integrated Development Studies Institute. Even if most online casino employees are Chinese, locals are finding employment with them as maintenance workers, cleaners, or security guards, he added. He says industry insiders believe up to 150,000 Filipinos could be working for POGOs.

Government coffers have also benefited. In 2018, online casinos paid 7.4 billion pesos ($145 million) in licensing and other regulatory fees, PAGCOR told CNN. The Department of Finance said it expects to collect 24 billion pesos ($471 million) per year in taxes from POGO workers.

But many employers are not paying up. POGO operators and service providers only paid 579 million pesos ($11 million) in withholding taxes in 2018 -- a mere 2.4% of what they owe, according to the Bureau of Internal Revenue.

In late 2019, the Philippines finance secretary started following through on threats to shut down non-payers. In early 2020, the Bureau of Internal Revenue (BIR) said the industry still owes the government around 50 billion pesos ($1 billion) in unpaid taxes for 2019.

The real estate market has also been transformed by online casinos, said Pitlo, from the Asia-Pacific Pathways to Progress Foundation. "They took up more than 1 million square meters (10.8 million square feet) in office space last year, making them the largest tenant in the country, even outstripping the call center industry," he said.

Rents have spiraled out of control in certain parts of Manila as POGO operators rent out residential compounds to house their workers, said Pitlo. "Middle class families are being priced out," he said.

Prices of one-bedroom apartments have surged by 120% since 2015 along Manila Bay, where many of the POGOs are located, according to a July 2019 report by Leechiu Property Consultants.

Kidnappings on the rise

The increase in POGOs has also led to a rise in criminality, according to Philippine officials.

"In their free time, their Chinese employees often gamble at the casinos and end up in debt," explained Elmer Cereno, a spokesman for the Philippine National Police-Anti Kidnapping Group. "They are then approached by loan sharks who offer to lend them money."

When they fail to pay it back, the loan sharks kidnap them and try to get ransom from their relatives back home, he said.

On October 2019, police rescued two Chinese POGO workers, whose families had been asked to pay ransoms ranging between 68,000 yuan and 80,000 yuan (about $9,800 to $11,500) for their release, according to a summary of the case seen by CNN. They had been abducted from a hotel six days earlier and held by five Chinese nationals in an office building in Taguig, a suburb south of Manila.

Between January 2017 and October 2019, Philippine police dealt with 65 cases of kidnap-for-ransom involving POGO workers or casino customers, leading to the arrests of 132 people, according to an official tally provided to CNN by the Philippines police. "Almost all the victims and perpetrators were Chinese nationals," said Cereno.

'That is where we stand'

China has been stepping up pressure on the Philippines to ban POGOs.

In its August 2019 statement, the Chinese embassy in Manila said online gambling in the Philippines had led to increased crimes and social problems in China, because "some gambling crimes and telecom frauds are closely connected."

It also said "hundreds of millions of Chinese yuan" of gambling-related funds were flowing illegally from China to the Philippines. Days later, foreign ministry spokesman Geng Shuang said he hoped that Manila would "ban all online gambling."

The Philippines answered some of China's concerns by imposing a moratorium on new licenses but stopped short of announcing a ban.

Manila has its own concerns about the industry, with top officials suggesting that the influx of Chinese workers could turn to spying, posing a risk to national security.

"You would also start getting worried when a whole building, a condominium tower is occupied by only one nationality where you might not be able to guard their activities," Philippine National Security Adviser Hermogenes Esperon, Jr. said in July 2019.

In May, dozens of legislators introduced a new bill to ban POGOs on the grounds they represent a social menace and a source of corruption.

Manila earlier responded by announcing plans to build two "self-contained" hubs for online casinos and their workers located in Cavite City and Clark, two cities near the capital. They both became operational late last year.

"These hubs will allow POGO workers to carry out their work, live and spend their leisure time under a single roof," according to the PAGCOR spokeswoman. "It will also increase their safety, as law enforcement agencies will have a presence there."

Several government agencies, such as the Bureau of Internal Revenue, will also set up antennae in the hubs, she said. This will allow them to keep a close eye on the POGOs, making sure they pay their taxes and obey the law.

China is not happy. In the August 2019 statement, it expressed "grave concern" about the centers, saying they risked infringing the "basic legal rights" of Chinese citizens.

Philippine officials seem unperturbed. "They (China) can't dictate on us," said Philippine ambassador to China, Jose Santiago Sta. Romana, in a media briefing. "Those are sovereign decisions. That is where we stand."

China issues warning to Britain: Beijing will 'strike back' if 'UK steps out of line'. CHINA plans to "strike back" in "areas where the UK steps out of line" as relations between Beijing and London deteriorate over Hong Kong and Huawei. By BRIAN MCGLEENON

The UK's relations with China have been rocked over recent months, and China's new security law in Hong Kong prompted a sharp response from Britain. The Foreign and Commonwealth Office launched its most robust and turbulent 6-month report on Hong Kong on Friday, warning China to “reconsider, to step back from the brink and respect Hong Kong’s autonomy and respect its own international obligations. The UK will not look the other way when it comes to the people of Hong Kong, we will stand by them, and we will live up to our responsibilities".

The law threatens to outlaw freedom of expression in the city and could potentially violate the Sino-British Joint Declaration that ensures political autonomy for Hong Kong until 2047.

Despite the implications of inciting wrath from Beijing, UK MPs and Peers joined an online rally on Saturday marking the one year anniversary of the Hong Kong protest movement.

The MPs including, Stewart McDonald and Alicia Kearns, called on international governments to rethink their dependence on China, avoid technology with Chinese links, including Huawei, Zoom, and WeChat and protect privacy and data.

Lord Adonis said at the speech: "Just as under Stalin we were all Berliners, so too under Xi Jinping must we all be Hongkongers."

And, fellow of Hong Kong Watch Luke de Pulford told how the UK had, "a lifetime of shared values and a lifetime of Standing with Hong Kong".

The Chinese Communist Party, CCP, tabloid The Global Times has warned that the British economy faces “substantial damage” if the UK government does not change course.

The news site told how Beijing would “strike back” in “areas where the UK steps out of line”.

The key areas that the UK economy could be compromised would be through those corporations that China has the greatest leverage over, it suggested.

Most notably HSBC, and Chinese investment in nuclear plants in the UK.

The Global Times declared that these sectors “could be impacted” and that Britain “does not have many cards to play” and “further moves to cut co-operation could shoot the UK in its own foot”.

China's official response to Hong Kong has been to consistently warn Britain and the international community not to intervene in its "internal affairs".

The Chinese foreign minister Wang Yi has told Dominic Raab in a phone call last Monday that Hong Kong is “purely China’s internal affair” and that national security is a “core interest”, as Beijing terms its red lines.

Liu Xiaoming, China’s ambassador in London, followed that shot across the bows with comments to British business leaders.

He said: “Some UK politicians still cling to the Cold War and colonial mentality, and refuse to accept the fact that Hong Kong has been returned to China."

However, Britain’s treatment in recent days has still not reached the pitch of Chinese attacks on some other Western allies, notably Australia and the US.

Euan Graham, a former British diplomat and senior fellow in Asia-Pacific security at the International Institute for Strategic Studies in Singapore said: “China is picking fights on all fronts."

“Their diplomacy is very confrontational.

"There are no calming voices on the Chinese side right now.

"They have to follow the path Xi has chosen.

“In Hong Kong, they have calculated that they can ride roughshod over the treaty agreements.

"But the offer of passports has clearly got them rattled.

“And Britain is not alone when it comes to China right now.

"Across Europe, countries are waking up to the many strings attached to any economic dealings with Beijing.”