Armen Posted July 27, 2004 Author Report Share Posted July 27, 2004 China, Taiwan, U.S. Display Might Exercises Are a Reminder of the Potential for Conflict Over the Island By Edward Cody Washington Post, July 27, 2004; Page A09 About 18,000 Chinese troops using their country's most advanced weapons systems last week rehearsed coordinated air, sea and ground attacks on Dongshan, an island in the South China Sea that resembles Taiwan in terrain and weather. At about the same time, Taiwanese pilots 185 miles northeast landed advanced Mirage 2000-5 fighters on a blocked-off freeway to practice what they would do if their air bases were hit during a Chinese missile assault on the disputed territory. Providing its own martial background music, the U.S. Navy staged a global readiness drill with seven carrier groups around the world to show that the United States could muster overwhelming force anywhere, including Taiwan, despite the war in Iraq. Asia's season of concurrent military exercises reached a high point with the Dongshan maneuvers. The activity provided a reminder that, although Iraq is the main focus of military conflict for the moment, the standoff over Taiwan remains one of the world's most dangerous flashpoints. The three governments involved, China, the United States and Taiwan, all insisted their military maneuvers were not timed to match those held by the others and should not contribute to the tension surrounding Taiwan. But their officials acknowledged that one purpose of holding such exercises was to demonstrate military resolve and ability to potential foes as well as friends. China's eighth annual exercises around Dongshan Island, which lies just off the mainland's southern rim, concluded Friday after a week of activity. The government-run China Youth Daily said the exercises were intended to allow the military to practice joint combat operations and show Taiwan's independence advocates that China has the power to back up its threat to recover the island by force, if necessary. In unusually detailed reporting on China's secretive military, the official newspaper said recently acquired Su-30 fighter jets, a Sovremenny-class destroyer and a Kilo-class submarine participated in the maneuvers. The drill, which coordinated different branches of the military, was designed to display the ability to seize air and sea dominance over Taiwan, the newspaper said. A U.S. military official said the Dongshan maneuvers showed "some enhancements this summer that we haven't seen before" in coordinating air, sea and ground forces, but that they did not mark a startling departure from past exercises. Taiwan's annual Hankuang exercises, which began Wednesday and are also scheduled to last a week, were unusual in that they opened with a landing by the two Mirage 2000-5's on Sun Yat-Sen Freeway in central Taiwan. According to reports from Taiwan, the landing was the first such use of the freeways since drills in the late 1970s. Pilots operating the French-built aircraft practiced refueling and re-arming with air-to-air missiles, simulating what they would do if they were called on to combat a Chinese air attack if their normal landing facilities were destroyed. In addition, the maneuvers included practice operations against a mock Chinese amphibious landing and against an airborne attack by Chinese paratroops. The Taiwanese maneuvers, although spectacular because of the freeway landings, seemed to have less real bearing on the island's defenses than a debate under way in the Legislative Yuan, or parliament, over a $16 million special budget allocated by President Chen Shui-bian's government for purchase of weapons from the United States. From among several weapons systems under consideration, PAC-3 advanced anti-missile defenses have been cited as the likely highest-priority purchase. The Bush administration has pressed Chen's government to devote more resources to defense, in particular for the PAC-3 system to counter approximately 500 short-range ballistic missiles that China has deployed along its southern shore just across the 100-mile Taiwan Strait. A recently issued Pentagon report on the Chinese military estimated that the Beijing government was adding about 75 missiles a year to the array as part of a general modernization program. The report said that China's defense spending has reached between $50 billion and $70 billion a year under the modernization program, ranking it behind only the United States and Russia. That estimate was considerably higher than the Chinese government's declared military budget for 2004, which reached $25 billion after an 11.6 percent increase from 2003. The United States' global exercises, Summer Pulse '04, have touched the Taiwan issue peripherally, according to U.S. officials. The operation, taking place through mid-August, was designed to show "global surge capability," or the ability to use force in several places at once even with 140,000 U.S. troops locked into Iraq, according to Navy Capt. John Singley, spokesman for the U.S. Pacific Command. Tao Wenzhao, deputy director of the American Studies Institute at the Chinese Academy of Social Sciences, said Chinese officials had been informed of the dimensions of Summer Pulse and were not alarmed. The subject did not arise in official conversations during a visit to Beijing last week by Adm. Thomas Fargo, the head of the Pacific Command, Singley said. But Fargo was told of China's growing frustration over Taiwan and what it fears is Chen's intention to push for independence during his second four-year term, which began May 20. The Bush administration's national security adviser, Condoleezza Rice, got a similar message when she visited here this month. Quote Link to comment Share on other sites More sharing options...
Armen Posted September 26, 2004 Author Report Share Posted September 26, 2004 Curtain Falls on China's 'Strongman' Era By Frank Ching Japan Times, Sep. 26, 2004 The decision by 78-year-old former President Jiang Zemin to step down as head of the Chinese Communist Party's Central Military Commission in favor of 61-year-old Hu Jintao, his successor as party and state leader, is a milestone in China's political development, marking as it does the completion of the first peaceful political transition in the 55-year history of the People's Republic of China. But now the hard work begins. The death of Chairman Mao Zedong in 1976 was followed by a palace coup in which his widow, Jiang Qing, and several of her closest political associates were arrested. This paved the way for Deng Xiaoping, who had twice been purged by Mao, to return to power by shunting aside Hua Guofeng, Mao's chosen heir. Deng scrapped class struggle, which had been so close to Mao's heart, and focused on economic development, which led to a period of rapid growth for China that is now in its 26th year. The pragmatic Deng tried to rid China of such practices as lifelong tenure in office and insisted on term limits and a retirement age. He picked first Hu Yaobang and then Zhao Ziyang as his political successor, but found each man too liberal for his taste. Finally, in the wake of the Tiananmen Square military crackdown, he chose Jiang Zemin to be leader of the third generation of the Chinese revolution. Deng also chose Hu Jintao as the leader of the fourth generation. Now, the transition from third to fourth generation is complete, having started in November 2002, when Hu took over from Jiang as party leader, followed by the presidency in 2003. The key question now is how the next leader of China is to be produced, since Deng is no longer with us and neither Jiang nor Hu is a strong man in the Deng mold who can single-handedly pick a new leader and make it stick. This means that Hu's successor, who will have to emerge within the next decade -- Hu cannot serve beyond 2013 as president even if he stays for a second term -- may well be chosen through a more democratic process or, at the very least, will be the result of a collective decision. While there are no term limits for party posts, Jiang has since assuming power insisted on retirement at the age of 70, even though that was a rule that he himself ignored. The era of strongman rule in China is over and a much more conventional process of choosing leaders and sharing power is at hand. No doubt, Jiang will still be influential but Hu will be much more his own man than he was before. There is unlikely to be immediate, major changes in policy. It is known that while Jiang favored development of coastal cities, Hu and Premier Wen Jiabao give more emphasis to developing the interior. But on issues like the United States, Taiwan or Hong Kong, there is unlikely to be major change, though Hu will have more flexibility in handling such issues than before. In foreign affairs, Hu may well be more assertive than Jiang, but that will be more a reflection of China's strength today vs. even 10 or 15 years ago. Hu will seek to maintain good relations with virtually all major powers, in particular the U.S. and Europe. However, the Taiwan issue will, as before, constrain the development of relations with Washington. Closer to home, attention will be paid to mending ties with major neighbors, such as South Korea and Japan. Relations with both countries have been strained recently because of differences over historical issues. China will also pay close attention to countries such as Russia, India and Australia. Jiang's retirement removes an anomaly because it contradicted the dictum that the party must control the gun. Over the last 15 years, Jiang had made significant contributions to China. His theory of the "three represents" is often ridiculed but it does help to justify allowing entrepreneurs into the communist party. Hu can now consolidate his position. The Central Committee, in addition to accepting Jiang's resignation, also said in a communique that it was vital for the party to enhance its ability to govern. In fact, the party earlier this month hosted a meeting of Asian political parties to draw on the experience of noncommunist ruling parties in Asia. Jiang's departure makes Hu's job of running a country of 1.3 billion people just a tad easier. Frank Ching is a Hong Kong-based journalist and commentator. Quote Link to comment Share on other sites More sharing options...
Armen Posted October 16, 2004 Author Report Share Posted October 16, 2004 FAR EASTERN ECONOMIC REVIEW U.S.-CHINA TRADE: Strategic Rivalries With the November 2 United States presidential election nearing, George W. Bush and John Kerry are both talking tough on China trade -------------------------------------------------------------------------------- By Susan V. Lawrence/WASHINGTON Issue cover-dated October 07, 2004 -------------------------------------------------------------------------------- WHEN ONE OF GEORGE W. BUSH'S point men on international trade, Undersecretary of Commerce Grant Aldonas, stood before an audience in Washington recently in his "personal capacity" to defend the United States president's record, he made sure he highlighted Bush's approach to China. Although the U.S. needs China's cooperation on issues ranging from North Korea to the war on terrorism, he said, Bush didn't flinch in setting a strategy last August of "holding China's feet to the fire" over implementation of its World Trade Organization (WTO) commitments. Aldonas then reeled off a list of achievements he said were due to that strategy. When Lael Brainard, a senior adviser to the campaign of Sen. John Kerry, Bush's challenger in the November 2 presidential election, followed Aldonas to the podium before the same American Enterprise Institute audience, she made sure to talk about China, too. Pillar three, she said, of Kerry's five-pillar strategy for improving the ability of Americans to compete in the global economy is "taking a proactive approach toward China." She assailed the Bush administration for waiting until March 2004 to file its first case against China at the WTO, and for waiting until December 2003 before agreeing to restrict imports of some kinds of Chinese textiles to protect U.S. producers. She also criticized the Bush administration for giving up leverage she said could have been used to pressure China to "stop manipulating its currency." The Bush administration, she charged, has been "turning a blind eye to the economic pain here at home." China is hardly a headline issue in America's presidential campaign. Iraq, the war on terrorism, the nebulous topic of "leadership," health care, and education all feature larger. Nonetheless, both the Bush and Kerry campaigns are eager to showcase their candidates as aggressive in demanding that China play by the rules in its trade relationship with the U.S. That China is the only country the two campaigns are talking about in any detail as they present their trade policies is testament to the impact China trade has had on the U.S. economy in the four years since the last presidential election. It is also testament to the broad public impression in the U.S. that China has not been playing fair. Two new reports from business groups assessing China's implementation of its market-access commitments made as a condition of its December 2001 entry into the WTO provide grist for the sparring. The reports, by the U.S. Chamber of Commerce and the U.S.-China Business Council, give China credit for significant progress over the past year in resolving outstanding compliance problems. That contrasts with 2003 when both groups "were sort of downcast in terms of how we assessed China's effort," says the U.S. Chamber's North Asia director, Jeremie Waterman. The more upbeat tone this year is a boost for the Bush administration, which can point to the progress as proof that its engagement with Chinese officials on trade disputes has paid off. But the reports also identify areas of continued concern, with poor enforcement of intellectual-property rights topping the list. For Asia, what's crucial is whether the two campaigns' tussling over China trade will make any difference to U.S. trade policy after the election. The Kerry campaign insists that when it comes to trade with China, Kerry will distinguish himself from the Bush administration in both strategy and substance. Seasoned observers of the U.S.-China economic relationship question, though, whether trade policy in a Kerry administration would really be so different. "Incumbent administrations tend to take the approach that Bush has taken, regardless of whether they're Democratic or Republican," says John Holden, president of the National Committee on U.S.-China Relations. "It seems like a dreary repetition of an old script" to have the challenger in a presidential campaign "portraying China as a national menace," says Robert Kapp, president of the U.S.-China Business Council. If Kerry wins, predicts Kapp, he will "spend the next year or more re-engaging in a productive relationship with China." That's especially likely, Kapp suggests, because of Kerry's strong record as a supporter of international trade. The biggest real change under a Kerry administration could be on the issue of China's currency, the renminbi. In speech after speech, Kerry has denounced China's "illegal currency manipulation," alleging that China is keeping the renminbi undervalued by 15%-40% as a way to depress the price of Chinese goods. Kerry says that unlike President Bush, he will employ all tools at his disposal to put concerted pressure on China to address the problem. The currency issue has strong popular resonance in the U.S., particularly in manufacturing states such as Ohio and South Carolina that have been hard-hit by competition from China, and that happen also to be swing states in the election. In testimony before a September 23 hearing in Akron, Ohio, convened by the congressionally-appointed U.S.-China Economic and Security Review Commission, Bruce A. Cain, president of a local firm, blamed China's currency policy squarely for the travails of his business and others in recent years. "We build a good quality mould, better than one from China and in the same time frame," he said of his firm, Xcel Mold and Machine Inc. "The issue comes down to price. China, having an unfair advantage because they refuse to float their currency, will continue to drive companies like ours out of business." The U.S. economic community is far from united, though, in recognizing the current renminbi-dollar valuation as a problem. Albert Keidel, an economist who specializes in China at the Carnegie Endowment for International Peace in Washington, dismisses charges that the renminbi is undervalued as "popular distortions encouraged by the loss of manufacturing jobs in the United States over the last three years." Keidel argues that the most important indicator of any imbalance would be a large surplus in global trade in goods and services. China's surplus, Keidel observes, is small. When a coalition of industry groups submitted a petition in early September arguing that China's exchange rate "unlawfully bolsters the Chinese economy at the expense of U.S. industry and production," the Bush administration immediately rejected it, in apparent defiance of election politics. "They've decided to leave themselves exposed," says James Steinberg, director of foreign-policy studies at the Brookings Institution in Washington and former deputy national-security adviser in the Clinton administration. "They've obviously made a judgment that this is not so big an issue." The administration's tack has been, instead, to argue that its engagement with China has helped persuade China to work toward a "flexible exchange-rate policy." Kerry also says he will be different from the Bush administration on China trade by being more ready to file cases against China at the WTO. Filing WTO cases, says Kerry campaign literature, "is not about litigation for litigation's sake." Rather, it is "a widely recognized way of helping reach negotiated solutions" and a way to show "the United States' seriousness about trade enforcement." For all the noise being generated by the two campaigns, most analysts believe it's unlikely that the China issue alone will sway many voters. In the last weeks of the presidential campaign, "China, most people are going to say, is out there, it's important," says the National Committee on U.S.-China Relations' Holden, "but nobody has an answer." Quote Link to comment Share on other sites More sharing options...
Armen Posted November 6, 2004 Author Report Share Posted November 6, 2004 http://www.atimes.com Middle East China Rocks the Geopilitical Boat TEHRAN - Speaking of business as unusual. A mere two months ago, the news of a China-Kazakhstan pipeline agreement, worth US$3.5 billion, raised some eyebrows in the world press, some hinting that China's economic foreign policy may be on the verge of a new leap forward. A clue to the fact that such anticipation may have totally understated the case was last week's signing of a mega-gas deal between Beijing and Tehran worth $100 billion. Billed as the "deal of century" by various commentators, this agreement is likely to increase by another $50 billion to $100 billion, bringing the total close to $200 billion, when a similar oil agreement, currently being negotiated, is inked not too far from now. The gas deal entails the annual export of some 10 million tons of Iranian liquefied natural gas (LNG) for a 25-year period, as well as the participation, by China's state oil company, in such projects as exploration and drilling, petrochemical and gas industries, pipelines, services and the like. The export of LNG requires special cargo ships, however, and Iran is currently investing several billion dollars adding to its small LNG-equipped fleet. Still, per the admission of the head of the Iranian Tanker Co, Mohammad Souri, Iran needed to purchase another 87 vessels by 2010, in addition to the 10 already purchased, in order to fulfill the needs of its growing LNG market. Iran has an estimated 26.6-trillion-cubic-meter gas reservoir, the second-largest in the world, about half of which is in offshore zones and the other half onshore. It is perhaps too early to digest fully the various economic, political and even geostrategic implications of this stunning development, widely considered a major blow to the Bush administration's economic sanctions on Iran and particularly on Iran's energy sector, notwithstanding the Iran-Libya Sanctions Act (ILSA) penalizing foreign companies daring to invest more than $20 million in Iran's oil and gas industry. While it is unclear what the scope of China's direct investment in Iran's energy sector will turn out to be, it is fairly certain that China's participation in the Yad Avaran field alone will exceed the ILSA's ceiling; this field's oil reservoir is estimated to be 17 billion barrels and is capable of producing 300 to 400 barrels per day. And this is besides the giant South Pars field, which Iran shares with Qatar, alone possessing close to 8% of the world's gas reserves. To open a parenthesis here, until now Tehran has been complaining that Qatar has been outpacing Iran in exploiting its resource 6-1. In fact, Iran's unhappiness over Qatar's unbalanced access to the South Pars led to a discrete warning by Iran's deputy oil minister and, soon thereafter, Qatar complied with Iran's request for a joint "technical committee" that has yet to yield any result. For a United States increasingly pointing at China as the next biggest challenge to its Pax Americana, the Iran-China energy cooperation cannot but be interpreted as an ominous sign of emerging new trends in an area considered vital to US national interests. But, then again, this cuts both ways, that is, the deal should, logically speaking, stimulate others who may still consider Iran untrustworthy or too radical to enter into big projects on a long term basis. Iran's biggest foreign agreement prior to this gas agreement with China was a long-term $25 billion gas deal with Turkey, which has encountered snags, principally over the price, recently, compared with Iran's various trade agreements with Spain, Italy and others, typically with a life-span of five to seven years. Thus some Iranian officials are hopeful that the China deal can lead to a fundamental rethinking of the risks of doing business with Iran on the part of European countries, India, Japan, and even Russia. Concerning India, which signed a memorandum of understanding with Iran initially in 1993 for a 2,670-kilometer pipeline, with more than 700km traversing Pakistani territory, the Iran-China deal will undoubtedly give a greater push to New Delhi to follow Beijing's lead and thus make sure that the "peace pipeline" is finally implemented. The same applies, mutatis mutandis, to Russia, which has as of late been dragging its feet somewhat on Iran's nuclear reactor, bandwagoning with the US and Group of Eight (G8) countries on the thorny issue of Iran's uranium-enrichment program. The Russians must now factor in the possibility of being supplanted by China if they lose the confidence of Tehran and appear willing to trade favors with Washington over Iran. Russia's Gazprom may now finally set aside its stubborn resistance to the idea of entering major joint ventures with Iran. Iran appears more and more interested to join the Shanghai Cooperation Organization (SCO) and form a powerful axis with its twin pillars, China and Russia, as a counterweight to a US power "unchained". The SCO comprises China, Russia, Tajikistan, Kazakhstan, Kyrgyzstan and Uzbekistan. China, Russia and Iran share deep misgivings about the perception of the United States as a "benevolent hegemon" and tend to see a "rogue superpower" instead. Even short of joining forces formally, the main outlines of such an axis can be discerned from their convergence of threat perception due to, among other things, Russia's disquiet over the post-September 11, 2001, US incursions in its traditional Caucasus-Central Asian "turf", and China's continuing unease over the Korean Peninsula and Taiwan; this is not to mention China's fixed gaze at a "new Silk Road" allowing it unfettered access to the Middle East and Eurasia, this as part and parcel of what is often billed as "the new great game" in Eurasia. Indeed, what China's recent deals with both Kazakhstan (pertaining to Caspian energy) and Iran (pertaining to Persian Gulf resources) signifies is that the pundits had gotten it wrong until now: the purview of the new great game is not limited to the Central Asia-Caspian Sea basin, but rather has a broader, more integrated, purview increasingly enveloping even the Persian Gulf. Increasingly, the image of the Islamic Republic of Iran as a sort of frontline state in a post-Cold War global lineup against US hegemony is becoming prevalent among Chinese and Russian foreign-policy thinkers. For the moment, however, the Iran-Russia-China axis is more a tissue of think-tanks than full-fledged policy, and the mere trade interdependence of the US and China, as well as Russia's growing energy ties to the US alone, not to mention its weariness over any perceived Chinese "overstretch", militate against a grand alliance pitted against the Western superpower. In fact, the Cold War-type alliances are highly unlikely to be replicated in the current milieu of globalization and complex interdependence; instead, what is likely to emerge in the future are issue-focused or, for the lack of a better word, issue-area alliances whereby, to give an example, the above-said axis may be inspired into existence along geostrategic considerations somewhat apart from purely economic considerations. Hence what the SCO means on the security front and how significant it will be hinges on a complex, and complicated, set of factors that may eventually culminate in its expansion, from the current group of six, as well as greater, alliance-like, cooperation. It is noteworthy that in Central Asia-Caucasus, the trend is toward security diversification and even multipolarism, reflected in the US and Russian bases not too far from each other. In this multipolar sub-order, neither the US is capable of exerting hegemony, nor is Russia's semi-hegemonic sway without competition. In the Caspian Sea basin, for example, Kazakhstan has opted to take part in several distinct, and contrasting, security networks, including the North Atlantic Treaty Organization's Partnership for Peace program, the Commonwealth of Independent States' Collective Security Organization, the SCO, and membership in OSCE (Organization for Security and Cooperation in Europe). Kazakhstan is not, however, an exception, but seemingly indicative of an expanding new rule of the (security and strategic) game played out throughout Central Asia-Caucasus. Economically, both Kazakhstan and Russia are members of the Central Asia Economic Cooperation Organization, and all the Central Asian states are also members of the Economic Cooperation Organization (ECO), which was founded by the trio of Iran, Turkey and Pakistan. Certain economic alliances are, henceforth, taking shape, alongside the budding security arrangements, which have their own tempo, rationale and security potential. Concerning the latter, in 1998, the ECO embarked on low security cooperation among its members on drug trafficking and this may soon be expanded to information-sharing on terrorism. Also, Iran has also entered into low security agreements with some of its Persian Gulf neighbors, including Saudi Arabia and Kuwait. The SCO initially was established to deal with border disputes and is now well on its way to focusing on (Islamist) terrorism, drug trafficking and regional insecurity. Meanwhile, the US, not to be outdone, has been sowing its own bilateral military and security arrangements with various regional countries such as Azerbaijan, Tajikistan, Kyrgyzstan and Uzbekistan, as well as promoting the Guuam Group, which includes Azerbaijan and Georgia, formed alongside the BTC (Baku-Tiblisi-Ceyhan) pipeline as a counterweight to Russian influence. Consequently, the overall picture that emerges before us is, as stated above, a unique multi-trend of military and security multipolarism defying the logic of Pax Americana. In this picture, Iran represents one of the poles of attraction, seeking its own sphere of influence by, for instance, entering into a military agreement with Turkmenistan in 1994, and, simultaneously, exploring the larger option of how to coalesce with other powers in order to offset the debilitating consequences of (post-September 11) unbounded Americanization of regional politics. A glance at Chinese security narratives, and it becomes patently obvious that Beijing shares Iran's deep worries about US unipolarism culminating in, as in Afghanistan and Iraq, unilateral militarism. Various advocates of US preeminence, such as William Kristol, openly write that the US should "work for the fall of the Communist Party oligarchy in China". Unhinged from the containment of Soviet power, the roots of US unilateralism, and its military manifestation of "preemption", must be located in the logic of unipolarism, thinly disguised by the "coalition of the willing" in Iraq; the latter is, in fact, as aptly put by various critics of US foreign policy, more like a coalition of the coerced and bribed than anything else. But, realistically speaking, what are the prospects for any regional and or continental realignment leading to the erasure of US unipolarism, notwithstanding the US military and economic colossus bent on preventing, on a doctrinal level, the emergence of any challenger to its global domination now or in the future? The strategic debates in all three countries, Russia, China and Iran, feature similar concerns and question marks. For one thing, all three have to contend with the difficulty of sorting the disjunctions between the different sets of national interests, above all economic, ideological and strategic interests. This aside, a pertinent question is who will win over Russia, Washington, which pursues a coupling role with Moscow vis-a-vis Beijing, or Beijing, trying to wrest away Moscow from Washington? For now, Russia does not particularly feel compelled to choose between stark options, yet the situation may be altered in China's direction in case the present drift of US power incursions are heightened in the future. The answer to the above question should be delegated to the future. For now, however, the quantum leap of China into the Middle East and Caspian energy markets has become a fait accompli, no matter how disturbed its biggest trade partner, the US, over its geopolitical ramifications. Kaveh L Afrasiabi, PhD, is the author of After Khomeini: New Directions in Iran's Foreign Policy (Westview Press) and "Iran's Foreign Policy Since 9/11", Brown's Journal of World Affairs, co-authored with former deputy foreign minister Abbas Maleki, No 2, 2003. He teaches political science at Tehran University. Quote Link to comment Share on other sites More sharing options...
MJ Posted November 6, 2004 Report Share Posted November 6, 2004 Isn’t it a mind bugling deal manifesting the arrival of new world paradigms? Assuming, certainly, it will go through and be executed. Another interesting and not an uncharacteristic observation in this article (and I largely disagree with the analysis of the article) is that the European Union, at least as a relevant world economy, is nowhere to be found. That is inline with what I would project the wiping out of the foundations of economic strength of the so-called European Union with the advancement of the Chinese phenomenon. Quote Link to comment Share on other sites More sharing options...
Armen Posted November 6, 2004 Author Report Share Posted November 6, 2004 (edited) I agree. I would add that this deal (and the article) is more a political manifestation than a possibility of an economic reality. There are a number of similar deals like Kazakh-Chinese pipeline, Russian - Japanese oil project in Far East, Russia - India - Iran ( the so-called North - South project) that exists because of the larger geopolitical game in the region. The interseting part however is that China has finally trown the glove and is fully entering the Great Game. Let's see if the U.S. will be able to pick it up with uncertainty in Iraq and hostile Europe. Edited November 6, 2004 by Armen Quote Link to comment Share on other sites More sharing options...
MJ Posted November 6, 2004 Report Share Posted November 6, 2004 I think the glove is thrown not into US face but EU. US and China are strategic partners for the long run. Quote Link to comment Share on other sites More sharing options...
Armen Posted November 6, 2004 Author Report Share Posted November 6, 2004 I think the glove is thrown not into US face but EU. US and China are strategic partners for the long run. style_images/master/snapback.png The U.S. - China alliance has a very high probability, as you noticed in the long run. However, for the time being numerous think tanks, both the U.S. and the Chinese governments, as well as those concerned in the business world are "praying" to see the Taiwan issue get resolved. At this moment Taiwan issue has reached a very dangerous threshold. The deepening of U.S. - Chinese relations is impossible without this solution. Also, if U.S. formes this allience, it will inevitably lose Japan as an ally, which will revise its constitution and become a full fledged military player. A counter Russo-Japanese alliance (note: the Russian - Japanese oil pipeline project) is possible in this case. This will bring Eurasia back to the traditional situation of European - Japanese cooperation through Russia with Europe being a less active player. Also, the European invetments in Chinese economy (German and Freinch inparticular) are significant enough to prevent China from direct conforntation with EU. Recent visit by Chirac to China comes to prove this. However, if the Taiwan issue is resolved the cooperation between U.S. and China will gain another momentum. In this case all the existing big projects will be realized in high speed. Quote Link to comment Share on other sites More sharing options...
MJ Posted November 6, 2004 Report Share Posted November 6, 2004 (edited) The US policy in the issue of Taiwan has always been clear – One China Policy - however resolution of this goal through peaceful means. Only two-three weeks ago the US State Department made yet another such statement, leaving Taiwan at unease. I don’t see problems with Japan. Japan will come along as well and quite readily. As to the Russian-Japan oil pipeline, oil or any single commodity does not shift political paradigms from one pole to another. Oil is an international commodity and there is international market for it. Whether from Russia or elsewhere, Japan and others will buy oil at more or less the same price – if to discount variety of transportation and storage costs. The important thing is that adequate volume of oil be dumped in international markets – it doesn’t meter where it comes from and where it goes. It is as simple as global demand and supply equilibrium settled according to what is called Dutch Auction in the economic literature. I also think Russia will be a junior partner in any major development – one foot in Europe and another one in Asia. And this is consistent with its geographic span. As to France and Europe investing in China, why not? Who is against it? But before Europe may have any substantiated claims in global economy it has to yet prevent the steady and potentially rapid downfall of its economy and the crash of its currency largely resulted from the deregulation of the Chinese currency. Edited November 6, 2004 by MJ Quote Link to comment Share on other sites More sharing options...
Armen Posted November 6, 2004 Author Report Share Posted November 6, 2004 (edited) The US policy in the issue of Taiwan has always been clear – One China Policy - however resolution of this goal through peaceful means. Only two-three weeks ago the US State Department made yet another such statement, leaving Taiwan at unease. That is the problem. Leaving Taiwan at unease makes them search for alternative partners and ways. Moreover, Taiwan's current government are extreme nationalists, who are advocating the "Taiwanesation" of the Taiwan (as opposed to Chinese sentiments of the former Kuomingdang), which makes China go ballistic. The 2008 Beijing olympics are gradually forming a subconscious threshold for solveing the problem in all the three capitals. Also, Taiwan's current presidnet clearly understands that if Taiwan has a chance to make the move to independence the window of opportunity is the two years prior to the olympics becuase Beijing will have the international constranits of extreme military actions because of largesacle preparation to make the 2008 olympics a show of China's comeback to the world stage as a global civilization. So, Taiwan's current elite has tremendous pressure of effective decision-making. Moreover, they clearly understand that at some point the U.S. may choose to sell them out. This makes them move closer to Japan, which acts as an independent player in this situation. By selling out Taiwan U.S. will compromise all its credibility as a reliable ally in the region, which will force other regional U.S. allies to chose China more for their security arrangements. This will inevitable move China into a central position in Asia, which U.S will not tolerate because China is not going to act like a U.S. regional proxy as e.g. Britain does in Europe. So, the situation may go the wronge way. Althouth this last few years the Bush administration was very skillful in handelling the situation. I don’t see problems with Japan. Japan will come along as well and quite readily. As to the Russian-Japan oil pipeline, oil or any single commodity does not shift political paradigms from one pole to another. Oil is an international commodity and there is international market for it. Whether from Russia or elsewhere, Japan and others will buy oil at more or less the same price – if to discount variety of transportation and storage costs. The important thing is that adequate volume of oil be dumped in international markets – it doesn’t meter where it comes from and where it goes. It is as simple as global demand and supply equilibrium settled according to what is called Dutch Auction in the economic literature. The Russian - Japanese pipeline has a very high political motive. (Actually, it was to be built to China by Yukos, but Yukos was removed from the contract). China lobbied havily to get the pipeline but didn't get it and was very much frustrated by the fact that Japan got primary role in the project by commiting to pay a large sum. The Chinese wanted the pipelinge to pass through their territory so that they control the access. But Japan reversed the direction to the port of Nakhodka where Japan, Korea and China will have an equal access. This shows exactly how much Japan is worried by the increasing role of China in the region. As for the Japanese capabilities, I believe they have the means to defend themselves agaist any country without the U.S. assistance if they have an independent access to oil. Currently, the U.S. and Singpour contol the Asian access to Middle East oil by controling the Malaca channel. I also think Russia will be a junior partner in any major development – one foot in Europe and another one in Asia. And this is consistent with its geographic span. Russia will be a junior partner only if its positions in the Caucasus are kept relatively large. Large enough to keep calm the population. If it is out of Caucasus I don't know what will be the reaction. It may go either way. We may well see another revolution. As to France and Europe investing in China, why not? Who is against it? But before Europe may have any substantiated claims in global economy it has to yet prevent the steady and potentially rapid downfall of its economy and the crash of its currency largely resulted from the deregulation of the Chinese currency. style_images/master/snapback.png I agree, Europes role is going to diminish if they do not reverse the current course of events. Edited November 6, 2004 by Armen Quote Link to comment Share on other sites More sharing options...
MJ Posted November 6, 2004 Report Share Posted November 6, 2004 When you talking about “US selling out Taiwan,” I don’t understand it. US policy has always been that Taiwan has to go back to China – only peacefully. And it will happen the same way it happened with Hong Kong, where there were enough nationalistic agendas as well. The issue will be resolved, I think, as China makes further progress towards free markets, and Taiwan understands that either she can be isolated from the economic perspective or may become part of world’s fastest growing economy. Basically, I am claiming that it would be recognized that the strategy of “carrot” would produce better results than that of a “stick.” As we know, getting pipeline pass through your territory or not (see Armenia) doesn’t change the big picture political paradigms. I would not interpret Japan’s worries as concern about China’s control in the region, which is there whether pipeline or not, but the additional tariffs that China might have imposed for transportation, thus increasing the final price of oil. I think Asia also will organize into a block with no trade, labor and other barriers, and sooner or later, China will enter it, erasing any concerns that Japan may have or making them irrelevant. The control of a channel matters only under circumstances of a war – actual or economic – where economic embargo is imposed by virtue of closing the channel. This may lead to unpredictable and undesirable results contrary to US interests (in the case of the Malaca channel) results. One example is the closing of the Suez channel by Egypt for the Israeli ships, which resulted in the 1968 war. I don’t think Egypt and others on her side liked the results. As to Europe's reversal of the current "events," I don't see it happening without trmendous shocks due to the socio-cultural layout of the European reality. Even if they would reverse, by some magic, the "events," the "train would have long left the station," and all they would need to do would be to catch up. Quote Link to comment Share on other sites More sharing options...
Armen Posted November 6, 2004 Author Report Share Posted November 6, 2004 (edited) When you talking about “US selling out Taiwan,” I don’t understand it. US policy has always been that Taiwan has to go back to China – only peacefully. And it will happen the same way it happened with Hong Kong, where there were enough nationalistic agendas as well. The issue will be resolved, I think, as China makes further progress towards free markets, and Taiwan understands that either she can be isolated from the economic perspective or may become part of world’s fastest growing economy. Basically, I am claiming that it would be recognized that the strategy of “carrot” would produce better results than that of a “stick.” U.S. has made a stratagic commitment by the Taiwan Relations Act (see here: http://www.fas.org/news/taiwan/taiwact.htm). Note the relevant points in Sec. 2: It is the policy of the United States-- (5) to provide Taiwan with arms of a defensive character; and (6) to maintain the capacity of the United States to resist any resort to force or other forms of coercion that would jeopardize the security, or the social or economic system, of the people on Taiwan. The U.S. official policy is to agree every peaceful agreement by the sides and prevent forceful resolution of the problem by Beijing. This is a well known commitment by the U.S. If the U.S. changes it to favor Beijing it will be an obvious "sell out" and will incease China's role in the region to a status of a regional dominating power. The Hong Kong situation was different legaly. There was a document signed between China and Britain giving the right of sovereignity over Hong Kong to the UK for 99 years. When that period ended China claimed it rights over the territory. Hong Kong has never been independent. On the contraty, Taiwan had a seet in the UN until 1971 when its seet was given to China, in return to a secret US-China alliance against the USSR (Nixon vist, Kissinger negotiations etc.). But it has been very hard for the U.S. to move any further from Taiwan because of the Taiwanese lobby in the Congress as well as strong Pentagon interest to sell weapons to Taiwan. MJ, you're right in predicting the further reforms in China and Taiwan's subsequent realization that it is not worth the fight because they are escencially Chinese. But this all will happen if the current deadlock is resolved. Democratic system sometimes has negative impact on a peace process. And this is the case in Taiwan right now. If the nationalists would not be voted into power both in 2000 and 2004 (this last election being questionable) I would agree with you. As we know, getting pipeline pass through your territory or not (see Armenia) doesn’t change the big picture political paradigms. I would not interpret Japan’s worries as concern about China’s control in the region, which is there whether pipeline or not, but the additional tariffs that China might have imposed for transportation, thus increasing the final price of oil. I think Asia also will organize into a block with no trade, labor and other barriers, and sooner or later, China will enter it, erasing any concerns that Japan may have or making them irrelevant. The control of a channel matters only under circumstances of a war – actual or economic – where economic embargo is imposed by virtue of closing the channel. This may lead to unpredictable and undesirable results contrary to US interests (in the case of the Malaca channel) results. One example is the closing of the Suez channel by Egypt for the Israeli ships, which resulted in the 1968 war. I don’t think Egypt and others on her side liked the results. Japan's situation is different from Armenia. Japan has an already developed economy and it cannot decrease its capacity (I am sure there is an academic term for this in economics) without a huge social cataclizm. To the contrary Armenia's development was never tied to increasing amount of oil needs because the nuclear plant fuels the limited industrial "growth". Japan has always been very sensetive to political pressures resulting from its oil needs. Althought it has a big reserve of oil and gaz, a single speculation of possible unstability in oil and LNG delivery will galvanize its price in Japan anytime. Japan has built lot of nuclear plants because of this. Nonetheless, they still have huge dependence on oil and gaz deliveries. Japanese government will not be permitted by its business to put the price of oil in Japan in any other country's hands. If the Asean Free Trade agreement advances in a way where Japan has an equal say that may happen. However, in any scenario of economic balance with China, Japan will seek to develop its military (or rather to display because it is there) capability in full fledge which will mean that the U.S. is out of the region as a seller of security. As to Europe's reversal of the current "events," I don't see it happening without trmendous shocks due to the socio-cultural layout of the European reality. Even if they would reverse, by some magic, the "events," the "train would have long left the station," and all they would need to do would be to catch up. style_images/master/snapback.png I agree with this. Edited November 6, 2004 by Armen Quote Link to comment Share on other sites More sharing options...
Armen Posted November 6, 2004 Author Report Share Posted November 6, 2004 The control of a channel matters only under circumstances of a war – actual or economic – where economic embargo is imposed by virtue of closing the channel. This may lead to unpredictable and undesirable results contrary to US interests (in the case of the Malaca channel) results. One example is the closing of the Suez channel by Egypt for the Israeli ships, which resulted in the 1968 war. I don’t think Egypt and others on her side liked the results. style_images/master/snapback.png In case of war the control of channels becomes vital and cricial. However, in peaceful times there is always lot of maneuvring around channels. In Taiwan;s case there also exists the factor of Taiwanese Straits being the easies and direct way of oil and goods transportation from and to Japan from the Indian ocean. When China started shooting missiles into the Taiwanese Straits in March 1996 to prevent the Taiwanese public of electing a nationalist president (and the succeded) the business life in all Far East virtually stopped for two weeks or so. Also, the state of Sigapour was created with deliberation to keep any country (Malasia and Indonesia particularly) of aqcuiring dominating status over the Malaca Straits. I would also mention that Turley has always used Bosfor as a asset to skillfuly manipulate Russia. At some point they even increased the viability of Baku-Cheihan by closing Bosfor for some days under some environmantal pretext. Quote Link to comment Share on other sites More sharing options...
Armen Posted November 6, 2004 Author Report Share Posted November 6, 2004 http://www.vic-info.org/images/taiwanrap.gif Quote Link to comment Share on other sites More sharing options...
MJ Posted November 7, 2004 Report Share Posted November 7, 2004 Don’t you think that if the business elite of Hong Kong would have not seen the “light at the end of the tunnel,” despite all legal and pseudo-legal (since 99 years is a whole a lot of time for a legal paper to be of relevance if there is no adequate will) could have stalled the process and done everything possible to at least dragl the process of integration? As to US selling weapons to Taiwan, I cannot take such argument at its face value. Nor I can buy the argument about certain lobbies’ power. The lobbies’ power stops where the US national interests come to the play. And the Taiwanese lobby is a very small player in such a big “game.” Did Armenia choose to downscale its economy? Didn’t the whole ordeal imply a tremendous cost for the Armenian economy? Also, in case of Armenia, it was not the oil pipeline that forced the Armenian economy to go into a downfall (which may still continue) but the implications along the lines of Armenia’s isolation from the regional processes and the prevention of her assertion of the role of a subject of international politics. Also, why would Russia mind supplying oil to China? If the reserves are there and the need for supply continues growing in China, what’s Russia’s problem? Wouldn’t she be happy to build another pipeline to China? ( As a side note, LNG continues to play relatively small role in world markets and it will take years for it to become a viable source of energy. For now, it is very expensive. ) I don’t think that the Japanese military is of much consequence. I also think that at the end of the day, governments of non-ideological countries are very rational. So, I think the rationality will prevail – be it in China or Japan. Why would US be interested in “selling security” if there would be no need for such? Why would US not be interested in security and stability everywhere and sell, rather, the primary products where she has advantage – intellectual and industrial expertise and know how? And besides, why to sell something to Japan if Japanese voluntarily and [immensely] invest inside the US, thus helping the development of the US economy? Perhaps the same can be said about China. The world is changing rapidly and the stereotypes of 50s or even 70s shed no light on what is going on today and where the world us headed. About the straits… Just looking at the map you have referenced and visualizing the Bosforus strait, wouldn’t you agree that we are talking here about two very different landscapes – one which encompasses international waters, and another one which is confined within territorial waters? Furthermore, why does US need to “control” the Malaca strait if it is not for guaranteeing the free passage there? What strategic interest does US have in blocking it? So that no one gets dominating status in any straits and free passage based on fair commercial rules is guaranteed to every one, don’t we need that infamous New World Order ? Also, wouldn’t you agree that the environment was/is not a merely “pretext” in Bosforus but a real issue? Otherwise, what’s the difference for Turkey whether the oil will flow through its territory through land or water? Are the tariffs less in one case compared to other? P.S. I have to jump out of this conversation and just relax, since tomorrow have to start writing something which is of more tangible consequence to me. Quote Link to comment Share on other sites More sharing options...
Armen Posted November 7, 2004 Author Report Share Posted November 7, 2004 Lot of valid questions, which I will take time to think about. I have answers to some of them. But the Taiwan Relations Act is still there Quote Link to comment Share on other sites More sharing options...
MJ Posted November 7, 2004 Report Share Posted November 7, 2004 Will read some other time. Quote Link to comment Share on other sites More sharing options...
Armen Posted December 2, 2004 Author Report Share Posted December 2, 2004 China’s encroachment on America’s backyard http://www.isn.ethz.ch/infoservice/sw/details.cfm?ID=10249 Hu's whirlwind tour of Brazil, Argentina, Chile, and Cuba has illustrated the extent to which Beijing can exploit the less-than-cozy relations between the US and Latin America to establish major economic and energy footholds in Washington's backyard. By Willy Lam for The Jamestown Foundation (29/11/04) Call it "Operation American Backyard", Hu Jintao's first trip to Latin America as president is emblematic of the fact that China's power projection has reached the furthest corners of the world - including Latin America, the United States' largely neglected backyard. Hu's fortnight-long journey involves much more than the Chinese supremo's participation in the annual Asia-Pacific Economic Cooperation forum in Santiago, Chile - more than even the much-awaited summit last Friday between Hu and President George W. Bush on the sidelines of the APEC Head of States conclave. Firstly, Hu's historic Latin American tour, which included Brazil, Argentina and Cuba, underscores the fact that "energy diplomacy" has become top priority for Chinese foreign and security policy in the wake of the spike in oil prices and continued instability in the Middle East. Secondly, the remarkable trip made by Hu not long after he became China's commander-in-chief last September has confirmed that Chinese foreign policy has entered a new era of activism, including a more assertive role in far-flung areas such as Africa and Latin America. Some diplomatic analysts have even seen in the leaps-and-bounds developments in Sino-Latin American ties the beginnings of the "Sinicization of Latin America". It is true, of course, that no Chinese cadre would say openly that China is taking on the US in its backyard. Yet the diplomatic analysts view the some 400 agreements and business deals notched up by Hu and his entourage of businessmen as pretty much amounting to a challenge to the 1823 Monroe Doctrine, which implies that Central and Latin America lie within Washington's "sphere of influence". Steering clear of direct confrontation A Beijing source close to the Chinese diplomatic establishment said owing to the huge gap between the military might of China and the US, the Hu leadership would continue to steer clear of direct confrontation with Washington. However, he said advisers to the Hu leadership were convinced that in terms of the scramble for oil and other resources, competition between major powers such as China, the US, Japan, and India has already reached fever pitch. "Before the 11 September 2001 terrorist attacks, Bush had characterized the US and China as strategic competitors," the source added. "While Sino-US rivalry has been sidetracked thanks to their cooperation in fighting terrorism, experts in both Beijing and Washington realize that the two countries are bound to intensify their jockeying for position in the field of securing scarce resources." On the front of energy and resources, Latin America presents a bonanza for China in the areas of oil and gas, iron ore, agriculture produce such as beef and soya bean, and other items. The "all-weather strategic partnership" that Hu was able to cement with Brazil last week was especially noteworthy. The Brazil state oil firm, Petrobras, expected that China would this year become the third-leading destination of Brazilian crude exports, with shipments of about 50’000 barrels per day. At the same time, the Chinese state oil company Sinopec invested US$1 billion in a joint venture with Petrobas for the construction of a gas pipeline linking south to northeast Brazil. Other deals the Chinese have recently signed included iron ore shipments from Companhia Vale do Rio Doce (CVRD), one of the world's largest mining concerns, for Shanghai's famous Baoshan Steel Mill. China's influence in the entire region has expanded owing to a dizzying array of new investments in not only mines and oilfields, but infrastructure and transport. Cumulative capital outlay has exceeded US$4 billion. Last year alone, Chinese state-owned enterprises (SOEs) pumped US$1.04 billion into the region, accounting for 36.5 per cent of Latin America's foreign direct investment (FDI). Yet this figure has been dwarfed by what Hu and his delegation of state entrepreneurs pledged last week. The Chinese vowed to plough in US$100 billion in the coming ten years. For instance, in Argentina alone, the SOEs are due to invest US$19.7 billion in the coming decade in mines, railroads, and other infrastructure projects. ‘Solidarity with the world’ In his tightly packed tour, Hu also flashed the "solidarity with the developing world" card. In addresses to the parliaments of Brazil and Argentina, the Chinese President stressed that his country would "forever stay on the side of developing countries." Hu noted that China would spare no effort to help build a multi-polar world order - "a democratic international order as well as a multiple [approach] to development models". This seemed a not-so-subtle dig at the unilateralism, if not "neo-imperialism", supposedly pursued by the Bush administration. More significantly, China's global clout is such that the Hu leadership is in a position to back up its rhetoric about helping Latin America with concrete economic and diplomatic gestures. Apart from FDI, Beijing has pledged to do what it can to promote the international status of large countries such as Brazil. Thus, China has lent support to Brazil's bid for a place in an expanded UN Security Council. Brazil's competitors include Japan - whose candidacy is supported by the US - and India. Again, the subtext of the special relationship that Beijing has been trying to forge with Brasilia is that if Brazil feels that its economic and political aspirations have been adversely affected by the giant shadow cast by the US, China is ready to extend a helping hand. In return for its largesse, Beijing will have assured supplies of oil and gas, minerals ranging from gold to nickel, as well as agricultural produce. This is despite the much longer distance involved in shipping over the goods to China. Moreover, Latin American countries including Brazil, Argentina, Chile, and Peru last week agreed to recognize China's "full market economy status" (FMES). So far, some two-dozen countries have accepted the Middle Kingdom's FMES, and Beijing is poised to put more pressure on the EU to do the same. Recognition of this status would enable China to better defend itself against charges of dumping that may be raised by its trading partners. Friends, brothers, and pariahs Beijing's much higher profile in this far-off region is also set to yield a Taiwan-related bonus. The Hu leadership is convinced that as China's influence grows, it will be well positioned to persuade practically all Central and Latin American countries to dump Taiwan. Already, the 13 Central and Latin American countries that still recognize Taipei are facing intense pressure from their businessmen, who are barred from the lucrative China market because of the Taiwan factor. The next country in this region that may switch recognition from Taiwan to China may be El Salvador. Recently, the El Salvador Foreign Minister Francisco Lainez admitted that his country was considering establishing diplomatic links with China owing to lobbying by the local business community that was anxious to profit from the China market. Over the long term, China's Latin-American offensive could have a negative impact on Sino-US relations. This is despite the fact that the Bush-Hu tête-à-tête last week was generally successful. Hu said after the brief meeting that he appreciated Washington's one-China stance - and vowed to work closer with the Bush White House in the coming four years to promote a "constructive, cooperative relationship" with the US. And Bush praised Chinese cooperation in the global war against terrorism, particularly Beijing's contribution to a possible resolution of the North Korean nuclear crisis. Hu's whirlwind tour of Brazil, Argentina, Chile, and Cuba the past week or so, however, has illustrated the extent to which Beijing can exploit the less-than-cozy relations between the US and Latin America to establish major economic and energy footholds in Washington's backyard. The Bush White House certainly does not want to see Beijing boosting its influence in countries such as Venezuela and Cuba, whose leaderships have thumbed their nose at Washington. Beijing's apparent success in securing oil supplies from Venezuela could undercut that country's crude exports to the US. And ever more intimate economic cooperation between China and Cuba will hurt the ability of the Bush administration to put pressure on the Fidel Castro regime through the imposition of sanctions. Indeed, in his meeting with a wheelchair-bound Castro earlier this week, Hu rhapsodized over the fact that China and Cuba were "not only friends, but brothers". The Chinese president then vowed to boost economic and technological aid to the pariah state. Quote Link to comment Share on other sites More sharing options...
Armen Posted January 4, 2005 Author Report Share Posted January 4, 2005 http://www.rand.org/commentary/111004AWSJ.html Commentary A Tale of Two Economies By Charles Wolf, Jr. -------------------------------------------------------------------------------- This commentary appeared in Asian Wall Street Journal on November 10, 2004. -------------------------------------------------------------------------------- Despite their huge differences, the Chinese and American economies share one common characteristic that is both a short-run problem and a long-run opportunity: rising labor productivity. In the U.S., election-year political rhetoric was directed at the so-called “jobless recovery” but ignored the fact that this problem, insofar as it exists, is largely due to rising labor productivity rather than to “outsourcing” of jobs abroad. Similarly, much of the criticism of China's limited ability to create sufficient new job opportunities has ignored the fact that these limits are due largely to rising labor productivity. Both the Chinese and American economies have generated rates of growth in labor productivity (measured as output per employed worker, or per hour worked), substantially above their previous performance. In China, for the period from 1998 to 2003, increases in labor productivity have been nearly 7%, the highest among the world's major economies. In the United States, annual increases in labor productivity in the same period have averaged between 3% and 3.5%, the highest among the major industrialized economies, including Japan and Germany. Rising labor productivity is a powerful contributor to economic growth and social progress. It drives the demand for labor, tending to boost wages and to raise profitability of capital. In the process, business investment and consumer spending are stimulated, and these in turn contribute to economic growth. At the same time, rising labor productivity reduces the amount of new employment created by economic growth. For example, if gross domestic product in the U.S. grows at an annual rate of 4% (the current U.S. growth rate) while labor productivity increases at an annual rate of 3%, then the rate of new job creation in the U.S. will not exceed 1%. This 1% increase amounts to approximately 1.4 million net new jobs annually, which is about 500,000 fewer jobs than the normal increase in the number of new entrants into the labor market each year. Higher labor productivity thus reduces the capacity of aggregate economic growth to generate new jobs. China has an analogous problem. While China's annual rate of GDP growth has averaged between 8% and 9% in the 1998-2003 period, annual growth in labor productivity has also been extraordinarily high: nearly 7%. The result has been to cap creation of new jobs at 1-2% of existing employment, about 10 million new jobs annually. This figure, although substantial, pales when compared with the total number of China's unemployed and underemployed labor. According to China's official statistics, registered unemployment rose to 4% from 3% of the urban labor force in the past five years, rates that are remarkably low compared with other countries. But these figures conceal as much as they reveal. When proper allowance is made for “unregistered” urban unemployment (for example, the number of itinerant migrant workers from rural areas has been estimated as over 100 million) and “disguised” rural unemployment (labor that, while nominally employed, does not add to output), China's actual unemployment soars to 23% of the labor force, about 168 million workers. In the short run, there is a tension between the goals of raising GDP growth, creating additional jobs, and increasing labor productivity. Notwithstanding the many and major differences between the U.S. and Chinese economies, rising labor productivity in both countries means that fewer new jobs result from any realized rate of economic growth than would result if productivity growth were slower. In the midterm and long run this tension is mitigated by the self-corrective effects of competitive markets: higher labor productivity generates additional demand for labor, boosting employment and economic growth. Yet these long-term effects provide limited comfort for policymakers and households anxious for employment to be expanded here and now. While bearing in mind the long-run prospects, both China and the U.S. should formulate policies that reflect the complex interactions among economic growth, labor productivity and new employment opportunities. Although the public-sector bureaucracies of both China and the U.S. — especially those of China — are swollen and should be streamlined, it probably makes sense in the short run to moderate reductions in these relatively low-productivity public-sector jobs. Investments by China in health-services delivery, in preventing and controlling epidemic disease, and in countering the country's serious air- and water-pollution problems can contribute to advancing economic growth and improving quality of life without appreciable effects on labor productivity in the near term. What is best in the short run may not be best in the long run, and vice versa. This point carries with it a particular message for China's policymakers: a higher rate of aggregate economic growth may not always be preferable to a lower rate. Annual growth of 7%, together with labor productivity growth of 3%, may be preferable to aggregate growth of 9% with accompanying growth in labor productivity of 7%, because the former combination will generate more new employment. -------------------------------------------------------------------------------- Mr. Wolf is a senior economic advisor and corporate fellow in international economics at the RAND Corporation and a senior research fellow at the Hoover Institution. Quote Link to comment Share on other sites More sharing options...
Armen Posted February 4, 2005 Author Report Share Posted February 4, 2005 Tian Mimi Performed by Teresa Tang. Enjoy Quote Link to comment Share on other sites More sharing options...
Armen Posted February 9, 2005 Author Report Share Posted February 9, 2005 Asia heralds Year of the Rooster http://news.bbc.co.uk/1/hi/world/asia-pacific/4248987.stm Quote Link to comment Share on other sites More sharing options...
Armen Posted February 23, 2005 Author Report Share Posted February 23, 2005 (edited) This is a very interesting article. I suggest it even to those who're not interested in China or Asia. -------------------------------------------------------------------- http://www.cato.org/pub_display.php?pub_id=3679 February 16, 2005 Why China Won't Revalue by Steve H. Hanke Steve H. Hanke is a professor of Applied Economics at the Johns Hopkins University in Baltimore and a Senior Fellow at the Cato Institute. In the wake of the Asian financial meltdown, experts predicted that China would devalue the renminbi. So did traders: Currency forwards priced in a significant devaluation. I didn't jump on that bandwagon. Indeed, the title of my Sept. 6, 1999 column, "Why China Won't Devalue," indicated my contrary call. And the right call it was. The exchange rate of 8.28 renminbi to the dollar hasn't budged since 1995. That fixed exchange rate doesn't suit everyone, however. Led by the U.S., a chorus of countries is loudly demanding that China ratchet up the value of its currency against the dollar. Such a revaluation is intended to make Chinese exports more expensive and less competitive. The Chinese authorities have politely demurred, but most experts think they will eventually succumb to international pressure. The markets agree. Hot money continues to flow into China, and the currency forward markets are pricing in a 5% renminbi revaluation against the dollar during the next year. Once again, I think the experts and the markets will be caught wrong-footed. I was introduced to the current Chinese currency flap on May 1, 2002, when the Senate Banking Committee held hearings on exchange-rate policy. This was pursuant to a 1988 law requiring the Treasury Department, in consultation with the International Monetary Fund, to determine whether countries like China are gaining an "unfair" competitive advantage in international trade by manipulating their currencies. Then-Treasury Secretary Paul O'Neill declared that none of our important trading partners had manipulated their exchange rates during the July-December 2001 reporting period. Five follow-up witnesses took the other side. They launched a well-choreographed attack on China's fixed exchange-rate regime and the 8.28 renminbi/dollar exchange rate. According to them, China was manipulating the exchange rate and the renminbi was undervalued. Consequently, China was an unfair trader. My testimony came last, and I took Secretary O'Neill's side. Since those 2002 hearings, foreign mercantilists have pushed revaluation of the renminbi to the front burner and turned up the heat, but with no results. The Chinese authorities refuse to alter the long-standing renminbi/dollar rate. In their eyes a fixed exchange rate, economic growth and stability are all tightly linked together. And in Beijing, stability might not be everything, but without it, everything is nothing. For this reason alone, it's hard to fathom a renminbi revaluation. There is, of course, plenty of local and regional history to reinforce Beijing's views about the dangers of meddling with an exchange rate. Consider Hong Kong, which abandoned its fixed exchange rate and floated its dollar in November 1974. The Hong Kong dollar did not float on a sea of tranquility, however. The volatility reached epic proportions in September 1983 when financial markets and the Hong Kong dollar sank. Hong Kong was in a state of panic, with people hoarding toilet paper, rice and cooking oil. The chaos ended abruptly on Oct. 15, 1983. That's when Hong Kong decreed that its dollar would be fixed at 7.8 to the U.S. dollar. The currency remains at that rate today. Japan is yet another object lesson. Under the Bretton Woods system the yen/dollar exchange rate was fixed at 360. Japan realized rapid growth and stability with this setup, which lasted until 1971. Since then Japan has been under mercantilist pressure, primarily from the U.S., to ratchet up the yen's value against the dollar. Tokyo has complied. Consequently, the economy has suffered from strong-yen-induced recessions and hasn't yet recovered from the enormous deflation of the 1990s. And the mercantilists in the U.S. remain agitated because Japan continues to register large trade surpluses. Now add to these factors the thoughts of Nobelist Robert Mundell. In July of last year he hosted some of his friends at Palazzo Mundell, a Renaissance villa near Sienna, Italy. When it came to China, I took careful notes. According to Mundell, a renminbi appreciation would cut foreign direct investment, cut China's growth rate, delay convertibility, increase bad loans, increase unemployment, cause deflation distress in rural areas, destabilize Southeast Asia, reward speculators, set in motion more revaluation pressures, weaken the external role of the renminbi and undermine China's compliance with World Trade Organization rules. Mundell is not a fan of revaluation. I recount these points because on October 28, 2004 Beijing announced the establishment of the Mundell International University of Entrepreneurship. It will be located in the Zhongguancun area, the "Silicon Valley of China." Connect the dots and you get a fixed exchange rate. This article also appeared in the February 28th issue of Forbes. Edited February 23, 2005 by Armen Quote Link to comment Share on other sites More sharing options...
Armen Posted March 6, 2005 Author Report Share Posted March 6, 2005 "The Mediterranean is the ocean of the past, the Atlantic, the ocean of the present, and the Pacific, the ocean of the future." -John Hay, US Secretary of State, 1889 Quote Link to comment Share on other sites More sharing options...
Armen Posted March 23, 2005 Author Report Share Posted March 23, 2005 (edited) The China challenge Is America headed for second place? http://www.boston.com/news/globe/editorial...hina_challenge/ By David M. Lampton | March 13, 2005 The 1957 orbiting of the Soviet Sputnik satellite woke up Americans. It signaled that the United States could no longer take its technological and military superiority for granted. Today we hear fevered expressions of anxiety that China is going to over-consume strategic raw materials, suck up global manufacturing and investment, and build a military behemoth that is a new threat. China has become this generation's Sputnik. However, the challenges are very different; the possibilities are much more positive. Sputnik represented principally a military challenge. In contrast, China's rise presents a comprehensive challenge, in part military, but principally economic and intellectual. China's challenge is an unfolding, multidimensional development that will last decades and could prove far more productive than the earlier Soviet-American contest. China is becoming an increasingly able competitor on the global playing field America did so much to build. China wants to play ball with America. The question is: Will America perform well in a game and on a field it long dominated? To address this question one must examine the building blocks of national power and competitiveness: national investment and savings, education, health, and sound, legitimate governance. China is doing comparatively well in the first three -- far less well in the last. If Chinese competition can push America to make its own needed adjustments, this is to be welcome, albeit painful. In 2003 the Chinese had an investment to gross domestic product ratio of between 32 and 42 percent. Looking at domestic savings alone, the International Monetary Fund says China's ''gross national savings" rate that year was 47.6 percent. These rates make high economic growth very likely. Chinese performance contrasts sharply with America's. Harvard University President Lawrence Summers was right when he said, ''In the last year [2003], the net savings rate of the United States has been between 1 and 2 percent . . . It represents the lowest net national savings rate in American history . . . In fact, net investment has declined over the last four to five years in the United States, suggesting that all of the deterioration of the current account deficit can be attributed to reduced savings and increased consumption rather than to increased investment." The United States cannot long compete when it borrows for current consumption while China invests using its own savings. America must rebalance its saving, investment, and consumption priorities. If we do, Beijing's competition will have done us a big favor. Examine the second building block -- education. US higher education is excellent. Nonetheless, considering its low current income levels, China has done well in bringing primary school education to 93 percent of the nation's population; the percentage of secondary school-age children enrolled has risen rapidly in the last decade; and the percentage of China's population in tertiary education has more than quadrupled since 1991-92. Many people say China is attracting foreign manufacturing investment because of cheap labor. In fact, the attraction is the combination of relatively inexpensive and relatively skilled labor. Take a field that is highly germane to economic modernization as an example -- engineering. China and the United States in 2002 granted approximately equal numbers of graduate-level engineering degrees, though China granted almost 3.5 times as many undergraduate engineering degrees. Moreover, US engineering schools have substantial enrollments of noncitizen students. More startling still, entering class sizes in engineering schools in China are growing very rapidly. Looking to the future, and even discounting for quality differences, China will have enormous and growing human resources in technology. Go to most US graduate schools in the hard sciences and you will see highly capable students from China in profusion. And, while the number of Americans studying in China is in the low thousands each year, China for more than a decade has had about 60,000 students matriculated in American institutions of higher learning studying science, technology, as well as business, economics, and international affairs. China is turning out language proficient, culturally adept, and scientifically and technically capable people at home and abroad in ever-greater numbers. We must do the same. If Chinese competition motivates us to do what we should be doing, this is positive. Public health is a tricky third building block. There are millions of people in China with virtually no medical care; the system is vulnerable to infectious diseases, as the world saw with SARS in 2002-03, and maladies once reduced to very low levels are increasing in incidence -- not to mention a looming HIV/AIDS catastrophe. Nonetheless, China had a life expectancy in 2002 of 71 years, which compares favorably with the life expectancy in a much richer United States -- 77, according to the World Bank. And yet, in 2002 China only consumed about 5.5 percent of its still modest GNP on health expenditures while the United States consumed 13.3 percent. By 2004, this had risen to 15.4 percent and is projected to reach a whopping 18.7 percent by 2014. The point is not that Americans should prefer Chinese healthcare, but rather that if the United States is to remain competitive it must control health expenditures. Turning to the security implications of China's rise, the trends merit vigilance. China's official, non-inflation-adjusted defense budget has increased in the double-digit range every year from 1990 through 2004, placing China's estimated expenditures in a league with Russia, Japan, and the United Kingdom. Second, China has an active space program, the dimensions of which would surprise most Americans, and emphasis is being placed on modernizing air, missile, and naval forces, as well as enhancing cyberspace, communication, guidance, and reconnaissance capabilities. China is developing these forces and capabilities to have military options if it determines Taiwan is moving unalterably toward independence, to deter Washington from entering a Taiwan Strait conflict, to safeguard China's nuclear deterrent, and to secure its resource lifelines. Washington and Beijing could end up in conflict in the Taiwan Strait if the situation there is not handled well. Beyond Taiwan, however, the US security situation in Asia is changing less as a consequence of China's growing military power than of Beijing's economic growth. America's post-World War II allies in East Asia (Australia, Japan, the Philippines, the Republic of Korea, and Thailand) are becoming increasingly dependent on exporting to China and/or receiving increasing investment from it. Consequently, most US allies will not allow themselves to be drawn into what they view as unnecessary friction with Beijing. Japan is the ally most tightly aligned with Washington. As China's economic power grows, therefore, the United States cannot count on most allies following its lead without question. We see this clearly with a South Korea that now exports more to China than to the United States. The amorous effects of China's economic aphrodisiac on our allies is nowhere more apparent than in NATO's likely decision to resume arms sales to China in the face of US opposition. Amid these dangers there also are positive possibilities. The most productive way to enhance security in Asia over time would be to work with China, Japan, and others to build new security structures to supplement the post-World War II bilateral alliances. The China challenge, therefore, is not destined to put America out of business or cause war. What China's rise means ultimately depends on how both nations respond. A colossal misstep would be for America to respond to a predominantly economic and intellectual challenge militarily. If Americans make the needed corrections at home, adjust security structures abroad, and all parties manage to avoid war in the Taiwan Strait, China's gains can push America and Asia forward. David M. Lampton, dean of faculty at Johns Hopkins School of Advanced International Studies and director of Chinese studies at the Nixon Center, is writing a book about the rise of China. Edited March 23, 2005 by Armen Quote Link to comment Share on other sites More sharing options...
Anahit Posted March 24, 2005 Report Share Posted March 24, 2005 In Chinese USA (Mei guo) means the Beautiful Land, France (Fa guo) means the Land of Law, Russia (E luo se) means the Hungry Land. style_images/master/snapback.png Armen jan, I really don't mean to question your chinese, but Russia, REALLY doesn’t mean a "hungry" country: the “e” there is NOT the one in word hungry, Chinese NEVER mean it, just as they NEVER mean a "beautiful land" by saying “meiguo” for the USA (it is just the short way for MEI LI JIANHE ZHONGGUO, “li” from “benefit” and “mei” stands for the continent “mei zhou”). The meanings for France and Armenia also are NOT what u think they are, unfortunately. But most foreigners think the same way,as u wrote, so... Quote Link to comment Share on other sites More sharing options...
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