Tuesday, 31 March 2009


David Isenberg

Asia Times, March 31, 2009

On March 25, the United States Department of Defense released the 2009 unclassified edition of its annual report "Military Power of the People's Republic of China" to Congress.

As a description of the ongoing development of China's military forces it is a reasonably informative document. But if it was supposed to be an alarm about the threat posed by Chinese military forces it failed badly. For this we should be grateful.

Ever since the demise of the Soviet Union many members of America's politico-military-industrial sector have been looking for another country as a replacement, if only to justify the huge military and security expenditures the United States appropriates annually. And, by default, given its sheer size, population, and increasing economic importance, China is seen as the new threat standard. Indeed, China now provides the rationale for at least a quarter of the Pentagon's budget.

Yet, unlike the waning years of the Cold War, when the Reagan-era Pentagon released its annual Soviet Military Power, giving an estimate of the Soviet Union's military power and strategy, the 66-page Chinese version is more nuanced and far less alarmist. And even the passages warning of threatening Chinese military developments seem unconvincing.

(...) [artículo aquí]

Monday, 30 March 2009

Nobel laureate Joseph E. Stiglitz on the coming global economic order.

Rana Foroohar

Newsweek, From the magazine issue dated Apr 6, 2009

The power shift from west to east continues, as developing nations flexed their muscles at the G20 in London recently, and China and Russia called for a new international reserve currency to replace the dollar. Nobel laureate Joseph E. Stiglitz, who pioneered the idea of "global greenbacks" in his book "Making Globalization Work," and is now at the center of many debates over the future of global capitalism, spoke to NEWSWEEK'S Rana Foroohar about Asia's big bucks, America's bad loans and why the European welfare state still works.

FOROOHAR: You've been talking for years about how the dollar reserve system is broken. Why is everyone getting on the bandwagon now?
STIGLITZ: A reserve currency has to be stable to be effective, and for some time now, it's been clear that the dollar is not. The financial crisis has brought this home with a vengeance. The Fed's balance sheet is surreal. They are in uncharted territory, and there are serious concerns about inflation, and its subsequent effects on the dollar. The Chinese are clearly very concerned about this. They see that some of their investments in the U.S. (like Blackstone) have gone badly wrong, and they worry that they will have worked so hard to save their $2 trillion in reserves, only to see it blown away by inflation. At the same time, there's this broader concern about how the current reserve system basically entails poor countries lending to the U.S. at very low interest rates. It's inequitable, and it also reduces consumer demand at a time when it's really needed.

Why can't the euro help fill the currency void?
A two-currency reserve system would be even more unstable than what we have now, because people would move in and out of the dollar and the euro depending on which is up or down, increasing volatility.

(...) [entrevista aquí]

Saturday, 28 March 2009


Li Yanping

Bloomberg, March 28, 2009

China has room to cut interest rates as consumer prices may end the year unchanged, the central bank said after inflation fell in February for the first time since 2002.

“The central bank still sees room for more rate cuts,” Zhang Jianhua, the research head of the People’s Bank of China, told an economic forum in Beijing today. “We haven’t yet cut rates because money market rates have dropped to quite low levels and banks have abundant liquidity.”

China’s consumer price index may stand at zero for 2009 and the nation may escape deflation because of “strong loan growth” and the government’s 4 trillion yuan ($585 billion) stimulus package to spark an economic recovery, Zhang said.

Plunging prices have increased the risk that deflation will become entrenched, prompting consumers to delay purchases, squeezing company margins and triggering wage cuts. Premier Wen Jiabao, who this month set a 4 percent inflation target for 2009, is relying on a surge in lending and the support measures to spark an economic recovery.

Wen said March 13 the nation’s 8 percent growth target for this year is “difficult but possible” to achieve. People’s Bank of China Governor Zhou Xiaochuan said this week that leading indicators are pointing to an economic recovery.

(...) [artículo aquí]

Friday, 27 March 2009


Hari Sud

UPI Asia Online, March 27, 2009

Toronto, ON, Canada, — With the United States in a serious recession and under a credit lockdown, there is an interesting geopolitical game in progress. U.S. Secretary of State Hillary Clinton paid a low-key visit to Beijing at the end of her four-nation tour of East Asia from Feb. 20-22. President Barack Obama had sent her to sound out the Chinese on supplying money the United States desperately needs.

As of January this year, China held US$739 billion of the U.S. Treasury debt. It cannot afford to buy more. The domestic situation is precarious: exports fell 25 percent in the last two months and unemployment is spiraling. The government is pumping huge sums into infrastructure projects to stave off social unrest.

Still, the United States is hoping to be the sole depository for China’s 2009 export earnings. That is what Clinton was indirectly asking.

The financial meltdown is causing deleveraging by both U.S. businesses and private citizens. The vaulted era of leveraged buyouts by businesses and uncontrolled consumer spending is over. Only the U.S. government, in the name of stimulus packages, has decided to spend its way out of recession. Its argument is that without this spending, 10 million people could be out of work.

Hence China comes to mind. China has two types of money at its disposal – high domestic savings, which could be pumped into its own economy, and a huge trade surplus, which could be used to lend money to the needy – such as the United States and Europe.

U.S. government debt to China is tied down in U.S. Treasury bonds and is not cashable. China has a total of US$1.8 trillion in worldwide reserves, 65 percent of it in U.S. currency. The Chinese consider the disposition of their reserves a state secret, hence the known information is incomplete.

It is known that at the end of 2007 China had about US$120 billion in mortgage-backed securities, or subprime loans, and $200 billion in sovereign funds, in addition to its U.S. Treasury bonds. This huge investment gives China a geopolitical advantage; but if the debtor cannot pay, it is a serious concern.

(…) [artículo aquí]


Jian Junbo

Asia Times, March 27, 2009

SHANGHAI - This month, the European Union (EU) parliament passed a resolution on the Tibet issue, urging the Chinese government to resume dialogue with the Tibetan spiritual leader in exile, the Dalai Lama, for "real autonomy for Tibet". However, a Chinese government spokesperson immediately rejected this, saying the call was interference in China's "internal affairs".

Not only the EU, but also all of its member states acknowledge that the Tibet Autonomous Region is a part of China, and they all adhere to the "one-China" policy, at least according to their laws and official statements.

This raises the question of why the EU parliament would endorse such a resolution when it was bound to be rejected by China, especially in the current economic climate, when the EU wants to build closer relations with China?

Firstly, the issue of human rights will always carry weight in the EU's foreign policy, and the Tibet issue fits into this category, that is, China's Tibet policy is perceived as human rights abuse. Moreover, the EU parliament passed the resolution on March 10, the 50th anniversary of the failed Tibetan armed uprising against Chinese rule, which ended with the Dalai Lama's fleeing Tibet for India, where he resides to this day.

So, for the EU parliament, it was a convenient date to bring up the Tibet issue. By doing this the EU could display its image of "normative power", while also showing that it has the resources and will to spread its Western values to other countries even when the world economy is in recession.

(...) [artículo aquí]

Thursday, 26 March 2009


Pepe Escobar

Asia Times, March 26, 2009

What happens on the immense battlefield for the control of Eurasia will provide the ultimate plot line in the tumultuous rush towards a new, polycentric world order, also known as the New Great Game.

Our good ol' friend the nonsensical "global war on terror", which the Pentagon has slyly rebranded "the Long War", sports a far more important, if half-hidden, twin - a global energy war. I like to think of it as the Liquid War, because its bloodstream is the pipelines that crisscross the potential imperial battlefields of the planet. Put another way, if its crucial embattled frontier these days is the Caspian Basin, the whole of Eurasia is its chessboard. Think of it, geographically, as Pipelineistan.

All geopolitical junkies need a fix. Since the second half of the 1990s, I've been hooked on pipelines. I've crossed the Caspian in an Azeri cargo ship just to follow the $4 billion Baku-Tblisi-Ceyhan pipeline, better known in this chess game by its acronym, BTC, through the Caucasus. (Oh, by the way, the map of Pipelineistan is chicken-scratched with acronyms, so get used to them!)

I've also trekked various of the overlapping modern Silk Roads, or perhaps Silk Pipelines, of possible future energy flows from Shanghai to Istanbul, annotating my own do-it-yourself routes for LNG (liquefied natural gas). I used to avidly follow the adventures of that once-but-not-future Sun-King of Central Asia, the now deceased Turkmenbashi or "leader of the Turkmen", Saparmurat Niyazov, head of the immensely gas-rich Republic of Turkmenistan, as if he were a Conradian hero.

In Almaty, the former capital of Kazakhstan (before it was moved to Astana, in the middle of the middle of nowhere) the locals were puzzled when I expressed an overwhelming urge to drive to that country's oil boomtown Aktau. ("Why? There's nothing there.") Entering the Space Odyssey-style map room at the Russian energy giant Gazprom's headquarters in Moscow - which digitally details every single pipeline in Eurasia - or the National Iranian Oil Company (NIOC)'s corporate HQ in Tehran, with its neat rows of female experts in full chador, was my equivalent of entering Aladdin's cave. And never reading the words "Afghanistan" and "oil" in the same sentence is still a source of endless amusement for me.

(...) [artículo aquí]

Wednesday, 25 March 2009


Simon Elegant

Time, March 25, 2009

It wasn't supposed to be like this. Many members of China's fledgling dissident community had hoped that after the successful hosting of the Olympics last summer, the control that authorities had exercised over the country's dissenting voices would ease up. Some human rights advocates, academics and other analysts in and out of China even expressed optimism that long-awaited reforms to the judiciary, the media, in labor relations and in the treatment of non-governmental organizations would finally materialize.

To many rights advocates, it has become increasingly clear in recent months that those reforms are still a long ways off. "It used to be the case that whatever the negative developments and systematic smothering of dissent, there were always some signs of hope and potential advances on other fronts," says Nicholas Bequelin, a China researcher with the New York-based Human Rights Watch. "But recently the good news has been very few and far between. There has been a total lack of progress on legal reform, the media, rural reform, labor. These issues were very much carrying forward hope for opening up of Chinese society, but now there's just nothing on the horizon."

(...) [artículo aquí]

Tuesday, 24 March 2009


Nazia Vasi

2point6billion.com, March 24, 2008

Does the economic crisis have the strength to turn the world on its head? Actually see the emerging economies of India and China develop into confident nations that will lead the world in the Asian century or will the massive resources and educated talent pool of the United States help it to continue to wield its power in the international league?

It’s a debate with valid opinions on both ends, however numbers tell another story. Economists globally seem to think that emerging economies will come out of this crisis sooner and stronger than the developed economies. Demonstrating their stalwartness, large companies in these economies are already buying more developed world companies then two years ago. Emerging-to-developed market deals represent 47 per cent of the developed-to-emerging total, compared with 23 per cent in the second half of 2006.

Further, while the richest economies are shrinking, the emerging giants are only slowing. The worst global crisis in 80 years is expected to contract the U.S. and Europe’s GDP by three percent and Japan’s by six percent, while the Indian economy is expected to decelerate to five percent and the Chinese economy will slow to seven percent.

That growth gap is destined to reshape the economic future of the world. Goldman Sachs chief economist Jim O’Neill now predicts that the major emerging markets—Brazil, Russia, India and China, a.k.a. the BRICs—could overtake the combined GDP of the G7 nations by 2027, nearly a decade sooner than the forecast in a landmark study a few years back, the Newsweek reported.

(...) [artículo aquí]


Siddharth Srivastava

Asia Times, March 24, 2009

NEW DELHI - Though it's uncertain how US President Barack Obama will impact the Indian outsourcing business, there is one legacy of the erstwhile George W Bush administration that looks set to continue - defense.

Last week, the Obama administration approved a US$2.1 billion sale to India of eight Boeing Co P-8I maritime patrol aircraft, the biggest US sale to the country to date.

The long-range maritime reconnaissance aircraft for the Indian navy will replace eight aging and fuel-guzzling Russian-origin Tupolev-142Ms. (The P-8I was derived from the commercial Boeing 737 airframe.)

The US State Department said in a statement that it cleared the direct commercial sale having factored in "political, military, economic, human-rights and arms control considerations".

It said direct arms-trade "offsets" were expected to include engineering services, manufacturing and integrated logistics-support projects of over $641 million.

Doubts in certain quarters that the Obama administration may review the strategic depth of India-US relations, an important component of which is defense, have been put to rest.

(...) [artículo aquí]

Monday, 23 March 2009

What's called a 'global' recession is in fact shrinking economies mainly in the West, not the East.

Rana Foroohar

Newsweek, From the magazine issue dated Mar 30, 2009

As Chinese Premier Wen Jiabao informed the world recently, he's a "little bit worried." Not about China, mind you, but about the United States. "We have loaned huge amounts of money to the U.S., so of course we have to be concerned," said Wen earlier this month, warning America to "honor its word" and "ensure the safety of Chinese assets." Translation: Those guys on Wall Street really screwed up. We think the dollar might tank and erase the value of our $2 trillion in T-bills. Get your act together.

It's a stunning turnabout from even a year ago, when such warnings were almost always issued by rich nations, like the U.S., to poorer ones. But a lot has changed in recent years and recent days. Emerging giants like China are stronger, more economically competent and vastly richer. Their confidence has only increased amid a calamity that is widely described as the worst "global" recession in 70 years, but is in fact not truly global. It is shrinking the richest economies, but only slowing the emerging giants. This year GDP is expected to contract by 3 percent in the U.S. and Europe, and by close to 6 percent in Japan, while continuing to expand in China and India by 7 and 5 percent, respectively.

That growth gap is destined to reshape the economic future of the world. Goldman Sachs chief economist Jim O'Neill now predicts that the major emerging markets—Brazil, Russia, India and China, a.k.a. the BRICs—could overtake the combined GDP of the G7 nations by 2027, nearly a decade sooner than the forecast in a landmark study a few years back. The ascent of the formerly poor giants is accelerating, and their confidence is evident not only in the utterances of Wen Jiabao. Manmohan Singh of India has blamed the "massive failure" on authorities in "developed societies," but his peers all name America by name. Vladimir Putin of Russia scorns "the irresponsibility of the system that claims leadership." Luiz Inácio Lula da Silva of Brazil, in an interview with NEWSWEEK (following story), says the U.S. bears the brunt of responsibility for the crisis, and for fixing it at the upcoming G20 summit in London.

(…) [artículo aquí]

Sunday, 22 March 2009


Irene Shen

Bloomberg, March 22, 2009

China’s stimulus spending may add as much as 1.9 percentage points to economic expansion and help the government achieve its growth target this year, according to the State Council’s research group.

“China has the ability to become the first in the world to step out of the crisis and keep stable growth for the mid and long term,” Zhang Yutai, director of the Development Research Center of the State Council, said in a live broadcast from the China Development Forum in Beijing today.

Vice Premier Li Keqiang reaffirmed China’s goal of 8 percent growth at today’s forum, saying some industries “have seen signs of recovery.”

China is targeting expansion in 2009 even as economies from the U.S. to Japan contract. The nation’s economy is showing “early signs” of stabilizing as government-backed investment counters a slump in exports, the World Bank said March 18.

Investment in China rose 26.5 percent in the first two months of 2009 and bank loans quadrupled in February, indications the government’s 4 trillion yuan ($585 billion) stimulus plan is starting to feed into the economy.

China’s government is battling to boost growth amid tumbling exports, rising unemployment, falling house prices and the risk of higher loan defaults. Millions of migrant workers have lost their jobs as declining overseas orders force factories to scale back production or shut.

(...) [artículo aquí]

Saturday, 21 March 2009


Xin Zhiming

China Daily, March 21, 2009

It remains too early to claim that China's economy has started to recover, although in the long run it still has the potential to grow by 7-8 percent annually, said economists at the China Development Forum today.

Economic indicators have shown initial signs of an economic recovery in China, such as the purchasing managers index (PMI), which has been on the rise for the third consecutive month in February. The fixed-asset investment and retail sales have also remained strong in the first two months.

"However, we may need to look at the indicators in March and the first quarter as a whole (to see whether a real recovery has come)," said Zheng Jingping, statistician from the National Bureau of Statistics.

The fixed-asset investment, for example, had dropped dramatically in the first two months of 2008 due to the severe storms in a large part of the country, which may have made this year's investment look exceptionally high, he said.

The global economic financial crisis, meanwhile, is still worsening and the world economy may contract by 0.5-1 percent this year, which will affect China's economic growth, he said.

China's export slumped by 17.5 percent and 25.7 percent in January and February respectively.

Lawrence Lau, president of the Chinese University of Hong Kong, said at the forum that China's export would remain resilient and rebound soon.

(...) [artículo aquí]

Friday, 20 March 2009


Peter M. Beck

Nautilus Institute, Policy Forum Online 09-022A: March 19th, 2009

With US spy satellites focused on North Korea for the announced launch of a satellite aboard an intercontinental ballistic missile capable of reaching Alaska, the idea of a nuclear deal with Pyongyang may seem remote. But that would be a hasty conclusion. The long-range missile test may well be North Korea's habitual way of seeking attention and getting an invitation to talk. It's not that Washington does not want to talk, but it will be difficult to deliver what North Korea wants - US recognition and massive economic aid and dissolution of the US-South Korea military alliance in exchange for a promise of dismantling its nuclear program.

Indeed, during her recent visit to Asia, Secretary of State Hillary Clinton suggested the Obama administration will adopt a balanced approach that combines multilateral talks with bilateral engagement with Pyongyang. The challenge will be to get the other key players to support this strategy. Ultimately, a "bold initiative" that abandons North Korean denuclearization as a precondition may be the only way to really test North Korea's intentions. Given North Korea's track record in making concessions with one hand and withdrawing with another, such bold initiative may indeed be, to borrow from Samuel Johnson's adage about remarriage, "the triumph of hope over experience."

The fact that the North Korean leadership is adopting a bellicose posture despite clear overtures from Washington requires us to consider what Pyongyang really wants. One way to get at this is to ask if Pyongyang has determined it needs more enemies or friends. If it needs enemies to rally the public, then we're in for a rough ride. Kim Jong Il may have concluded that he needs enemies to justify his failed rule and succession to an under-achieving son. If Kim decides he needs friends who can provide security guarantees and assistance, then the rhetoric is just a prelude to a deal.

(...) [artículo aquí]

Thursday, 19 March 2009


Omar Waraich

Time, March 19, 2009

The drums have fallen silent, the dancing in the streets has ended, and Pakistan's stock exchange has rebounded, but Monday's political compromise that ended a dangerous standoff has not necessarily ensured political stability. Monday's announcement of the reinstatement of Chief Justice Iftikhar Chaudhry and 60 other judges sacked two years ago by then President Pervez Musharraf was a momentous victory for an opposition-backed protest movement. It also satisfied the concerns of Pakistan's military chiefs to avoid a confrontation on the streets — while easing U.S. fears that partisan infighting would imperil Pakistan's battle against extremism. But the outcome of the standoff has dealt a body blow to President Asif Ali Zardari and his ruling Pakistan People's Party (PPP), potentially opening the way to further political turmoil.

Political support for Zardari and his government was flagging even before the showdown over the judges, which revealed cracks within the PPP as key party leaders either abandoned the cabinet or attacked it from the sidelines before the president's embarrassing retreat.

Monday's announcement by Prime Minister Yousaf Raza Gilani that the judges would be reinstated was greeted with acclaim, although few bought his explanation that the PPP had always sought the return of Chaudhry. Despite the PPP having backed the lawyers' movement to demand that Musharraf reinstate the judges fired in 2007, once in power Zardari backtracked, prompting accusations that he feared an independent judiciary might reinstate corruption charges against him dropped as part of an amnesty proclaimed by Musharraf, the legality of which has been questioned.

(...) [artículo aquí]

Wednesday, 18 March 2009


The World Bank


- China’s real economy has been hit hard by the global crisis, but has been holding up. Although China’s growth is set to slow, it is still likely to outgrow most other countries.
- However, the continued global crisis is bound to contain China’s growth in 2009 and 2010, especially via weaker exports and market-based investment. The World Bank projects GDP growth of 6.5 percent in 2009.
- Nonetheless, China’s economic fundamentals are strong enough to allow policymakers to consider policies that will affect the economy well beyond 2009.
- There are useful synergies between China’s short and medium term policy objectives. Financial sector reform will help.

(Summary and Full Report here)

Tuesday, 17 March 2009

As exports plummet and coastal factories close, Beijing looks inland for a new economic model.

Melinda Liu

Newsweek, From the magazine issue dated Mar 23, 2009

Even if you follow news about China, it's possible that you've never heard of Chongqing, a sprawling municipality of 32 million people on the Yangtze River. A major industrial center and logistics base, Chongqing bills itself as the "Gateway to Western China." Seventy percent of its citizens are peasants. Per capita income levels, while growing, have never reached those of better-known cities such as Shanghai or Beijing. Yet Chongqing and a host of smaller inland cities like it are central to China's economic-recovery hopes. Chongqing is already outperforming not just the depressed coast but the rest of China, too. The city's GDP is slated to grow at an eye-popping 12 percent in 2009—beyond the wildest dreams of most Western countries, or indeed beyond China's own 2009 national target of 8 percent, which even Premier Wen Jiabao now admits will be "arduous" to achieve.

This unusual record is due largely to billions of dollars in government money. More than 60 percent of China's two-year, $586 billion economic-stimulus package will go to inland regions, and some $34 billion is earmarked for Chongqing—more than double the per capita share for China's 1.3 billion people. Ambitious rail- and road-expansion projects—such as the Chongqing-Lanzhou rail line—will help connect the Yangtze port and other inland cities to markets farther west as well as to big cities back east: $220 billion of stimulus money is for such projects. This accelerated spending will, in turn, drive up demand for coal and iron ore—two major commodities shipped along the Yangtze. In January the river's ports saw their first monthly increase in cargo in half a year. "Chongqing has entered a new growth cycle," predicts Mayor Wang Hongju.

The numbers back him up. Investment in infrastructure and other types of construction in 2009 has jumped 35 percent from the same period last year. And, with labor and property costs still relatively low, companies that once built factories on the coasts are relocating to Chongqing. (HP has begun building a new facility, as has the major Chinese electronics manufacturer Jiangsu Baixue.) It's a shift sanctioned by Beijing, which sees the city as the centerpiece of its newly reinvigorated "Go West" campaign, which aims to shift China's future growth from the coasts to the vast hinterland. Now, with the coastal export model well and truly broken, Beijing has political license to move full steam ahead with the plan, which is focused on bettering the lives of China's 750 million farmers in more than 400,000 villages, mostly in the interior—and, eventually, turning them into consumers.

(…) [artículo aquí]


Shashi Tharoor

The Globe and Mail, March 17, 2009

With the world's most developed economies reeling under the incubus of what is already being called the Great Recession, India took stock at the beginning of the year and issued a revised estimate for GDP growth in the 2008-09 fiscal year. Its projection came out at a healthy 7.1 per cent.

Despite the doom and gloom assailing world markets, there is no fear of recession in India. Even pessimists are speaking only of lower growth.

This is quite a turnabout for an economy that crept along for years at what was derisively called the "Hindu rate of growth" - about 3 per cent - while other Asian economies shot ahead. For more than four decades after independence in 1947, India suffered from the economics of nationalism, which equated political independence with economic self-sufficiency, relegating the country to bureaucratic protectionism and stagnation.

Since 1991, however, India has liberalized its economy and profited from globalization. Its tech-savvy technology pioneers, software engineers and call-centre operators have made the country an economic success story.

(…) [artículo aquí]

Monday, 16 March 2009


Christian Fleming

China Briefing, March 16, 2009

Since the collapse of major financial institutions this past fall, China has been spending a fortune trying to keep their country running smoothly and continue expanding. A large part of this spending has come from the RMB4 trillion stimulus package designed to maintain growth even as world trade collapses.

The breakdown of the stimulus plan is as follows: RMB1.5 trillion in fixed-asset investment, RMB1 trillion to help rebuild areas in Sichuan affected by the earthquake, RMB400 billion for affordable-housing projects, RMB370 billion towards improving rural living standards, RMB370 billion towards technological innovation, RMB210 billion for energy-saving efforts, and RMB150 billion for health and education.

The Chinese government has pledged RMB1.18 trillion of the stimulus plan while the rest will come from provincial and municipal governments, policy loans, and corporate bonds.

Realizing that depending on exports to fuel growth relied too much on external factors from abroad; China needs to implement a strategy that would stimulate their economy by both increasing their domestic consumption while decreasing their reliance on foreign demand.

The recent stimulus plan has done that and more. Forty-five percent of the stimulus package has been directed towards fixed-asset investment in the form of roads, railways, airports, pipelines, and electricity networks, to name a few. Factories and other outdated facilities will be renovated or rebuilt while new projects will be added. So far this year, China has seen a 26 percent increase in urban fixed-investment up to more than RMB1 trillion. Furthermore, railway investment has tripled, agricultural doubled, and spending on coal-mining has increased by almost 60 percent.

(...) [artículo aquí]

Friday, 13 March 2009


Belinda Cao and Judy Chen

Bloomberg, March 13, 2009

China, the U.S. government’s largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe, Premier Wen Jiabao said.
“We have lent a huge amount of money to the United States,” Wen said at a press briefing in Beijing today after the annual meeting of the legislature. “I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”

U.S. President Barack Obama is relying on China to sustain buying of Treasuries as his administration sells record amounts of debt to fund a $787 billion economic-stimulus package. Chinese investors have lost money on the securities so far this year, after increasing their holdings 46 percent to $696 billion in 2008, according to Treasury Department data.

“China’s purchases of American debt have been one of the few bolts keeping the wheels on the global economy,” said Phil Deans, a professor of international affairs at Temple University in Tokyo. “If China stops buying where does Obama’s borrowing to fund his stimulus come from?”

Treasuries declined, causing the yield on the 10-year U.S. note to rise six basis points to 2.92 percent at 4:51 p.m. in Hong Kong, according to BGCantor Market Data. The securities handed investors a loss of 2.7 percent in yuan terms this year, according to Merrill Lynch & Co.’s U.S. Treasury Master index. The dollar fell 0.2 percent to $1.2938 per euro.

“Of course we are concerned about the safety of our assets,” said Wen. “To be honest, I am a little bit worried.”

(...) [artículo aquí]

Thursday, 12 March 2009

Unlike Cambodia and China, the sub-continent hasn't managed to rise above its old conflicts

Barun Roy

Business Standard, March 12, 2009

Unlike countries like Cambodia and China, the sub-continent hasn't managed to rise above its old conflicts.

The beginning, last month, in Cambodia, of a process to bring former Khmer Rouge leaders to trial for their role in a reign of genocide in the 1970s that left at least 1.7 million people dead, is meant to formally close a chapter of Cambodian history that nobody wants to remember.

Cambodia has outlived its fractious past and is moving convincingly towards a future of common economic well-being with the rest of Southeast Asia. Vietnam, once a hated intruder, is no longer an enemy, and friendly relations with Thailand, Laos, and China have produced a surge in investments, tourism, and trade. Growth averaged 9.4 per cent annually through the last decade and per capita GDP doubled between 1998 and 2007.

Two things have made Cambodia’s current economic success possible: Peace and political stability. Just the two things that are behind Vietnam’s success, too, whose political tolerance and economic realism, setting aside decades of bloody ideological enmities, have surprised the entire world and paved the way for the emergence of Asia’s next China.

(...) [artículo aquí]

Wednesday, 11 March 2009


Michael Heath and Heejin Koo

Bloomberg, March 11, 2009

South Korea said any North Korean rocket launch would violate a United Nations resolution whether the communist state fires a ballistic missile or sends a satellite into space.

“The two operate on very similar technology,” South Korean Foreign Minister Yu Myung Hwan said in an interview after speaking at a seminar in Seoul today. He was responding to comments by the director of U.S. National Intelligence, who told lawmakers yesterday that North Korea is planning a space launch.

U.S. and South Korean officials have said there are signs North Korea is planning to test a Taepodong-2 missile that is technically capable of reaching Alaska. Kim Jong Il’s regime has denied planning such a test, saying Feb. 24 it intends to launch a communications satellite as part of a peaceful space project.

“The North Koreans announced that they were going to do a space launch and I believe that that’s what they intend,” Dennis Blair told the Senate Armed Services Committee in Washington yesterday. “I could be wrong, but that would be my estimate.”

The technology for a space launch “is indistinguishable from an intercontinental ballistic missile,” Blair said, according to a government transcript. If the “three-stage space-launch vehicle works” it could technically reach the U.S. mainland, he added.

(...) [artículo aquí]

Tuesday, 10 March 2009


Swaminathan S Anklesaria Aiyar

The Economic Times, March 11, 2009

Five years (2003-08) of near-9% growth suddenly seems a distant memory. The CSO estimated GDP growth in October-December 2008 at just 5.3%.

Indeed, the IMF estimates that India will average just 5.1% growth in the calendar year 2009. There is much gloom and doom in the stock market, which has now fallen below its October-November lows. The government claims bravely that its stimulus packages are finally having an impact, but this is not reflected in the mood of corporates or households.

Maybe growth in 2009 will be 6%, a tad higher than the IMF estimate. But it may not get much faster till the world economy recovers, and that may not happen till 2010 or even 2011. If so, India will grow at just 6% annually for the next two years.

Some experts ask, what’s wrong with 6% growth? Why are we whining and groaning? After all, 6% growth will represent the fastest growth rate in the world after China’s. If India can grow at 6% when the US has just plunged downward by 6%, why not enjoy the spectacle? One consulting firm says that it scents trouble in only one of six verticals of its business. Why then is so much gloom and doom?

(...) [artículo aquí]


Li Yanping and Nipa Piboontanasawat

Bloomberg, March 10, 2009

China’s consumer prices fell for the first time since 2002 as food, clothing and fuel costs declined, threatening growth in the world’s third-largest economy.

Consumer prices dropped 1.6 percent in February from a year earlier, when they reached an 11-year high, the statistics bureau said today. The median estimate in a Bloomberg News survey of 10 economists was for a 1 percent decline. Producer prices fell 4.5 percent, the most in a decade.

The drop in prices raises the risk that deflation will become entrenched, prompting consumers to delay purchases, squeezing company margins and triggering wage cuts. Premier Wen Jiabao, who last week set a 4 percent inflation target for 2009, is relying on a surge in lending and a 4 trillion yuan ($585 billion) stimulus package to spark an economic recovery.

“Deflation, though a real concern, is expected to be a temporary phenomenon,” said Jing Ulrich, head of China equities at JPMorgan Chase & Co. in Hong Kong. The government may cut interest rates and banks’ reserve requirements and add measures to spur consumption to avoid “extended” deflation, she said.

The yuan traded at 6.8398 against the dollar as of 12:32 p.m. in Shanghai from 6.8402 before the data was released. The Shanghai Composite Index of stocks rose 0.5 percent.

“We can’t yet draw the conclusion that deflation has arrived,” the statistics bureau said in a statement. It cited falling raw-material prices and one-off factors, including the timing of a Lunar New Year holiday and blizzards that pushed up food prices a year ago.

(...) [artículo aquí]


Si Tingting and Fu Jing

China Daily, March 10, 2009

China is likely to overtake Japan to become the world's second largest economy, either this year or by 2010, a research paper issued recently by the China Policy Institute of the University of Nottingham (UK) has revealed.

Yao Shujie, an author of the research paper, had said two years ago that China would become the No 2 in the world's economic pecking order in 2018.

Right now, we don't have figures for Japan's GDP in 2008, but I think China may have already overtaken Japan last year," Yao told China Daily in a telephonic interview yesterday.

Based on the World Bank and IMF's figures on China and Japan's 2007 GDP and output growth rate of 2008, Yao estimated China and Japan's GDP would reach $4.42 and 4.68 trillion in 2008, respectively.

Yao's research has revealed that the US, Japan, Germany and the UK are not likely to recover to their 2007 output levels until 2011 or 2012, but China is expected to expand at 7 to 8 percent this year.

(...) [artículo aquí]

Monday, 9 March 2009


Richard Lloyd Parry

The Times, March 9, 2009

If the North Korean state media was all you had to go on, you would conclude that East Asia was right now an extremely dangerous place to be. “War exercises ... strategic bomber corps ... grave situation ... war maniacs ... we will retaliate ... prompt counter strikes” – and all this in just one dispatch from the Korean Central New Agency.

North Korea is preparing to test fire an intercontinental ballistic missile it insists is a peaceful space rocket. Japan is threatening to blast any such missile out of the sky. The United States and South Korea conduct a massive military exercise. It sounds like the countdown to an appalling confrontation, to a repeat of the 1950-53 Korean War, which killed millions and sucked in armies from across the world. So why do the people elected to worry about these things, from Barack Obama to Gordon Brown, not seem especially alarmed?

It is true that Korea has the potential, at very short notice, to descend into the nastiest war since Vietnam. A million North Korean soldiers (ill-equipped, but fanatical) face 680,000 South Koreans and 26,000 Americans (well trained and superbly armed) across a mile of landmines and barbed wire. North Korea's leader, Kim Jong Il, suffered a stroke last year and has still not formally named a successor. If he died suddenly, he would leave a power vacuum in a state that has already tested a nuclear device.

It is the stuff of nightmares but this is the way it has been for years. Nothing done or said in the past few weeks changes the rather simple fundamentals on the North Korean peninsula – or the one scenario that could lead to its resolution.

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Ralph A. Cossa

The Korea Times, March 9, 2009

Secretary of State Hillary Clinton's trip to Asia last month underscored elements of continuity and change in the Obama administration's Asia policy.

Generally speaking, her visits to Northeast Asia - to Japan, Korea, and China - represented continuity. But her trip to Indonesia signaled change.

Her first stop was, as it should have been, Tokyo, where she underscored the continuing role of the U.S.-Japan alliance relationship as the "foundation" of U.S. Asia policy and the "cornerstone of security in East Asia," as it was during the Bush administration (and during her husband's and prior administrations before that).

She clearly endorsed the "military transformation" plans of her predecessor by formally signing an agreement with her Japanese counterpart to relocate some 8,000 U.S. Marines from Okinawa to Guam by 2014 (with substantial Japanese financial support), while stressing that America's defense commitment to Japan remained as strong and unwavering as ever.

Clinton also met with the families of "abductees" (Japanese citizens known or suspected to have been kidnapped by North Korea, mostly during the 1980s) promising, as the Bush administration had before her, that their loved ones would not be forgotten, while being equally careful not to tie North Korean denuclearization too closely to progress on the abductee issue.

(...) [artículo aquí]

Sunday, 8 March 2009


People’s Daily, March 8, 2009

International media opinions in recent days have been praising China's economic stimulus measures and paying close attention to information released on its two ongoing annual political conferences indicating "some signs of a return to stability and warmth" of the Chinese economy.

The two conferences are the Second Session of the 11th National People's Congress (NPC) and the Second Session of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC).

Referring to Zhang Ping, head of China's National Development and Reform Commission, Finance Minister Xie Xuren and central bank governor Zhou Xiaochuan, Reuters said China's economic leaders struck a note of quiet confidence at a press conference that the economy is already reviving in response to swift action to counter the shock of the global financial crisis.

"The economic figures are stabilizing and recovering, which demonstrates that the policies have begun to show an impact," a Reuters report quoted Zhou as saying.

"We must err on the side of being quick and decisive," Zhou was quoted as saying.

Japan's Kyodo News also quoted Zhou as saying that China's efforts to combat the impact of the global financial crisis is taking effect, but challenges are severe.

(...) [artículo aquí]

Saturday, 7 March 2009


Donald Kirk

Asia Times, March 7, 2009

WASHINGTON - North Korea may be off the United States State Department's list of nations sponsoring terrorism, but its warning to South Korea about the safety of flights through its air space has escalated fears of a surprise North Korean strike to new levels.

Inconceivable though it may sound for North Korea to fire on a flight carrying passengers to South Korea, the North's threat is drawing demands for the State Department to put North Korea's name back on the list from which former president George W Bush ordered its removal last June.

Officials at the State Department, National Security Council and Pentagon seem to agree, however, that such a strong response to North Korean rhetoric would be premature. The State Department in particular is falling back on a word that's come up a number of times lately to describe North Koreas's conduct - "unhelpful".

Secretary of State Hillary Clinton, during her swing through Northeast Asia last month, described North Korean rhetoric as "unhelpful", to which a State Department spokesman added "distinctly" as a sign of increasing worries that North Korea may try to pull off a violent surprise in the near future.

(...) [artículo aquí]

Friday, 6 March 2009


Tania Branigan

The Guardian, March 6, 2009

China's economic leaders said today that they see signs of recovery, but vowed to act "quickly and decisively" if further help for the world's third-largest economy was needed.

Zhou Xiaochuan, governor of the central bank, said he believed the economy was "stabilising and recovering" in the face of the global economic crisis. The chair of the country's top economic planning body reiterated that there were no plans to top up the country's 4 trillion yuan (£4bn) stimulus package, with officials waiting to see what is necessary.

World stockmarkets fell yesterday, and kept falling in Asia today, as anticipation of a top-up announcement at the National People's Congress proved premature. "The policies (to date) have achieved significant results," Zhou told a news conference on the sidelines of the NPC, the largely ceremonial parliament.

The governor added: "We are also seeing that the economic figures are stabilising and recovering, which demonstrates that the policies have begun to show an impact."

But he added: "In particular, we have to prevent being too slow-handed or light-handed in responding. We must err on the side of being quick and decisive."

(…) [artículo aquí]

Thursday, 5 March 2009


Joe Klein

Time, March 5, 2009

On the Friday after he was inaugurated, Barack Obama held a full-scale National Security Council meeting about the most serious foreign policy crisis he is facing — the deteriorating war in Afghanistan and Pakistan. "It was a pretty alarming meeting," said one senior Administration official. "The President was extremely cool and in control," said another participant. "But some people, especially political aides like Rahm Emanuel and David Axelrod who hadn't been briefed on the situation, walked out of that meeting stunned." The general feeling was expressed by one person who said at the very end, "Holy s***."

The situation in Afghanistan and Pakistan has only gotten worse since then. Both countries are suddenly boggled by constitutional crises; both Presidents — Hamid Karzai and Asif Ali Zardari — lead governments teetering on the edge of chaos. And the war is going badly on both sides of the border. The Pakistani Taliban has taken over the Swat Valley, a mere 100 miles (160 km) from Islamabad, and has wreaked havoc with NATO supply lines into Afghanistan through the Khyber Pass; the Afghan Taliban staged a dramatic terrorist attack in downtown Kabul. In his first major decision as Commander in Chief, Obama promised an additional 17,000 troops for Afghanistan, but he still hasn't fully defined the U.S. goal there, even though he repeatedly insisted during the campaign that this war — the war that began as an effort to find Osama bin Laden and dismantle al-Qaeda — was in the national interest and had to be won.

(...) [artículo aquí]

Tuesday, 3 March 2009


Dune Lawrence

Bloomberg, March 4, 2009

China said it will boost defense spending by 14.9 percent this year to raise salaries of the world’s largest standing army as it competes for regional influence with the U.S. and Japan.

China’s military spending will rise to 480.6 billion yuan ($70.3 billion), from a revised 418.2 billion yuan last year, Chinese legislature spokesman Li Zhaoxing said today at a press conference ahead of the body’s annual session tomorrow. The amount compares with $513.3 billion approved by the U.S. Congress for fiscal 2009 not including war spending.

The Communist Party’s move to strengthen naval and space capabilities has sparked criticism from the U.S., which contends that the Asian nation is underreporting its spending. U.S. Deputy Assistant Secretary of Defense for East Asia, David Sedney, suggested on Feb. 28 that China is acquiring more military capabilities than justified by its stated strategic goals.

The U.S. told China in military talks last week that it wants “clarity” on the connection between its developing military capacity and strategic objectives, Sedney said.

Defense spending in China has increased an average of 16.2 percent from 1999 to 2008, according to figures from the latest defense white paper published in January. The biggest increase was 20.4 percent in 2006.

“China’s defense spending is relatively low in the world,” Li said. “China’s limited military power will be used solely to safeguard its sovereignty and territorial integrity.”

(...) [artículo aquí]


Zhang Dingmin and Rong Feiwen

Bloomberg, March 3, 2009

China’s economy, the world’s third biggest, is “very likely” to recover in the first half of 2009, central bank Vice Governor Su Ning said in Beijing.

“We’re very confident,” Su told reporters at the annual meeting of the Chinese legislature’s advisory body today.

China is trying to reverse an economic slide that has cost the jobs of 20 million migrant workers after exports collapsed because of the global recession. The government may double a 4 trillion yuan ($585 billion) package of stimulus spending through 2010, according to Standard Chartered Bank Plc.

“The effects of the fiscal stimulus will start to be seen in the second half,” said Wang Qing, Hong Kong-based chief China economist at Morgan Stanley. “The bulk of the money is yet to be dispersed or even approved.”

Wang expects growth to slow to between 3 percent and 4 percent in the first half, picking up in the second for full- year expansion of 5.5 percent. That would be the weakest annual growth since 1990.

Su said “both monetary and fiscal policies are very important” in managing the economy. Finance Minister Xie Xuren reiterated today that the nation had a “proactive” fiscal policy.

The central bank has said it will make “moderate” use of interest rates this year after five cuts in the final four months of last year took the key one-year lending rate to 5.31 percent.

(...) [artículo aquí]

Monday, 2 March 2009

Clinton made no mistakes on her China trip. Yet there's no evidence of serious strategic thinking either.

Kishore Mahbubani

Newsweek, From the magazine issue dated Mar 9, 2009

Why did Hillary Clinton lose the race for the democratic presidential nomination? Simple. She had a plan A: to romp through initial primaries, build momentum and squash her opponents. But when plan A failed, she found she had no backup. Even though she successfully scrambled and managed to slow Obama's momentum, the battle was already lost. Clinton failed to engage in strategic thinking in the biggest competition of her life, and it cost her.

All this made her a curious choice to become secretary of state. Clinton is intelligent, tough, shrewd and, when she chooses to be, charming. But the key to doing her new job well is to engage in long-term strategic thinking on major geopolitical challenges —such as the U.S. role in managing the rise of Asia.

Her recent trip to the region provides some early clues on how she'll manage this task. There's no doubt she did a competent job. Clinton followed the advice of her briefing books, making Japan her first stop to reassure this nervous and insecure ally. Then she went to Indonesia, probably at Obama's instigation, to rebuild America's image in the world's most populous Islamic country. South Korea was an essential stop to send the usual tough signals to North Korea. And then came China, her most important destination.

(...) [artículo aquí]


Heather Timmons

The New York Times, March 2, 2009

NEW DELHI — While most of the world grapples with a crippling financial crisis and a recession, optimism reigns in much of India as its economy continues to grow.

India’s trillion-dollar economy remains a relative bright spot, some say, in part because the country’s bureaucracy and its protectionist polices have kept it insulated from the fallout of the global downturn.

“India is not as vulnerable” as other countries, said Rajeev Malik, head of Indian and Southeast Asian economics at Macquarie Capital, who recently wrote a report titled “India: Better Off Than Most Others.”

On Friday, India reported that its economy grew 5.3 percent in the quarter ended in December when compared with the previous year. While that was down from the 7.6 percent growth in the earlier quarter, it was in sharp contrast to the retrenchment in other countries.

Washington, for example, reported Friday that gross domestic product for the end of the year had contracted at an annualized rate of 6.2 percent, and Japan recently reported that its economy shrank at an annual rate of 12.7 percent.

(...) [artículo aquí]