NORTH KOREA FILLS THE AIR WITH THREATS

Donald Kirk

Asia Times, March 7, 2009

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

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

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

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

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CHINESE FINANCE LEADERS SEE SIGNS OF ECONOMIC RECOVERY

Tania Branigan

The Guardian, March 6, 2009

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

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

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

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

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

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THE AFGHANISTAN PROBLEM: CAN OBAMA AVOID A QUAGMIRE?

Joe Klein

Time, March 5, 2009

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

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

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CHINA PLANS TO BOOST 2009 MILITARY SPENDING BY 14.9%

Dune Lawrence

Bloomberg, March 4, 2009

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

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

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

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

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

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

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CHINA ECONOMY MAY RECOVER IN FIRST HALF, SU NING SAYS

Zhang Dingmin and Rong Feiwen

Bloomberg, March 3, 2009

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

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

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

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

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

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

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

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WHAT HILLARY DIDN’T DO IN ASIA
Clinton made no mistakes on her China trip. Yet there's no evidence of serious strategic thinking either.

Kishore Mahbubani

Newsweek, From the magazine issue dated Mar 9, 2009

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

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

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

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INDIA MAINTAINS SENSE OF OPTIMISM AND GROWTH

Heather Timmons

The New York Times, March 2, 2009

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

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

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

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

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

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