Sree Iyer: Namaskar, today is June 23rd, Wednesday, and Welcome to Daily Global Insights with Sri and Sree. This is episode 188. We have a lot to cover and shall jump straight to Global News.
In global news, Xi Jinping demands Loyalty from top Chinese Officials as rumours spread about alleged high ranking defector. So it is true and in fact, you will get an idea that it was true because of what happened in that one meeting between the US and Chinese officials that took place in Alaska, with more on this, let’s go over to Sridharji. Sridharji Welcome to the program and your thoughts on this, sir.
Sridhar Chityala: Good morning to everybody on this bright, sunny day here on the east coast of the United States and probably early hours on the West Coast.
My thoughts are we have been hearing a fair amount of rumbles in the CCP. I think we are beginning to witness the first signs, I think more fallout would come as even the Covid revelations, begin to come out into the open. So I don’t think there is content within the party in terms of this unilateral approach, that’s one thing.
The second is that no one has perpetually ruled the CCP, or China for the long. They all retire, at the end of the two terms; this is another thing that’s rumbling that’s going on. And as you rightly point out more is likely to come out.
Sree Iyer: North Korea rejects Biden administration offer for talks without preconditions. While Kim’s sister says, the US is interpreting a signal from North Korea in the wrong way, speak from both sides of the mouth, and nobody knows which is the truth, isn’t it?
Sridhar Chityala: It is, I think that they play this, you know, ding dong battle, no, pun intended, between Kim Jong-Un and his sister. I think he’s saying just because I am interested in talking to you, don’t misinterpret that I’m coming to talk to you from a position of weakness, so, don’t set any conditions for me. Come and talk to me as an equal.
Sree Iyer: From submarines to Missiles the United States, is nudging, Japan to step up on defence and says that it cannot face China alone in the first signs of visible Quad meltdown. So the Quad as even under Trump, perhaps was the strongest, especially with Mike Pompeo leading the charge. And now we are seeing visible signs of 18 debilitations, Quad cannot consider this function without the complete full ascent of Japan, India, Australia in it and why is this happening? Is it again, Internal sabotage because of some malcontents or from China in various countries or do you think it is just philosophical differences?
Sridhar Chityala: I think we made the first call. In fact, I said that the Quad is once Biden assumes power his whole approach is going to change is no different to any of his other rhetorical policies which are this is Trump, so, I will play in the quad, but I will dilute its role. He went on this difference between, you know, your bilateral partner versus a trading partner. Biden and his team were more focused on Japan and Korea because they been long-standing partners the fact that he’s now pushing Japan to get itself organized with its military, be it submarines, be it Aircraft carriers and be it other types of missiles. It is a reflection that he thinks that it is the United States and Japan that is going to rule the roost. But, on the contrary, the leadership has actually come from Australia and India, India and Australia taking much more coordinated effort. And Japan because of Suga issues, Suga being quite weak, holding on to the power, he hasn’t won an election. You find that Japan has taken a little bit of a backseat as the days have, you know, progressed and you can also see Britain and France taking a much more active role within the Quad architecture. Having said that India had EU Indian Ocean two day exercises. India is just kicked off two-day exercises with the United States. So clearly the leader in that part of the pack is India, but it is India within the context of minus Quad.
Sree Iyer: While all this is happening in ASEAN, the Association for Southeast Asian Nations. ASEAN defends, its Indo-Pacific centrality between Quad and China, as Singapore Defence Minister spoke about the meeting of all powers be. With your permission sir, I am going to put up a chart here that shows the ASEAN, how it sees itself in the Quad and as things play out, I have that chart up here, so, sir you can talk.
Sridhar Chityala: Well, when you take a look at the chart, you find, right in the centre, is the ASEAN countries. Who are the countries who are most impacted by Indo-Pacific and by the South China Sea, and Taiwan and East Asia issues, it is ASEAN, or you take the Malacca Strait again in these ASEAN countries, which are at the epicentre of the issue. So what ASEAN is saying is we preserve our integrity, we have worked together in a collaborative manner so we will continue to do that. okay, Quad you have a loosely, you know architected structure then, you want to be part of it, so we’ll invite you to this defence ministers meeting. So we can have some kind of norms established, how we navigate the water. So, you have in the first perimeter the quad countries then you have Quad plus countries like France and Korea and so on. They are all part of this broader architecture of how the Indian Ocean, Indo-Pacific, South China all would be coordinated. Because that is the fulcrum point of three important things, one is trading, second is natural gas and third is the other resources that are floating around. So, effectively the defence ministers meeting that happened earlier and more information is beginning to trickle out. You can see again the Quad has been relegated to the backseat and respective loosely coordinated and tightly coupled countries like ASEAN are grouped, you know, holding the meeting and trying to find to bring the various parties together. In fact, a very profound statement from the Singapore Defence Minister is to say we are all here, we are talking to China, we are talking to the United States, to we are talking Japan, we are talking to India. We are also talking to the other nations which matter, such as the UK, France and Korea etc, which is a reflection that this is the forum that must come together to address the issue.
Sree Iyer: Covid variant called Delta Plus is now cited in 10 plus or more nations. Sridharji, this now taking a more mainstream role, will the United States also going to be facing a new wave. What are your thoughts?
Sridhar Chityala: Well, Dr Fauci has answered the question which says that the Delta variant already is cited in the United States. So the greatest risk from pandemic recovery is going to be determined by how profound the impact of the Delta variant is going to be in the United States. So they’ve already made it. So you can see that countries in China are impacted because they have cancelled the flights from Shenzhen to Beijing because that area seems to be affected. It is breaking news last night or this morning. So clearly Southeast China has been affected. We have talked about that, you know, India has seen early. Now, the US has seen the Delta variants. The UK is news to me, therefore, apparently, the UK has got the Delta variant. Obviously, Japan is a big problem if Japan has got the Delta variant, the Olympics, yesterday we talked about the decision to have Olympics, but with no spectators, but some of these European countries like Switzerland, Portugal, Russia, Poland, Nepal one can understand adjacent to India, but all seem to show the signs of the Delta variant. I also heard Indonesia you know there was a partial little bit of a shutdown. I’m speaking with someone in the early hours of this morning from Indonesia and you know the outlet offices were shut down, so it seems to be this Delta variant is now slowly, but surely coming into the foray and China is not exempted either.
Sree Iyer: Lithuania donate Covid vaccines to Taiwan and the German industry asked the government to confront China on human rights. So we have this interesting situation in Germany wherein the heir apparent to Angela Merkel has openly said that we should be friends with China. So there is the governing body or the people who are anointed to be the successors were taking a very pro-china stand. But, now we are seeing that German Industry which is one of the biggest industry bodies, I think is asking its government to say no you have to confront China on human rights. So where do you think this is going to end? Is Germany going to be, which is been the last holdout of, supporting China, are they also turn face up.
Sridhar Chityala: I doubt with the German government, a socialistic government would turn its tide against China, I very much doubt. The industry is naturally impacted and using Human rights, but their concern is that the Chinese industry is going to railroad its way and you may begin to see the core competence of Germany diluted, which is manufacturing and exports. They are Powerhouse in automotive and several, you know, high tech and reengineering stuff. So, it could be impacted. So I think there is going to be this clash but eventually, you know, Germany is a small nation. Well, we have also covered in DGI, some of the ports that we’ve opened up, which will connect directly from the port of Shanghai and to the upper ports of Germany and then providing the gateway to Europe via the road system, which’s very well Networked in Europe.
Sree Iyer: The election of Raisi in Iran is unlikely to change the dynamics of nuclear talks. While Israeli defence forces Chief Kohavi warns the US against rejoining the 2015 Nuclear Deal; the Drone attack is said to have targeted US forces in Iraq close to Bagdad International Airport. So, this is something that is again, developing news. So let’s take the two different things. Israel is saying you should not be engaging, the US is probably not going to listen to Israel that is continuing, but the new even more extreme right stand leader in Iran is saying, you know, things that perhaps are not going to use it to the US’s ears.
Sridhar Chityala: I call the three I’s. Okay, Israel, Iraq and Iran. The three I’s which are like the three vertices of a triangle is going to be problematic. Iran has proxies working and directly against I which is Israel. Then, you have Iraq, which is where the US forces are. You have Iran directly involved in Iraq also be if proxy forces within Iran. So this triangle is going to be problematic along with the SEHAL region in Africa, which we alluded to. These are being, you know, hot points and none of the decisions that our policy-making decisions that are being made in the United States are anything that is looking like mitigating any of the challenges. The fact is this is the 45th or the 46th drone attack that has happened, you know, Proximus to be US forces and US Air Base, so it’s worrying sign, whether the United States will worry about this, or completely abdicated, its responsibility in the South China Sea remains a big question, sir.
Sree Iyer: Now, one thing that the Biden administration has not explained is the need for going back to the Iran deal. Why are you doing this? It’s not as if Iran has been asking or pushing you at least not in your own left supported media. I didn’t see any Iran request. So why is this government so hell-bent, on making this deal? Is this again going back to my hypothetical checklist where everybody who has supported you or get the help you get elected? You have to just keep on taking. Okay. This favour for this person, this favour for this person. Is that is what is going on? Sridharji, your thought before we go on to US news.
Sridhar Chityala: I’ll give you two direct blunt reasons. Okay, first this is Biden administration number one, Obama administration number three. So every policy that you see here is basically making sure that re-legitimizing the Obama Administration policy Obama did the Iran deal, so, therefore, you go back to the table and regroup that’s number one. Number two days, much stronger Iranian influence on ground lobbied very heavily in the US elections, many of them aligned with Democratic party, you are aware of many of NGOs which are present. So you’re beginning to see that tilt of that and the impact of that is the policy formulation, okay. So, I don’t want to mention, which NGOs. But, everybody who lives in the United States knows about it and that is what you are seeing here, doesn’t matter which policy Obamacare, infrastructure, racial theory, broad socialization, foreign policy, all we are enacting Obama administration’s policies, within Biden.
Sree Iyer: And let’s move on to the US news, Fauci declares Delta variant the greatest threat to the nation’s efforts to eliminate Covid as the US battles over 5 million active cases. Again sir, the total infected base of 34.426 million. Now, take a look at this and then in light of the new thing where Daszak has been taken out of the panel on the UN for covid because of conflict of interest. Is this now going to reach the door of this person, Fauci and is he going to step down. Is this going to be the reason? Your thoughts, sir.
Sridhar Chityala: I don’t think, when you look at the number of people from the United States as well who are involved, you know, from academic, and from research, within WHO, and funding Wuhan facilities by virtue of Grants. I think that it is impossible to see unless they conduct a complete and thorough investigation, which the House GOP has demanded which there, seems to be no action forthcoming. Okay, the House representative the comprising of Democrats and Republicans, Democrats are more focused on their Progressive agenda. They couldn’t care anything about Covid. They couldn’t care for anything about anything else. They only want reform of elections, racial theory, defunding policy, climate, unlimited budget. So, they are on an entirely different plateau compared to what is confronting them here. Okay. So that is why they will be no resolution and they will be no enforcement and Republicans can go on shouting. Fauci will continue to be at the forefront of making announcement and more discoveries will come out. I think I don’t know maybe, we’ll talk to Peter Daszak tomorrow rather than today, but most striking is what the data is not being articulated is. The United States still has 5 million active cases of which California has close to 1.3 million. 1.3 million Active cases in one state and the United States was the first country to vaccinate. And there are states where an average number of active leases is between 250,000 to 500,000. Maryland has got 400,000, Washington DC has 200,000 plus. Kentucky has got 200,000 plus. So, you have a vast number of states still floating around and only close to 60 % of the population vaccinated with one single dose the United States kind of make a problem looming ahead.
Sree Iyer: Senator Manchin agrees to join Democrats in supporting the voting bill while the GOP is all poised to block the election bill in the Senate, can they filibuster it, so that it will not pass or will the vice president casting vote help usher in a new voting bill? Your thoughts.
Sridhar Chityala: Well the story is she was there and she presided over the meeting so they couldn’t break the filibuster Rule. Now, there is going to be two days of hearings, everybody in the House shouting, you know, making their your presence felt, which is to say this is the problem with the Democracy, we are a democratically-elected, we have won the percentage and we have won the maximum number of the representative both from the states and we cannot get our act filibuster is nonsense. On the contrary, you have Republican, you know, who was trying to usurp Presidency, having not got the percentage, having not got the Electoral College votes and they are trying to block the agenda that they are going. So this is going to be the fight that is going to happen when a filibuster will be removed. We will soon see. At least to the extent that Manchin and Sinema, are basically trying to say, no, the filibuster is not going to be burst. Let’s wait and see. I think the drama is unfolding.
Sree Iyer: In my opinion, sir, and I’ve been saying this many many times, election to the United States has to do, reforms have to be done but it has to be done in a way that it is absolutely bulletproof. If you want to call yourself the technologically most advanced nation on earth, then you have to act like one. In my opinion first of all whatever the conduct of the election is it has to adhere 100% to the United States Constitution. What does it say? Number one, only US citizens should be allowed to vote. Number two, we have to make sure that every citizen needs to vote. This is our responsibility as a citizen of this country to vote. So we have to make sure that whatever the process that we usher in will make sure that every person has to vote otherwise you impose fines on them. Third, you need to able to have a way that is consistent across the state, you cannot allow some county to change the rule. It has to be centralized and it needs to use some technology such as the Distributed Ledger technology or BlockChain so that it has to be a complete audit trail, incontrovertible. Anybody can go and look at that with sufficient permissions to know what happened. The voter is allowed to change his or her mind any number of times until the last vote that they cast. This is my simple theory. I think both Democrats and Republicans will get behind it. I don’t know your thoughts, sir, but at least I will let you have your thoughts before we the next line item.
Sridhar Chityala: I think that somebody… We have not shared that chart because it’s not public, it’s a private exchange. Very rightly said what we are fighting is a citizen to vote, an ID to vote, the mandate to vote and the only vote per person, this basically should be the norm and not two votes per person. People who have died have come and voted, anybody who is living here can vote, anybody who doesn’t present an ID can work. All these kinds of things that they are trying to bring about without bending the integrity of the electoral system because there has to be fair and just conduct of the election process. This has been the problem. There have been very different approaches. Similarly, depending on whether you have a Democrat running the legislature or whether you have a Democrat running the judicial system or whether you have Republican running the legislature or you have Republican running the Judiciary or the governorship, if there is going to be this misalignment then without a comprehensive and consistent policy, then it is going to be a subjective interpretation depending on your Ideology which never results in a consistent or uniform outcome from the elections. I think you have nailed it by listing all those kinds of issues. This is the problem that the United States is facing. Three important people, but if they defer then you get a submarginal result.
Sree Iyer: GOP Senators tear into Biden National Security advisor for calling Nord Stream 2AG, a Swiss company. I thought this was an American company, sir.
Sridhar Chityala: Nord Stream 2 is a Russian company. Remember, one of the pipes while Biden passed executive orders to unilaterally stop gas and energy pipeline activity in the United States. He allowed an exemption for Nord Stream 2 and that’s a pipe that goes from Germany to Europe and heats up the houses, he gave an exemption. Jack Sullivan is going through the interview, I think it was Andrea Mitchell show, he was asked the question so he mistook it and he said we gave exemption to 2 companies and then he said both were Swiss companies. It’s conceivable that how can a National Security Advisor commit such a blunder, but these things happen. So that’s what the whole news is that when having policymakers not being cognizant of what they stood for what they voted for and what they didn’t vote for and what they approved, we have such problems looming up. Then, you can imagine Biden signs a paper. Okay, that’s Swiss, I will sign the paper. This is a very big topic that came up in the discussion. We have covered at least 2-3 times in DGI.
Sree Iyer: Critical Race Theory explodes from obscure debate to the frontlines of Culture War. Again, this is another one of those Progressive agenda. What difference is this going to make to the overall education of a child, I wonder! Your thoughts, sir. Is there going to be a balanced counter view also presented? Will the children be mature enough to understand these things? Your thoughts, sir.
Sridhar Chityala: First and foremost, I think this will again go down on the political ideology. If you are a democratic state and if your local administration is Democratic then the schools are going to be forced to follow this particular curriculum that is being introduced. So you are free. Some of these things have to be presented in the parents and community gathering. So you are beginning to see parents and people and communities taking both sides. People saying that this is somehow underplayed and how this has to be brought to the front of the surface, so people can… It is almost like you want to make people feel guilty. The history is not hidden. The history is very clear and it is documented, but people can have differentiated views. India is going to talk about Moguls, again and again, it’s over and it is done and you got to move on. You find in the community gatherings, boards now popping up all over the place. So it is now front and centre of the issue from obscurity because it’s going to be a mainstream policy. The main contention is basically the minds of the children, right at the school is being corrupted or is being returned without any consent or awareness of the parents, that’s the single biggest issue.
Sree Iyer: Senate confirms Kiran Ahuja, the nominee with Critical Race Theory ties to run Federal Personnel Office. So again, this is playing out even in the administration, isn’t it?
Sridhar Chityala: It is. She is supposed to have been associated with NGOs that have been part of the Critical Race Theory propagation or advocacy groups and that came up with the hearing but how many you are going to block? So she’s going to run the personnel office. So that the general prejudice and general objection is to raise the issue which is to say, Okay, now we are going to have entire Washington DC inundated with these type of people advocating this theory. So that was the main objection but she is confirmed.
Sree Iyer: ‘I’m not going back to work’ an Indiana resident file lawsuit after Governor ends the unemployment benefits. You’ve talked about this in the past that people are not willing to go back to work and as luck would have it, China would keep on introducing new variants and every time it looks like the US is going to lift its head up and start working again, you’ll have another variant. And the US has done nothing about it. They haven’t fired the guy who’s colluding with them. I don’t know where this is headed, sir. This is a disaster 1.0.
Sridhar Chityala: It is basically people saying, if there was a theory, now it is quite open, people who are receiving unemployment benefits will go on till September. They say I’m getting married in September. Why should I come to work? I’m not going to work.
Sree Iyer: Consumers, not companies are bearing the brunt of inflation. This is beginning to play out. You go to the grocery store, you go to Cosco, you buy online stuff, you start seeing the rise in prices. This is percolating through all sectors of the economy. I think this is going to be the biggest Waterloo. I think President Biden because it’s too much money chasing too few things and there are also these artificial scarcities plus the fear of another wave, I think, I can just go on. Sir, you wrap up and then we can go on to Indian News.
Sridhar Chityala: My observation is, Biden is going to start with running the Obama administration. He probably is going to finish with a Jimmy Carter Administration. See, It is very clear, interest rates are down, plenty of money that is borrowed is put into the system, people are not working for therefore naturally the prices have to go up. That is the rudimentary principle. When you have excess liquidity, low-interest rates, everybody wants to buy the same house. Everybody wants to rent the same apartment and what happens, it’s a demand. So therefore the price goes up. So what that results in, is inflation. And Biden has committed he is going to put $6 trillion every year for the next four years or until his term completes or to the next term if he gets elected. So your point is well made and I think we are getting into a vicious cycle. If the Delta variant comes in, more trouble looming for us with the balance sheet bloated.
Sree Iyer: Let’s take a look at India related news. Indian Prime Minister attending the G7 meet online and his dialogue with France, UK, Italy, and Germany to present a unified stand against China, is further edging India and EU to a closer Economic and Political Deal. I think this is a good thing. I will go onto the next item also. India is all set to kick start a two-day air combat exercise with the US in the Indian Ocean commencing June 23rd which is today. US Navy’s Ronald Reagan Carrier Strike Group which is currently in the Indian Ocean will be participating. You will not read this in any mainstream media news in India. I wonder why. Sir, your thoughts.
Sridhar Chityala: My thoughts are, EU clearly sees that it needs alternate markets and India is a big, big market. There is a general alignment, whatever one may want to call, India is caught somewhere between the free market, and its socialistic principle by just sheer size and diversity of the population. Europe is very similar, most of the countries have free-market principles, but again, very much socialistic principles in terms of dispensation. So there is a natural harmony. EU is a much stronger partner and more reliable partner when you look at it within the context of the United States. Again, the United States government and the United States business are two different entities, people don’t understand and still, in India, people don’t get this point that the United States business ecosystem works differently to the United States government. Even here, the economy is decoupled from the government only, to the extent of the interest rates that are set by the Fed. So I think to summarize this, the fact that for defence, India continues to work with the US. For trade, it continues to expand the scope of its activity, both with the EU, as well as with the UK because the UK is one of the prime partners. The fact is when you look at India’s defence on other ties, which are the big spends, who are the big players? Russia, Israel, France, Britain. Where are they all from barring Israel? Everybody else is from Europe. Now, the US is slowly making up the list. So, I think it augurs well.
Sree Iyer: India electrifies 19 villages in Siachen with Renewable Power taking Ladakh closer to Carbon Neutrality goal. That is a very impressive achievement because we know how hard the terrain is to be able to erect solar panels there and being able to consistently extract reliable power. Perhaps they also have a way to store it for the night, I don’t know. It looks very good sir.
I’ll go on because we are a little bit behind. Indian Railways Build Road Over Bridge on dedicated Freight Corridor at Valsad in record 20 days. So now, what you usually associate with armies when they have to build bridges in a matter of days. Now, Indian railways is able to do that. This is a very impressive achievement that India can put together very very important things like railway lines in such a short time.
Sridhar Chityala: I think that I continue to emphasize Indian Railways and its infrastructure because this is now become the Hub and Spoke and architecture of the Indian Transportation, Logistics and other things, It doesn’t matter whether it is covid, doesn’t matter whether it is Army, doesn’t matter whether it is grain, doesn’t matter whether it is manufacturing goods, doesn’t matter whether it is infrastructure, it seems to be the epicentre. One has to give an enormous amount of credit to Piyush Goyal. As the Railways Minister, the transformative nature of the work that he has done in elevating Indian Railways to be the front and centre of the economic transformation albeit slowly taking place in India.
Sree Iyer: Covaxin demonstrates 77.8% efficacy in phase 3 trials, while India demonstrates the 10 to 12 million vaccines per day is an achievable goal. This is the first time that India has managed to do this kind of a number of vaccinations in a day. Although people question that your capacity is only 4 million in a month, how can you have so many vaccines, we don’t know the details. But certainly, the website from the government says that they have done this. Your thoughts, sir.
Sridhar Chityala: My thoughts are too full. Again, in DGI we have covered this. 100 million vaccines… I get confused between 10 crores and 7 crores. You can interpret it in million, I get confused. But 10 million is what the Serum Institute has committed in terms of moving forward with its capacity. 7 crores is what the Bharat Biotech in Hyderabad has committed. This excludes all other manufacturers who are coming up. So you’re talking about at least 20 – 50 crores when you include J&J, the new vaccine that is coming from DRDO, then when you include Eli Lilly’s program, please go back and track the patterns of the vaccinations. India has consistently done somewhere north of 3.5 to 5 million. Yesterday, they elevated themselves to 8.6 million vaccines, you translate that to lakh and crores, I am not very good at this translation. So 8.6 million vaccines were given yesterday, the numbers are visible. The State-wide break up is visible. So, the point is can they reach the 10 million number? The answer is, yes. They have done this before they have logistics in place. There is a place. I don’t want to waste, I’m cognizant of the time. So, yes, the numbers are achievable.
Sree Iyer: Yes indeed. 7 crores are 70 million, 10 crores are 10 million. So, let’s take a look at the markets news, now. Markets climb for the second day and NASDAQ hits an all-time high amid Bitcoin comeback. Quickly, sir, let’s take a look at markets. Your thoughts and then we can call it a wrap.
Sridhar Chityala: Well, the markets are back up. It was the NASDAQ day, it rose 111 points yesterday. All the market indices grew. Now if you look at Dow, if you look at S&P, they are back to their 10% levels. NASDAQ today is around 11%. So, I think the money in the ecosystem that simply implies that there will be volatility in the markets and there’ll be shifting patterns of market gyrations. So that’s just a reflection of where the markets are. But what is important is, if you take a look at the Brent prices, the Brent and oil are inching towards that 75. Brent has crossed 75. $100 next year is within the realms. This is not something that I am unable to reconcile what kind of economic outcome that it is going to create is unclear at this stage. While this level of inflation, the 30-year treasury rate is now at its lowest point at 2.08. It went up to 2.8 and it has now come back to 2.08. The 10-year had gone up to 1.7, it’s now come back to 1.46. There’s clearly something wrong. What exactly is going on here will determine the outcome in terms of the economic consequences as we move forward. That’s my observation on the market side.
Sree Iyer: With that, our today’s episode comes to a close. Thanks for watching, do subscribe to our channel. Namaskar.
Sridhar Chityala: Namaskar and have a good day. Once again apologies, we went past the 30-minute mark and we spent 37, we spent a lot of time on many topics.
Sree Iyer: Thank you, sir.
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