China Concerns Accelerate, As Manufacturing Gauge Comes In Weak
from Clusterstock by Joe Weisenthal
With all the new talk about a double-dip in the economy, you can sense the center of attention shifting away from Europe, and towards the two poles of the global economy: The US and China. A bona fide slowdown in either one would seriously rattle global markets, and lately the data has been consistently disappointing.
The latest out of China confirms the trend.
Bloomberg:
China’s manufacturing expanded at a slower pace for a second month in June, adding to signs that growth in the world’s third-largest economy is moderating.
The Purchasing Managers’ Index fell to 52.1 from 53.9 in May, the Federation of Logistics and Purchasing said in an e- mailed statement today. That was less than the median 53.2 estimate in a Bloomberg News survey of 12 economists.
Read the whole thing >
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Wednesday, June 30, 2010
Asia in the grip of water crisis: Asian Development Bank
Asia in the grip of water crisis: Asian Development Bank
Singapore (AFP) June 30, 2010 -
Asia is in the grip of a water crisis that could set back the region's robust economic growth if left unresolved, according to a top Asian Development Bank (ADB) official. Arjun Thapan, special adviser to ADB president Harukiko Kuroda on water and infrastructure issues, said governments must start managing the resource better to prevent the problem from worsening. "We certainly believe t ... more
Singapore (AFP) June 30, 2010 -
Asia is in the grip of a water crisis that could set back the region's robust economic growth if left unresolved, according to a top Asian Development Bank (ADB) official. Arjun Thapan, special adviser to ADB president Harukiko Kuroda on water and infrastructure issues, said governments must start managing the resource better to prevent the problem from worsening. "We certainly believe t ... more
Chongqing ECFA signing revisits history China's Symbolic Choice for Taiwan Pact
Chongqing ECFA signing revisits history
China's Symbolic Choice for Taiwan Pact
http://chinapost.com.tw/commentary/the-china-post/william-fang/2010/06/30/262695/Chongqing-ECFA.htm
William Fang, China Post
The landmark economic cooperation agreement (ECFA) between Taiwan and China was signed in Chongqing in southwest China on June 30, which is expected to usher Taiwan into an era of unprecedented economic boom as China has agreed to lower import tariffs on 539 items, totaling US$13.84 billion. Some experts point out that “China is giving Taiwan everything it wants.” At any rate, it is generally acknowledged that Taipei gets much more than Beijing in this protocol. Why so? When asked about this question, officials of Beijing's Association for Relations across the Taiwan Strait (ARATS), replied bluntly: “Because the two sides of the Strait are from one family.”
China's Symbolic Choice for Taiwan Pact
http://chinapost.com.tw/commentary/the-china-post/william-fang/2010/06/30/262695/Chongqing-ECFA.htm
William Fang, China Post
The landmark economic cooperation agreement (ECFA) between Taiwan and China was signed in Chongqing in southwest China on June 30, which is expected to usher Taiwan into an era of unprecedented economic boom as China has agreed to lower import tariffs on 539 items, totaling US$13.84 billion. Some experts point out that “China is giving Taiwan everything it wants.” At any rate, it is generally acknowledged that Taipei gets much more than Beijing in this protocol. Why so? When asked about this question, officials of Beijing's Association for Relations across the Taiwan Strait (ARATS), replied bluntly: “Because the two sides of the Strait are from one family.”
Chinese Economy's Secret Recipe Fan Gang, Project Syndicate
Chinese Economy's Secret Recipe
Fan Gang, Project Syndicate
China’s GDP growth this year may approach 10%. While some countries are still dealing with economic crisis or its aftermath, China’s challenge is – once again – how to manage a boom.
Thanks to decisive policy moves to pre-empt a housing bubble, the real-estate market has stabilized, and further corrections are expected soon. This is good news for China’s economy, but disappointing, perhaps, to those who assumed that the government would allow the bubble to grow bigger and bigger, eventually precipitating a crash.
http://www.project-syndicate.org/commentary/fan16/English
Fan Gang, Project Syndicate
China’s GDP growth this year may approach 10%. While some countries are still dealing with economic crisis or its aftermath, China’s challenge is – once again – how to manage a boom.
Thanks to decisive policy moves to pre-empt a housing bubble, the real-estate market has stabilized, and further corrections are expected soon. This is good news for China’s economy, but disappointing, perhaps, to those who assumed that the government would allow the bubble to grow bigger and bigger, eventually precipitating a crash.
http://www.project-syndicate.org/commentary/fan16/English
Why China Could Lead Us Into Another Depression
Why China Could Lead Us Into Another Depression
from SeekingAlpha.com: Home Page by Graham and Dodd Investor
Graham and Dodd Investor submits:
Most people breathed a sigh of relief as the economic crisis of early 2009 came and went. Another Great Depression had been avoided, or so people thought. After they got over their initial, late 2008 shock, the U.S. Treasury Department and Federal Reserve Bank got the job done, albeit in the worst way, creating enough liquidity to prevent a financial “seizure,” at the cost of worsening the deficit.
That deficit is actually symbolic of America’s problems. Current income levels can only support a 1980s level of spending. We’ve been borrowing the difference, meaning that once the lending window is closed (as it was recently), there has to be a quarter century regression in the American standard of living (the original 1930s took America back to the 1910s). That was the true meaning of the 1930s Depression. Soup lines and 25% unemployment were merely the symptoms.
Complete Story »
from SeekingAlpha.com: Home Page by Graham and Dodd Investor
Graham and Dodd Investor submits:
Most people breathed a sigh of relief as the economic crisis of early 2009 came and went. Another Great Depression had been avoided, or so people thought. After they got over their initial, late 2008 shock, the U.S. Treasury Department and Federal Reserve Bank got the job done, albeit in the worst way, creating enough liquidity to prevent a financial “seizure,” at the cost of worsening the deficit.
That deficit is actually symbolic of America’s problems. Current income levels can only support a 1980s level of spending. We’ve been borrowing the difference, meaning that once the lending window is closed (as it was recently), there has to be a quarter century regression in the American standard of living (the original 1930s took America back to the 1910s). That was the true meaning of the 1930s Depression. Soup lines and 25% unemployment were merely the symptoms.
Complete Story »
EIA: The China Syndrome by Steven R. Kopits
EIA: The China Syndrome
by Steven R. Kopits
http://www.econbrowser.com/archives/2010/06/eia_the_china_s.html
by Steven R. Kopits
http://www.econbrowser.com/archives/2010/06/eia_the_china_s.html
China Now Ahead Of US In Patenting And Commercialization Of Bioethanol
China Now Ahead Of US In Patenting And Commercialization Of Bioethanol
Columbus OH (SPX) Jun 30, 2010 - Chemical Abstracts Service reports that in 2009, China surpassed all other countries in the production of bioethanol patents, emerging as the global leader in the commercialization of bioethanol research. In the CAS Chemistry Research Report: China Takes Lead in the Commercialization of Bioethanol, CAS examines 40 years of scientific research into biofuel development. Their key finding is ... more
Columbus OH (SPX) Jun 30, 2010 - Chemical Abstracts Service reports that in 2009, China surpassed all other countries in the production of bioethanol patents, emerging as the global leader in the commercialization of bioethanol research. In the CAS Chemistry Research Report: China Takes Lead in the Commercialization of Bioethanol, CAS examines 40 years of scientific research into biofuel development. Their key finding is ... more
Tuesday, June 29, 2010
China denies military exercise aimed at U.S.
China denies military exercise aimed at U.S.
BEIJING
Tue Jun 29, 2010 5:53am EDT
http://www.reuters.com/article/idUSTRE65S1YU20100629
* Pakistan president to visit China as nuclear deal advances
5:53am EDT
BEIJING (Reuters) - China denied on Tuesday media reports that an artillery drill in the East China Sea was in response to a planned military exercise between South Korea and the United States.
BEIJING
Tue Jun 29, 2010 5:53am EDT
http://www.reuters.com/article/idUSTRE65S1YU20100629
* Pakistan president to visit China as nuclear deal advances
5:53am EDT
BEIJING (Reuters) - China denied on Tuesday media reports that an artillery drill in the East China Sea was in response to a planned military exercise between South Korea and the United States.
China Rebuffs Western Criticism Over North Korea
China Rebuffs Western Criticism Over North Korea
from VOA News: Top Stories by Peter Simpson
North Korea depends on Beijing to prop up its struggling economy through aid and trade
from VOA News: Top Stories by Peter Simpson
North Korea depends on Beijing to prop up its struggling economy through aid and trade
Why the China-Taiwan trade agreement doesn’t solve everything from Shadow Government by Daniel Blumenthal
Why the China-Taiwan trade agreement doesn’t solve everything
from Shadow Government by Daniel Blumenthal
The signing by Taiwan and China of the Economic Cooperation Framework Agreement is a welcome development. The agreement cuts tariffs on 539 Taiwanese products bound for China and 267 Chinese products exported to Taiwan. The cuts on the Taiwan items are valued at $13.84 billion and those from China $2.86 billion.
Economically, Taiwan, the PRC, and the United States will all benefit. Politically, the agreement means a reduction in tension across the Strait, and it provides incentives for Chinese restraint (it is easy to forget that interdependence works both ways -- Taiwan may rely on China for final assembly and low-end manufacturing, but China is dependent upon Taiwan's investment and managerial know-how).
However, Washington should not be lulled into complacency -- the cross Strait problem has not disappeared. With over a thousand missiles pointed at it, Taiwan faces Chinese coercion every day: All of Taipei's negotiations, including those over the ECFA, are conducted with the equivalent of a gun pointed at its head. We should view the ECFA as only the first step in a series of measures that will strengthen Taiwan, stabilize the Strait, and liberalize trade in Asia.
Next up, we should sell Taiwan the additional F-16 aircraft it has requested, which it needs in order to counter China's daunting threat to the island's airspace. An F-16 sale would demonstrate America's abiding commitment to Taiwan's security and strengthen the hand of Taiwan's President Ma Ying-jeou as he continues to negotiate stability in the Strait. Would Beijing raise a stink? Of course. But it has no leg to stand on. Taiwan already has F-16s and simply needs more to replace the numerous aging aircraft in its fleet. Moreover, it is China that has decided to negotiate and threaten at the same time. In response, Taiwan needs to simultaneously negotiate and deter. Finally, the cost to Washington would be low: Beijing has already thrown its quarterly temper tantrum by cutting off bilateral military talks and prohibiting Secretary of Defense Robert Gates from visiting China.
Beyond arms sales, the United States can help Taiwan become the place to do business in Asia, a move that would benefit both Washington and Taipei. Taiwan has already liberalized its trading relationship with China, its high-end manufacturing and design capabilities are world class, and its businesses succeed in the China market where many others fail. Washington should negotiate a free trade agreement with Taiwan for three reasons. First, an FTA with Taiwan will provide economic benefits to both sides. Second, now that Taiwan has liberalized trade with China, U.S. businesses can use Taiwan as a launching pad to succeed in the China market. Third, other Asian economies will only move forward with their own FTAs with Taiwan -- necessary for both Taiwan's security and its future prosperity -- if Washington provides political cover.
With some help from Washington, Taiwan could make itself into the region's business hub. If Taiwan becomes Asia's economic nerve center, its security will improve immeasurably.
from Shadow Government by Daniel Blumenthal
The signing by Taiwan and China of the Economic Cooperation Framework Agreement is a welcome development. The agreement cuts tariffs on 539 Taiwanese products bound for China and 267 Chinese products exported to Taiwan. The cuts on the Taiwan items are valued at $13.84 billion and those from China $2.86 billion.
Economically, Taiwan, the PRC, and the United States will all benefit. Politically, the agreement means a reduction in tension across the Strait, and it provides incentives for Chinese restraint (it is easy to forget that interdependence works both ways -- Taiwan may rely on China for final assembly and low-end manufacturing, but China is dependent upon Taiwan's investment and managerial know-how).
However, Washington should not be lulled into complacency -- the cross Strait problem has not disappeared. With over a thousand missiles pointed at it, Taiwan faces Chinese coercion every day: All of Taipei's negotiations, including those over the ECFA, are conducted with the equivalent of a gun pointed at its head. We should view the ECFA as only the first step in a series of measures that will strengthen Taiwan, stabilize the Strait, and liberalize trade in Asia.
Next up, we should sell Taiwan the additional F-16 aircraft it has requested, which it needs in order to counter China's daunting threat to the island's airspace. An F-16 sale would demonstrate America's abiding commitment to Taiwan's security and strengthen the hand of Taiwan's President Ma Ying-jeou as he continues to negotiate stability in the Strait. Would Beijing raise a stink? Of course. But it has no leg to stand on. Taiwan already has F-16s and simply needs more to replace the numerous aging aircraft in its fleet. Moreover, it is China that has decided to negotiate and threaten at the same time. In response, Taiwan needs to simultaneously negotiate and deter. Finally, the cost to Washington would be low: Beijing has already thrown its quarterly temper tantrum by cutting off bilateral military talks and prohibiting Secretary of Defense Robert Gates from visiting China.
Beyond arms sales, the United States can help Taiwan become the place to do business in Asia, a move that would benefit both Washington and Taipei. Taiwan has already liberalized its trading relationship with China, its high-end manufacturing and design capabilities are world class, and its businesses succeed in the China market where many others fail. Washington should negotiate a free trade agreement with Taiwan for three reasons. First, an FTA with Taiwan will provide economic benefits to both sides. Second, now that Taiwan has liberalized trade with China, U.S. businesses can use Taiwan as a launching pad to succeed in the China market. Third, other Asian economies will only move forward with their own FTAs with Taiwan -- necessary for both Taiwan's security and its future prosperity -- if Washington provides political cover.
With some help from Washington, Taiwan could make itself into the region's business hub. If Taiwan becomes Asia's economic nerve center, its security will improve immeasurably.
Monday, June 28, 2010
China Will Soon Match U.S. Military/Defense Electronics from War News Updates by Bookyards
China Will Soon Match U.S. Military/Defense Electronics
from War News Updates by Bookyards
China Closer To First World Standards In Defense Electronics -- Washington Times
China revealed during a recent defense industry show that its defense electronics are rapidly advancing to First World military standards.
The communist regime's defense electronics prowess was on display at the recent China Defense Electronics Exposition (CIDEX) in Beijing from May 12 to 14.
"The type of components I am seeing in China are not readily available anywhere — except maybe in the U.S.," said a Ukrainian defense electronics specialist who attended the show.
Read more ....
from War News Updates by Bookyards
China Closer To First World Standards In Defense Electronics -- Washington Times
China revealed during a recent defense industry show that its defense electronics are rapidly advancing to First World military standards.
The communist regime's defense electronics prowess was on display at the recent China Defense Electronics Exposition (CIDEX) in Beijing from May 12 to 14.
"The type of components I am seeing in China are not readily available anywhere — except maybe in the U.S.," said a Ukrainian defense electronics specialist who attended the show.
Read more ....
Friday, June 25, 2010
Meanwhile, Here Are 20 Signs That China Is Cornering The Global Oil Market
China Has Basically Purchased Its Own Latin American Country
China Has Basically Purchased Its Own Latin American Country
from Clusterstock by Gus Lubin
Ecuador
China now finances a majority of the public energy projects underway in Ecuador. Recent deals include an 85% stake in a hydroelectric dam that will cover a third of the country's energy needs by 2016. Chinese firms will also take charge of most construction.
As you can imagine if another country controlled our utilities, many Ecuadorians are extemely anxious, reports Asia Times:
For his part, former Ecuadorean vice president Leon Roldos (1981-1984) maintained that the loan is illegal, because it finances a "turn-key contract" without "definitive studies or detail engineering", which he said is expressly prohibited by law.
Ecuadorians are also upset by loans they call larger than necessary:
Another contradiction, Roldos argued, is that although it is a fixed price contract, the financing deal is based on price indexing - adjusting amounts by the change over time in prices - for materials and labor power "using a more generous formula than the one normally used for Ecuador's public procurements".
In an article published last week by the El Comercio newspaper, the former vice president said the dam was "severely overpriced" because the $1.98 billion price tag is $400 million higher than the cost projected in 2008.
Is China purchasing its own Latin American country? Meanwhile see how China has cornered the international oil market >
from Clusterstock by Gus Lubin
Ecuador
China now finances a majority of the public energy projects underway in Ecuador. Recent deals include an 85% stake in a hydroelectric dam that will cover a third of the country's energy needs by 2016. Chinese firms will also take charge of most construction.
As you can imagine if another country controlled our utilities, many Ecuadorians are extemely anxious, reports Asia Times:
For his part, former Ecuadorean vice president Leon Roldos (1981-1984) maintained that the loan is illegal, because it finances a "turn-key contract" without "definitive studies or detail engineering", which he said is expressly prohibited by law.
Ecuadorians are also upset by loans they call larger than necessary:
Another contradiction, Roldos argued, is that although it is a fixed price contract, the financing deal is based on price indexing - adjusting amounts by the change over time in prices - for materials and labor power "using a more generous formula than the one normally used for Ecuador's public procurements".
In an article published last week by the El Comercio newspaper, the former vice president said the dam was "severely overpriced" because the $1.98 billion price tag is $400 million higher than the cost projected in 2008.
Is China purchasing its own Latin American country? Meanwhile see how China has cornered the international oil market >
Sunday, June 20, 2010
China to step up exploring in deep water
China to step up exploring in deep water
http://www.ft.com/cms/s/0/9870bfb0-7a71-11df-9cd7-00144feabdc0.html
By Leslie Hook in Hong Kong
Published: June 18 2010 03:06 | Last updated: June 18 2010 03:06
The Gulf of Mexico is still under a drilling moratorium after the BP oil spill but plans to step up deep-water exploration on the other side of the world, in the South China Sea, remain largely unchanged.
CNOOC, the Chinese state-controlled company with exclusive rights to develop China’s offshore resources, ordered safety checks on all its rigs after the BP disaster. But long-term plans still aim to step up deep-water exploration.
“Offshore and especially deep-water oil and gas discoveries have great significance for replenishing China’s and the world’s oil resources,” said Zhou Shouwei, CNOOC vice-president, in comments posted on the company’s website on June 10.
“We can’t cancel or stop deep-water oil and gas extraction because of the accident in the Gulf of Mexico.”
China’s potential offshore reserves account for between a quarter and a third of the country’s hydrocarbon resources.
So far, China’s main deep-water discoveries have all been made by a foreign company, Calgary-based Husky Energy, but CNOOC is positioning itself to become more active in the sector. Its first deep-water ship to lay pipeline was launched in May. CNOOC is also acquiring its first deep-water drilling rig, which is under construction in Shanghai and due to be operational by the end of 2010 or the beginning of 2011.
Several deep-water blocks in the South China Sea are under exploration by foreign companies, including the UK-based BG Group, but under Chinese law CNOOC has the right to acquire up to a 51 per cent stake in the event of a commercial discovery.
A big challenge for China’s deep-water prospects is that the known reserves are mostly natural gas, which must be transported through expensive pipelines on the ocean floor.
“The main engineering challenge is to lay out the pipeline on the sea floor,” said Changlin Wu, a geologist and founder of Longwoods group, an energy company based in Beijing and Chicago. “There are a lot of submarine valleys and the currents are pretty strong in the South China Sea.”
Mr Wu said the BP disaster would not discourage China’s deep-water ambitions.
“I think the BP accident is actually a good alert to the Chinese players and also the international players in China. Everyone now realises that safety is more important than anything else ... I don’t think BP’s accident will be driving anyone away from China deep water.”
http://www.ft.com/cms/s/0/9870bfb0-7a71-11df-9cd7-00144feabdc0.html
By Leslie Hook in Hong Kong
Published: June 18 2010 03:06 | Last updated: June 18 2010 03:06
The Gulf of Mexico is still under a drilling moratorium after the BP oil spill but plans to step up deep-water exploration on the other side of the world, in the South China Sea, remain largely unchanged.
CNOOC, the Chinese state-controlled company with exclusive rights to develop China’s offshore resources, ordered safety checks on all its rigs after the BP disaster. But long-term plans still aim to step up deep-water exploration.
“Offshore and especially deep-water oil and gas discoveries have great significance for replenishing China’s and the world’s oil resources,” said Zhou Shouwei, CNOOC vice-president, in comments posted on the company’s website on June 10.
“We can’t cancel or stop deep-water oil and gas extraction because of the accident in the Gulf of Mexico.”
China’s potential offshore reserves account for between a quarter and a third of the country’s hydrocarbon resources.
So far, China’s main deep-water discoveries have all been made by a foreign company, Calgary-based Husky Energy, but CNOOC is positioning itself to become more active in the sector. Its first deep-water ship to lay pipeline was launched in May. CNOOC is also acquiring its first deep-water drilling rig, which is under construction in Shanghai and due to be operational by the end of 2010 or the beginning of 2011.
Several deep-water blocks in the South China Sea are under exploration by foreign companies, including the UK-based BG Group, but under Chinese law CNOOC has the right to acquire up to a 51 per cent stake in the event of a commercial discovery.
A big challenge for China’s deep-water prospects is that the known reserves are mostly natural gas, which must be transported through expensive pipelines on the ocean floor.
“The main engineering challenge is to lay out the pipeline on the sea floor,” said Changlin Wu, a geologist and founder of Longwoods group, an energy company based in Beijing and Chicago. “There are a lot of submarine valleys and the currents are pretty strong in the South China Sea.”
Mr Wu said the BP disaster would not discourage China’s deep-water ambitions.
“I think the BP accident is actually a good alert to the Chinese players and also the international players in China. Everyone now realises that safety is more important than anything else ... I don’t think BP’s accident will be driving anyone away from China deep water.”
China Signals End to Currency Peg to Dollar
China Signals End to Currency Peg to Dollar
from SeekingAlpha.com: Home Page by Bondsquawk
Bondsquawk submits:
by Rom Badilla
The Chinese Central Bank announced Saturday evening that it will proceed with exchange rate reform and allow a more flexible currency, signalling an end to the renminbi’s peg to the U.S. dollar according to an article from The New York Times.
Complete Story
http://seekingalpha.com/article/210871-china-signals-end-to-currency-peg-to-dollar?source=feed
from SeekingAlpha.com: Home Page by Bondsquawk
Bondsquawk submits:
by Rom Badilla
The Chinese Central Bank announced Saturday evening that it will proceed with exchange rate reform and allow a more flexible currency, signalling an end to the renminbi’s peg to the U.S. dollar according to an article from The New York Times.
Complete Story
http://seekingalpha.com/article/210871-china-signals-end-to-currency-peg-to-dollar?source=feed
Marc Faber Debates Arthur Kroeber on China
Marc Faber Debates Arthur Kroeber on China
from SeekingAlpha.com: Home Page by The Fundamental Analyst
The Fundamental Analyst submits:
This is an interesting debate, although the protagonists probably agree on more than they disagree. A couple of observations: Kroeber is a touch arrogant and overconfident, always a bad sign. More importantly though, Kroeber dismisses a lot of economic history with a version of the “this time it’s different” argument.
Kroeber cites the volatility in Chinese GDP over the last decade or so and says that while those swings are significant they are not of the type that would produce a huge crash. While correct, that argument completely ignores the fat tail problem. Just because China hasn’t experienced a massive crash in the last 20 years is no indication that they won't in the future. It’s the same argument used by the believers in the so-called ‘great moderation’, the belief that the economic cycle was dead and severe recessions a relic of the past all the while being blind to the build up of hidden risks in the financial system.
Complete Story
from SeekingAlpha.com: Home Page by The Fundamental Analyst
The Fundamental Analyst submits:
This is an interesting debate, although the protagonists probably agree on more than they disagree. A couple of observations: Kroeber is a touch arrogant and overconfident, always a bad sign. More importantly though, Kroeber dismisses a lot of economic history with a version of the “this time it’s different” argument.
Kroeber cites the volatility in Chinese GDP over the last decade or so and says that while those swings are significant they are not of the type that would produce a huge crash. While correct, that argument completely ignores the fat tail problem. Just because China hasn’t experienced a massive crash in the last 20 years is no indication that they won't in the future. It’s the same argument used by the believers in the so-called ‘great moderation’, the belief that the economic cycle was dead and severe recessions a relic of the past all the while being blind to the build up of hidden risks in the financial system.
Complete Story
China's Bank Plans Make Markets Nervous
China's Bank Plans Make Markets Nervous
from SeekingAlpha.com: Home Page by Patrick Chovanec
Patrick Chovanec submits:
This past Thursday (June 17), Motley Fool published a special guest column I wrote on Chinese banks’ big capital-raising plans this summer, and why some investors are wary. The original post can be found here.
The World’s Largest IPO, and What It Means for China
from SeekingAlpha.com: Home Page by Patrick Chovanec
Patrick Chovanec submits:
This past Thursday (June 17), Motley Fool published a special guest column I wrote on Chinese banks’ big capital-raising plans this summer, and why some investors are wary. The original post can be found here.
The World’s Largest IPO, and What It Means for China
China's Vague RMB Announcement
China's Vague RMB Announcement
from SeekingAlpha.com: Home Page by IPE at UNC
IPE at UNC submits:
This Could Be Significant: Announcement of RMB "Flexibility" (The Atlantic):
At 7am this morning US East Coast time, the People's Bank of China published an announcement on its website that appears to signal the change everyone has been expecting. Chinese version here, with a posting date two minutes earlier. It begins:
Complete Story
http://seekingalpha.com/article/210916-china-s-vague-rmb-announcement?source=feed
from SeekingAlpha.com: Home Page by IPE at UNC
IPE at UNC submits:
This Could Be Significant: Announcement of RMB "Flexibility" (The Atlantic):
At 7am this morning US East Coast time, the People's Bank of China published an announcement on its website that appears to signal the change everyone has been expecting. Chinese version here, with a posting date two minutes earlier. It begins:
Complete Story
http://seekingalpha.com/article/210916-china-s-vague-rmb-announcement?source=feed
Why China's Environment Is Becoming Increasingly Important
Why China's Environment Is Becoming Increasingly Important
from SeekingAlpha.com: Home Page by Dutch Trader
Dutch Trader submits:
As the largest developing country in the world, China has achieved rapid economic development, averaging an annual gross domestic product (GDP) growth rate of 10% over the past two decades. But this success comes at the cost of deterioration of the environment. China’s environmental problems, including outdoor and indoor air pollution, water shortages and pollution, desertification, and soil pollution, have become more pronounced and are subjecting Chinese residents to significant health risks.
In Chinese cities, outdoor air pollution is the biggest environmental challenge for public health. The source of air pollution in Chinese cities has gradually changed from conventional coal combustion to a mixture of coal-combustion and motor-vehicle emissions. Generally, China’s current air pollution situation is similar to to that of developed countries in the 1960s. The annual average concentrations of inhalable particles [particles < 10 µm in aero-dynamic diameter (PM10)], sulfur dioxide (SO2), and nitrogen dioxides (NO2), the three criteria pollutants in China, were 89 µg/m3, 48 µg/m3, and 34 µg/m3, respectively, in 113 medium to large Chinese cities (Ministry of Environmental Protection of China 2009).
from SeekingAlpha.com: Home Page by Dutch Trader
Dutch Trader submits:
As the largest developing country in the world, China has achieved rapid economic development, averaging an annual gross domestic product (GDP) growth rate of 10% over the past two decades. But this success comes at the cost of deterioration of the environment. China’s environmental problems, including outdoor and indoor air pollution, water shortages and pollution, desertification, and soil pollution, have become more pronounced and are subjecting Chinese residents to significant health risks.
In Chinese cities, outdoor air pollution is the biggest environmental challenge for public health. The source of air pollution in Chinese cities has gradually changed from conventional coal combustion to a mixture of coal-combustion and motor-vehicle emissions. Generally, China’s current air pollution situation is similar to to that of developed countries in the 1960s. The annual average concentrations of inhalable particles [particles < 10 µm in aero-dynamic diameter (PM10)], sulfur dioxide (SO2), and nitrogen dioxides (NO2), the three criteria pollutants in China, were 89 µg/m3, 48 µg/m3, and 34 µg/m3, respectively, in 113 medium to large Chinese cities (Ministry of Environmental Protection of China 2009).
Wednesday, June 16, 2010
China Key to Handling North Korea
China Key to Handling North Korea
Will Marshall, U.S. News
The Obama administration should redouble its efforts to persuade China to stop supporting the belligerent regime.
Will Marshall, U.S. News
The Obama administration should redouble its efforts to persuade China to stop supporting the belligerent regime.
China Ups the Ante in Asia
China Ups the Ante in Asia
from RealClearWorld
Michael Richardson, Japan Times
In the opening session last month of the China-U.S. strategic and economic dialogue, Chinese President Hu Jintao said it was natural for the two countries to disagree on some issues. What was important, he added, was to "respect and accommodate each other's core interests and major concerns, appropriately handle the sensitive issues and strengthen the foundation of mutual trust."
from RealClearWorld
Michael Richardson, Japan Times
In the opening session last month of the China-U.S. strategic and economic dialogue, Chinese President Hu Jintao said it was natural for the two countries to disagree on some issues. What was important, he added, was to "respect and accommodate each other's core interests and major concerns, appropriately handle the sensitive issues and strengthen the foundation of mutual trust."
China-U.S. Ties Still Frigid at Best Frank Ching, China Post
China-U.S. Ties Still Frigid at Best
Frank Ching, China Post
Although China voted with the United States and other countries to impose another round of sanctions against Iran in the United Nations Security Council, there is still little political trust between the two countries, especially between their militaries. This was evident when U.S. Secretary of Defense Robert Gates was in Singapore for the Shangri-La Dialogue, during which he appealed to China to restore military cooperation so as to reduce misunderstanding.
Frank Ching, China Post
Although China voted with the United States and other countries to impose another round of sanctions against Iran in the United Nations Security Council, there is still little political trust between the two countries, especially between their militaries. This was evident when U.S. Secretary of Defense Robert Gates was in Singapore for the Shangri-La Dialogue, during which he appealed to China to restore military cooperation so as to reduce misunderstanding.
Do not politicize renminbi float issue, China tells US from LEAP/Europe 2020 by China Daily
Do not politicize renminbi float issue, China tells US
from LEAP/Europe 2020 by China Daily
China's Foreign Ministry on Monday hit back at calls by the United States for the country to soon let the yuan rise in value amid fresh pressure from US politicians for faster yuan appreciation ahead of the G20 summit later this month.
The yuan was not to blame for the US trade deficit with China, Foreign Ministry spokesman Qin Gang said in response to a question about recent comments by US Treasury Secretary Timothy Geithner and calls from US lawmakers to pass a bill threatening to press China over its yuan exchange rate policy.
from LEAP/Europe 2020 by China Daily
China's Foreign Ministry on Monday hit back at calls by the United States for the country to soon let the yuan rise in value amid fresh pressure from US politicians for faster yuan appreciation ahead of the G20 summit later this month.
The yuan was not to blame for the US trade deficit with China, Foreign Ministry spokesman Qin Gang said in response to a question about recent comments by US Treasury Secretary Timothy Geithner and calls from US lawmakers to pass a bill threatening to press China over its yuan exchange rate policy.
Tuesday, June 15, 2010
US wants China to clarify Pakistan atomic reactor deal
US wants China to clarify Pakistan atomic reactor deal
Washington (AFP) April 29, 2010 - The United States said Tuesday it had sought clarification from China on the sale of two civilian nuclear reactors to Pakistan, saying the deal must be approved by the Nuclear Suppliers Group. "We've asked China to clarify the details of its sale of additional nuclear reactors to Pakistan," State Department spokesman Philip Crowley told reporters. The Financial Times reported in April th ... more
Washington (AFP) April 29, 2010 - The United States said Tuesday it had sought clarification from China on the sale of two civilian nuclear reactors to Pakistan, saying the deal must be approved by the Nuclear Suppliers Group. "We've asked China to clarify the details of its sale of additional nuclear reactors to Pakistan," State Department spokesman Philip Crowley told reporters. The Financial Times reported in April th ... more
Peaceful Rise through Unrestricted Warfare: Grand Strategy with Chinese Characteristics by Dr. Tony Corn
Inside the Ring
Pakistan to get Chinese AEW&C aircraft ZDK-03 later this year ZDK-03 is based from Yun-8 transport plane.
China seeks Soviet technology from other states in Former Soviet Union Soviet Secrets Still For Sale
China Steals The Abandoned Su-33
China Steals The Abandoned Su-33
For over five years, China has been developing a carrier version of the Russian Su-27, calling it the J-15. There is already a Russian version of this, called the Su-33. Russia refused to sell Su-33s to China, when it was noted that China was making illegal copies of the Su-27 (as the J-11), and did not want to place a big order for Su-33s, but only wanted two, for "evaluation." China eventually got a Su-33 from Ukraine, which inherited some when the Soviet Union dissolved in 1991. The first prototypes of the J-15 have been under construction for two years, and the aircraft is believed to have taken its first flight in the last few months. The Russians are not happy with this development. Russian aviation experts have openly derided the J-15, casting doubt on the ability of Chinese engineers to replicate key features of the Su-33. That remains to be seen, as the Chinese have screwed up copying Russian military tech in the past. But the Chinese have a lot of experience stealing foreign tech, so the J-15 may well turn out to be at least as good as the Su-33. Meanwhile. Russia itself has stopped using the Su-33.
Late last year, the Russian Navy ordered 24 MiG-29Ks (for about $42 million each) to replace the Su-33s currently operating from the aircraft carrier Kuznetsov. It was two years ago that the carrier version of the Russian MiG-29, the MiG-29K, made its first flight, about fifteen years later than originally planned. India is buying 30-40 of these for use on at least two aircraft carriers. The Indians are already receiving the first sixteen. The reason for dropping the Su-33 is the order from India. It's cheaper to build 64 (or more, for planned Russian carriers) MiG-29Ks, than just 16 more Su-33s to replace the ones already on the Kuznetsov (and wearing out). The MiG-29Ks are lighter and cheaper than the Su-33s.
In the early 1990s, work began on creating a variant of the MiG-29 for carrier use. These were to be used on the Kuznetsov class carriers, originally conceived of as 90,000 ton, nuclear powered ships, similar to American carriers (complete with steam catapults). Instead, because of the cost, and the complexity of modern (American style) carriers, the Russians were forced to scale back their goals, and ended up with the 65,000 ton (full load) ships that lacked steam catapults, and used a ski jump type flight deck instead. Nuclear power was dropped, but the Kuznetsov class was still a formidable design. The thousand foot (322 meter) long carrier ended up carryings a dozen Su-33s, 14 Ka-27PL anti-submarine helicopters, two electronic warfare helicopters and two search and rescue helicopters. The ship was designed to carry up to 36 Su-33s and sixteen helicopters.
The 33 ton Su-33 is larger than the 21 ton MiG-29K, and both types of aircraft were to operate from the three 65,000 ton Kuznetsovs. But when the Cold War ended, only the Kuznetsov was near completion. The second ship in the class, the Varyag, was sold to China. The smaller Gorshkov is being rebuilt and sold to India (who believed the smaller MiG-29K was more suitable for this carrier.).
The MiG-29K modifications included arrestor gear and stronger landing gear for carrier landings, folding wings and rust proofing to reduce corrosion from all that salt water. Anti-radar paint is also used, to reduce the radar signature. Fuel capacity was increased 50 percent and more modern electronics installed. A more powerful engine is used, which enabled the aircraft to carry over five tons of weapons (air-to-air and anti-ship missiles, smart bombs).
http://www.strategypage.com/htmw/htnavai/articles/20100607.aspx
For over five years, China has been developing a carrier version of the Russian Su-27, calling it the J-15. There is already a Russian version of this, called the Su-33. Russia refused to sell Su-33s to China, when it was noted that China was making illegal copies of the Su-27 (as the J-11), and did not want to place a big order for Su-33s, but only wanted two, for "evaluation." China eventually got a Su-33 from Ukraine, which inherited some when the Soviet Union dissolved in 1991. The first prototypes of the J-15 have been under construction for two years, and the aircraft is believed to have taken its first flight in the last few months. The Russians are not happy with this development. Russian aviation experts have openly derided the J-15, casting doubt on the ability of Chinese engineers to replicate key features of the Su-33. That remains to be seen, as the Chinese have screwed up copying Russian military tech in the past. But the Chinese have a lot of experience stealing foreign tech, so the J-15 may well turn out to be at least as good as the Su-33. Meanwhile. Russia itself has stopped using the Su-33.
Late last year, the Russian Navy ordered 24 MiG-29Ks (for about $42 million each) to replace the Su-33s currently operating from the aircraft carrier Kuznetsov. It was two years ago that the carrier version of the Russian MiG-29, the MiG-29K, made its first flight, about fifteen years later than originally planned. India is buying 30-40 of these for use on at least two aircraft carriers. The Indians are already receiving the first sixteen. The reason for dropping the Su-33 is the order from India. It's cheaper to build 64 (or more, for planned Russian carriers) MiG-29Ks, than just 16 more Su-33s to replace the ones already on the Kuznetsov (and wearing out). The MiG-29Ks are lighter and cheaper than the Su-33s.
In the early 1990s, work began on creating a variant of the MiG-29 for carrier use. These were to be used on the Kuznetsov class carriers, originally conceived of as 90,000 ton, nuclear powered ships, similar to American carriers (complete with steam catapults). Instead, because of the cost, and the complexity of modern (American style) carriers, the Russians were forced to scale back their goals, and ended up with the 65,000 ton (full load) ships that lacked steam catapults, and used a ski jump type flight deck instead. Nuclear power was dropped, but the Kuznetsov class was still a formidable design. The thousand foot (322 meter) long carrier ended up carryings a dozen Su-33s, 14 Ka-27PL anti-submarine helicopters, two electronic warfare helicopters and two search and rescue helicopters. The ship was designed to carry up to 36 Su-33s and sixteen helicopters.
The 33 ton Su-33 is larger than the 21 ton MiG-29K, and both types of aircraft were to operate from the three 65,000 ton Kuznetsovs. But when the Cold War ended, only the Kuznetsov was near completion. The second ship in the class, the Varyag, was sold to China. The smaller Gorshkov is being rebuilt and sold to India (who believed the smaller MiG-29K was more suitable for this carrier.).
The MiG-29K modifications included arrestor gear and stronger landing gear for carrier landings, folding wings and rust proofing to reduce corrosion from all that salt water. Anti-radar paint is also used, to reduce the radar signature. Fuel capacity was increased 50 percent and more modern electronics installed. A more powerful engine is used, which enabled the aircraft to carry over five tons of weapons (air-to-air and anti-ship missiles, smart bombs).
http://www.strategypage.com/htmw/htnavai/articles/20100607.aspx
Yuan back in US firing line
Yuan back in US firing line
Hopes for an improvement in relations between China and the United States are being dashed as US politicians, faced with high unemployment among voters and forthcoming elections, renew their demands that President Barack Obama increase pressure on Beijing to raise the value of the Chinese currency.
Hopes for an improvement in relations between China and the United States are being dashed as US politicians, faced with high unemployment among voters and forthcoming elections, renew their demands that President Barack Obama increase pressure on Beijing to raise the value of the Chinese currency.
Beijing puts down marker in nuclear power race
Beijing puts down marker
in nuclear power race
China's decision to sell two nuclear reactors to Pakistan comes amid a global expansion of trade in nuclear technology, with South Korea at the forefront. Beijing is ensuring it can compete with such rivals while recognizing geopolitical realities, even if that crosses the lines drawn by the Nuclear Suppliers Group and the Nuclear Non-proliferation Treaty. - Stephen Blank
in nuclear power race
China's decision to sell two nuclear reactors to Pakistan comes amid a global expansion of trade in nuclear technology, with South Korea at the forefront. Beijing is ensuring it can compete with such rivals while recognizing geopolitical realities, even if that crosses the lines drawn by the Nuclear Suppliers Group and the Nuclear Non-proliferation Treaty. - Stephen Blank
SUN WUKONG Naked in the 'Sunshine'
SUN WUKONG
Naked in the 'Sunshine'
Little-known Baimiao made national headlines when it became China's first town to make its accounts public, meeting Beijing's wish that local authorities take charge of transparency and corruption as part of a "Sunshine" policy. However, officials and businessmen quickly began boycotting the place in fear of being named and shamed, raising doubts that the initiative will work at a national level. - Wu Zhong (Jun 15, '10)
Naked in the 'Sunshine'
Little-known Baimiao made national headlines when it became China's first town to make its accounts public, meeting Beijing's wish that local authorities take charge of transparency and corruption as part of a "Sunshine" policy. However, officials and businessmen quickly began boycotting the place in fear of being named and shamed, raising doubts that the initiative will work at a national level. - Wu Zhong (Jun 15, '10)
Globalist Analysis China in the Times to Come
Globalist Analysis
China in the Times to Come
How can Americans understand China as it is — not as politicians and pundits prefer to depict it?
China in the Times to Come
How can Americans understand China as it is — not as politicians and pundits prefer to depict it?
How China and India Really Operate in Africa
How China and India Really Operate in Africa
How are China and India using their "first mover" advantages to bring Africa into network trade?
How are China and India using their "first mover" advantages to bring Africa into network trade?
China and a Post-Kim North Korea Gordon Chang, The Diplomat
China and a Post-Kim North Korea
Gordon Chang, The Diplomat
The rule of Chairman Kim Jong-il is coming to an end. ‘The Lodestar of the 21st Century’ and ‘the Guardian of Our Planet’ is elderly, ailing, and obviously tired. His economy, despite a brief respite in 2008, is continuing on a downward spiral. His subjects literally worshipped his father, the founder of the North Korean state, but despise him. Kim’s plan to install his 27-year-old son on the throne looks like a precarious bet.
Gordon Chang, The Diplomat
The rule of Chairman Kim Jong-il is coming to an end. ‘The Lodestar of the 21st Century’ and ‘the Guardian of Our Planet’ is elderly, ailing, and obviously tired. His economy, despite a brief respite in 2008, is continuing on a downward spiral. His subjects literally worshipped his father, the founder of the North Korean state, but despise him. Kim’s plan to install his 27-year-old son on the throne looks like a precarious bet.
U.S. objects to China supplying nuclear reactors to Pakistan
U.S. objects to China supplying nuclear reactors to Pakistan
from NEI SmartBrief
The White House is objecting to a nuclear deal between Chinese state-owned companies and the Pakistan government that could v -More-
from NEI SmartBrief
The White House is objecting to a nuclear deal between Chinese state-owned companies and the Pakistan government that could v -More-
China: Where’s the Inflation? by Michael Pettis
China: Where’s the Inflation?
by Michael Pettis
:
I apologize for waiting two weeks since my last post, but my schedule has been crazier than usual what with the SED meeting and a number of conferences and visitors to Beijing. What’s more, next week I will go to New York and environs for a week, followed by a week in Italy. It always takes a huge amount of time to prepare for these things, although the Italian trip will be as much holiday as work. Among other things I will have a chance to have dinner with legendary American composer and Rome resident, Alvin Curran, who performed in my club when he visited Beijing three years ago. That will be a great pleasure.
But here in China things don’t ever seem to slow down. Last week the inflation numbers for May came in. At 3.1% year on year, inflation was slightly higher than expected. Here is what an article in Saturday’s People’s Daily had to say:
Complete Story »
by Michael Pettis
:
I apologize for waiting two weeks since my last post, but my schedule has been crazier than usual what with the SED meeting and a number of conferences and visitors to Beijing. What’s more, next week I will go to New York and environs for a week, followed by a week in Italy. It always takes a huge amount of time to prepare for these things, although the Italian trip will be as much holiday as work. Among other things I will have a chance to have dinner with legendary American composer and Rome resident, Alvin Curran, who performed in my club when he visited Beijing three years ago. That will be a great pleasure.
But here in China things don’t ever seem to slow down. Last week the inflation numbers for May came in. At 3.1% year on year, inflation was slightly higher than expected. Here is what an article in Saturday’s People’s Daily had to say:
Complete Story »
China - Pakistan Nuclear Cooperation Is Raising Red Flags from War News Updates by Bookyards
China - Pakistan Nuclear Cooperation Is Raising Red Flags
from War News Updates by Bookyards
Washington Objects To China-Pakistan Nuclear Deal -- Washington Post
The Obama administration has decided to object to a lucrative deal in which a state-owned Chinese companies would supply Pakistan with two nuclear reactors, U.S. officials said.
The deal is expected to be discussed next week at a meeting in New Zealand of the 46-nation Nuclear Suppliers Group, which monitors such transactions. Experts had said it appears to be a violation of international guidelines forbidding nuclear exports to countries that have not signed onto the nuclear Non-Proliferation Treaty or do not have international safeguards on reactors. Pakistan has not signed the treaty.
Read more ....
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/14/AR2010061404680.html
Update #1: China on verge of signing nuke deal with Pakistan: Expert -- Times Of India
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/14/AR2010061404680.html
Update #2: Asia looks to nuclear power for energy: China intends to build nuclear reactors in Pakistan, presenting a conundrum for the Obama administration -- Vancouver Sun/Canwest
http://www.vancouversun.com/business/Asia+looks+nuclear+power+energy/3151398/story.html
Bookyards Comment: Even with Pakistan's rotten history when it comes to nuclear proliferation .... the Chinese have made the decision to ignore the consequences and proceed in this nuclear deal. Like the Russian decision to supply nuclear reactors to Iran, this decision by China to supply nuclear reactors to Pakistan will only heighten tensions in the region, and will cause a reciprocal backlash from countries (like India) who will perceive this as an attempt by Pakistan to further enhance it's own nuclear weapon's program.
from War News Updates by Bookyards
Washington Objects To China-Pakistan Nuclear Deal -- Washington Post
The Obama administration has decided to object to a lucrative deal in which a state-owned Chinese companies would supply Pakistan with two nuclear reactors, U.S. officials said.
The deal is expected to be discussed next week at a meeting in New Zealand of the 46-nation Nuclear Suppliers Group, which monitors such transactions. Experts had said it appears to be a violation of international guidelines forbidding nuclear exports to countries that have not signed onto the nuclear Non-Proliferation Treaty or do not have international safeguards on reactors. Pakistan has not signed the treaty.
Read more ....
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/14/AR2010061404680.html
Update #1: China on verge of signing nuke deal with Pakistan: Expert -- Times Of India
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/14/AR2010061404680.html
Update #2: Asia looks to nuclear power for energy: China intends to build nuclear reactors in Pakistan, presenting a conundrum for the Obama administration -- Vancouver Sun/Canwest
http://www.vancouversun.com/business/Asia+looks+nuclear+power+energy/3151398/story.html
Bookyards Comment: Even with Pakistan's rotten history when it comes to nuclear proliferation .... the Chinese have made the decision to ignore the consequences and proceed in this nuclear deal. Like the Russian decision to supply nuclear reactors to Iran, this decision by China to supply nuclear reactors to Pakistan will only heighten tensions in the region, and will cause a reciprocal backlash from countries (like India) who will perceive this as an attempt by Pakistan to further enhance it's own nuclear weapon's program.
Sunday, June 13, 2010
For China, stability inside--and outside--key for future prosperity Interview with Wang Jisi/ YOICHI FUNABASHI, Editor in Chief, Asahi
Interview with Wang Jisi/ YOICHI FUNABASHI, Editor in Chief, Asahi
Saturday 12 June 2010
For China, stability inside--and outside--key for future prosperity
The ascent of China will most likely be the biggest geopolitical drama of the 21st century. Wang Jisi, dean of the School of International Studies at Peking University, discusses China's military expansion, the longevity of the country's 'peaceful rise,' and the effects on global governance and international rules.
Question: I remember a couple of years ago the CCTV aired a program called "The Rise of Great Nations" that featured the histories of Rome, Great Britain, Germany, Japan and the Soviet Union. What implications do these lessons have for China?
Answer: I think the consensus here is that economic growth is the key to becoming a rising power. The Chinese have also concluded that to sustain economic growth it is also necessary to maintain political stability. In the rise and fall of great powers, one lesson the Chinese always learn is that aggression will not pay. So the lessons we have learned are very consistent with the current policies.
Some younger-generation opinion leaders and others, maybe some officials as well, are calling for a more assertive policy toward other countries. But the mainstream thinking, I mean the top leadership, is still very sober-minded about China's own power and influence, and they are very conscious of China's internal challenges combined with external challenges. So they will continue to pursue a policy following Deng Xiaoping's teaching that we should keep a low profile.
Q: To be honest, I don't have a problem with China being more assertive, since it will commit the country more deeply to constructing and maintaining peace and security in the world. That commitment is perhaps driven by Chinese people's growing confidence in themselves, as China grows much bigger and much more powerful.
I have more of a problem with China's nationalism driven by humiliation or a victim complex. This means that two kinds of nationalism are emerging in China. And I hope the more constructive or healthy nationalism will prevail over the more negative and reactionary nationalism.
A: I share your sentiments and observation. There are people in China who feel China is still being humiliated by advanced countries.
This kind of sentiment is a very interesting combination of superiority and inferiority. On the one hand, some people say we are stronger than before, China is a rising power and China may dominate the world in the future. On the other hand, when unpleasant things happen they say China is being humiliated and still a victim of world politics.
How can we overcome this mentality? I think by more exposure to the outside world, and more importantly, by better education in China itself. I mean, we have to improve our own society and rule of law.
China was indeed humiliated by Western powers in its modern history. But that humiliation was not only a result of Western aggression; it had a lot to do with China's own problems. Our history books have not provided very balanced and comprehensive interpretations. That's why I think we should restudy history.
I also believe we should upgrade the level of our civilization and have better social conduct. If one does not enjoy equality and is mistreated in society, how can he or she treat others as equals? So I think the feeling of being humiliated and victimized internationally has deep roots in China's own society. When Chinese citizens have more self-esteem, dignity and confidence toward each other, and when the hierarchical order as we see today is changed, they will have more confidence in international affairs.
Q: What is the primary driving force that will shape the world in terms of politics and global governance in the next 20 years?
A: Well, I can think of three or four driving forces.
The first is globalization. I think globalization is still going on, although it has setbacks and the negative effect of globalization is more obvious than before. The negative effect is basically twofold. The first is social and economic disparity, not only between rich and poor countries, but within all rich and poor countries.
But globalization, with all its problems, will have to go on as a driving force. You cannot reverse it.
And then the second driving force I can think of is still the traditional competitions and relations between nation states, or the rise and fall of great powers. Some powers are stronger, some are weaker than before.
China, the United States, Japan, the European Union, Russia, India, Brazil and many others, they together shape the world order, and they are the biggest driving forces. Still, smaller countries also are driving forces.
The third driving force I can think of is ethnic groups, religious groups and their organizations that are not under the control of nation states. Those groups can take actions and mobilize their populations. In the Middle East, for instance, Islamic groups are active. In the United States, we also see influential religious groups. In China, we have ethnic groups, Tibetans, Uighurs and so on.
Q: China is becoming more involved in regional strategic politics, particularly in the oil and gas fields. This could complicate China's peaceful foreign policy as well as its relations with the United States and other countries. Have you any suggestions on how to overcome these potential problems?
A: Well, when we talk about peaceful rise and peaceful development, I don't think that is a declaration that China will never use its military force under any circumstances. When we think about peaceful rise, I'm thinking that China should avoid direct military confrontation with great powers and with other countries, including smaller neighbors like Cambodia and Mongolia. We should not engage ourselves in military conflict in solving problems with those countries.
But I cannot exclude the possibility that sometimes we have to use military force to solve a local problem, for instance, to rescue Chinese citizens from being kidnapped and to protect some communication line if the line is threatened by piracy or some terrorist group.
Q: Some might argue that although we have had this military-industrial complex since the Eisenhower days in the United States, there seems to be a sort of military-oil-and-gas complex emerging in China. And that could actually upset the "peaceful rise" strategy, to use the official phrase. That could perhaps bring about some setback or perhaps negative implications for this peaceful conduct of foreign policy. How would you respond to those concerns?
A: We are depending more and more on oil and natural gas supplies and other natural resources imports from all over the world, from Sudan to Angola to Venezuela to Chile. So there are communication lines China is concerned about. There are sea lanes not only through the Malacca Straits, but also through the Persian Gulf, the Indian Ocean, the Pacific Ocean and Central Asia. Military forces are needed. We already have sent fleets to fight piracy in Somalia and elsewhere.
China participates in quite a few U.N. peacekeeping operations, as well. These moves do not need to bring about tensions with other countries. Rather, they have increased the opportunities for international cooperation, including with the United States and Japan, because we share the common goals and interests to provide security and safeguard peace.
We don't fight each other in the Malacca Straits and stop each other from getting oil supplies. We are guarding against terrorist groups, pirates and natural disasters. I don't think China's expansion of naval forces alone can solve the problem of ensuring oil supplies. International cooperation is the key.
We also have to protect China's economic interests and our citizens in many countries. We have seen Chinese people being kidnapped in Afghanistan and killed elsewhere. Enhancing our diplomatic activities can help, but maybe sometime in the future China would use its rapidly deployed forces to rescue Chinese citizens. These are very comprehensive operations, not simply military issues.
What's more, China should diversify oil and natural gas supplies. Now we have supplies from Iran, which is faced with possible sanctions. We also seek alternatives in, for instance, Saudi Arabia, Angola, Sudan, Myanmar (Burma) and Venezuela. Interestingly, most of the countries I refer to are not favored by the United States. This is an additional reason why the U.S. is an important but complicating factor.
One strong Chinese argument here is that the Americans have good trade relations with the traditional, reliable and large oil producers, while China is a newcomer and has to compete. Does the United States intend to set obstacles for China to get supplies by putting pressure on those countries that are friendly to China but not so friendly to the U.S.?
To be sure, China is more and more involved in those regional issues. And this is a fairly new challenge. In the Mao Tse-tung years, China was isolated from world economics and was not very much influenced by regional instability. In the initial years of reform and opening, China was in a sense a free rider.
With fast-expanded economic interests, especially in many less-developed countries like Afghanistan, Central Asia and southern Africa, China will have to be more responsible and proactive in providing, or in helping provide, political stability in those countries and sustaining regional peace.
Q: What do you think would have a direct impact on China's stability and security in the coming years? It seems that religious and ethnic strife will likely come from the western part of China, whereas the fallout of the great power struggle will likely come from the eastern border. Globalization perhaps will come from everywhere. Which direction will China's primary threat come from?
A: Problems are rising in the western part of China in recent years. But those coastal areas also have many, many vulnerabilities and pitfalls, but of a different nature. China is kind of representative of the whole world. You have the First World in Zhejiang, Jiangsu and Shanghai and somewhere in Beijing. And you have the Third World in some remote areas in the west. They are going through different phases of historical development.
In some national minority areas, the problems are still pre-modern, so to speak. But in Shanghai, there are many postmodern problems. You don't have to ask people to take birth control measures in Beijing and Shanghai. In the pre-modern communities, the ethnic tensions you mentioned may be more serious. But in Shanghai and elsewhere, problems related to the aging population, social welfare and education may also lead to social unrest.
I think it more and more depends on local governments, officials and people to solve their own problems, rather than depending on the central government's instructions and aid. You will see a more diversified China. Although this is still a very unified country, we should allow different voices, different policies conducted by localities according to their conditions.
Geopolitically and geo-economically, the western part of China, the western border and beyond will gain more importance in the future. I'm not here to reduce the significance of Japan. But I really think the western part of Asia is gaining more importance to China. For one thing, we don't get oil supplies, natural gas supplies from Japan or South Korea. We have to look to the west for all those communication lines for supplies of natural resources.
Q: So it sounds like the Shanghai Cooperation Organization could become a much more powerful and important vehicle and forum than the G-20 from a Chinese perspective.
A: Well, I don't necessarily think so. While the Shanghai Cooperation Organization is growing and being strengthened, it is essentially a loosely organized mechanism, not an alliance. The original purpose until today is to counter terrorism, separatism and extremism aimed at domestic and regional stability. Economic cooperation is becoming more important, but it is still based on bilateral trade.
Taken as a whole, a regional cooperation mechanism is lacking. Central Asia is still very much divided along national borders. Social and economic dimensions of integration are lagging behind security cooperation. They are not as advanced as in East Asia. So SCO still has a long way to go.
In addition, I don't want to hide the different desires and different expectations of the organization. I mean, China and Russia do not think exactly the same way.
Q: Some intellectuals in the West say China is now imposing its rule on the world as the country grows, as exemplified by Martin Jacques' book "When China Rules the World." How do you react to those arguments?
A: I don't see the possibility, not in my lifetime, that China will become No. 1 in world politics or China will dominate or rule the world. Because looking from within we have so many domestic challenges, including those reflected in the enlarged gap between rich and poor, social disparity and also in environmental degradation. If we cannot find a way to solve those problems, such as water shortage, pollution, climate change, and cope with social tensions successfully, China will not become that kind of global power on a par with the United States.
I don't want to overemphasize China's challenges, but I do think the outside world should take this into account when some say China is going to rule the world.
Another part of the question, which is not directly (in response to) the question you asked, is the so-called China model, zhongguo moshi, or Beijing Consensus. Yes, many developing countries and some developed countries admire China's achievements. When I went to Eastern Europe, some said Peking University is as good as Harvard University. Well, to me it is not true, of course. China's economy, education and technology are lagging far behind those of the United States. Those exaggerations of China's power may not be ill-intended, but we should not be fooled and intoxicated by those exaggerations and praises.
In addition, in reality how many countries are really learning Chinese experiences? And how can they learn if they don't establish their own Communist party or a similar political system?
China's experiences are so unique. When we review our history in the past 30 years and try to explain why China has made such achievements, the main official conclusion is that most importantly we have the wise policies carried out by this very strong and correct Communist Party leadership. Without such an efficient, centralized and powerful government, there would not have been the China miracle.
If that is the case, which I believe is true, when other countries want to learn from China they should first of all adopt a similar form of government, establish a ruling party that will not be challenged by opposition parties.
When you think of how other countries can learn from the so-called China model, you must bear in mind the uniqueness of China. It is easy to say they desire to learn, but how much they could learn and whether they have really studied are entirely different. Otherwise, I don't think that is a very valid statement or argument. You can learn a little bit, for instance, state intervention into the market, regulations, etc., but that is very limited.
I don't want to avoid answering a very fundamental question, which is that China is politically different from most other countries in the world. Namely, China is seen as a Communist country--and China is really led by a Communist party.
In the Western terminology and mind-set, how can a Communist country join the world? That is a fundamental conceptual challenge to them, and also to us. Because we are seen as politically different, many people in China hold the suspicion that the Western world will never accept China as an equal partner.
Theoretically, there are two ways to solve the puzzle. The first is to transform China into a country that is similar to Western democracies. However, that is not feasible and not desirable to China's leaders and elites. The other way around it is that China cooperates with other countries and they gradually accept and treat China as an equal partner.
At the same time, I also think that China will have to change itself by conducting political reform. I don't mean to propose changes into a political system akin to that of Japan or the United States--and Japan and the United States have different political systems, too. China will remain a one-party polity for a long, long time to come. This is a reality we have to recognize. Meanwhile, China will be more pluralistic and diversified politically, and will strengthen its legal system and find ways to protect human rights.
Q: Recently, people have begun to define the U.S.-China relationship as a "strategic partnership," or involving "strategic reassurance." Yet nothing has actually taken root intellectually, conceptually or even in policy terms. Beyond the national interest argument, is there anything that actually makes the U.S.-China relationship genuinely strategic?
A: I think both countries, especially both governments, realize very well the trend towards globalization. Because they are more and more interdependent, and their economies are intertwined, their financial institutions have to cooperate with each other on the values of the dollar and yuan. China and the U.S. are linked by other global issues, and regional issues like the North Korean nuclear problem, the Iranian nuclear deadlock. These are all strategic issues.
In their respective strategic outlook, the two giants have taken into consideration all these issues. Without the strategic partnership, China cannot enjoy economic prosperity. And without financial stability in China and without China's economic growth, the United States cannot enjoy economic recovery either. They don't need to say they have common strategic interests in that regard. They know it very well.
And they also know very well that a major conflict between the two nations would lead to disasters to both. American strategists are looking at China's future 20 years from now, 30 years from now. If Chinese and American strategists predict that United States and China will confront each other in a war, how could they plan for the future of their nation? To this extent, notions like "strategic reassurance," "responsible stakeholder" carry real meanings.
Q: I was really struck by an article written by a Chinese scholar arguing that China should help the United States retain its leading role in maintaining the world order because U.S. hegemony has benefitted China greatly by excusing the country from committing to maintaining the world order. Does this argument make sense?
A: Yes, it makes sense to me, but only to a limit. We really want to see the U.S. economy prospering. China benefits from a strong U.S. economy and borrows from its technological know-how. The paradox there is that political elites in China don't want to see too much American political influence in the world and the expansion of its military power.
And the same kind of paradox and anxiety exists in the U.S. when it watches China. The Obama administration says it welcomes a strong, prosperous China. But do they mean a stronger military power of China? These two countries share one thing in common: They wish each other well in economic terms but not necessarily in political and geostrategic terms.
On the one hand, I do share this scholar's expectation that the United States will remain prosperous and educationally and scientifically advanced. It has the resources and advantages to keep its leading position in the world. But frankly speaking, this hope cannot be translated into assessing and perceiving U.S. military and political power.
It is politically incorrect in China to say we want a stronger U.S. hegemony. But this kind of strategic thinking you just described is very important. I mean, we should analyze the world in a more complicated and sophisticated way.
The same logic applies to Japan. We really want Japan to be economically advanced so we can make more money together with it. But at the same time, we don't want Japan to be armed with nuclear weapons or to have a very rapid expansion of naval power because we have some problems with Japan in security terms. This kind of complexity and ambivalence will last almost forever.
Q: How do you think the Chinese see the U.S.-Japan alliance? Since Nixon's visit in the 1970s, China's position on the alliance has been one of grudging acceptance, rather than welcoming it. How do you think China sees the alliance right now, and how will that view change over the coming years?
A: I think most Chinese analysts will say the U.S.-Japan strategic alliance will last for its own sake and for the interests of both countries. Both want to maintain it, and this is the reality, a fait accompli. In the early and mid-1990s, when the Cold War just ended and a Taiwan Strait crisis occurred, there were anxieties in Beijing and some expectations that Japan would move away from the U.S. orbit.
Nowadays we are accustomed to the U.S.-Japan alliance. Now the U.S. and Japan have some bilateral problems, but I don't see many Chinese try to take pleasure from that. Instability in U.S.-Japan relations may not necessarily benefit China.
Q: Former Prime Minister Yukio Hatoyama said the primary rationale for Japan to allow the U.S. military to be stationed in Okinawa is to maintain the deterrence factor. So far, that deterrence has been designed to cope with North Korean instability or threat. But some are now trying to include China as a reason for the deterrence factor. Do you think China will and can be deterred by the United States and Japan?
A: I don't see many new things here. I mean, the continuity is very obvious. With the saying or without the saying that China provides the rationale, the U.S.-Japan strategic alliance is partly directed at China.
Now, China is growing up with a larger naval power. I think it is natural that some Japanese would say they should do something to counter or balance off Chinese power. As an analyst, I don't have a big problem with that, although such a saying is not very good for public relations.
Many Chinese will say we have peaceful intentions, and the growing of our military power will pose no threat to anyone. This is a sincere statement. But in the real world, we see the security dilemma faced by every country.
* * *
Wang Jisi, an expert on U.S. diplomacy, U.S.-China relations and international politics, is concurrently director of the Institute of International Strategic Studies at the Central Party School of the Communist Party of China. He is one of the most influential scholars of American studies, and carries a great deal of weight in the policymaking of the Chinese leadership led by President Hu Jintao. After graduating from Peking University, he pursued his academic career at Oxford University and the University of California at Berkeley. While he has an active network with U.S. government officials, he is also well-versed in Japan-China relations. He was once a visiting fellow at the Tokyo Foundation.
Saturday 12 June 2010
For China, stability inside--and outside--key for future prosperity
The ascent of China will most likely be the biggest geopolitical drama of the 21st century. Wang Jisi, dean of the School of International Studies at Peking University, discusses China's military expansion, the longevity of the country's 'peaceful rise,' and the effects on global governance and international rules.
Question: I remember a couple of years ago the CCTV aired a program called "The Rise of Great Nations" that featured the histories of Rome, Great Britain, Germany, Japan and the Soviet Union. What implications do these lessons have for China?
Answer: I think the consensus here is that economic growth is the key to becoming a rising power. The Chinese have also concluded that to sustain economic growth it is also necessary to maintain political stability. In the rise and fall of great powers, one lesson the Chinese always learn is that aggression will not pay. So the lessons we have learned are very consistent with the current policies.
Some younger-generation opinion leaders and others, maybe some officials as well, are calling for a more assertive policy toward other countries. But the mainstream thinking, I mean the top leadership, is still very sober-minded about China's own power and influence, and they are very conscious of China's internal challenges combined with external challenges. So they will continue to pursue a policy following Deng Xiaoping's teaching that we should keep a low profile.
Q: To be honest, I don't have a problem with China being more assertive, since it will commit the country more deeply to constructing and maintaining peace and security in the world. That commitment is perhaps driven by Chinese people's growing confidence in themselves, as China grows much bigger and much more powerful.
I have more of a problem with China's nationalism driven by humiliation or a victim complex. This means that two kinds of nationalism are emerging in China. And I hope the more constructive or healthy nationalism will prevail over the more negative and reactionary nationalism.
A: I share your sentiments and observation. There are people in China who feel China is still being humiliated by advanced countries.
This kind of sentiment is a very interesting combination of superiority and inferiority. On the one hand, some people say we are stronger than before, China is a rising power and China may dominate the world in the future. On the other hand, when unpleasant things happen they say China is being humiliated and still a victim of world politics.
How can we overcome this mentality? I think by more exposure to the outside world, and more importantly, by better education in China itself. I mean, we have to improve our own society and rule of law.
China was indeed humiliated by Western powers in its modern history. But that humiliation was not only a result of Western aggression; it had a lot to do with China's own problems. Our history books have not provided very balanced and comprehensive interpretations. That's why I think we should restudy history.
I also believe we should upgrade the level of our civilization and have better social conduct. If one does not enjoy equality and is mistreated in society, how can he or she treat others as equals? So I think the feeling of being humiliated and victimized internationally has deep roots in China's own society. When Chinese citizens have more self-esteem, dignity and confidence toward each other, and when the hierarchical order as we see today is changed, they will have more confidence in international affairs.
Q: What is the primary driving force that will shape the world in terms of politics and global governance in the next 20 years?
A: Well, I can think of three or four driving forces.
The first is globalization. I think globalization is still going on, although it has setbacks and the negative effect of globalization is more obvious than before. The negative effect is basically twofold. The first is social and economic disparity, not only between rich and poor countries, but within all rich and poor countries.
But globalization, with all its problems, will have to go on as a driving force. You cannot reverse it.
And then the second driving force I can think of is still the traditional competitions and relations between nation states, or the rise and fall of great powers. Some powers are stronger, some are weaker than before.
China, the United States, Japan, the European Union, Russia, India, Brazil and many others, they together shape the world order, and they are the biggest driving forces. Still, smaller countries also are driving forces.
The third driving force I can think of is ethnic groups, religious groups and their organizations that are not under the control of nation states. Those groups can take actions and mobilize their populations. In the Middle East, for instance, Islamic groups are active. In the United States, we also see influential religious groups. In China, we have ethnic groups, Tibetans, Uighurs and so on.
Q: China is becoming more involved in regional strategic politics, particularly in the oil and gas fields. This could complicate China's peaceful foreign policy as well as its relations with the United States and other countries. Have you any suggestions on how to overcome these potential problems?
A: Well, when we talk about peaceful rise and peaceful development, I don't think that is a declaration that China will never use its military force under any circumstances. When we think about peaceful rise, I'm thinking that China should avoid direct military confrontation with great powers and with other countries, including smaller neighbors like Cambodia and Mongolia. We should not engage ourselves in military conflict in solving problems with those countries.
But I cannot exclude the possibility that sometimes we have to use military force to solve a local problem, for instance, to rescue Chinese citizens from being kidnapped and to protect some communication line if the line is threatened by piracy or some terrorist group.
Q: Some might argue that although we have had this military-industrial complex since the Eisenhower days in the United States, there seems to be a sort of military-oil-and-gas complex emerging in China. And that could actually upset the "peaceful rise" strategy, to use the official phrase. That could perhaps bring about some setback or perhaps negative implications for this peaceful conduct of foreign policy. How would you respond to those concerns?
A: We are depending more and more on oil and natural gas supplies and other natural resources imports from all over the world, from Sudan to Angola to Venezuela to Chile. So there are communication lines China is concerned about. There are sea lanes not only through the Malacca Straits, but also through the Persian Gulf, the Indian Ocean, the Pacific Ocean and Central Asia. Military forces are needed. We already have sent fleets to fight piracy in Somalia and elsewhere.
China participates in quite a few U.N. peacekeeping operations, as well. These moves do not need to bring about tensions with other countries. Rather, they have increased the opportunities for international cooperation, including with the United States and Japan, because we share the common goals and interests to provide security and safeguard peace.
We don't fight each other in the Malacca Straits and stop each other from getting oil supplies. We are guarding against terrorist groups, pirates and natural disasters. I don't think China's expansion of naval forces alone can solve the problem of ensuring oil supplies. International cooperation is the key.
We also have to protect China's economic interests and our citizens in many countries. We have seen Chinese people being kidnapped in Afghanistan and killed elsewhere. Enhancing our diplomatic activities can help, but maybe sometime in the future China would use its rapidly deployed forces to rescue Chinese citizens. These are very comprehensive operations, not simply military issues.
What's more, China should diversify oil and natural gas supplies. Now we have supplies from Iran, which is faced with possible sanctions. We also seek alternatives in, for instance, Saudi Arabia, Angola, Sudan, Myanmar (Burma) and Venezuela. Interestingly, most of the countries I refer to are not favored by the United States. This is an additional reason why the U.S. is an important but complicating factor.
One strong Chinese argument here is that the Americans have good trade relations with the traditional, reliable and large oil producers, while China is a newcomer and has to compete. Does the United States intend to set obstacles for China to get supplies by putting pressure on those countries that are friendly to China but not so friendly to the U.S.?
To be sure, China is more and more involved in those regional issues. And this is a fairly new challenge. In the Mao Tse-tung years, China was isolated from world economics and was not very much influenced by regional instability. In the initial years of reform and opening, China was in a sense a free rider.
With fast-expanded economic interests, especially in many less-developed countries like Afghanistan, Central Asia and southern Africa, China will have to be more responsible and proactive in providing, or in helping provide, political stability in those countries and sustaining regional peace.
Q: What do you think would have a direct impact on China's stability and security in the coming years? It seems that religious and ethnic strife will likely come from the western part of China, whereas the fallout of the great power struggle will likely come from the eastern border. Globalization perhaps will come from everywhere. Which direction will China's primary threat come from?
A: Problems are rising in the western part of China in recent years. But those coastal areas also have many, many vulnerabilities and pitfalls, but of a different nature. China is kind of representative of the whole world. You have the First World in Zhejiang, Jiangsu and Shanghai and somewhere in Beijing. And you have the Third World in some remote areas in the west. They are going through different phases of historical development.
In some national minority areas, the problems are still pre-modern, so to speak. But in Shanghai, there are many postmodern problems. You don't have to ask people to take birth control measures in Beijing and Shanghai. In the pre-modern communities, the ethnic tensions you mentioned may be more serious. But in Shanghai and elsewhere, problems related to the aging population, social welfare and education may also lead to social unrest.
I think it more and more depends on local governments, officials and people to solve their own problems, rather than depending on the central government's instructions and aid. You will see a more diversified China. Although this is still a very unified country, we should allow different voices, different policies conducted by localities according to their conditions.
Geopolitically and geo-economically, the western part of China, the western border and beyond will gain more importance in the future. I'm not here to reduce the significance of Japan. But I really think the western part of Asia is gaining more importance to China. For one thing, we don't get oil supplies, natural gas supplies from Japan or South Korea. We have to look to the west for all those communication lines for supplies of natural resources.
Q: So it sounds like the Shanghai Cooperation Organization could become a much more powerful and important vehicle and forum than the G-20 from a Chinese perspective.
A: Well, I don't necessarily think so. While the Shanghai Cooperation Organization is growing and being strengthened, it is essentially a loosely organized mechanism, not an alliance. The original purpose until today is to counter terrorism, separatism and extremism aimed at domestic and regional stability. Economic cooperation is becoming more important, but it is still based on bilateral trade.
Taken as a whole, a regional cooperation mechanism is lacking. Central Asia is still very much divided along national borders. Social and economic dimensions of integration are lagging behind security cooperation. They are not as advanced as in East Asia. So SCO still has a long way to go.
In addition, I don't want to hide the different desires and different expectations of the organization. I mean, China and Russia do not think exactly the same way.
Q: Some intellectuals in the West say China is now imposing its rule on the world as the country grows, as exemplified by Martin Jacques' book "When China Rules the World." How do you react to those arguments?
A: I don't see the possibility, not in my lifetime, that China will become No. 1 in world politics or China will dominate or rule the world. Because looking from within we have so many domestic challenges, including those reflected in the enlarged gap between rich and poor, social disparity and also in environmental degradation. If we cannot find a way to solve those problems, such as water shortage, pollution, climate change, and cope with social tensions successfully, China will not become that kind of global power on a par with the United States.
I don't want to overemphasize China's challenges, but I do think the outside world should take this into account when some say China is going to rule the world.
Another part of the question, which is not directly (in response to) the question you asked, is the so-called China model, zhongguo moshi, or Beijing Consensus. Yes, many developing countries and some developed countries admire China's achievements. When I went to Eastern Europe, some said Peking University is as good as Harvard University. Well, to me it is not true, of course. China's economy, education and technology are lagging far behind those of the United States. Those exaggerations of China's power may not be ill-intended, but we should not be fooled and intoxicated by those exaggerations and praises.
In addition, in reality how many countries are really learning Chinese experiences? And how can they learn if they don't establish their own Communist party or a similar political system?
China's experiences are so unique. When we review our history in the past 30 years and try to explain why China has made such achievements, the main official conclusion is that most importantly we have the wise policies carried out by this very strong and correct Communist Party leadership. Without such an efficient, centralized and powerful government, there would not have been the China miracle.
If that is the case, which I believe is true, when other countries want to learn from China they should first of all adopt a similar form of government, establish a ruling party that will not be challenged by opposition parties.
When you think of how other countries can learn from the so-called China model, you must bear in mind the uniqueness of China. It is easy to say they desire to learn, but how much they could learn and whether they have really studied are entirely different. Otherwise, I don't think that is a very valid statement or argument. You can learn a little bit, for instance, state intervention into the market, regulations, etc., but that is very limited.
I don't want to avoid answering a very fundamental question, which is that China is politically different from most other countries in the world. Namely, China is seen as a Communist country--and China is really led by a Communist party.
In the Western terminology and mind-set, how can a Communist country join the world? That is a fundamental conceptual challenge to them, and also to us. Because we are seen as politically different, many people in China hold the suspicion that the Western world will never accept China as an equal partner.
Theoretically, there are two ways to solve the puzzle. The first is to transform China into a country that is similar to Western democracies. However, that is not feasible and not desirable to China's leaders and elites. The other way around it is that China cooperates with other countries and they gradually accept and treat China as an equal partner.
At the same time, I also think that China will have to change itself by conducting political reform. I don't mean to propose changes into a political system akin to that of Japan or the United States--and Japan and the United States have different political systems, too. China will remain a one-party polity for a long, long time to come. This is a reality we have to recognize. Meanwhile, China will be more pluralistic and diversified politically, and will strengthen its legal system and find ways to protect human rights.
Q: Recently, people have begun to define the U.S.-China relationship as a "strategic partnership," or involving "strategic reassurance." Yet nothing has actually taken root intellectually, conceptually or even in policy terms. Beyond the national interest argument, is there anything that actually makes the U.S.-China relationship genuinely strategic?
A: I think both countries, especially both governments, realize very well the trend towards globalization. Because they are more and more interdependent, and their economies are intertwined, their financial institutions have to cooperate with each other on the values of the dollar and yuan. China and the U.S. are linked by other global issues, and regional issues like the North Korean nuclear problem, the Iranian nuclear deadlock. These are all strategic issues.
In their respective strategic outlook, the two giants have taken into consideration all these issues. Without the strategic partnership, China cannot enjoy economic prosperity. And without financial stability in China and without China's economic growth, the United States cannot enjoy economic recovery either. They don't need to say they have common strategic interests in that regard. They know it very well.
And they also know very well that a major conflict between the two nations would lead to disasters to both. American strategists are looking at China's future 20 years from now, 30 years from now. If Chinese and American strategists predict that United States and China will confront each other in a war, how could they plan for the future of their nation? To this extent, notions like "strategic reassurance," "responsible stakeholder" carry real meanings.
Q: I was really struck by an article written by a Chinese scholar arguing that China should help the United States retain its leading role in maintaining the world order because U.S. hegemony has benefitted China greatly by excusing the country from committing to maintaining the world order. Does this argument make sense?
A: Yes, it makes sense to me, but only to a limit. We really want to see the U.S. economy prospering. China benefits from a strong U.S. economy and borrows from its technological know-how. The paradox there is that political elites in China don't want to see too much American political influence in the world and the expansion of its military power.
And the same kind of paradox and anxiety exists in the U.S. when it watches China. The Obama administration says it welcomes a strong, prosperous China. But do they mean a stronger military power of China? These two countries share one thing in common: They wish each other well in economic terms but not necessarily in political and geostrategic terms.
On the one hand, I do share this scholar's expectation that the United States will remain prosperous and educationally and scientifically advanced. It has the resources and advantages to keep its leading position in the world. But frankly speaking, this hope cannot be translated into assessing and perceiving U.S. military and political power.
It is politically incorrect in China to say we want a stronger U.S. hegemony. But this kind of strategic thinking you just described is very important. I mean, we should analyze the world in a more complicated and sophisticated way.
The same logic applies to Japan. We really want Japan to be economically advanced so we can make more money together with it. But at the same time, we don't want Japan to be armed with nuclear weapons or to have a very rapid expansion of naval power because we have some problems with Japan in security terms. This kind of complexity and ambivalence will last almost forever.
Q: How do you think the Chinese see the U.S.-Japan alliance? Since Nixon's visit in the 1970s, China's position on the alliance has been one of grudging acceptance, rather than welcoming it. How do you think China sees the alliance right now, and how will that view change over the coming years?
A: I think most Chinese analysts will say the U.S.-Japan strategic alliance will last for its own sake and for the interests of both countries. Both want to maintain it, and this is the reality, a fait accompli. In the early and mid-1990s, when the Cold War just ended and a Taiwan Strait crisis occurred, there were anxieties in Beijing and some expectations that Japan would move away from the U.S. orbit.
Nowadays we are accustomed to the U.S.-Japan alliance. Now the U.S. and Japan have some bilateral problems, but I don't see many Chinese try to take pleasure from that. Instability in U.S.-Japan relations may not necessarily benefit China.
Q: Former Prime Minister Yukio Hatoyama said the primary rationale for Japan to allow the U.S. military to be stationed in Okinawa is to maintain the deterrence factor. So far, that deterrence has been designed to cope with North Korean instability or threat. But some are now trying to include China as a reason for the deterrence factor. Do you think China will and can be deterred by the United States and Japan?
A: I don't see many new things here. I mean, the continuity is very obvious. With the saying or without the saying that China provides the rationale, the U.S.-Japan strategic alliance is partly directed at China.
Now, China is growing up with a larger naval power. I think it is natural that some Japanese would say they should do something to counter or balance off Chinese power. As an analyst, I don't have a big problem with that, although such a saying is not very good for public relations.
Many Chinese will say we have peaceful intentions, and the growing of our military power will pose no threat to anyone. This is a sincere statement. But in the real world, we see the security dilemma faced by every country.
* * *
Wang Jisi, an expert on U.S. diplomacy, U.S.-China relations and international politics, is concurrently director of the Institute of International Strategic Studies at the Central Party School of the Communist Party of China. He is one of the most influential scholars of American studies, and carries a great deal of weight in the policymaking of the Chinese leadership led by President Hu Jintao. After graduating from Peking University, he pursued his academic career at Oxford University and the University of California at Berkeley. While he has an active network with U.S. government officials, he is also well-versed in Japan-China relations. He was once a visiting fellow at the Tokyo Foundation.
Friday, June 11, 2010
China: It's All About Hu, Not Yuan from SeekingAlpha.com: by Marc Chandler
China: It's All About Hu, Not Yuan
from SeekingAlpha.com: by Marc Chandler
The Russian despot Vladimir Lenin was a big fan of Frederick Taylor. Taylor's time and motion studies revolutionized the work process by boosting output, albeit often at the cost of worker dehumanization. Taylorism is not about capitalism per se, it is about efficiency, and apparently good communists can respect that.
As Taylorism was adopted by the Soviet Union, so too does it appear that Fordism may be coming to China. Fordism refers to a type of a political economy that recognizes that, despite the great disparities in power, workers need to earn high enough wages to afford to purchase the products that are being created in order to complete the circuit of production.
The financial impact of the euro’s decline over the past six months have seen European officials dialing back their calls for Chinese yuan appreciation. While the US Treasury appears to be embracing a multilateral effort (e.g. IMF, G20), many in the US Congress are preparing to escalate their case, perhaps, if it is not too cynical, as the November mid-term elections approach.
from SeekingAlpha.com: by Marc Chandler
The Russian despot Vladimir Lenin was a big fan of Frederick Taylor. Taylor's time and motion studies revolutionized the work process by boosting output, albeit often at the cost of worker dehumanization. Taylorism is not about capitalism per se, it is about efficiency, and apparently good communists can respect that.
As Taylorism was adopted by the Soviet Union, so too does it appear that Fordism may be coming to China. Fordism refers to a type of a political economy that recognizes that, despite the great disparities in power, workers need to earn high enough wages to afford to purchase the products that are being created in order to complete the circuit of production.
The financial impact of the euro’s decline over the past six months have seen European officials dialing back their calls for Chinese yuan appreciation. While the US Treasury appears to be embracing a multilateral effort (e.g. IMF, G20), many in the US Congress are preparing to escalate their case, perhaps, if it is not too cynical, as the November mid-term elections approach.
China Leading World Markets Out of Slump from SeekingAlpha.com by Jim Trippon
China Leading World Markets Out of Slump
from SeekingAlpha.com by Jim Trippon
http://seekingalpha.com/article/209621-china-leading-world-markets-out-of-slump?source=feed
Europe's debt fever is infecting markets around the world, raising investor fears that global economic recovery could be ruined by a default among the PIIGS (Portugal, Italy, Ireland, Greece & Spain).
But China rocked the world's stock markets following a Reuters news flash that Chinese exports are growing faster anyone imagined. Chinese exports in May grew by a stunning 50 percent from a year ago. That figure that blew past all expectations and reassured investors who were concerned that Europe's debt problems might dampen demand for Asian goods.
Complete Story »
from SeekingAlpha.com by Jim Trippon
http://seekingalpha.com/article/209621-china-leading-world-markets-out-of-slump?source=feed
Europe's debt fever is infecting markets around the world, raising investor fears that global economic recovery could be ruined by a default among the PIIGS (Portugal, Italy, Ireland, Greece & Spain).
But China rocked the world's stock markets following a Reuters news flash that Chinese exports are growing faster anyone imagined. Chinese exports in May grew by a stunning 50 percent from a year ago. That figure that blew past all expectations and reassured investors who were concerned that Europe's debt problems might dampen demand for Asian goods.
Complete Story »
U.S. Chairman Of The Joint Chiefs "Concerned" About China's Military Buildup from War News Updates by Bookyards
U.S. Chairman Of The Joint Chiefs "Concerned" About China's Military Buildup
from War News Updates by Bookyards
Mullen: China Buildup 'Out Of Step' With Territorial Defense -- Stars And Stripes
http://www.stripes.com/news/pacific/mullen-china-buildup-out-of-step-with-territorial-defense-1.106589
WASHINGTON — Adm. Mike Mullen delivered a stinging rebuke to China over the nation’s military buildup, its refusal to engage in open military-to-military relations with the United States, and a “tepid” response to international calls for reprisals against North Korea.
China’s amassing of “expeditionary maritime and air capabilities,” he said, “seems oddly out of step with their stated goal of territorial defense.”
Read more ....
More News On Mullen's "Concerns" About China's Military Buildup
Adm. Mullen "Genuinely Concerned" About China's Military Buildup -- CBS News
http://www.cbsnews.com/8301-503543_162-20007340-503543.html
US concerned about China's military investments -- Christian Science Monitor
http://www.csmonitor.com/World/terrorism-security/2010/0610/US-concerned-about-China-s-military-investments
U.S. Concern Over China Military Growing, Mullen Says -- Bloomberg Businessweek
http://www.businessweek.com/news/2010-06-10/u-s-concern-over-china-military-growing-mullen-says-update1-.html
Mullen Cites Importance of Asian Partners, Stability in Pacific Region -- U.S. Department of Defense
http://www.defense.gov/news/newsarticle.aspx?id=59565
from War News Updates by Bookyards
Mullen: China Buildup 'Out Of Step' With Territorial Defense -- Stars And Stripes
http://www.stripes.com/news/pacific/mullen-china-buildup-out-of-step-with-territorial-defense-1.106589
WASHINGTON — Adm. Mike Mullen delivered a stinging rebuke to China over the nation’s military buildup, its refusal to engage in open military-to-military relations with the United States, and a “tepid” response to international calls for reprisals against North Korea.
China’s amassing of “expeditionary maritime and air capabilities,” he said, “seems oddly out of step with their stated goal of territorial defense.”
Read more ....
More News On Mullen's "Concerns" About China's Military Buildup
Adm. Mullen "Genuinely Concerned" About China's Military Buildup -- CBS News
http://www.cbsnews.com/8301-503543_162-20007340-503543.html
US concerned about China's military investments -- Christian Science Monitor
http://www.csmonitor.com/World/terrorism-security/2010/0610/US-concerned-about-China-s-military-investments
U.S. Concern Over China Military Growing, Mullen Says -- Bloomberg Businessweek
http://www.businessweek.com/news/2010-06-10/u-s-concern-over-china-military-growing-mullen-says-update1-.html
Mullen Cites Importance of Asian Partners, Stability in Pacific Region -- U.S. Department of Defense
http://www.defense.gov/news/newsarticle.aspx?id=59565
WarNewsUpdates: China's Neighbors Are Nervous About China
WarNewsUpdates: China's Neighbors Are Nervous About China http://warnewsupdates.blogspot.com/2010/06/chinas-neighbors-are-nervous-about.html
WarNewsUpdates: The U.S. - China Military Deep Freeze Continues
WarNewsUpdates: The U.S. - China Military Deep Freeze Continues http://warnewsupdates.blogspot.com/2010/06/us-china-military-deep-freeze-continues.html
WarNewsUpdates: Did China Sell Nuclear Missile Technology To Saudi Arabia?
Thursday, June 10, 2010
China's Regulators Approve Massive $20 Billion Agricultural Bank IPO from Business Insider by Vince Veneziani
China's Regulators Approve Massive $20 Billion Agricultural Bank IPO
from Business Insider by Vince Veneziani
agricultural bank of china pic
Looks like China just cleared the way for what may be the largest IPO offering ever.
-----------
SHANGHAI (AP) -- China's stock regulator has approved Agricultural Bank of China's plans for an initial public offering in Shanghai and Hong Kong worth well over $20 billion that may be the world's biggest ever, despite current market doldrums.
The China Securities Regulatory Commission reviewed the plan Wednesday and announced in a brief notice on its website that it had been approved.
Beijing-based Agricultural Bank, which serves mainly rural customers, is the last of the country's "big four" state-owned banks to seek a share listing. It plans to sell a total of up to 53 billion shares in separate listings on the two exchanges, with trading expected to begin by mid-July, state-run newspapers reported Wednesday.
The bank had denied reports the offering might be delayed due to recent market turmoil, which has dragged share prices to 13-month lows.
Expectations of strong government backing for the IPO, and other possible market-boosting measures, prompted a rebound in shares Wednesday, with the benchmark Shanghai Composite Index gaining 69.92 points, or 2.8 percent, to close at 2,583.87.
Agricultural Bank, which is issuing shares worth 15 percent of its equity, chose Goldman Sachs Group Inc., JP Morgan Chase & Co., Macquarie Group Ltd., China International Capital Corp., and Deutsche Bank AG. to run its IPO in Hong Kong. CICC and three other Chinese brokerages were chosen to advise on its share sales in China.
The bank has yet to set an IPO price for its shares, which are expected to raise between $23 billion and $30 billion. That would exceed the world record previously set by Industrial & Commercial Bank of China, whose $21.9 billion dual Hong Kong-Shanghai IPO in October 2006 helped make it the world's biggest bank by market value.
Bank of China and the China Construction Bank also held multibillion dollar IPOs as part of their transformation into fully commercial banks.
Though the Agricultural Bank is gargantuan, with more than 24,000 branches and more than 350 million customers, it is considered relatively weak given its focus on rural lending. In a report late last year, Fitch Ratings give the lender an "E", its second lowest rating.
However, analysts note that the bank's margins on its loans and deposits are relatively wide given its near-monopoly in the countryside, where borrowers have little bargaining leverage.
Unlike its peers, the bank has not taken on any foreign strategic investors, though it has received 15 billion yuan ($2.2 billion) from the country's Social Security Fund as part of its restructuring.
China's share markets often suffer from fears that massive inflows of new shares might overwhelm demand, dragging prices lower.
Given the recent malaise in markets, other major companies have pulled back on fundraising plans of their own, perhaps giving the Agricultural Bank greater leeway for its own share offering.
from Business Insider by Vince Veneziani
agricultural bank of china pic
Looks like China just cleared the way for what may be the largest IPO offering ever.
-----------
SHANGHAI (AP) -- China's stock regulator has approved Agricultural Bank of China's plans for an initial public offering in Shanghai and Hong Kong worth well over $20 billion that may be the world's biggest ever, despite current market doldrums.
The China Securities Regulatory Commission reviewed the plan Wednesday and announced in a brief notice on its website that it had been approved.
Beijing-based Agricultural Bank, which serves mainly rural customers, is the last of the country's "big four" state-owned banks to seek a share listing. It plans to sell a total of up to 53 billion shares in separate listings on the two exchanges, with trading expected to begin by mid-July, state-run newspapers reported Wednesday.
The bank had denied reports the offering might be delayed due to recent market turmoil, which has dragged share prices to 13-month lows.
Expectations of strong government backing for the IPO, and other possible market-boosting measures, prompted a rebound in shares Wednesday, with the benchmark Shanghai Composite Index gaining 69.92 points, or 2.8 percent, to close at 2,583.87.
Agricultural Bank, which is issuing shares worth 15 percent of its equity, chose Goldman Sachs Group Inc., JP Morgan Chase & Co., Macquarie Group Ltd., China International Capital Corp., and Deutsche Bank AG. to run its IPO in Hong Kong. CICC and three other Chinese brokerages were chosen to advise on its share sales in China.
The bank has yet to set an IPO price for its shares, which are expected to raise between $23 billion and $30 billion. That would exceed the world record previously set by Industrial & Commercial Bank of China, whose $21.9 billion dual Hong Kong-Shanghai IPO in October 2006 helped make it the world's biggest bank by market value.
Bank of China and the China Construction Bank also held multibillion dollar IPOs as part of their transformation into fully commercial banks.
Though the Agricultural Bank is gargantuan, with more than 24,000 branches and more than 350 million customers, it is considered relatively weak given its focus on rural lending. In a report late last year, Fitch Ratings give the lender an "E", its second lowest rating.
However, analysts note that the bank's margins on its loans and deposits are relatively wide given its near-monopoly in the countryside, where borrowers have little bargaining leverage.
Unlike its peers, the bank has not taken on any foreign strategic investors, though it has received 15 billion yuan ($2.2 billion) from the country's Social Security Fund as part of its restructuring.
China's share markets often suffer from fears that massive inflows of new shares might overwhelm demand, dragging prices lower.
Given the recent malaise in markets, other major companies have pulled back on fundraising plans of their own, perhaps giving the Agricultural Bank greater leeway for its own share offering.
Asia Is On The Brink Of Nuclear Proliferation from War News Updates by Bookyards
Asia Is On The Brink Of Nuclear Proliferation
from War News Updates by Bookyards
China’s DF-31A ICBM. Photo from China-Defense-Mashup
Grappling With Nuclear Asia -- Richard Weitz, The Diplomat
The latest NPT review had interesting implications for Asia's nuclear security. But securing binding agreements was tough.
Last month saw the conclusion of the eighth Review Conference of the Treaty on the Non-Proliferation of Nuclear Weapons (otherwise known as the Nuclear Non-Proliferation Treaty or NPT) in New York City. Membership in the NPT is virtually universal. At present, it has 189 states parties—more than any other disarmament treaty—with only 4 countries recognized by the United Nations that are not members. But this broad tent makes significant progress extremely difficult.
Read more ....http://warnewsupdates.blogspot.com/2010/06/asia-is-on-brink-of-nuclear.html
Enforcing nuclear proliferation safeguards in this part of the world is very difficult at best, impossible at the worse. It is a good summary on what is happening in the region, and the problems that are going to arise as these states continue with their nuclear weapon's programs.
from War News Updates by Bookyards
China’s DF-31A ICBM. Photo from China-Defense-Mashup
Grappling With Nuclear Asia -- Richard Weitz, The Diplomat
The latest NPT review had interesting implications for Asia's nuclear security. But securing binding agreements was tough.
Last month saw the conclusion of the eighth Review Conference of the Treaty on the Non-Proliferation of Nuclear Weapons (otherwise known as the Nuclear Non-Proliferation Treaty or NPT) in New York City. Membership in the NPT is virtually universal. At present, it has 189 states parties—more than any other disarmament treaty—with only 4 countries recognized by the United Nations that are not members. But this broad tent makes significant progress extremely difficult.
Read more ....http://warnewsupdates.blogspot.com/2010/06/asia-is-on-brink-of-nuclear.html
Enforcing nuclear proliferation safeguards in this part of the world is very difficult at best, impossible at the worse. It is a good summary on what is happening in the region, and the problems that are going to arise as these states continue with their nuclear weapon's programs.
Blog - Chinese Government to Purchase Stake in U.S. Semiconductor Firm from Technology Review: Q&A: Mark Little, Head of GE Global Research
Blog - Chinese Government to Purchase Stake in U.S. Semiconductor Firm
from Technology Review: Q&A: Mark Little, Head of GE Global Research
The investment would represent China's first ownership stake in the firm behind part of its home-grown Loongson processor.
Chinese language news sources are reporting that the Institute of Computing Technologies of the Chinese Academy of Sciences is considering plans to buy a 20% stake in MIPS technologies, the California-based semiconductor IP development firm founded more than 20 years ago by John Hennessy, who is now president of Stanford University.
http://www.technologyreview.com/blog/guest/25298/?ref=rss
from Technology Review: Q&A: Mark Little, Head of GE Global Research
The investment would represent China's first ownership stake in the firm behind part of its home-grown Loongson processor.
Chinese language news sources are reporting that the Institute of Computing Technologies of the Chinese Academy of Sciences is considering plans to buy a 20% stake in MIPS technologies, the California-based semiconductor IP development firm founded more than 20 years ago by John Hennessy, who is now president of Stanford University.
http://www.technologyreview.com/blog/guest/25298/?ref=rss
Tuesday, June 8, 2010
Monday, June 7, 2010
China crashes Cafta's party
China crashes Cafta's party
Central American nations have long been trying to hook their economies to the US market, but they can't compete with China
Kevin Gallagher
guardian.co.uk,
Saturday 5 June 2010 18.00 BST
I am writing from the Shanghai Forum, the annual event dubbed as Asia's version of the World Economic Forum in Davos. A major issue at the forum has been the need to alleviate China's impending labour shortage. The implications for Central America and other developing countries loom large.
It might seem inconceivable that a country with more than 1 billion people would have a labour shortage, but it's true. According to reports in the New York Times, the shortage is due to two factors: the increase in the levels of Chinese people going through higher education and getting absorbed into the emerging high technology, high value-added sectors of the economy; and the decrease in China's birth rate since its "one child" policy that began in 1977.
At the forum, Min Hua, director of the Institute of World Economy at Fudan University unveiled China's solution to the problem: the industrialisation of Chinese agriculture and the creation of scores of new cities to absorb the 800 million farmers who will migrate to those cities. That's right, China plans to move 800 million farmers to existing and newly created cities. If they mechanise the countryside and achieve similar productivity levels to the US, they say, China will only need 100 million people in the rural sector.
When the nations of Central America hear about this they will be shaking in their (Chinese) boots. For years these countries have been working to hook their economies to the US market, with a particular emphasis on clothing and apparel exports. Beginning in the 1980s, most Central American nations set up export processing zones that export textiles and clothing to the United States. By 2001, 87% of all El Salvadoran exports to the US were from such zones. For Honduras, 78%, and Guatemala and Nicaragua each export 63% of their exports to the US were from export processing zones.
The capstone of such efforts was the Central American Free Trade Agreement between the US, Central American nations (excluding Panama) and the Dominican Republic (Cafta, for short). Cafta, by lowering tariffs and locking in access to the US economy, was supposed to solidify Central America as a clothing hub. Then China crashed the party.
In 2001, both China and Central America sold approximately $6.5bn worth of clothing exports to the United States, with each holding approximately 12% of the US market for clothing. In 2004, the year before Cafta went into effect and after China's WTO entry was in full swing, Central American exports to the US reached $7.5bn and China's were still in the same order of magnitude at $10.7bn.
Yet since Cafta went into effect, Central American exports of clothing to the US have fallen by 25%. How could this happen? Clothing exports to the US from Central America in 2009 were down from $7.5bn in 2004 to $5.6bn but China's were up to $24.3bn – a 127% increase for China since 2004. The Central American share of US clothing imports has declined to 8.7%. China now holds 38% of the US import market for clothing.
News of a Chinese labour shortage was thus very welcome in Central America. Central American nations, as well as Vietnam, India, Sri Lanka and some others would stand to gain. Hundreds of millions of "new" low-skilled workers however, could seal Central America's fate.
As Roberto Porzecanski and I argue in our forthcoming book on China and the future of industrial competitiveness in the Americas, these trends are not reason to point fingers at China. Rather than bashing the Chinese, Central Americans, not to mention nations such as Mexico that have chosen a "low-wage export to the US through free trade agreements" development strategy, developing nations should look to learn from China.
Both China and the Americas have been globalising their economies for 30 years. China has adopted a strategic and gradual approach to globalisation where the government plays a key role, the Americas have practised the Washington Consensus of rapid trade and investment liberalisation and yanking the governmentfrom economic affairs. China has turned out to be the best globaliser in the developing world.
guardian.co.uk © Guardian News and Media Limited 2010
Central American nations have long been trying to hook their economies to the US market, but they can't compete with China
Kevin Gallagher
guardian.co.uk,
Saturday 5 June 2010 18.00 BST
I am writing from the Shanghai Forum, the annual event dubbed as Asia's version of the World Economic Forum in Davos. A major issue at the forum has been the need to alleviate China's impending labour shortage. The implications for Central America and other developing countries loom large.
It might seem inconceivable that a country with more than 1 billion people would have a labour shortage, but it's true. According to reports in the New York Times, the shortage is due to two factors: the increase in the levels of Chinese people going through higher education and getting absorbed into the emerging high technology, high value-added sectors of the economy; and the decrease in China's birth rate since its "one child" policy that began in 1977.
At the forum, Min Hua, director of the Institute of World Economy at Fudan University unveiled China's solution to the problem: the industrialisation of Chinese agriculture and the creation of scores of new cities to absorb the 800 million farmers who will migrate to those cities. That's right, China plans to move 800 million farmers to existing and newly created cities. If they mechanise the countryside and achieve similar productivity levels to the US, they say, China will only need 100 million people in the rural sector.
When the nations of Central America hear about this they will be shaking in their (Chinese) boots. For years these countries have been working to hook their economies to the US market, with a particular emphasis on clothing and apparel exports. Beginning in the 1980s, most Central American nations set up export processing zones that export textiles and clothing to the United States. By 2001, 87% of all El Salvadoran exports to the US were from such zones. For Honduras, 78%, and Guatemala and Nicaragua each export 63% of their exports to the US were from export processing zones.
The capstone of such efforts was the Central American Free Trade Agreement between the US, Central American nations (excluding Panama) and the Dominican Republic (Cafta, for short). Cafta, by lowering tariffs and locking in access to the US economy, was supposed to solidify Central America as a clothing hub. Then China crashed the party.
In 2001, both China and Central America sold approximately $6.5bn worth of clothing exports to the United States, with each holding approximately 12% of the US market for clothing. In 2004, the year before Cafta went into effect and after China's WTO entry was in full swing, Central American exports to the US reached $7.5bn and China's were still in the same order of magnitude at $10.7bn.
Yet since Cafta went into effect, Central American exports of clothing to the US have fallen by 25%. How could this happen? Clothing exports to the US from Central America in 2009 were down from $7.5bn in 2004 to $5.6bn but China's were up to $24.3bn – a 127% increase for China since 2004. The Central American share of US clothing imports has declined to 8.7%. China now holds 38% of the US import market for clothing.
News of a Chinese labour shortage was thus very welcome in Central America. Central American nations, as well as Vietnam, India, Sri Lanka and some others would stand to gain. Hundreds of millions of "new" low-skilled workers however, could seal Central America's fate.
As Roberto Porzecanski and I argue in our forthcoming book on China and the future of industrial competitiveness in the Americas, these trends are not reason to point fingers at China. Rather than bashing the Chinese, Central Americans, not to mention nations such as Mexico that have chosen a "low-wage export to the US through free trade agreements" development strategy, developing nations should look to learn from China.
Both China and the Americas have been globalising their economies for 30 years. China has adopted a strategic and gradual approach to globalisation where the government plays a key role, the Americas have practised the Washington Consensus of rapid trade and investment liberalisation and yanking the governmentfrom economic affairs. China has turned out to be the best globaliser in the developing world.
guardian.co.uk © Guardian News and Media Limited 2010
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