SOUTH KOREA TELLS NORTH KOREA TO STOP RAISING TENSION

Heejin Koo

Bloomberg, January 30, 2009

South Korea told North Korea to stop raising tension on the Korean peninsula after the communist nation said it is scrapping all military and political agreements with the government in Seoul.

“Creating and raising tensions in South-North relations is not beneficial for the Korean peninsula, northeast Asia or for world peace,” Unification Ministry spokesman Kim Ho Nyoun said in Seoul. “We urge North Korea to return to dialogue.”

North Korea accused South Korea of pursuing confrontational policies that are pushing the two nations to “the brink of war,” according to a statement carried by the official Korean Central News Agency today.

The North Korean announcement comes less than two weeks after it threatened “strong military steps” in response to South Korea’s confrontational policies and about two months after North Korea imposed border restrictions with South Korea.

North Korea also said it is canceling an Agreement on Reconciliation, Non-Aggression, Cooperation and Exchange with South Korea and nullified the military boundary in the West Sea.

“All the agreed points concerning the issue of putting an end to the political and military confrontation between the north and south will be nullified,” the reunification committee in Pyongyang said, according to the official news agency.

Kim Jong Il’s regime has repeatedly called South Korean President Lee Myung Bak a “traitor” and a “sycophant to the U.S.” It has demanded South Korea stop civic groups from launching balloons loaded with so-called propaganda leaflets criticizing Kim.

(...) [artículo aquí]

WILL CHINA BE ABLE TO WEATHER THE STORM?

Pablo Bustelo

January 29, 2009

English translation of an Op-Ed in El País (Negocios), Madrid, January 25, 2009 (this version, with updated figures, is slightly different from the one published in the newspaper).

The international crisis is beginning to have adverse effects on China, whose economy – which, according to the data recently released, became the third largest in 2007, surpassing Germany – has grown until now very rapidly, contributing considerably to global expansion. Let’s simply recall that China’s GDP growth was 13% in 2007, the highest rate – with difference – in the world. China was responsible of 17% of global growth, measured in purchasing power parity, between 2000 and 2007, a proportion similar to the one of the EU, whose economy is five times greater, and even larger than the percentage of the US, which has a GDP four times greater.

The provisional figures for 2008 suggest that China’s GDP increased around 9% in 2008, a still very considerable rate. However, the quarterly rates, which surpassed 10% in the first and second quarters, were 9% in the third and only 7% in the fourth. The forecasts for 2009 vary between the 8% of the official estimate and the 6% of the Economist Intelligence Unit, with the 7.5% of the Word Bank in between.

Do we really have indications that China might decelerate its growth to half – from 13% to 6% - in only two years, between 2007 and 2009? This would be certainly bad news, partly because China has been, along with the US and the EU, a main engine of the world economy and partly because it is widely acknowledged that, below 8%, growth might not be enough to create the required jobs and, hence, to maintain social and even political stability.

(...) [complete article here, PDF file]

CHINA'S EUROPE TOUR OVERSHADOWED BY US RELATIONS

François Godement

EU Observer, January 29, 2009

EUOBSERVER / COMMENT - We are on the eve of a five-country tour (including Brussels) of Europe by Chinese Premier Wen Jiabao. The event looks like a hastily put together trip after China's last minute no show at the annual EU-China summit on 1 December in Lyons. Wen's trip offers plenty to gossip about for foreign policy pundits, since it glaringly skirts around France, whose president had been earlier pilloried by Chinese officials for meeting with the Dalai-Lama in his capacity as EU chair.

But we have a world crisis on, so there is not a peep in the media about Wen's peripatetic dealings with the EU and five European countries, including Germany, the UK and Switzerland. Instead, public attention has focused on the new US Treasury Secretary Timothy Geithner's confirmation hearing in the Senate, and specifically on one sentence in the 102 page-long document he submitted for that hearing: "President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency."

Time will show whether this snippet of a sentence is really a harbinger for Sino-American relations. It is in fact mitigated by another sentence: "The question is how and when to broach the subject in order to do more good than harm." Indeed. But that's not the issue for Europeans. The point is that, as the global financial crisis charges on, the world's economic axis is still perceived to lie between Washington and Beijing, not between the US and Europe, and even less between China and Europe.

Imbalances, not just numbers, are what matters. There is wide-spread agreement that the huge capital imbalance between China and the US was the first contribution to the bubbles that burst last year. Economists may differ on where to put the blame - the insatiable US preference for spending over saving, or the equally boundless Chinese policy of saving over spending. Whatever the cause, it is the resolution of this imbalance which is the priority to solving the crisis. Eurozone countries as a whole haven't had such a role in this crisis, and so they don't matter as much in the solution. The China-US "Strategic Economic Dialogue" is paramount. And this is true even if our own trade and economic interests will be deeply influenced by the form of the solution to come.

(...) [artículo aquí]

GEITHNER GETS IT WRONG ON YUAN

Sungjoon Cho

Asia Times, January 28, 2009

The Barack Obama administration has certainly brought some change to United States policy. Sharply departing from a more engaging China policy, Treasury Secretary Tim Geithner rattled the ground by declaring during his confirmation hearings that China was "manipulating" its currency, the yuan, and vowing that the US would employ "aggressive" means to remedy this.

Not only are the grounds of such a claim insecure, but the timing and the manner of his comments are highly inappropriate. The US should not attempt unilaterally to search for and then destroy economic weapons of mass destruction.

The accusation on China's currency manipulation is not new. Geithner's predecessor, Hank Paulson, implied a certain connection between the current financial meltdown and global imbalances caused by China's foreign exchange policy. In a similar tone, Representative Sander Levin, who chairs the sub-committee on trade within the House Ways and Means Committee, has recently proposed suing China before the World Trade Organization (WTO) for its alleged currency manipulation.

Yet, a closer scrutiny tends to find such claims barely persuasive. As of November 2008, China's share of US exports was only 5.4% and its share in US imports 19.1%. It is too extensive and inferential to argue that China's currency policy, no matter what it may be, has caused the massive US trade deficit.

Former Federal Reserve chairman Alan Greenspan observed a few years ago that even a 20% revaluation of the yuan would not dent the US trade deficit. He was right: since 2005, the value of the yuan has risen by about 20% and there is no sign that it has helped reduce the US trade deficit.

(...) [artículo aquí]

US TO DECIDE IF CHINA IS CURRENCY MANIPULATOR IN SPRING

AFP, January 27, 2009

WASHINGTON (AFP) — President Barack Obama's new administration said it will determine in the coming months whether China is manipulating its currency, setting the stage for a new burst of trade friction.

White House spokesman Robert Gibbs said the administration had not decided its policy on the perennial controversy of the yuan's value, despite a stir caused by Treasury Secretary Timothy Geithner last week.

According to Gibbs, Geithner "was restating what the president had said during the (election) campaign," when he observed in congressional testimony that Obama believes China is manipulating its currency.

"I think it's safe to say this administration will determine in the spring what that means."
The Treasury Department issues twice-yearly reports on global currency policies. The next one is due in April, and a finding that China is "manipulating" its currency to gain a trade edge could trigger US sanctions.

Under the former administration of George W. Bush, the Treasury stopped short of that designation despite furious complaints in Congress that China does indeed artificially weaken the yuan's value to boost its exports.

(...) [artículo aquí]

INDIAN ECONOMY TO DECELERATE, BUT NO NEED TO PRESS PANIC BUTTON

The Economic Times, January 26, 2009

China has just declared the GDP estimates for the fourth quarter and the outcome was not very encouraging. The Chinese economy, which is now world’s third-largest, (in nominal terms) grew by just 6.8% during the December ’08 quarter. This is a sharp deceleration from 9% growth in the previous three months and 13% expansion in whole of 2007.

The news would come as a rude shock to many economic observers and investors. China’s economy was supposed to experience only a mild slowdown and thus cushion the global impact of a recession in North America, Euro zone and Japan. The latest estimates from Chinese statistics bureau have now put cold water on this hope. Simultaneously, it has highlighted the head winds being faced by the emerging economies. The world’s attention will now be focussed on India, the developing world’s second-biggest economy.

The question every one will be asking is how vulnerable is the Indian economy? Certain leading indicators such as exports and manufacturing output is clearly showing that Indian economy slowing down. But how severe can it get?

To get an answer to that we have to look at the expenditure side of the India’s economy. In an economy gross domestic product (GDP) is nothing but the sum total of good and services produced in that economy in a given year.

(...) [artículo aquí]

¿PODRÁ CHINA CAPEAR EL TEMPORAL?

Pablo Bustelo

El País (Negocios), 25 de enero de 2009

La recesión internacional está empezando a tener efectos adversos en China, cuya economía -que se convirtió el año pasado en la tercera mayor del mundo, adelantando a la de Alemania- ha crecido hasta ahora a tasas muy elevadas, contribuyendo mucho a la expansión global. Baste recordar que en 2007 el PIB de China aumentó el 11,9%, la tasa más alta, con diferencia, del planeta. A China se debió nada menos que el 17% del crecimiento global entre 2000 y 2007, proporción similar a la de Estados Unidos, cuya economía es cuatro veces mayor, e incluso superior al 16% correspondiente a la UE, que tiene un PIB cinco veces superior.

Las cifras provisionales para 2008 sugieren que el PIB de China aumentó alrededor del 9%, una cifra todavía muy alta. Sin embargo, las tasas trimestrales superaron el 10% en el primer y segundo trimestre, fueron del 9% en el tercero y de apenas el 6% en el cuarto. Las previsiones para este año varían entre el 8% de la estimación oficial y el 6% de la Economist Intelligence Unit, pasando por el 7,5% del Banco Mundial.

¿Hay realmente indicios de que China pueda ver desacelerarse su crecimiento a la mitad -del 12% al 6%- en apenas dos años? Tal cosa sería ciertamente grave, en parte porque el país ha sido, junto con Estados Unidos y la UE, locomotora del mundo y en parte porque se considera que, por debajo del 8%, el crecimiento podría ser insuficiente para crear el empleo necesario y, por tanto, para mantener la estabilidad social e incluso política.

(...) [artículo aquí] [versión con datos actualizados, PDF]

CHINA TELLS UNITED STATES TO HANDLE TIES WITH CARE

Chris Buckley

Reuters, January 24, 2009

BEIJING (Reuters) - China's Foreign Minister has urged U.S. Secretary of State Hillary Clinton to be careful with sensitive issues that could strain ties, calling the relationship between their two nations one of the world's most important.

Foreign Minister Yang Jiechi made the remarks to Clinton, settling into her new job as Washington's top diplomat, in a phone call on Friday, the Chinese Foreign Ministry website (www.fmprc.gov.cn) reported on Saturday.

But Yang's published remarks did not mention the yuan currency issue, which has become the first test for ties between his government and the new Obama administration.

"The China-U.S. relationship is one of the world's most important bilateral relations," Yang told Clinton, according to the report.

Each side should "respect and show consideration for the other's core interests and appropriately handle differences and sensitive issues," he said.

(...) [artículo aquí]

THE WAY FORWARD FOR US-SINO TIES

Jing-dong Yuan

Asia Times, January 23, 2009

In his inaugural speech, United States President Barack Obama vowed to seek greater cooperation among nations to confront global challenges such as climate change, poverty, terrorism and nuclear proliferation. Crucially important for the success of this welcome call for a return to multilateralism will be how his administration manages US-China relations.

Fortunately, in this regard the Obama administration inherits sound US-China ties, mainly due to the recent efforts of the Chinese leadership and the George W Bush administration. Unlike the rather tense beginnings of some previous administrations, where issues like Taiwan, human rights and trade cast a shadow over bilateral relations, Beijing and Washington can start by consolidating a relationship which has matured well over the past three decades.

Today the United States and China are partners in many areas, ranging from energy and the environment to the "war on terror" and combating nuclear proliferation. Over the past few years, a series of strategic dialogues on security and economic issues has been established which ensures regular consultations between US and Chinese leaders on bilateral, regional and global issues which affect their interests.

But Sino-US relations also face some serious obstacles, and how effectively these are managed during the Obama administration will have far-reaching global and regional ramifications.

(...) [artículo aquí]

CHINA’S ECONOMY GROWS 6.8%, SLOWEST PACE IN 7 YEARS

Kevin Hamlin and Li Yanping

Bloomberg, January 22, 2009

China’s economy expanded at the slowest pace in seven years as the global recession dragged down exports, increasing pressure for more government spending and lower interest rates to buoy growth.

Gross domestic product grew 6.8 percent in the fourth quarter from a year earlier, after a 9 percent gain in the previous three months, the statistics bureau said in Beijing today. The figure matched the median estimate of 12 economists surveyed by Bloomberg News.

Plummeting Chinese demand for parts and materials for exports is reverberating across Asia and the Pacific, driving Taiwan, South Korea and Australia closer to recessions and worsening Japan’s slump. Premier Wen Jiabao said this week that the government must work urgently this quarter to reverse the slowdown and maintain social stability amid a “very grim” outlook for jobs.

“It’s an astonishingly steep slowdown,” said Paul Cavey, an economist with Macquarie Securities in Hong Kong. “We haven’t yet seen all of the pain.”

The yuan traded at 6.8364 against the dollar as of 1:41 p.m. in Shanghai from 6.8378 yesterday. The CSI 300 Index of stocks rose 0.5 percent.

The central bank may cut the key one-year lending rate by as much as 81 basis points to 4.5 percent by the middle of the year, after 2.16 percentage points of reductions since September, Cavey said. Bank reserve requirements will also decline, he said.

(...) [artículo aquí]

INDIA OPTIMISTIC ABOUT OBAMA BUT DOUBTS REMAIN

The Times of India, January 21, 2009

NEW DELHI: The first African-American president of the United States, Barack Obama, is being widely hailed as a harbinger of change and, perhaps, not without reason.

Even before he was sworn in as the 44th US president around 11.30am (local time) on Tuesday, Obama had come to signify hope and change for the better for millions cutting across country, race and religious divides.

India is no exception as Obama's elevation to power has been largely met with optimism. The only sore note, if one can call it that, has been the new president's inclination to draw a link between the situation on Pak-Afghan border and the J&K dispute between India and Pakistan which many in the West believe can lead to a flare-up on Pakistan's eastern border.

However, the good news for India is that Obama has already declared that the war on terror during his regime is going to focus on Afghanistan-Pakistan and not Iraq. This clearly authenticates India's stand that it is important to sort out these two countries to root out terrorism.

Obama's predecessor had been pilloried for the US follies in launching an all out war on Iraq and Obama's decision to withdraw troops from that country has been greeted well by the world community. In that sense, Obama has already started to make a difference.

India, of course, would want to ward off any attempt by the Obama administration to force a resolution of the J&K dispute on the pretext of ensuring more cooperation from Pakistan in the war against terror. However, Obama clearly understands that India looks upon J&K as a bilateral dispute, with the world community having little or no role in it, and is unlikely to disturb the balance.

(...) [artículo aquí]

ADVISING THE NEW U.S. PRESIDENT ON ASIA POLICY

National Bureau of Asian Research, January 19, 2009

What does the incoming administration need to know about Asia? Michael Green, T.J. Pempel, Nicholas Eberstadt, Robert Sutter, and 15 other editorial board members of NBR’s journal Asia Policy offer their expert recommendations on a wide array of topics, including China, North Korea, Japan, Mongolia, economic nationalism, terrorism, energy, S&T, and human rights. Read the advance release of Advising the New U.S. President, a roundtable from the upcoming issue of Asia Policy that was made possible by the generous support of the Henry M. Jackson Foundation.

[archivo PDF aquí]

CHINA NOT A LIMITLESS SPONGE FOR U.S. DEBT
Growth of Chinese forex reserves slows at a time when Washington needs Beijing to buy Treasuries more than ever.

Tina Wang

Forbes, January 19, 2009

In the past few years, the ballooning of China's foreign-exchange reserves seemed a given, the yin to the yang of rising U.S. debt. But growth of the country's forex reserves slowed last year for the first time in nearly a decade, leading many to wonder if Beijing will slow its Treasury purchases as the U.S. government seeks to ramp up debt issuance to fund stimulus spending.

China's forex reserves climbed 27.3% in 2008, to $1.9 trillion, down sharply from growth of 43.3% in 2007, based on central bank figures quoted by state news agency Xinhua last week. The Xinhua report attributed the yearly slowdown--the country's first since 2000--to shrinking trade surplus, an outflow of speculative capital and plunging foreign direct investment.

The country's forex reserves actually diminished in October, for the first time since 2003, plunging by $25.9 billion, even as China's trade surplus reached the third-highest level on record that same month. (See "China's Disquieting Trade Surplus.") Forex reserves grew by only $5.0 billion in November and $61.3 billion in December, when the trade surplus hit its second-highest level ever because imports fell faster than exports. This implies the capital account is the primary contributor to the slowdown in reserve accumulations.

(...) [artículo aquí]

CHINA'S FDI FALLS AT SLOWER SPEED

Winny Wang

Shanghai Daily, January 16, 2008

FOREIGN direct investments in China fell for a third consecutive month in December but by a slower pace of 5.7 percent, compared with November's 36.52 percent plunge, the Ministry of Commerce said yesterday.

December saw FDI of US$5.98 billion, a dive of 25.78 percent from a year earlier, said Yao Jian, a ministry spokesman. Foreign investors set up 2,562 companies in China in that month.

FDI last year rose 23.58 percent on an annual basis to US$92.4 billion, faster than the 13.8 percent growth in 2007, and the service industry attracted more funds than other industries in the period, according to Yao.

Non-financial companies on the Chinese mainland invested US$40.65 billion in overseas markets last year, a jump of 63.6 percent from a year earlier, Yao said.

The global financial crisis has cut exports and foreign investments. Although the meltdown has not hit China severely, the country is not totally immune to the global slowdown.

(...) [artículo aquí]

KEEPING PAKISTAN'S NUKES EXTREMIST-FREE

Russ Wellen

Asia Times, January 15, 2009

Never mind loose nukes, what if a whole nuclear program gets loose?

In the aftermath of the Mumbai attacks last November, war has thus far been averted between India and Pakistan. Nevertheless, India speaks of "surgical strikes" and Pakistan has moved troops from its western border with Afghanistan to its eastern with India, where they're reported to be in a high state of alert.

Remaining vigilant is also sound advice for the rest of the world when it comes to India and Pakistan. Both states refused to sign the nuclear Non-Proliferation Treaty and later embarked on their own programs. As if to prove the folly of both courses of action, they came dangerously close to nuclear war during their 2002 standoff. But another problem, equally troublesome, persists.

It's common knowledge that the former states of the Soviet Union suffer an ongoing threat from the theft of loose nukes. India and Pakistan, however, face the theft of their entire program.

India's nuclear weapons aren't usually considered at risk. But the Bharatiya Janata Party (BJP) sometimes acts as apologists for Hindutva extremists, such as those who staged the 2002 Gujarat riots. Who's to say that the next time the BJP is in power the prime minister will be strong enough to resist the importunities of Hindutva leader K S Sudarshan? His recent pronouncements about nuclear war were remarkably cavalier.

(...) [artículo aquí]

FIN DEL MODELO CHINO

El País, 14 de enero de 2009

Nada hay de bueno y sí de inquietante en la compleja evolución que probablemente sufrirá la sociedad china en los próximos años. El origen de la transformación es económico. La economía china ya no puede crecer a tasas en torno al 10% porque la recesión en las principales economías mundiales, clientes de China, va a reducir drásticamente las exportaciones. Pero las consecuencias de una desaceleración en el país asiático son mucho peores de las que pueden darse en los países industrializados. Crecer al 7,5% en 2009, como prevé el Banco Mundial, o todavía menos, en lugar del 9% o el 10%, puede significar cierres en cadena de empresas, incapacidad de la industria y los servicios para absorber la mano de obra que fluye incesantemente desde el sector agrícola (millones de emigrantes regresan a sus pueblos porque no encuentran trabajo en las ciudades) y 10 millones de parados más como mínimo.

China ha sido hasta el momento uno de los grandes motores del crecimiento mundial. También un garante de la estabilidad financiera a través de sus ingentes compras de deuda estadounidense y de sus gigantescos fondos nacionales de inversión. Si la economía se detiene, las autoridades chinas se verán empujadas a modificar aspectos sustanciales de su estrategia económica, basada en la producción barata y las exportaciones. El plan de estímulo económico aprobado en noviembre, dotado con nada menos que 440.000 millones de euros, no debería gastarse simplemente en reproducir el modelo económico actual. Si quieren evitar un problema social de gran envergadura, las autoridades chinas están obligadas a explorar otros modelos de crecimiento y de cohesión social. La inversión pública en educación, sanidad, eficiencia energética y mejoras tecnológicas en la agricultura serían las prioridades de ese nuevo modelo económico. Crean empleo, aumentan las redes de protección social y mejoran el capital humano del país.

(...) [artículo aquí]

CHINA’S EXPORTS DECLINE BY MOST IN DECADE ON GLOBAL RECESSION

Li Yanping and Nipa Piboontanasawat

Bloomberg, January 13, 2009

China’s exports fell the most in almost a decade in December as the deepening global recession cut demand for the nation’s toys, clothes and electronics.

Shipments dropped 2.8 percent, the customs bureau said on its Web site today. That compares with a 21.7 percent gain a year earlier. Exports grew 17.2 percent for all of 2008, down from 25.7 percent in 2007.

Waning export demand has led to protests by fired factory employees, an exodus of 600,000 migrant workers from the manufacturing hub of Guangdong, and an estimated urban unemployment rate of more than 9 percent. Premier Wen Jiabao pledged Jan. 11 to add to the nation’s 4 trillion yuan ($585 billion) stimulus package to create jobs and avoid social instability.

“There is little hope that exports will recover this year, as developed economies remain mired in recessions,” said Sun Mingchun, a Hong Kong-based economist at Nomura Holdings. “Textile, steel and electronic exports are the most badly hurt.”

The yuan fell to 6.8376 against the dollar from yesterday’s close of 6.8370, as of 3:38 p.m. in Shanghai. The CSI 300 Index of stocks declined 2.3 percent.

Exports to the European Union, China’s biggest export market, fell 3.5 percent in December from a year earlier. Shipments to the U.S. slipped 4.1 percent.

(...) [artículo aquí]

U.S. AND CHINA MARK 30 YEARS OF DIPLOMATIC TIES

Edward Wong

The New York Times, January 13, 2009

BEIJING — They waxed nostalgic about secret negotiations in Beijing, a cold war alliance against the former Soviet Union, and the first visit to the United States by Deng Xiaoping, the former Chinese leader.

They mentioned some touchy issues, including tensions over Taiwan and Tibet.
But in the end, the American and Chinese leaders who gave speech after speech in Beijing on Monday afternoon chose to focus on China’s stunning economic growth and its place in the world today, and how that might be different had relations between Washington and Beijing taken another course 30 years ago.

“There is no more important diplomatic relationship in the world than the one that has grown between the People’s Republic of China and the United States of America,” said Jimmy Carter, the former American president.

Mr. Carter’s speech opened a two-day conference to celebrate the 30th anniversary of the normalization of relations between the United States and China. Mr. Carter was president when the American government restored diplomatic relations with mainland China on Jan. 1, 1979. Around the same time, Mr. Deng adopted a new policy of encouraging economic growth, transforming the Chinese economy into the juggernaut that it is today. Now, the two countries do nearly $400 billion of annual trade.

(...) [artículo aquí]

OBAMA’S WORST PAKISTAN NIGHTMARE

David E. Sanger

The New York Times, January 11, 2009

To get to the headquarters of the strategic plans division, the branch of the pakistani government charged with keeping the country’s growing arsenal of nuclear weapons away from insurgents trying to overrun the country, you must drive down a rutted, debris-strewn road at the edge of the Islamabad airport, dodging stray dogs and piles of uncollected garbage. Just past a small traffic circle, a tan stone gateway is manned by a lone, bored-looking guard loosely holding a rusting rifle. The gateway marks the entry to Chaklala Garrison, an old British cantonment from the days when officers of the Raj escaped the heat of Delhi for the cooler hills on the approaches to Afghanistan. Pass under the archway, and the poverty and clamor of modern Pakistan disappear.

Chaklala is a comfortable enclave for the country’s military and intelligence services. Inside the gates, officers in the army and the Directorate for Inter-Services Intelligence, known as the ISI, live in trim houses with well-tended lawns. Business is conducted in long, low office buildings, with a bevy of well-pressed adjutants buzzing around. Deep inside the garrison lies the small compound for Strategic Plans, where Khalid Kidwai keeps the country’s nuclear keys. Now 58, Kidwai is a compact man who hides his arch sense of humor beneath a veil of caution, as if he were previewing each sentence to decide if it revealed too much. In the chaos of Pakistan, where the military, the intelligence services and an unstable collection of civilian leaders uneasily share power, he oversees a security structure intended to protect Pakistan’s nuclear arsenal from outsiders — Islamic militants, Qaeda scientists, Indian saboteurs and those American commando teams that Pakistanis imagine, with good reason, are waiting just over the horizon in Afghanistan, ready to seize their nuclear treasure if a national meltdown seems imminent.

(...) [artículo aquí]

WHY CHINA WORKS
A look at bright spots in the recession begins with Beijing, where state control is looking smart.

Rana Foroohar

Newsweek, From the magazine issue dated Jan 19, 2009

China is the only major economy that is likely to show significant growth this year, because it is the only one that routinely breaks every rule in the economic textbook. There is no truly free market in China, where the state doctors statistics, manipulates the stock markets, fixes prices in key industries, owns many strategic industries outright, and staffs key bank posts with Communist Party members and tells them to whom they should lend, and in what they should invest. In fact, the main reason China is not slowing as fast as the other big five economies is its capacity for what economists ridicule, in normal times, as state meddling: it limited foreign investment in the banking sector and didn't embrace the exotic financial innovations that are the melting core of the global credit crisis.

Why does China's brand of command capitalism work? The question has long intrigued economists, who tend to cast the state as hopelessly stupid, the market as naturally brilliant. Now that the United States and Europe are moving toward state control—by nationalizing the banking and car industries, and imposing heavy new regulation on the financial industry—the question has a new urgency. China, the poorest and most chaotic big economy, looks like the one best positioned to navigate what may be the worst global downturn in seven decades.

(…) [artículo aquí]

THE BOOM FROM THE BOTTOM
Isolated from world trends, India's aspiring poor will help it grow through the credit storm.

Jason Overdorf

Newsweek, From the magazine issue dated Jan 19, 2009

Though it may not look it on the ground at times, India is one of the few bright spots in a global economy with decidedly dim prospects in 2009. It is forecast to grow at a robust 5 to 6 percent this year—which is faster than it averaged in the 1990s, and nearly double the rate of expansion over the country's first three decades of independence. Yes, its stock market has crashed, unemployment is spiking, swaths of the real-estate market have more than a passing resemblance to Miami Beach and it now turns out that Satyam Computer Services—one of the country's top five IT companies—has been cooking its books. But a one off incident of fraud in the flagship IT sector won't knock the country off the rails. India boasts an unlikely growth driver all its own: legions of poor whose incomes have risen just enough in recent years to create powerful demands for basic goods and services.

The rise of India's aspiring middle—a group that lives above the poverty line but hasn't yet attained true membership in modern consumer society—is hardly a new story. But what's surprising is the resilience of this cohort, and the extent to which it has counterbalanced the global credit crisis and the slump in the global export economy of which India is a key player. In part, this is a consequence of New Delhi's past failures; policymakers were never able to make India the export powerhouse that China has become over the past three decades, so now they don't rely nearly as heavily on growth driven by investment and demand from foreign markets.

(...) [artículo aquí]

OBAMA, SOCCER AND SOUTH ASIAN SECURITY

M K Bhadrakumar

Asia Times, January 10, 2009

The United States could be on the threshold of a big breakthrough in the geopolitics of the South Asian region. A planned visit by Pakistan President Asif Ali Zardari to Washington in late January could well turn out to be the tipping point.

The diplomatic tango over the terrorist attacks on the western Indian city of Mumbai on November 27 is entering a crucial phase. In a media interaction on Wednesday, the American ambassador to India, David Mulford, let it be known that India's dossier linking Pakistani nationals with the Mumbai attacks is "credible". New Delhi had handed over the dossier to Islamabad on Monday.

He said, "I think the dossier is credible. A lot of that was prepared with assistance from the FBI [Federal Bureau of Investigation]. The US doesn't compile stuff which is not credible." Mulford went on to say that the Mumbai attacks appeared to have been carried out from Pakistan and that an FBI team was en route to Pakistan, which would take the probe forward. Equally, Mulford reacted sharply to the widespread notion that Pakistan holds the US by the jugular vein over the Afghan war. He said, "Americans are very good at skinning the cats."

After having secured New Delhi's assurance that India will not resort to a military strike against Pakistan, Washington is perceptibly stepping up pressure on Islamabad to act on the available evidence regarding the Mumbai attacks. Mulford's tough statement signifies a shifting of gear. So far Islamabad has been on a denial mode, but on Wednesday, the Foreign Ministry in Islamabad publicly acknowledged that the lone terrorist survivor in the Mumbai attacks was after all a Pakistani national. On Thursday, in another statement, the Foreign Ministry affirmed that the Indian dossier is under "serious consideration".

(...) [artículo aquí]

GLOBAL POWER SHIFT – WEST TO EAST?
The west-east transfer of power depends on acquiring technological knowhow to go with it

Sarajit Majumdar

Asia Sentinel, January 9, 2009

How far east of Washington, DC is east? The question arises from the report of the US-based National Intelligence Council 2025 Project, published in December, which foresees “the unprecedented transfer of wealth roughly from West to East:”

The whole international system, the report says, “as constructed following WWII – will be revolutionized,” according to the council. “Not only will new players – Brazil, Russia, India and China (BRICs) – have a seat at the international high table, they will bring new stakes and rules of the game.”

Wealth as material objects means nothing unless a nation acquires the appropriate knowledge to use it. From the Neanderthal age to the Computer age, the story of civilization and prosperity is marked by the progress of technological knowledge. In this sense, the US symbolizes the west for its technological prowess. It is the only state that, according to Neil Postman, can be called a technopoly – totalitarian technocracy. Less so are France, Germany, Russia, et al. Following the NIC pointer far to the east, can India and China overcome the US technopoly?

Anyone from outside the US has reasons to be elated at the possible decline of the “Big Boys” supremacy, since the observation comes from a highly influential US agency – the NIC, and not from agencies of weaker economies. Taken seriously, the observations require careful consideration. Consider:

India and China have crossed the US$1 trillion-plus gross domestic product, the latter far exceeding the former. Indian GDP grew at 9.2 percent, close to double digits, during 2007 according to the IMF. China did even better at 11.4%. They lend money to the US government. Both achieved all this with export-led growth, not by catering to their own population. India achieved high growth by exporting service sector products like IT and IT enabled services. China exported small-scale and large-scale industrial products – steel, garments, toys, milk products, electronic products, etc. Exportable goods are highly susceptible to demand fluctuation abroad, as evident from the onset of the current worldwide recession. Export-dependent growth will remain wobbly. Stability of growth has to be found in the two countries’ own backyard.

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PAKISTAN REJECTS INDIAN ACCUSATIONS, PLAYS DOWN TENSION

Pamela Constable and Candace Rondeaux

The Washington Post, January 8, 2009

During a visit to Afghanistan, Pakistan's foreign minister on Wednesday strongly rejected accusations by India that Pakistani government agencies had played a role in the terrorist attacks in Mumbai in November, insisting that his government wants to "get to the bottom" of the incident and hopes for cooperation with India, not "finger-pointing."

At the same time, Pakistan's powerful intelligence chief said in a rare public interview from Islamabad that his government has no desire to fight a war with India, Pakistan's larger neighbor and longtime rival, and that he views terrorism as the "real enemy" of his country.

But in a sign of the deep fissures within Pakistan's government over the Mumbai attacks, the country's national security adviser was fired in Islamabad on Wednesday after publicly acknowledging that the lone surviving gunman appeared to be a Pakistani citizen, an allegation previously denied by Pakistani authorities.

In an interview with CNN, Mahmud Ali Durrani said there appeared to be proof that all 10 gunmen had Pakistani roots. Officials from the Foreign and Information ministries confirmed that assertion, but the Foreign Ministry later retracted its statement, and within hours, government officials and national TV channels reported that Durrani, a former intelligence chief, had been dismissed by Prime Minister Yousaf Raza Gillani.

On Tuesday, senior Indian officials all but accused Pakistani government agencies of having a hand in the three-day siege in India's financial capital that left more than 170 people dead. Indian authorities have blamed the attacks on a banned Islamist group based in Pakistan.

The contradictory statements came during a first-ever trip by Pakistani President Asif Ali Zardari to Afghanistan, where he and President Hamid Karzai agreed to jointly combat regional terrorism and appeared eager to mend fences after years of hostility between officials in Kabul and the previous government in Islamabad.

(...) [artículo aquí]