Thursday, 12 September 2013

YONGBYON RESTARTED

BBC News

NORTH KOREA'S YONGBYON REACTOR 'NEARING OPERATION'

Steam has been seen rising from North Korea's Yongbyon nuclear facility, suggesting that the reactor has been restarted, a US institute says.

BBC News, September 12, 2013

The colour and volume of the steam indicated that the reactor was in or nearing operation, the institute said.

Pyongyang vowed to restart facilities at its main Yongbyon nuclear complex in April, amid high regional tensions.

The reactor can produce plutonium, which North Korea could use to make nuclear weapons.

Analysts believe North Korea already possesses between four and 10 nuclear weapons, based on plutonium produced at the Yongbyon reactor prior to mid-2007, when the facility was closed down.

(...) [article here]

Tuesday, 3 September 2013

FACTORIES IN BANGLADESH

Time

HELL FOR LEATHER: BANGLADESH’S TOXIC TANNERIES RAVAGE LIVES AND ENVIRONMENT

Jason Motlagh / Dhaka

Time, September 3, 2013

Inside the factory, shirtless workers stretch freshly dyed sheets of goat leather across industrial drying racks. Sleek and durable, the leather is in great demand at fashion houses from Italy to Hong Kong, feeding a global appetite for Bangladesh-made clothing that has boosted the country’s export earnings more than 20% in the past year. But outside, under the glaring sun, it’s clear who’s paying the price. Toxic runoff, the color of crude oil, is discharged into open gutters that course their way through jam-packed streets and makeshift housing, en route to city waterways. Seated by one of the gutters on his tea break is a gaunt Saddam Hossein — he is 23, but looking 10 years older and his hands are scarred from processing chemicals. “It’s hard labor,” he says. “But what else can I do?”

Bangladesh has become synonymous with cheap, ready-made garments and — in the wake of April’s Rana Plaza disaster — the appalling cost of fast fashion. Less notorious but no less grim is its booming leather industry, where workers and environment are degraded to sustain a billion-dollar business. Nearly all the country’s 206 tanneries are concentrated in one area — Hazaribagh, a cramped, filthy neighborhood in southwestern Dhaka, the sprawling capital.

(...) [article here]

Thursday, 29 August 2013

CHINA’S AGING AND MEDICAL CARE

Bloomberg_logo

CHINA SEEKS WESTERN-STYLE CARE AMID EXPLOSION OF ELDERLY

Natasha Khan

Bloomberg, August 28, 2013

The Chinese increasingly eat, shop and play in ways their Western counterparts would instantly recognize. They’re aging like them too, living longer lives that are often limited by debilitating illnesses.

As the almost 200 million population of over-60s more than doubles in the next 40 years, China faces a deluge of infirm elderly who can’t live alone. Nor can they rely on Confucian tradition of children caring for their parents: the country’s one-child policy has left fewer offspring to share the load, while more Chinese are moving away from home to study or work.

While China spent 1.1 trillion yuan ($179.7 billion) over the past four years to cut the cost of drugs and provide basic medical coverage for more than 90 percent of its 1.3 billion people, services for the elderly have fallen behind. To plug the gap, Premier Li Keqiang said Aug. 16 the government will cut red tape and costs to spur foreign investment into the type of privately funded care that is common in the West.

“They’re going to be struggling with an enormous burden in terms of caring for their elderly,” said Benjamin Shobert, managing director of Rubicon Strategy Group in Seattle, which advises companies on how to enter Asian health-care markets. “They don’t really have two bites of the apple. Purely from a time-frame point of view, the next 10 years are critical.”

(...) [article here]

Wednesday, 28 August 2013

THE INDIAN RUPEE DECLINE

Firstpost

RUPEE BREACHES 67: FOUR MYTHS ABOUT INDIA AND THE POLITICS OF PESSIMISM

Rajesh Pandathil

Firstpost, August 28, 2013

Why this panic about the rupee decline, asked Paul Krugman on 20 August, a day when the currency hit 64.13 forcing the RBI to intervene to pull it back to 63.25 levels at the close.

His contention was that a panic was unwarranted now as India's dollar denominated debt situation is not like the Asian crisis countries of 1997-1998 or Argentina in 2001 and the fall in the rupee was in line with the emerging market currencies.

“Now, the depreciation of the rupee will presumably lead to a spike in inflation - but it should be temporary. So at first examination this doesn't look like as big a deal as some headlines are suggesting. What am I missing?,” he said in his blog.

But then the rupee's record low was 64.13, a level which now looks like a strong one. The rupee has fallen 65 and 66 in a matter of 7-8 days and looks set to reach 70 faster than expected.

The Indian rupee breached the 67-mark in early trade Wednesday, hitting a record low of 67.98 against the dollar in a couple of minutes of trade.

(...) [article here]

Tuesday, 27 August 2013

SIX-WAY TALKS

Yonhap

10 YEARS AFTER LAUNCH, SIX-WAY TALKS REMAIN EFFECTIVE TOOL TO DENUKE NORTH

Yonhap, August 27, 2013

SEOUL. Aug. 27 (Yonhap) -- Ten years after the six-party talks' launch, the multilateral dialogue has fallen short of disarming North Korea, but the now long-stalled talks are still seen as an effective tool to denuclearize the communist country, analysts said Tuesday.

On Aug. 27, 2003, six nations - the two Koreas, the United States, China, Russia and Japan -- opened their first negotiations in Beijing in multilateral efforts to end the North's nuclear program, deemed a security threat to the region.

The advent of the six-party talks followed escalating security concerns surrounding the reclusive North's growing nuclear capacities.

Amid rising U.S. allegations that the North started an illegal enriched uranium weapons program, the North withdrew in January 2003 from the Nuclear Non-proliferation Treaty, an international treaty to prevent the spread of nuclear weapons, triggering anxieties among neighbors over the North's nuclear ambitions.

Washington's previous attempts to denuclearize the North also ended in failure when the North defaulted in 2002 on the Agreed Framework, under which the North agreed in 1994 with the U.S. to freeze its plutonium-producing nuclear facilities.

(...) [article here]

Monday, 24 June 2013

CHINA’S SHADOW BANKING

BBC News

CASH CRUNCH? CHINA'S TRUE CRUNCH TIME IS YET TO COME

China's 'shadow banking' sector could pose serious problems for the country in future

Linda Yueh

BBC News, June 24, 2013

How can a largely state-owned banking system experience a credit crunch? When the central bank decides to rein back credit.

The Chinese central bank has been reining back credit for some time now as it has sought to control housing prices. But, when the cheap money from the rest of the world began reversing (see my post on Great Reversal part II) due to the Fed signalling an end date for the era of cheap money, funds leaving emerging economies like China have made the situation more apparent.

Last week, the overnight lending rate between banks jumped to exceed 25% as banks became reluctant to lend to each other. But the lending rates fell again when the state-owned banks fell into line and resumed lending to each other.

Now, the Chinese central bank says that liquidity is "ample" and essentially indicated that it will not inject more cash, holding firm on the line of controlling credit growth in the economy.

As a result, the Chinese stock market fell into bear market territory led by the decline of banks. In other words, banks can't count on the central bank for cheap cash. In fact, the central bank wants to root out the poorly performing banks - especially those in the so-called shadow banking system.

(...) [article here]

Thursday, 20 June 2013

JAPAN’S FISCAL STIMULUS

Bloomberg_logo

JAPAN TO CONSIDER FISCAL STEPS TO COUNTER HIT FROM TAX RISE

Mayumi Otsuma and Kyoko Shimodoi

Bloomberg, June 20, 2013

Japan’s government is ready to provide extra spending if a sales-tax increase next year damps economic growth, a senior finance ministry official said.

“We must take appropriate action to counter” any decline in economic growth after the tax increase planned for April, Yuzuru Takeuchi, 54, parliamentary secretary for finance and a lower house legislator, said in an interview today in Tokyo. The government will also create a panel to encourage companies to raise wages, he said.

Prime Minister Shinzo Abe is rolling out fiscal and monetary stimulus to help pull the economy out of a more than decade-long deflationary malaise. The government is grappling with supporting growth while trying to slow the increase in Japan’s debt burden, the developed world’s largest.

“If the government doesn’t announce a further fiscal package, we’re likely to see some payback” in growth from the boost in 2013 from government spending, said Masaaki Kanno, chief Japan economist at JPMorgan Chase & Co. in Tokyo.

The economy may shrink an annualized 3.9 percent in the second quarter of 2014 after the sales tax is raised to 8 percent from its current 5 percent, according to the median forecast of economists surveyed by Bloomberg News. The tax will be further increased to 10 percent in 2015.

(...) [article here]

Wednesday, 19 June 2013

CHINA AND NORTH KOREA

Bangkok Post

CHINA, NKOREA HOLD 'STRATEGIC DIALOGUE': OFFICIALS

Bangkok Post, June 19, 2013

A high-ranking North Korean official with long experience as his country's international nuclear negotiator held talks Wednesday with Chinese officials, Beijing's foreign ministry announced.

North Korean first vice foreign minister Kim Kye-Gwan and Chinese vice foreign minister Zhang Yesui co-chaired a "strategic dialogue" meeting between their ministries in the Chinese capital, foreign ministry spokeswoman Hua Chunying said.

"The two sides exchanged views on China-DPRK relations and the situation on the Korean peninsula," she told a regular briefing, referring to North Korea by the acronym of its official name, the Democratic People's Republic of Korea.

Kim also met Wu Dawei, China's special envoy for Korean peninsula affairs, Hua said.

The talks come amid ongoing tensions on the peninsula over the North's nuclear programme and mark the second high-level visit to China in less than a month by a North Korean official.

The visit also coincides with talks in Seoul on Wednesday and Thursday between United Nations' chief Ban Ki-moon and Chinese leaders.

China has come under pressure to encourage North Korea to halt its nuclear programme after the reclusive nation in February carried out its third underground nuclear test, which brought worldwide condemnation.

(...) [article here]

Tuesday, 18 June 2013

CHINA’S PROPERTY PRICES

Bloomberg_logo

CHINA HOME-PRICE GAINS ADD TO DILEMMA ON CASH CRUNCH: ECONOMY

Bloomberg News

Bloomberg, June 18, 2013

Chinese property prices rose at the fastest pace in more than two years in major cities, defying tougher government curbs and constraining the ability of policy makers to ease credit in response to weakening economic growth.

New home prices in Beijing, Shanghai and Guangzhou posted the biggest gains in May since at least January 2011, and 69 of the 70 cities tracked by the government showed increases, the most since August 2011, National Bureau of Statistics data showed today in Beijing. Inbound non-financial investment rose 0.3 percent in May from a year earlier, the weakest in four months, according to the Ministry of Commerce.

The property gains limit the ability of Premier Li Keqiang to counter an economic slowdown that showed signs of deepening in May. The central bank today refrained from adding cash to the financial system and money-market rates reached the highest level in seven years this month, a liquidity squeeze that Fitch Ratings says may accelerate a banking crisis.

“The government is in a dilemma right now,” said Zhang Zhiwei, Hong Kong-based chief China economist at Nomura Holdings Inc., who previously worked at the International Monetary Fund.“It’s difficult for China to tighten the property market, while it also needs to bolster the economy, which has a strong reliance on property.”

(...) [article here]

Monday, 17 June 2013

CHINA AND THE SERVICE SECTOR

The China Post

CHINA SETS FOCUS ON SERVICE INDUSTRIES

Bao Chang

The China Post, June 17, 2013

WU--I -- Now is the best time for China to develop its service trade, and the country can become one of the biggest outsourcing service providers in the world within the next few years, Wei Jianguo, former vice minister of commerce and secretary-general of China Center for International Economic Exchanges, said on Saturday.

At present, outsourcing service buyers in developed economies are moving their focus from investing in labor-intensive industries to the outsourcing service in high technology and research and development sectors.

“China should seize this unprecedented opportunity and get a foothold in the transaction of the world's service trade and gain an advantage compared with other emerging economies which are also seeking new opportunities in the outsourcing industry upgrading,” Wei said.

Wei was speaking at the Sixth Global Outsourcing Summit in Wuxi, in East China's Jiangsu province.

Jointly organized by the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, the Asia-Pacific CEO Association and the People's Government of Wuxi Municipality, the summit targets the promotion of multinational outsourcing and insourcing cooperation, and looks at the city's transformation amid economic globalization.

(...) [article here]

Sunday, 16 June 2013

NORTH KOREA’S PROPOSED TALKS WITH THE US

Bloomberg_logo

N. KOREA PROPOSES U.S. TALKS ON PEACE TREATY, DENUCLEARIZATION

Sangwon Yoon and Rose Kim

Bloomberg, June 16, 2013

North Korea proposed its first talks with the U.S. in more than a year to discuss nuclear disarmament and a peace treaty to formally end the Korean War, less than a week after it scrapped a meeting with the South.

Any talks must have no preconditions, an unidentified spokesperson of North Korea’s National Defense Commission said in a statement carried by the official Korean Central News Agency. North Korea confirmed its denuclearization commitment on condition that it’s discussed as part of broader talks toward a“nuclear free world,” the commission headed by North Korean leader Kim Jong Un said.

The U.S. is unlikely to agree to today’s proposal after repeatedly demanding North Korea take steps toward disarmament as a condition for any dialogue. China, North Korea’s biggest benefactor, has also taken a tougher stance against Kim’s regime after it tested an atomic weapon in February and threatened pre-emptive nuclear strikes in response to sanctions.

“There is no sincerity in North Korea’s offer today for dialogue with U.S., nor do the Americans have any reason to accept the proposal when the North shows no change in its stance regarding its nuclear weapons program,” Park Young Ho, senior research fellow at the state-run Korea Institute for National Unification in Seoul, said by phone today. “Ultimately the offer is aimed to appease China, to show that the North is heeding Beijing’s calls for a return to dialogue.”

(...) [article here]

Saturday, 15 June 2013

AIR POLLUTION AND SOLAR ENERGY IN CHINA

Reuters

CHINA MAKES FRESH PROMISES ON AIR POLLUTION, PLEDGES SUPPORT FOR SOLAR

Reuters, June 15, 2013

SHANGHAI (Reuters) - China's cabinet approved new measures to combat air pollution on Friday, in the latest step by China's new leadership to address the country's enormous environmental problems, with pollution a key source of rising social discontent in China.

The government also promised to support China's troubled solar power industry, despite problems with overcapacity and ongoing trade disputes with the United States and Europe.

In a meeting chaired by Premier Li Keqiang, the State Council approved 10 anti-pollution measures, the council said in a statement posted on its website late Friday.

In particular, the State Council promised to:

- Accelerate the installation of pollution control equipment on small, coal-fuelled refineries.

- Curb the growth of high-energy-consuming industries like steel, cement, aluminum, and glass.

- Reduce emissions per unit of GDP in key industries by at least 30 percent by the end of 2017.

- Improve indicators used to evaluate the environmental impact of new projects and deny administrative approvals, financing, land, and other support to projects that fail to meet high standards.

- Strengthen enforcement and collection of fees and penalties that companies pay based on their emissions.

- Use legal action to force industries to upgrade pollution controls and establish or revise industry-level emissions standards.

(...) [article here]

Thursday, 13 June 2013

THE CHANGING ECOMOMIC DYNAMICS IN ASIA

Business Spectator

WHAT ASIA'S NEW GROWTH TACK MEANS FOR INVESTORS

Asia has been a driving force behind global growth since the financial crisis. But the dynamics are changing as growth slows in China and Australia, and Japan pursues “hyperactive” monetary policy. In this issue of our Secular Outlook Series, portfolio managers Ramin Toloui, Tomoya Masanao and Robert Mead discuss how these developments are affecting the global outlook for the next three to five years and the implications for investors.

PIMCO

Business Spectator, June 13, 2013

Question: What is PIMCO’s secular outlook for Asia?

Ramin Toloui: Asia has been the critical driver of the global economy during the past five years, providing by far the largest contribution to global GDP growth of any region. China has been at the centre of Asia’s growth story, so the most important question for Asia’s secular outlook is: Can China maintain high rates of economic growth in the years ahead?

Our view is that Chinese GDP growth will downshift, averaging 6 per cent to 7.5 per cent annually for the next five years versus more than 9 per cent on average for the past five. The reason is that the previous engines of Chinese growth – net exports and investment – are reaching their limits. Prospects for export-led growth are inhibited by China’s large size in a global marketplace that remains deficient in aggregate demand due to high indebtedness in the developed world. Investment cannot play its previous role in driving growth because it has already risen to almost 50 per cent of GDP – up from 35 per cent in 2000 and from 42 per cent in 2007 before the global financial crisis – an extraordinary ratio by historical standards.

To sustain growth, China’s economy needs to shift to greater reliance on household demand. The good news is that the potential is extraordinary after more than a decade in which consumption has declined from 46 per cent to 35 per cent of GDP. Latent demand for not only consumer goods but also services such as health care is likely enormous. However, turning that potential into reality requires changes in economic policy that are wide-ranging and difficult, and also challenge vested interests among the political and industrial elite.

(...) [article here]

Wednesday, 12 June 2013

JEMAAH ISLAMIYAH

Asia Times 2NEXT GENERATION RADICALS IN INDONESIA

Jacob Zenn

Asia Times, June 12, 2013

JAKARTA - Driven by strong exports and buoyant domestic markets, Indonesia is projected to be among the world's top 10 economies by 2025. While the future looks bright for Southeast Asia's largest economy, a growing tide of religious intolerance threatens to undermine those gains. Where officials have in the past attributed religious violence and terrorism to foreign influenced groups, now the threats to stability are more clearly homegrown.

In the late 1990s and 2000s Jemaah Islamiyah (JI) was the main threat in Indonesia. The radical group attacked foreign tourists in Bali in 2002 and 2005, the Australian embassy in Jakarta in 2004, the J W Marriott hotel in Jakarta in 2003 and 2009, and the Ritz Carlton hotel in the capital city in 2009.

JI was largely considered a Malaysian import to Indonesia, with most of the extremist group's key members having fought in Afghanistan against the Soviet Union in the 1980s or in the 1990s with the Taliban again its domestic rival the Northern Alliance. Most of JI's key members are now either in prison or have been killed by Indonesia's elite counter-terrorism force, Detachment 88 (or Densus 88).

In November 2012, one of JI's Indonesian-born and bred members, the Poso native Upik Lawanga (aka Taufiq Buraga), was captured trying to cross from East Kalimantan, Indonesia to Sabah, Malaysia, on the island of Borneo. Lawanga was allegedly involved in the beheading of three Christian students in Poso, church bombings in nearby Palu in 2005, the two hotel bombings in Jakarta in 2009, and suicide bombings at a mosque in a police compound in Cirebon and a church in Solo in 2011.

(...) [article here]

Tuesday, 11 June 2013

US, CHINA, AND INDIA

The Indian Express

THE G-2 DILEMMA

The current dynamic between the US and China poses challenges for Delhi

C. Raja Mohan

The Indian Express, June 11, 2013

The informal California summit over the weekend between the US and Chinese presidents, Barack Obama and Xi Jinping has unveiled a new phase in great power relations and demands a significant recalibration of India’s recent foreign policy assumptions. Although the summit did not produce any major breakthroughs, its very conception is based on the American recognition that a measure of political understanding with China is necessary for the management of the challenges confronting Asia and the world.

Any talk of US-China collaboration makes India rather nervous. Two recent occasions come to mind. In June 1998, barely weeks after the Indian and Pakistani nuclear tests, presidents Bill Clinton and Jiang Zemin declared the intent to build a strategic partnership and promote non-proliferation in the subcontinent. New Delhi went into a paroxysm denouncing the prospects for a Sino-US “condominium” in Asia.

In a Beijing summit in November 2009, Obama and Hu Jintao declared their commitment to seek stability in the subcontinent. Travelling to the US three weeks later, Prime Minister Manmohan Singh sought assurances from the US president that Washington’s partnership with Beijing will not be at the expense of Delhi. Looking back a little further, in the early years of the Cold War, India continually urged America and the Soviet Union to end their confrontation and seek peaceful coexistence. When America and Russia sought to achieve precisely those objectives in the 1970s, Delhi became anxious about superpower hegemony and protested nuclear agreements between them that constrained India’s strategic options.

The current dynamic between America and China will pose even greater challenges to Delhi. In the 1970s, Delhi neutralised the impact of Sino-American rapprochement by a tighter embrace of Soviet Russia. Today, Moscow is much closer to Beijing and is not eager to balance a rising China.

(...) [article here]

Monday, 10 June 2013

WEAKER DEMAND IN CHINA

Bloomberg_logo

CHINA LEADERS TESTED ON GROWTH RESOLVE AFTER SLOWDOWN: ECONOMY

Bloomberg News

Bloomberg, Jun 10, 2013

China’s new leaders face a test of their resolve to forgo short-term stimulus for slower, more-sustainable growth after May trade, inflation and lending data trailed estimates, signaling weaker global and domestic demand.

Industrial production rose a less-than-forecast 9.2 percent from a year earlier and factory-gate prices fell for a 15th month, National Bureau of Statistics data showed yesterday in Beijing. Export gains were at a 10-month low and imports dropped after a crackdown on fake trade invoices while fixed-asset investment growth moderated and new yuan loans declined.

The data add pressure on President Xi Jinping and Premier Li Keqiang to shore up growth less than three months into their tenure, after first-quarter expansion unexpectedly slowed. While the figures boost the case for easing monetary policy or approving more spending, the government’s room is limited by rising home prices, financial risks and overcapacity.

“The May data will force China’s leadership and the central bank to rethink growth and inflation -- it seems they were too optimistic about growth and too concerned about inflation,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. “It’s a test for China’s leadership to see whether they are determined to reform.”

(...) [article here]

Friday, 7 June 2013

JAPAN’S “THREE-ARROW” POLICY

The Washington Post

JAPAN’S SHINZO ABE UNDERWHELMING PACKAGE OF ECONOMIC REFORMS

Editorial Board

The Washington Post, June 7, 2013

JAPAN HAS been in a state of economic stagnation for much of the past two decades. The United States would benefit if this important ally could reverse that trend, aiding not only Japan’s own well-being and national security but also the balance of power in Northeast Asia.

The good news is that there is broad consensus about what ails Japan, and a new prime minister, Shinzo Abe, has come into office determined to act. Mr. Abe has fired the first two “arrows” in his “three-arrow” policy, aiming them at fiscal and monetary policy with the goal of ending Japan’s chronic deflation. His government is spending heavily on infrastructure, and the Bank of Japan has embarked on a massive asset-buying program.

Aggressive as these policies are, enacting them was relatively simple, politically, relative to tackling the third source of Japan’s woes: a vast web of regulations, subsidies and trade barriers whose net effect has been to support inefficient sectors, and the voters who live off them, at the expense of growth and innovation. Japanese productivity has remained essentially flat for the past two decades, a dangerous state of affairs in a country with a shrinking labor force and a growing dependent elderly population.

The politically powerful agriculture sector illustrates how self-defeating Japanese policy can be. Economists Takeo Hoshi, now at Stanford University, and Anil K. Kashyap of the University of Chicago have calculated that Japan’s farms got $53 billion in subsidies in 2010, an amount equal to the total value they added to the economy. In other words, farming made zero net contribution to Japan’s national income.

(...) [article here]

Thursday, 6 June 2013

SLOW GROWTH IN CHINA

Forbes

CHINA'S SLOW GROWTH CAN BE GOOD NEWS

Junheng Li

Forbes, June 6, 2013

Over the past 33 years, China thrived on a singular economic model: high-volume manufacturing of low-margin products for the rest of world. Today, that growth model has stalled – and not just for cyclical or near team temporary reasons, but because it has come to the end of the line. That is evidenced by the excess capacity that has built up in many sectors such as steel, cement, solar panels and construction materials, as well as the rising cost structure, declining global competitiveness and shrinking corporate profitability of many Chinese companies.

According to a study by brokerage CLSA on 428 publicly traded Chinese companies (excluding banks), corporate margins have declined from approximately 30% in 1997 (before the Asian Financial Crisis) to 10.5% currently. A lack of R&D and innovation has hindered Chinese companies from moving up the value chain, and China is falling behind in global competitiveness. Many state-owned enterprises (SOEs), including state-owned banks, are kept afloat by taking on increasingly more debt from banks or from each other. Excluding banks, Chinese companies’ return on equity has declined by approximately 35%, while corporate leverage has increased approximately 33% since 1997.

The picture is clear. Despite its unprecedented achievement of lifting 500 million people out of poverty in as little as thirty-three years, China’s economy has become a prisoner of its own success.

(...) [article here]

Wednesday, 5 June 2013

CHINA AND THE SLD

asia_times_logo OK

SHANGRI-LA LOST FOR CHINA

Bonnie Glaser

Asia Times, June 5, 2013

The Shangri-La Dialogue (SLD), launched by the Institute of International Strategic Studies (IISS) in 2002, brings together Asia-Pacific defense ministers and experts from around the world to discuss regional security challenges and opportunities for cooperation.

The 12th SLD convened in Singapore from May 31 to June 2. IISS Director General and Chief Executive John Chipman noted in his opening remarks that the meeting took place "after a year of heightened tensions in the Asia-Pacific, recognizing that defense diplomacy is needed to contain disputes, limit provocations and inspire conflict prevention".

For a vast number of the attendees, much of the instability in the region can be traced to China's assertive defense of its expansive sovereignty claims in the South China Sea and East China Sea.

Concern about China was the main theme of the opening keynote speech delivered by Vietnamese Prime Minister Nguyen Tan Dung. Although China was not singled out by name, it was clear that his references to growing risks to "maritime security and safety as well as freedom of navigation" were delivered with China in mind.

(...) [article here]

Tuesday, 4 June 2013

US, CHINA AND NORTH KOREA

Asia Times 2

NORTH KOREA COMMON GROUND FOR US, CHINA

George Gao

Asia Times, June 4, 2013

UNITED NATIONS - US President Barack Obama is set to host his Chinese counterpart, Xi Jinping, on June 7-8 for their first bilateral meeting as heads of state. Figuring on their agenda is how to address a precarious North Korea, which is armed with a small nuclear arsenal and vying for a bigger one.

In the past seven years, North Korea has suffered a spate of UN Security Council sanctions, the most recent of which was co-drafted by the US and China in March under resolution 2094. The resolution prohibits the transfer of any materials and financial assets into North Korea that may contribute its nuclear program. The resolution also prevents some luxury goods from entering the country.

But in general, UN sanctions have yet to halt North Korea's nuclear developments, much less disarm its nuclear arsenal.

"Clearly, UN sanctions have not been effective, as evidenced by North Korea's continued development and testing of nuclear weapons since sanctions were first introduced in 2006," said Charles K Armstrong, a professor of history at Columbia University and the director of the Center for Korean Research.

(...) [article here]

Monday, 3 June 2013

THE SHANGRI-LA DIALOGUE SEEN BY CHINA

BBC_WorldNews_Stack_Rev_RGB [Converted]

CHINA MEDIA: SHANGRI-LA DIALOGUE

BBC News, June 3, 2013

Media and experts discuss territorial tensions and US military deployments in Asia following a security conference in Singapore, while the Hong Kong press note a rift among the pro-democracy camp ahead of the 4 June vigil.

Global Times expresses disappointment at US Defence Secretary Chuck Hagel's declaration at the Shangri-La Dialogue in Singapore that the US will redeploy 60% of its fleet and overseas-based air force to the Asia-Pacific region by 2020.

It says his remarks have spoiled the atmosphere ahead of a key summit between the Chinese and US presidents later this week.

"The military redeployment is a self-deceiving and misguiding effort to check and balance China. This is also an embodiment of the fact that the US is nearly exhausted when it comes to dealing with China's rise," it says.

China Daily also criticises Mr Hagel's "unwarranted accusations" on Chinese state-backed cyber-attacks.

"Compared with China's consistency, the US is sending a mixed, and even confusing, message... The US defence chief should be told that such unconfirmed allegations neither help solve the issue, nor help build strategic mutual trust between the two countries," it says.

In Global Times, Han Xudong, a professor at the National Defence University, says "Western" media "hype about China's growing military power and the US' military redeployments serves multiple ulterior motives including helping the US to export more arms as well as build a US-led security system in Asia-Pacific.

(...) [article here]

Sunday, 2 June 2013

US-CHINA TALKS

The Guardian

CYBERSECURITY TOPS OBAMA'S AGENDA FOR CHINA TALKS

Julie Pace (AP)

The Guardian, June 2, 2013

AP White House Correspondent= WASHINGTON (AP) — President Barack Obama will be looking for signs from China's leader at their upcoming meeting that Beijing is ready to address its reported high-tech spying, which the White House sees as a top threat to the U.S. economy and national security.

The talks between Obama and Chinese President Xi Jinping will be followed by a July meeting between U.S. and Chinese officials focusing on cyberespionage, along with other strategic and economic issues. Secretary of State John Kerry announced the U.S.-China meetings when he visited Beijing in April.

The summit Friday and Saturday at a California estate also is aimed at establishing personal ties between Obama and Xi as relations between the two global powers grow increasingly complex.

Obama needs Xi's help in stemming nuclear threats from North Korea and Iran, combating the violence in Syria, and continuing the U.S. economic recovery.

(...) [article here]

Saturday, 1 June 2013

CHINA, THE US AND CYBER ESPIONAGE

The Washington Post

HAGEL CHIDES CHINA FOR CYBER ESPIONAGE

Ernesto Londono

The Washington Post, June 1, 2013

SINGAPORE — Secretary of Defense Chuck Hagel took China to task for alleged cyber espionage on Saturday, drawing a sharp response from a Chinese general who questioned whether America’s growing military presence in Asia is anything more than an affront to Beijing’s rise.

Delivering the keynote speech at the Shangri-La Security Dialogue, Hagel said the U.S. is “clear-eyed about the challenges in cyber,” and echoed past administration assertions that the “growing threat of cyber intrusions,” targeting U.S. government and industry portals “appear to be tied to the Chinese government and military.”

It was the latest public charge from the Obama administration, which has concluded that calling out China publicly could curb what U.S. officials call a brazen and sophisticated quest for American secrets stored online.

“We are determined to work more vigorously with China and other partners to establish international norms of responsible behavior in cyberspace,” Hagel said in a conference hall packed with Asian military officials.

China has denied Washington’s accusations, most pointedly last week, when it said it did not need to steal American military hardware blueprints because it was more than capable of producing its own.

(...) [article here]

Friday, 31 May 2013

INDIA’S GROWTH IN 2013-14

The Economic Times

INDIA'S FY13 GDP GROWTH HITS DECADE LOW OF 5%

Agencies

The Economic Times, May 31, 2013

NEW DELHI: India's Gross Domestic Product (GDP) grew at 4.8% in the fourth quarter of FY13, marginally lower than an ET Now poll estimate of 4.9%. This is a marginal improvement over the Q3 GDP growth rate of 4.7%.

The GDP for the entire FY13 grew at 5%, which is a decade low number. The manufacturing sector of the economy grew at 2.6%.

The consensus estimates of the poll ranged from 4.3% to 5.5%.

India's economic growth was at 6.2 per cent for the 2011-12 fiscal.

It had grown by 5.4 per cent, 5.2 per cent and 4.7 per cent in the first, second and third quarters, respectively, of 2012-13, according to data released by the Central Statistical Organisation (CSO) today.

(...) [article here]

Wednesday, 29 May 2013

CHINA AND THE WORLD ORDER

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WORLD EYES CHINA'S COEXISTENCE STRATEGY

Liselotte Odgaard

Asia Times, May 29, 2013

China is no longer merely a passive recipient of the world order, but it has become a key factor in determining the foreign and defense policy choices that are open to other international actors.

Beijing seems to have positioned the country as a global great power in a political sense. It has achieved this position by means of a strategy of coexistence that was recently reiterated in the Chinese defense white paper. This strategy is designed to change the context for other states' international behavior without promoting a completely new world order.

Instead, China's version of world order is founded in a revised interpretation of the existing UN system, invoking the principles of absolute sovereignty and non-interference. It is an interest-based order designed to protect China against overseas interference and maintain international peace and stability without any obligations for extensive cooperation.

Beijing seeks to influence the context more often than directly shaping the behavior of other international actors. This coexistence strategy does not require economic and military capabilities at US levels to exercise this type of influence, because it relies on the persuasiveness of its version of world order as an advantage for others without promoting a China-centric model of interaction.

(...) [article here]

Tuesday, 28 May 2013

7% GROWTH IN CHINA

Bloomberg_logo

LI TELLS GERMANY CHINA TARGETS 7% GROWTH FOR DECADE: ECONOMY

Bloomberg News

Bloomberg, May 28, 2013

Chinese Premier Li Keqiang told German business leaders his country is confronted by “huge challenges” as it seeks 7 percent annual growth this decade, down from more than 10 percent in the previous 10 years.

China needs growth of about 7 percent to double per capita gross domestic product by 2020 from the level in 2010, Li said yesterday in Berlin after meeting with Chancellor Angela Merkel during his first trip abroad as premier. Expansion is cooling from the pace that propelled the nation to become the world’s second-biggest economy.

Li, who succeeded Wen Jiabao as premier in March, is signaling the limits of leaders’ tolerance for slower growth as Europe’s debt crisis curbs shipments abroad, manufacturing weakens and a government anti-extravagance campaign restrains restaurant and retail sales. The comments came days after President Xi Jinping said China won’t sacrifice the environment to ensure short-term expansion and policy makers outlined plans for a bigger role for the private sector.

“I don’t think it’s a change of policy stance, but I do feel that in the past several months we’ve started to hear more and more signals from the central government that they want to tolerate lower growth,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong.

Yesterday’s comments at a Germany-China business forum compare with Li’s remarks at a March 17 press conference that China must average 7.5 percent growth through 2020. State-media transcripts that day said Li gave a 7 percent figure.

(...) [article here]

Monday, 27 May 2013

THE DOWNTURN OF CHINA’S ECONOMY

SCMP

CHINA'S ECONOMY FACES A ROUGH RIDE IN THE NEXT FEW YEARS

G. Bin Zhao says China's economy faces a rough ride in the next few years as the new leadership introduces major changes but the nation will emerge as a global powerhouse in two decades

G. Bin Zhao

South China Morning Post, 27 May, 2013

The world couldn't hide its disappointment when China's first-quarter GDP growth dropped to 7.7 per cent, slightly lower than market expectations. Unfortunately, this might just be the start; worse news could be just around the corner. Indeed, there are a number of reasons why the Chinese economy faces a downturn over the next few years. So, just how bad can it get?

First, the current leadership transition is an issue. It is clear the new Chinese leaders will introduce many changes, because they understand there is absolutely no alternative to secure China's long-term growth. Without major policy adjustments, any notion of turning the nation into a real superpower over the next few decades will just be an unrealistic dream. Certainly, the transition process will lead to social pain, particularly for the economy. In the meantime, the world needs to be aware of this so that another severe slide in China's gross domestic product will not come as a big blow to the global economy.

Second, economic growth is no longer the top priority on the Chinese agenda. Since the growth target is set at 7.5 per cent, the market should not expect any stimulus plan when it fluctuates to around seven per cent, or goes lower. As President Xi Jinping recently emphasised, the days of "ultra-high-speed" growth in China are over. Thus, policymakers will tolerate further economic decline.

(...) [article here]

Sunday, 26 May 2013

CAN INDIA DETER CHINA?

Hindustan Times

STRATEGIC DETERRENCE AGAINST CHINA

Mandeep Singh Bajwa

The Hindustan Times, May 26, 2013

Deft diplomacy working patiently and paying no heed to shrill calls for upping the ante has resolved the tense situation arising out of the Chinese intrusion in Ladakh. To back up the diplomatic initiative, the military subtly flexed its muscles. The army presented the government with a number of options, including a show of strength, if necessary, implemented in a regulated manner to apply pressure.

XIV Corps consisting of an infantry division, a mountain division, certain specialised troops, an artillery brigade and an armoured battle group maintained a high level of operational readiness to meet any possibility. Long-range observation systems and UAVs (unmanned aerial vehicles) were used to keep a track of the People's Liberation Army (PLA) movements and build-up.

The pattern of Chinese behaviour means that we can expect more posturing on our borders. What are our options in strategic terms to deal with intrusions and nibbling away at our territory? While there has been a significant addition to our defence post-62, they need to be further strengthened in the view of increasing Chinese capabilities. However, the greatest truth in warfare is that a purely defensive strategy never works in the long-term.

We, therefore, need to build an offensive wherewithal with the capacity to strike deep into enemy territory while keeping our own base intact. The raising of mountain strike corps for the northern and eastern theatres with lightweight artillery, heavy light helicopters and bold, new concept of aggressive action can no longer be delayed. We also need to build a limited offensive capability for the central sector as well as in all defensive corps.

(...) [article here]

Saturday, 25 May 2013

HOT MONEY IN CHINA

China Daily

THROWING COLD WATER ON HOT MONEY

Xin Zhiming

China Daily, May 25, 2013

The Chinese economy has become very attractive to speculative hot money. But by allowing the yuan to rise strongly, the authorities cause doubts whether the challenge is handled in a proper and coordinated manner.

Despite the slowing of its economy in the first quarter, foreign capital has been flowing into China to cash in on yuan appreciation and relatively high interest rates.

It is difficult to calculate the exact scale. However, some indicators, such as its foreign exchange purchases and value of exports, cast light on the abnormal influx of capital.

The country's new foreign exchange purchases an indicator for monitoring capital inflows amounted to 1.2 trillion yuan ($193.5 billion) in the first quarter, a huge increase on the 500 billion yuan for the whole of 2012.

According to the State Administration of Foreign Exchange, China had a surplus of more than $100 billion in its capital and financial accounts in the first quarter, compared with $20 billion for the fourth quarter of 2012.

Moreover, the jump in export growth in April, which was 14.7 percent year-on-year, is far higher than market expectations of about 10 percent, resulting in a 114.5-billion-yuan trade surplus. In March, China registered a trade deficit of 7.24 billion yuan.

These abnormal changes indicate an undefined amount of speculative money has been flowing into China.

(...) [article here]

Thursday, 23 May 2013

CHINA AND PAKISTAN

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IS PAKISTAN DELUSIONAL ABOUT CHINA’S SUPPORT?

Firstpost., May 23, 2013

Islamabad: Chinese Premier Li Keqiang praised the Sino-Pakistan relationship to the hilt on Thursday, urging the "all-weather friends" to boost cooperation in business, trade, energy and infrastructure and build a long-vaunted economic corridor.

But not everyone is convinced China has Pakistan interests totally at heart.Li arrived in the Pakistani capital on Wednesday on the second leg of his first official trip since taking office in March and after a visit to Pakistan and China's arch rival, India. He leaves for Switzerland and Germany later on Thursday.

"We want to achieve dynamic balance in our trade," Li said in an address to the Senate.

"We are ready to work with Pakistan to speed up the project of upgrading the Karakoram Highway, actively explore and develop the long-term plans of building a China-Pakistan economic corridor, expanding our shared interests."

The Karakoram Highway, built through towering mountains with China's help, links northern Pakistan with western China.

Li expressed hope for financial, maritime, agricultural, defence and energy cooperation, and praised Pakistan for its "tenacity and fortitude" and "creating one miracle after another".

"The China-Pakistan friendship has stood the test of hardship and is more precious than gold," he said.

(...) [article here]

Tuesday, 21 May 2013

INDIA-CHINA EXCHANGES

Business Standard2

LI KEQIANG DECLARES 2014 AS YEAR OF EXCHANGES BETWEEN INDIA, CHINA TO BOOST FRIENDSHIP

Business Standard, May 21, 2013

Stressing on the need for increased people-to-people interaction between India and China, Chinese Premier Li Keqiang on Tuesday declared 2014 as the year of exchanges between the two nations to boost understanding and friendship.

Addressing captains of Indian industry at a function organised by FICCI here, Keqiang said: " The year of 2014 will be to boost understanding and friendship between both countries."

Li Keqiang, who is in India on a three-day state visit, further said both India and China have the wisdom to find mutually acceptable solution to the boundary problem.

"India and China have not shied away from addressing boundary question, have wisdom to find a fair and mutually acceptable solution...We have been able to put all issues on the table," he added.

Supporting a favourable trade balance and seeking to decrease trade deficit between India and China, he said Beijing would support Chinese enterprises to increase investments in India and help Indian products have access to Chinese market.

Li Keqiang on Monday said that global prosperity would not be possible without the simultaneous development of China and India.

(...) [article here]

Monday, 20 May 2013

FIFTH MISSILE FROM NORTH KOREA

Bloomberg_logo

NORTH KOREA TEST FIRES FIFTH MISSILE IN THREE DAYS OFF ITS COAST

Sangwon Yoon and Sungwoo Park

Bloomberg, May 20, 2013

North Korea fired its fifth missile in three days, demonstrating its military capabilities in defiance of global sanctions and diplomatic efforts to convince the totalitarian state to return to talks.

Kim Jong Un’s regime fired a projectile into waters off its eastern coast between 11 a.m. and noon today, South Korean Defense Ministry spokesman Kim Min Seok said in Seoul. The North, which launched a short-range missile yesterday after firing three on May 18, today said it is exercising its right to test-fire rockets as part of regular military drills.

The launchings follow months of North Korean threats that have moderated since U.S. and South Korea intensified diplomatic efforts this month to ease tensions and boost Chinese participation in global sanctions that target the North’s nuclear weapons program. The North has warned of nuclear strikes since testing an atomic device in February.

While the South sees no unusual North Korean troop movements, the military is “closely monitoring the situation” and is ready to respond to any escalation, Defense Ministry spokesman Kim said earlier. Earlier this month, the North threatened to retaliate against joint U.S. and South Korean naval drills.

“The North is likely testing these missiles as an armed protest against the recent military drills jointly conducted by the U.S. and South Korea,” said Yang Moo Jin, a professor at the University of North Korean Studies in Seoul.

(...) [article here]

Sunday, 19 May 2013

LI KEQIANG GOES TO DELHI

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IN THE HANDS OF LI KEQIANG AND MANMOHAN SINGH, THE FUTURE OF A CONTINENT

Firstpost, May 19, 2013

In the summer of 1914, Archduke Franz Ferdinand and his wife Duchess Sophie were assassinated on the Latin Bridge in Sarajevo. The shots weren't, as pop history now has it, heard around the world. Europe was riding a great wave of prosperity that had stretched for over a century; its markets better-integrated than ever before and economic institutions better-developed than any in human history. Britain, focused on the Irish conflict, paid little attention to the regicide in the Balkans. The United States had long retreated into isolation, choosing to know little and care less. France had-what else-a sex scandal on its mind.

Less than weeks after the killing in Sarajevo, though, jaunty marching-bands were cheering on soldiers headed into a war that would end in the death of 10 million soldiers and seven million civilians. Europe's great powers had begun an inexorable march towards the abyss.

Chinese premier Li Keqiang will land in New Delhi on Sunday-bearing a message, he says, that his country and India “must shake hands… so that together we can raise the standing of Asia in the world”. It's hard to imagine either he or Prime Minister Manmohan Singh don't know their not-always-steady hands must guide their nations towards something more important than prestige: the survival of a continent.

Europe in 1913 looked a lot like Asia in 2013. China, like Germany back then, fears its rise is being shackled by the established great powers. In the global system, the United States operates much like imperial Britain, an arbiter of the destiny of nations far from its shores. India, like Russia, is struggling to emerge from backwardness-and views its newly powerful neighbour with deep trepidation. There are competing military modernisation programmes; new geo-strategic alliances; tensions from the East China Sea to the Himalaya and the deserts of Persia.

(...) [article here]

Saturday, 18 May 2013

NK’S SHORT-RANGE MISSILES

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NORTH KOREA FIRES THREE SHORT-RANGE MISSILES

South Korea’s defense ministry has said North Korea fired three short-range missiles from its east coast. The alleged launches follow months of threats from Pyongyang of impending war with the US and Seoul.

Deutsche Welle, May 18, 2013

"North Korea fired short-range guided missiles twice in the morning and once in the afternoon off its east coast," the South Korean Defense Ministry said by telephone. The missiles were fired into the Sea of Japan.

The official said the purpose of the launch remained unknown and would not speculate whether they were part of a test or training exercise.

"In case of any provocation, the ministry will keep monitoring the situation and remain on alert," the official said.

Pyongyang conducts regular launches of its short-range missiles, which have the capability to hit targets in South Korea.

Tensions had recently begun to cool on the Korean peninsula after months of threats following fresh UN sanctions against North Korea for its third nuclear test in February. Under the resolutions, the North is banned from testing ballistic missiles.

In March, North Korea tested two short-range missiles off its east coast amidst near daily warnings of impending war with Seoul and the United States.

(...) [article here]

Friday, 17 May 2013

CHINA AND INDIA AS SOURCES OF CAPITAL

Reuters

CHINA, INDIA TO BE BIGGEST INVESTORS BY 2030: REPORT

Anna Yukhananov

Reuters, May 17, 2013

WASHINGTON (Reuters) - The percentage of global investment that goes to developing countries should triple in the next two decades as emerging economies catch up to richer nations and become more integrated into financial markets, the World Bank predicted in a report on Thursday.

These nations and their comparatively younger and bigger populations are also set to become the largest sources of capital, with China and India turning into the world's two biggest investors by 2030, the global development lender said.

The shifting landscape of saving and investment has profound implications for everything from which currencies will dominate global markets to the rise of new financial centers, patterns of capital flows and investment priorities.

But policymakers are still woefully unprepared for the changes, fixating instead on what will happen in the next three to six months, Kaushik Basu, the World Bank's chief economist, said.

"The big question that should concern us all is what will happen to the major drivers of growth and development: namely savings and investment," Basu told reporters ahead of the report's release.

(...) [article here]

Wednesday, 15 May 2013

SHARIF AND PAKISTAN-INDIA

The Economic Times

COMPETING PRESSURES AND THREATS: A LONG ROAD AHEAD FOR NAWAZ SHARIF

Vivek Katju

The Economic Times, May 15, 2013

In February 1999, the Pakistani defence services chiefs, including Pervez Musharraf, called on then Indian Prime Minister Atal Bihari Vajpayee in Government House, Lahore. As the call concluded, a Pakistani minister emphatically told this writer that the government would not allow the army to disrupt the historic process initiated by the visit. Three months later, the guns boomed in Kargil.

Nawaz Sharif is reaching out to India in a gushing, warm Lahori embrace. But Delhi must not lose sight of the enduring realities of the Pakistani state. Howsoever much Sharif may wish that the Constitution be respected by all Pakistani institutions, the army will not give up its decisive role in the formulation of the country's security policies, nor its traditional reflexes towards India.

Undoubtedly, the elections were credible despite the violence. They are an important milestone in the political evolution of Pakistan. Two points stand out vis-a-vis the elections to the National Assembly.

First, they have diminished the spread of the PML(N) and the PPP. Sharif effectively represents only the Punjab - 118 of his 126 seats come from that province. The PPP with 31 seats is now effectively a Sindhi party, with only one seat in Punjab. And despite the fervour of the metropolitan youth, some subtle support from the intelligence agencies and media attention, the bulk of Imran Khan's 29 seats come from pockets of Khyber-Pakhtunkhwa, FATA and northern Punjab.

(...) [article here]

Tuesday, 14 May 2013

MA GUANGYUAN AND CHINA’S ECONOMY

China Daily

'CHINA'S ECONOMY SERIOUSLY UNBALANCED'

Li Yu and Peng Chao

China Daily, May 14, 2013

China's economy is suffering from serious imbalances, financial commentator Ma Guangyuan said at the business school of Sichuan University on May 9.

"China's economy relies too much on investment and export," he said.

China's investment accounts for more than 45 percent of its GDP in recent years, almost twice the world's average. In 2010, the share climbed to 69.3 percent, according to Ma.

The high investment hasn't led to high return, however. China's investment has increased 25 percent annually in the past five years, but GDP has only increased by about 10 percent.

Low consumption is also a big problem. The share of consumption as a part of China's GDP has been falling sharply in recent years, according to materials Ma provided.

Consumption made up over 50 percent of China's GDP in the 1980s and 46 percent in the 1990s. The share fell to 33.8 percent in 2010, much lower than the world's average (61 percent).

"A nation is irresponsible to the world's economy if it doesn't consume," Ma quoted American experts.

(...) [article here]

Monday, 13 May 2013

TAIWAN AND THE PHILIPPINES

The Washington Post

TAIWANESE PROTEST KILLING OF FISHERMAN BY PHILIPPINES COAST GUARD IN DISPUTED WATERS

Associated Press

The Washington Post, May 13, 2013

TAIPEI, Taiwan — Some 200 Taiwanese gathered outside the Philippines representative office in Taipei on Monday to protest the killing of a Taiwanese fisherman by the Philippines coast guard in disputed waters.

Burning Philippines flags and waving banners with legends like “You can’t kill our people, you can’t insult our country,” the demonstrators demanded that the Philippines apologize for Thursday’s incident in the Bashi Strait, where Philippines coast guard personnel opened fire on a Taiwanese fishing vessel, killing 65-year-old Hung Shih-cheng. The strait is between Taiwan and the northern Philippines.

With upward of 75 police officers in attendance, Monday’s demonstration was peaceful.

President Ma Ying-jeou has given the Philippines until Tuesday to apologize for the incident and provide compensation to the dead man’s family. If the Philippines refuses, Ma has said he will order Taiwanese representatives in Manila back to Taipei and deny Filipinos permission to work in Taiwan.

Approximately 87,000 Filipinos are employed on the island, many in the manufacturing sector, where their English-language skills are seen as a boon to the island’s export-oriented high-tech industries.

The Philippines coast guard has admitted it fired the shots that killed the Taiwanese fisherman, but said it acted in self-defense because the Taiwanese vessel was about to ram it.

China has sought to make common cause with Taiwan against Manila, deploring the shooting in harsh rhetoric that threatened to spark another diplomatic tussle between Beijing and the Philippines, a key U.S. ally.

(...) [article here]

Saturday, 11 May 2013

CURRENCY WARS AND THE YEN

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AS YEN HITS 100 TO US$, GET READY FOR MORE CURRENCY WARS

Vivek Kaul

Firstpost, May 11, 2013

Ushinawareta Nijūnen, or the period of two lost decades for Japan (from 1990 to 2010), might finally be coming to an end. Or so it seems.

And Japan has to thank Abenomics unleashed by its current Prime Minister Shinzo Abe for it. Abe has more or less bullied the Bank of Japan, the Japanese central bank, to go on an unlimited money printing spree, until it manages to create an inflation of 2 percent.

Japanese money supply is set to double over a two-year period. And all this 'new' money that is being pumped into the financial system will chase an almost similar number of goods and services, and thus drive up their prices. Or so the hope is. The target is to create an inflation of 2 percent and get people spending money again. When prices are rising or are expected to rise, people tend to buy stuff, because they don't want to pay a higher price later (This, of course, is true to a certain level of inflation and doesn't hold in the Indian case where retail inflation is greater than 10 percent). As people go out and shop, it helps businesses and in turn the overall economy.

In an environment where prices are stagnant or falling, as has been the case with Japan for a while now, people tend to postpone purchases in the hope of getting a better deal. The situation where prices are falling is referred to as deflation.

In 2012, the average inflation in Japan was zero percent, which meant that prices neither rose nor fell. In fact, in each of the three years for the period between 2009 and 2011, prices fell on the whole. This has led people to postpone their consumption and hence had a severe impact on Japanese economic growth. To break this "deflationary trap", Shinzo Abe and the Bank of Japan have decided to go on an almost unlimited money printing spree.

(...) [article here]

Friday, 10 May 2013

¿THATCHERISM… IN CHINA?

Caixin

THATCHERISM WITH CHINESE CHARACTERISTICS

Conditions in China are similar to what Britain faced during Thatcher's reign, something the new leadership should note

Deng Tishun

Caixin, May 10, 2013

As the world mourned the passing of former British prime minister Margaret Thatcher, and remembered her belief in small government, free enterprise and monetarism, we should look at what today's China can learn from her legacy.

At almost exactly the same time Thatcher was leading Britain out of an economic slump, China under Deng Xiaoping embarked on its own social and economic reform, which had tenets similar to what was later known as Thatcherism.

Deng understood how the free market functioned, giving people more power over their lives by granting private property ownership, motivating the formation of private enterprises and rolling back omnipresent government controls. China has since enjoyed dramatic ascendance.

Despite its eye-catching growth, China remains a developing country with per capita GDP well below the global average. Its growth momentum has slowed noticeably over the past few years, partly due to a lack of reform breakthroughs. Many economic challenges faced by Thatcher in the 1970s pose the same threats to today's China. These include:

Big government. China's fiscal revenue as a percentage of GDP increased to 23 percent at the end of 2012 from 12.9 percent in 1992. Its fiscal expenditure as a percentage of GDP increased to 24 percent from 13.9 percent over the same period. These figures are now back to the levels they were at in 1981 when China embarked on economic reform programs.

(...) [article here]

Thursday, 9 May 2013

PRESSURE ON NORTH KOREA

The Hankyoreh

S. KOREA, US AND CHINA COORDINATING PRESSURE ON N. KOREA

Recent diplomatic activity shows three countries working together to address N. Korea nuclear issue

Kim Kyu-won and Gil Yun-hyung, staff reporters and Seong Yeon-cheol, Beijing correspondent

The Hankyoreh, May 9, 2013

Seoul, Washington, and Beijing are working together on an all-out pressure offensive against Pyongyang.

South Korean President Park Geun-hye and US President Barack Obama formally stated at their May 7 summit that North Korea would have to make changes before any dialogue could take place. Prior to the meeting, the Bank of China blocked accounts with North Korea’s Foreign Trade Bank (FTB).

The question now is how North Korea will react to the pressure.

Park and Obama made it clear at their summit that North Korea would have to make changes first if it wants dialogue.

Obama said at a press conference that the two countries were “prepared to engage with North Korea diplomatically and, over time, build trust.”

But he also stressed, “the days when North Korea could create a crisis and elicit concessions . . . are over.”

The remarks sent a strong message to Pyongyang that it is on the wrong path and needs to get back on the right track. They also surprised some observers who were expecting a surprise dialogue offer to North Korea to emerge from the summit in response to the recent tensions on the Korean Peninsula.

Similar behavior was seen from Beijing. On May 7, just before the South Korea-US summit, the Bank of China gave notice to FTB that it was closing its accounts and halting all financial transactions. The Bank of China is the country’s largest foreign exchange bank, while FTB handles North Korea’s overseas financial operations.

(...) [article here]