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

asia_times_logo OK

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

deutsche-welle-logo

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]

Wednesday 8 May 2013

CHINA DENIES CYBER ESPIONAGE

deutsche-welle-logo

CHINA DENIES US ALLEGATIONS OF CYBER ESPIONAGE

Spencer Kimball

Deutsche Welle, May 8, 2013

For the first time, Washington has directly accused Beijing of conducting cyber espionage against the Pentagon. The attacks were allegedly aimed at gathering intelligence on US defense programs.

Beijing has denied US allegations that the Chinese military was conducting cyber espionage against the Pentagon, claiming instead that Washington was trying to sensationalize China's military buildup as a national security threat.

"The Chinese government and armed forces have never sanctioned hacking activities," Senior Colonel Wang Xinjun, a researcher at the Academy of Military Sciences in Beijing, told the official Xinhau news agency. The academy is a high-level research institute affiliated with the People's Liberation Army (PLA).

In its annual report on China's ongoing military buildup, the US Defense Department had claimed on Monday that some recent breaches of American government-owned computer networks were "attributable directly to the Chinese government and military."

"These intrusions were focused on exfiltrating information," The Pentagon said in its report. "China is using its computer network exploitation (CNE) capability to support intelligence collection against the U.S. diplomatic, economic, and defense industrial base sectors that support US national defense programs."

China's Foreign Ministry, for its part, called the US allegations of cyber espionage "irresponsible," saying that China's defense buildup was "legitimate and normal."

"China is committed to a path of peaceful development and pursues a defensive defense policy," said Foreign Ministry spokeswoman Hu Chunying, adding that Beijing "resolutely oppose[s] any form of hacking attacks."

(...) [article here]

Tuesday 7 May 2013

CHINA AND CYBER ESPIONAGE

The Washington Post

PENTAGON: CHINESE GOVERNMENT, MILITARY BEHIND CYBERSPYING

Ernesto Londoño

The Washington Post, May 7, 2013

Cyber-espionage targeting U.S. government and business entities appears “to be attributable to the Chinese government and military,” the Pentagon charged Monday in the U.S. government’s most explicit public accusation to date against Beijing.

The 2013 “Military and Security Developments Involving the People’s Republic of China” provides detailed allegations about a problem of rising concern to the U.S. government and American businesses.

Chinese hacking capabilities are particularly worrisome because U.S. officials fear that Beijing could use them as an offensive tactic.

“The access and skills required for these intrusions are similar to those necessary to conduct computer network attacks,” the report says.

The Chinese government has denied orchestrating or condoning hacking operations against U.S. government and corporate networks.

The Pentagon added that China is also stepping up its conventional weapons and aerospace systems, saying China is transforming an armed force that two decades ago was regarded as “a poorly equipped, ground forces-centric military.”

Significantly, China rolled out last year its first aircraft carrier and invested heavily in short- and medium-range ballistic missiles.

(...) [article here]

Monday 6 May 2013

LADAKH REGION

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INDIA, CHINA STAND-OFF IN LADAKH ENDS BUT AT WHAT COST TO INDIA?

Venky Vembu

Firstpost, May 6, 2013

At first blush, the news of an end to the 20-day-long border stand-off between Indian and Chinese troops in the Ladakh region will be welcomed to the extent that it has averted the very real possibility of a skirmish in the high Himalayas. When troops of the two countries, with an enormous trust deficit to bridge, stand eyeball-to-eyeball in confrontation, as they have been since the 15 April incursion by Chinese troops into notionally Indian territory, the scope for things getting out of hand gets dramatically heightened. Neither India nor China would have been well-served by a border skirmish - or even just a protracted stand-off - which is perhaps why they cranked the levers of military diplomacy to de-escalate the tension.

The precise details of the terms of agreement under which both Chinese and Indian troops pulled back from the brink aren't known yet. Nor is it immediately clear what caused the Chinese to yield ground when for much of these past 20 days, they had remained unyielding in their claim that they had not ingressed into Indian territory, and therefore saw no compelling reason to retreat.

It's entirely possible that the signals that India sent in the past couple of days - suggesting that External Affairs Minister Salman Khurshid's upcoming visit to China might be deferred because the Chinese response to Indian objections on the incursion had been less than satisfactory - have yielded dividends. As analysts have consistently argued, and as Firstpost too has noted earlier, India was not without diplomatic options in facing up to the Chinese challenge. It didn't need India to ratchet up the military rhetoric, which is the false framework set up by some analysts who favoured a softly-softly approach to China.

(...) [article here]

Sunday 5 May 2013

INDIA SEEN BY CHINA

The Economic Times

CHINESE FIND INDIA A POTENTIAL PARTNER UNLIKE JAPAN

Leo Wang

The Economic Times, May 5, 2013

The past 12 months have seen China getting directly involved in potentially explosive situations such as Ladakh or the Diaoyu Islands. It almost seems as if, as China rises, it is starting to flex its muscles and shift away from the more non-confrontational approach it has used in the past decade towards more direct military confrontation. However, appearances can be deceiving. These two situations, seen from the point of view of Chinese citizens, are extremely different from each other.

The recent conflict surrounding the Diaoyu Islands is born from the trauma China endured under Japanese occupation during the World War II. To this day, the relationship with Japan remains extremely tense, particularly due to what is perceived as continuing provocation, such as Japanese prime minister Shinzo Abe's yearly visit to the Yasukuni shrine where Class A, B and C war criminals are enshrined. As a consequence, any geopolitical conflict with Japan usually arouses very strong reactions from the population, often demanding immediate retribution and forcing the government into taking a hard stance.

PARTNERS NOT FOES

The Ladakh conflict, however, is seen as very different. Very few Chinese citizens feel there are tensions between India and China, to the extent that awareness of this incident is extremely low. Furthermore, the strategic importance of the Ladakh region or other border areas such as NEFA seems far lower than the Diaoyu Islands. They do not fit into China's plan for Tibet, and the massive, forbidding heights of the Himalayas make the regions difficult to access and develop.

(...) [article here]

Saturday 4 May 2013

CURRENCY WARS IN ASIA

The Star

ABENOMICS AND CURRENCY WARS.WHAT ARE WE TO DO

Tan Sri Lin See-yan

The Star, May 4, 2013

ABENOMICS, the aggressive management blend of monetary and fiscal stimuli to reflate Japan's stagnant economy, according to Prime Minister Shinzo Abe. Consequently, yen weakened considerably notching 23 weeks of back-to-back falls against the US dollar, completing the longest losing streak in 24 years. The sell-off brought it within striking distance of 100 yen to US$1, a level not seen since 2009.

US dollar has since climbed 25%, and the pound 9%-10% against the yen since mid-April. Worries are that yen can move to within 110. This has led to a growing chorus of emerging nations (including China, Russia, Colombia and Thailand) expressing alarm over the prospect of “currency wars.” Indeed, many nations around the world are vying to keep their currencies “weak” as well, through “macro-prudential” means, including limited interventions. So much so the Moscow G-20 meeting in February had to re-affirm that economic stimulus policies should be aimed at lifting domestic growth and not target exchange rate.

The Asian Shadow Financial Regulatory Committee (of which I am a member) recommended at its April 18 meeting at Shanghai's Fudan University that (i) Asian economies particularly those in North-East Asia, should refrain from competitive devaluation and protectionist policies, which would have a negative impact on world trade flows; (ii) the Bank of Japan should be considerate, cautious and transparent in undertaking further quantitative easing, by not targeting a weak yen and taking into account the concern of others; and (iii) IMF and, in particular ADB need to closely monitor international financial flows and strengthen its surveillance framework for macroeconomic policies of nations so that it will be more effective in promoting global monetary stability.

(...) [article here]

Friday 3 May 2013

INDIA’S ECONOMY: ROBUST AND RESILIENT

The Economic Times

INDIA GROWTH STORY INTACT, WILL CONTINUE TO GROW FASTER ON DOMESTIC DEMAND: ADB PRESIDENT

The Economic Times, May 3, 2011

NEW DELHI: Growth in emerging Asian economies, including India and China, is likely to remain robust and resilient even after the global crisis due to strong domestic demand, Asian Development Bank's new president Takehiko Nakao said.

Speaking on Thursday, ahead of the ADB's annual meeting, Nakao conceded that the current account surpluses in emerging economies had depleted to 2% from 10% because of the economic crisis.

However, he said, "India, China and other emerging economies would continue to grow faster than other developed economies because of strong domestic demand and strong production capacity in the region." The way forward for these economies is to continue attracting investments, especially in infrastructure development, Nakao said, adding that this can be done by good taxation and mobilising domestic savings.

Admitting that private sector has been a key contributor to Asia's economic boom and a powerful tool in the fight against poverty, he said there still remains considerable untapped potential for drawing on the entrepreneurship, talent and productivity in our region. "India needs to upgrade its services sector to absorb millions of workforce that gets generated each year. Besides, government needs to enhance private sector participation by creating conducive business environment to expand the sources and volume of available infrastructure financing," he said.

(...) [article here]

Thursday 2 May 2013

ABE AND THE CONSTITUTION’S AMENDMENT

Bloomberg_logo

JAPAN’S ABENOMICS HAUNTED BY GHOST OF GENERAL MACARTHUR

Isabel Reynolds and Takashi Hirokawa

Bloomberg, May 2, 2013

Prime Minister Shinzo Abe’s drive to revise Japan’s pacifist constitution for the first time risks alienating voters who support his economic agenda and dividing his coalition government before July elections.

Abe aims to make it easier to amend the constitution, a first step in plans to beef up the military at a time when Japan is mired in territorial disputes with China and South Korea. His Liberal Democratic Party is forecast to win the upper house race, potentially giving him the two-thirds majority in both chambers needed to alter the charter.

Overhauling a document imposed by U.S. General Douglas MacArthur’s occupation force after World War II has been a goal of LDP politicians, including Abe’s grandfather, since the party was founded in 1955. While polls show the public backs Abenomics, his strategy to resuscitate the world’s third-largest economy after more than a decade of deflation, a majority of voters don’t rate constitutional revision as a priority.

“The growth strategy can only be accomplished with sustained attention,” said Koichi Nakano, a political science professor at Sophia University in Tokyo. “It’s a monumental task in its own right. If he takes up more nationalistic causes and Abenomics is not looking good, this could lead to a loss of authority after the election.”

(...) [article here]

Wednesday 1 May 2013

SINO-INDIAN BORDER

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HISTORY LESSON: WHY CHINA AND INDIA WILL HAVE TO DO A SWAP

Firstpost, May 1, 2013

China and India both insist they share a border sanctified by centuries of custom-but their troops are facing off on some of the most brutal terrain in the world, unable to agree on it. The problem is simple. The two countries' claims rest on agreements arrived at by local rulers hundreds of years ago, when the only places in the Himalaya that mattered were the passes across the inner Himalayas-used by seasonal trading caravans that provided valuable taxes to local rulers. No one knew, or cared, where the line ran through the high mountains.

Elsewhere in the world, countries are fighting for territories with oil, gas or minerals. In this case, they're geo-strategic: China needs Ladakh's Aksai Chin area to link Tibet to Xinjiang, and India fears losing Arunachal Pradesh would make its entire North-East vulnerable.

Many experts say the two great Asian powers will eventually have to do a swap-in essence, that India will have to sacrifice its claims to Aksai Chin in Ladakh for China acknowledging Indian sovreignity over Arunachal Pradesh. Both sides have been engaged in talks that have skirted around this issue, but neither seems keen on expending political capital on such a deal.

In part, that's because the debate over the border is clouded by political grandstanding, and publics sometimes ill-informed about what the border dispute is actually about.

(...) [article here]