Chinese Military,Political and Social Superthread

[a_majoor]

Although this can also go under the "US economy" thread, it seems appropriate here since it indicates China's reaction to the mounting US debt and potential for inflation devaluing their holdings of US Treasuries, as well as the declining amount of control the Chinese (and by extention other large scale holders of US debt) potentially have over the US economy:

http://www.nytimes.com/2009/04/13/business/global/13yuan.html?_r=2&ref=global-home

China Slows Purchases of U.S. and Other Bonds

By KEITH BRADSHER
Published: April 12, 2009

HONG KONG — Reversing its role as the world’s fastest-growing buyer of United States Treasuries and other foreign bonds, the Chinese government actually sold bonds heavily in January and February before resuming purchases in March, according to data released during the weekend by China’s central bank.

Cutting Back China’s foreign reserves grew in the first quarter of this year at the slowest pace in nearly eight years, edging up $7.7 billion, compared with a record increase of $153.9 billion in the same quarter last year.

China has lent vast sums to the United States — roughly two-thirds of the central bank’s $1.95 trillion in foreign reserves are believed to be in American securities. But the Chinese government now finances a dwindling percentage of new American mortgages and government borrowing.

In the last two months, Premier Wen Jiabao and other Chinese officials have expressed growing nervousness about their country’s huge exposure to America’s financial well-being.

Chinese reserves fell a record $32.6 billion in January and $1.4 billion more in February before rising $41.7 billion in March, according to figures released by the People’s Bank over the weekend. A resumption of growth in China’s reserves in March suggests, however, that confidence in that country may be reviving, and capital flight could be slowing.

The main effect of slower bond purchases may be a weakening of Beijing’s influence in Washington as the Treasury becomes less reliant on purchases by the Chinese central bank.

Asked about the balance of financial power between China and the United States, one of the Chinese government’s top monetary economists, Yu Yongding, replied that “I think it’s mainly in favor of the United States.”

He cited a saying attributed to John Maynard Keynes: “If you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy.”

Private investors from around the world, including the United States, have been buying more American bonds in search of a refuge from global financial troubles. This has made the Chinese government’s cash less necessary and kept interest rates low in the United States over the winter despite the Chinese pullback.

There have also been some signs that Americans may consume less and save more money in response to hard economic times. This would further decrease the American dependence on Chinese savings. (Interpolation. This is the response of US Citizens. The Administration and the Congress have gone entirely in the opposite direction)

Mr. Wen voiced concern on March 13 about China’s dependence on the United States: “We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.”

The main worry of Chinese officials has been that American efforts to fight the current economic downturn will result in inflation and erode the value of American bonds, Chinese economists said in interviews in Beijing on Thursday and Friday.

“They are quite nervous about the purchasing power of fixed-income assets,” said Yu Qiao, an economics professor at Tsinghua University.

Economists said there was no sign that the Chinese government had deliberately throttled back its purchases of overseas bonds to punish the United States for pursuing monetary and fiscal policies aimed at stimulating the American economy.

While those policies may run a long-term risk of setting off inflation, they also may benefit China if they rekindle economic growth in the United States and thereby revive China’s faltering exports.

The abrupt slowdown in China’s accumulation of foreign reserves instead seems to suggest that investors were sending large sums of money out of mainland China early this year in response to worries about the country’s economic future and possibly its social stability in the face of rising unemployment.

Evidence of such capital flight included a flood of cash into the Hong Kong dollar. Mainland tourists were even buying gold and diamonds during Chinese new year holidays here in late January.

China’s reserves have soared in recent years as the People’s Bank bought dollars on a huge scale to prevent China’s currency from appreciating as money poured into the country from trade surpluses and heavy foreign investment. But China’s trade surpluses have narrowed slightly as exports have fallen, while foreign investment has slowed as multinationals have conserved their cash.

Jun Ma, a Deutsche Bank economist in Hong Kong, predicted that China’s foreign reserves would rise only $100 billion this year after climbing $417.8 billion last year.

Some economists contend that slower growth in Chinese foreign currency reserves is not important to the economic health of the United States, even though it may be politically important. In the first quarter, instead of the Chinese government sending money out of the country to buy foreign bonds, Chinese individuals and companies were buying many of the same bonds.

“The outflow would mostly end up in the U.S. anyway,” even if China is no longer controlling the destination of the money, said Michael Pettis, a finance professor at Peking University, in an interview on Thursday.

Heavy purchases of Hong Kong dollars by mainland Chinese residents early this year also have the indirect effect of helping the United States borrow money. The Hong Kong government pegs its currency to the American dollar, and stepped up its purchases of Treasury bonds this winter in response to strong demand for Hong Kong dollars.

But China’s economy appears to be bouncing back from the global economic downturn faster than its trade partners’ economies. If that proves true, the result could be an increase in imports to China while its exports recover less briskly. This would limit trade surpluses and leave the People’s Bank with less money to plow into foreign reserves.

 

[CougarKing]

Here is an article where journalist/writer Chip Tsao, who some argue to be the Hong Kong's version of John Stewart, mocks Chinese ultra-nationalists by writing a satirical piece, where he feigns lecturing his maid from the Philippines on how a poor country like theirs should not be challenging China's supposed claim to certain areas of the South China Sea. However, the article sparked an outrage in the Philippines which forced the Hong Kong newspaper which first ran his article to finally withdraw it and even issued an apology, IIRC. The Philippine government even responded to the popular outrage by supposedly banning Chip Tsao from ever entering the Philippines.

It sparked an outrage since there are many poor Filipinos who go overseas to neighbouring countries/territories such as Taiwan, Singapore and Hong Kong and work menial jobs such as being maids or domestic helpers in order to send remittances back home. Thousands work in Hong Kong alone, where the women in particular get the stereotype of being A-mas (Cantonese word for maid) and the predominance of such a stereotype has made the Hong Kong locals develop a sense of biased resentment and feeling of superiority over the Filipinos, since many can barely speak English and don't even speak Cantonese/Mandarin at all. This has led to many of them being abused or maltreated by their employers.

Still, the Han-centric, PRC-inspired "Sinosphere" Nationalism which Tsao mocks, arguably, is also starting to make itself felt in Hong Kong as well more than a decade after the 1997 Handover. Whether such racially-charged conflicts will explode into armed conflict with China's neighbours as China later begins to assert itself remains to be seen.
 

http://hk-magazine.com/feature/war-home#comment-2675


The War At Home
March 27th, 2009

The Russians sank a Hong Kong freighter last month, killing the seven Chinese seamen on board. We can live with that—Lenin and Stalin were once the ideological mentors of all Chinese people. The Japanese planted a flag on Diàoyú Island. That’s no big problem—we Hong Kong Chinese love Japanese cartoons, Hello Kitty, and shopping in Shinjuku, let alone our round-the-clock obsession with karaoke.

But hold on—even the Filipinos? Manila has just claimed sovereignty over the scattered rocks in the South China Sea called the Spratly Islands, complete with a blatant threat from its congress to send gunboats to the South China Sea to defend the islands from China if necessary. This is beyond reproach. The reason: there are more than 130,000 Filipina maids working as $3,580-a-month cheap labor in Hong Kong. As a nation of servants, you don’t flex your muscles at your master, from whom you earn most of your bread and butter.

As a patriotic Chinese man, the news has made my blood boil. I summoned Louisa, my domestic assistant who holds a degree in international politics from the University of Manila, hung a map on the wall, and gave her a harsh lecture. I sternly warned her that if she wants her wages increased next year, she had better tell every one of her compatriots in Statue Square on Sunday that the entirety of the Spratly Islands belongs to China.

Grimly, I told her that if war breaks out between the Philippines and China, I would have to end her employment and send her straight home, because I would not risk the crime of treason for sponsoring an enemy of the state by paying her to wash my toilet and clean my windows 16 hours a day. With that money, she would pay taxes to her government, and they would fund a navy to invade our motherland and deeply hurt my feelings.

Oh yes. The government of the Philippines would certainly be wrong if they think we Chinese are prepared to swallow their insult and sit back and lose a Falkland Islands War in the Far East. They may have Barack Obama and the hawkish American military behind them, but we have a hostage in each of our homes in the Mid-Levels or higher. Some of my friends told me they have already declared a state of emergency at home. Their maids have been made to shout “China, Madam/Sir” loudly whenever they hear the word “Spratly.” They say the indoctrination is working as wonderfully as when we used to shout, “Long live Chairman Mao!” at the sight of a portrait of our Great Leader during the Cultural Revolution. I’m not sure if that’s going a bit too far, at least for the time being.

Chip Tsao is a best-selling author and columnist. A former reporter for the BBC, his columns have also appeared in Apple Daily, Next Magazine and CUP Magazine, among others. 

(Chip Tsao (real name To Kit) has had other racially charged articles before:Whites.This dates back to 2005.)

And here is a page scan of the "War at Home" article.

 

[Journeyman]

For two contradictory views on China's potential future, you may want to read Minxin Pei and Jonathan Anderson, "The Color of China," in the current online edition of The National Interest.

Both Minxin and Anderson debate the how the global financial situation will impact upon China's advances to date, bearing in mind its already problematic societal ills (environment, infrastructure, resentful population).


It's a somewhat lengthy article. Sorry, that's the price of informed opinion 

 

[CougarKing]

PLAN Admiral Wu Sheng Li(吴胜利), (the commander of China's East Sea Fleet of the Nanjing Military Region just opposite from Taiwan before he became the PLAN head), reiterates what has long been increasingly evident.

Reuters | 04/16/2009 11:58 AM


BEIJING – China will accelerate development of warships, stealth submarines and long-range missiles as the country makes a stronger navy a priority in military modernization, a Chinese admiral told state media.

Admiral Wu Shengli said the Communist Party leadership had ordered the navy to upgrade preparedness to defend the nation's expanding interests, Chinese newspapers reported on Thursday.

"The Party central leadership has demanded that the navy make preparedness for military struggle at sea a priority in national security strategy and military strategy," Xinhua news agency cited Wu as saying in the interview first issued on its website (www.xinhuanet.com) on Wednesday.

"We must accelerate progress in developing key weapons equipment," Wu added, singling out big warships, long-distance stealth submarines, supersonic jet fighters, and high-accuracy long-range missiles.

Chinese media have highlighted the government's hopes to build an aircraft carrier, seen as the badge of a mature ocean-going power. But Wu's remarks highlighted the country's broader ambitions to expand its naval reach.

China's navy had become an "ocean-going iron Great Wall" to "counter a range of security threats," Wu said.

He gave the interview to highlight the 60th anniversary of China's navy, which will be marked next Thursday with a ship parade. But his outline of Beijing's ambitions also comes after recent friction in the South China Sea with a United States navy ship, and also while China is showing its expanding reach by joining anti-piracy operations off east Africa.

Wu, a member of the Central Military Commission, which steers China's military forces, said the People's Liberation Army Navy was becoming more adept at long-distance operations.

Chinese military plans have long centered on Taiwan, the self-ruled island close to the mainland coast that Beijing says must accept eventual reunification, by force if necessary.

But with China's appetite for energy and resources increasingly dependent on distant sources, strategists have called for a navy that can protect the nation's interests in distant seas.

"Training on high seas has become the norm," Wu said.

But the PLA navy has a long way to go before it approaches U.S. naval power. China has about 290,000 navy personnel, many working on aged vessels. And even with new technology, China has some way to catch up in mastering joint operations.

 

[CougarKing]

And Beijing increases its presence in the Spratlys.

Beijing sends 6 more patrol ships to Spratlys
BEIJING—China has dispatched more civilian patrol boats to the South China Sea, where tensions have risen recently over a long-standing territorial dispute, state press said Thursday.

At least six patrol vessels belonging to provincial units of the Maritime Safety Bureau of China have been sent to the South China Sea in recent weeks, with several others being prepared for departure, China Daily reported.

Some of the busiest international shipping lanes cut through the South China Sea, which is home to the disputed Spratly and Paracel islands that are valued for potentially vast mineral and oil deposits.

China announced last month it had sent one civilian patrol vessel to waters around the Spratlys, drawing concern from the Philippines, one of the nations claiming sovereignty over the area.

Recently renewed claims by nations over parts of the Spratlys were one reason for China stepping up its presence in the area, China Daily reported.

The increased patrols also come after a near collision last month between Chinese boats and a US naval surveillance ship in international waters within China’s exclusive economic zone off Hainan island.

“This year could be the starting point of many more disputes,” the paper quoted Zhou Zhonghai, a maritime law expert at China University of Politics and Law, as saying.

“Strategies with a firm stance to protect marine territories are of vital importance.”

Zhou said a United Nations effort this year to chart maritime territory had led to a rise in tensions, as nations hurry to submit claims and other legal documentation to the international body.

Apart from China and the Philippines, the Spratlys are claimed in whole or in part by Brunei, Malaysia, Taiwan and Vietnam.

Authorities in Vietnam recently shut down a newspaper for three months for articles that criticized China for asserting its sovereignty over territories claimed by both nations, state-controlled media reported Thursday.

The Ministry of Information and Communication shut down the semiweekly Du Lich (Tourism) for its “serious violation” of Vietnam’s press law, the Thanh Nien (Young People) newspaper said.

Although Vietnam’s government opposes Chinese policy toward the disputed territories, it wants to maintain friendly relations with its powerful northern neighbor.

Authorities accused the newspaper of publishing untruthful information, inciting violence and sowing hatred between nations, Thanh Nien said.

The report did not specify the untruthful information.

Ministry officials and newspaper executives were not immediately available for comment Thursday.

Communist Vietnam maintains strict control over all local media. The closure of the newspaper took effect Tuesday, and the ministry also ordered it to install new leadership, Thanh Nien reported.

In its Lunar New Year edition earlier this year, the newspaper ran several articles supporting anti-China protesters, praising them for their “pure patriotism.”

Thousands of demonstrators, mostly university students, gathered in late 2007 near China’s diplomatic missions in Hanoi and Ho Chi Minh City to protest Chinese policy toward three disputed archipelagos in the South China Sea, including the Spratly Islands.

China had announced a plan to create an administrative region called Sansha to manage the territory. The issue struck a nationalist chord in Vietnam, which has fought several wars against China, and the protesters took to the streets even though the government generally prohibits public protests of any kind.

The largely uninhabited islands and surrounding waters are believed to have large oil and natural gas reserves. They straddle busy sea lanes and are rich fishing grounds.

Taiwan, the Philippines, Malaysia and Brunei also claim sovereignty over all or some of the Spratlys. AFP and AP

 

[tomahawk6]

Fleet Maneuvers.

 

[tomahawk6]

 

[Edward Campbell]

They're in a nice straight line ... I guess that means good station keeping which, I suspect is indicative of good seamanship.

 

[CougarKing]

These pics which T6 just posted are from the PLAN's 60th anniversary naval review.

China Parades Naval Might
By MARIANNE BARRIAUX, AGENCE FRANCE-PRESSE
Published: 23 Apr 2009 13:07 

BEIJING - China paraded its warships and nuclear submarines April 23 in an unprecedented display of maritime might attended by 14 other nations to mark the 60th anniversary of its navy.

Fifty-six Chinese subs, destroyers, frigates, missile boats and planes were displayed off the eastern port city of Qingdao just weeks after tensions flared after a naval stand-off with the U.S. in the South China Sea.

The review - only the fourth to take place since 1949 and the first on such a large and international scale - was opened by two of China's nuclear-powered submarines, the first time in history they have been unveiled to the public.

President Hu Jintao boarded the destroyer Shijiazhuang, after having sought to reassure the heads of foreign navy delegations that China's maritime power posed no threat to anyone.

"Both now and in the future, no matter to what extent we develop, China will never seek hegemony," he said, in comments reported by Xinhua.

State television showed Hu standing on the deck of the Shijiazhuang saluting and calling out to the ships that passed before him.

But Jean-Pierre Cabestan, professor of political science at Hong Kong Baptist University, described the event as "a show of force, of power."

"It's a public relations display with a double message - China as an integrator, showing it is keeping with the rules of the international game, but also showing it is now in the big power arena," he said.

Ships from 14 countries, including the U.S., Russia and France, took part in the fleet review, which Chinese officials have said is aimed at promoting understanding about China's military development.

"Suspicions about China being a 'threat' to world security are mostly because of... lack of understanding about China," Ding Yiping, deputy commander of the navy, told the official Xinhua news agency this week.

China has always stressed its military build-up, watched with a wary eye by the U.S. - which accuses the Chinese of a lack of transparency - does not pose a threat to other countries.

A number of recent incidents at sea have heightened tensions.

In March, the U.S. complained that Chinese boats had harassed one of its ships in the South China Sea, forcing it to take action to prevent a collision.

China denied the claim and accused the U.S. vessel of "illegal activities".

Early this month, China's dispatch of civilian patrol vessels to waters around disputed islands in the same sea - the Spratlys - sparked concern in the Philippines, which also claims sovereignty over the archipelago.

China's increasing maritime confidence was also reflected in its decision to send ships to the Gulf of Aden, off the coast of Somalia, for an anti-piracy assignment in the first potential combat mission for its navy beyond its territorial waters.

And the navy's commander-in-chief, Admiral Wu Shengli, said in April China would develop a new generation of warships and aircraft to give it much longer-range capabilities.

But Hong Kong Baptist University's Cabestan said China's navy still lagged behind other countries, with no aircraft carriers despite plans to build some.

"In terms of technology they are still far behind the Americans, the Japanese, or even the Russians, but in tonnage, they have now become the first navy in Asia," he said.

The U.S., which has sent navy chief Admiral Gary Roughead and the destroyer Fitzgerald to the event, would be watching the parade very closely, according to the professor.

"The United States are participating, they are playing the card of integration, of the policy of engagement," he said.

"But they are also watching attentively the progress of the People's Liberation Army (PLA), all the new missions that the Chinese navy do."

Sixty years ago, the PLA's navy was formed when a unit of the Kuomintang's coastal defense fleet defected to the rival communists, bringing with it nine warships and 17 other boats.
Kuomintang nationalist forces had been locked in a civil war with the communists, who eventually won and came to power on Oct. 1, 1949.

 

[Snakedoc]

Some pretty impressive looking pictures, the Chinese sure know how to put on a good show.

 

[CougarKing]

Another update, this time on the effect of the economic downturn on Taiwan.

Agence France-Presse - 5/1/2009 11:08 AM GMT
Taiwanese protesters scuffle with police
Demonstrators scuffled with police in the Taiwanese capital Taipei on Friday during a May Day march to protest at the deteriorating job market after unemployment hit a record high.

However there were no arrests and organisers said the 12,000 turnout was one of the biggest May 1 protests in recent years and showed people's resentment against the government was brewing as more and more workers lost their jobs.

"Anti-unemployment! We want dignity!" the crowd shouted while marching through Taipei, where 100 demonstrators tried but failed to break through a line of riot police armed with shields and batons.

Several of the protesters reported slight injuries in their attempt to push their way to the sealed-off cabinet building.

Labour Minister Wang Ju-hsuan was then repeatedly booed as she attempted to address the crowd on top of a van as the protesters, largely from the island's eight leading unions, demanded her resignation.

They blame her and the government for failing to stop growing unemployment, up to a record 5.81 percent in March as businesses slashed jobs in the ongoing recession.

Taiwan, Asia's sixth biggest economy, has been hit hard by the global financial crisis with record falls in its key export sector, particularly at electronics firms.

"In the face of the worsening job market, the government may have created some temporary jobs, but what people really need is stable and long-term jobs," one demonstrator said.

 

[a_majoor]

Enough words; actions speak....

http://www.ft.com/cms/s/0/996b1af8-43ce-11de-a9be-00144feabdc0.html?nclick_check=1

Brazil and China eye plan to axe dollar
By Jonathan Wheatley in São Paulo

Published: May 18 2009 18:24 | Last updated: May 18 2009 23:31

Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil’s central bank and aides to Luiz Inácio Lula da Silva, Brazil’s president.

The move follows recent Chinese challenges to the status of the dollar as the world’s leading international currency.

Mr Lula da Silva, who is visiting Beijing this week, and Hu Jintao, China’s president, first discussed the idea of replacing the dollar with the renminbi and the real as trade currencies when they met at the G20 summit in London last month.

An official at Brazil’s central bank stressed that talks were at an early stage. He also said that what was under discussion was not a currency swap of the kind China recently agreed with Argentina and which the US had agreed with several countries, including Brazil.

“Currency swaps are not necessarily trade related,” the official said. “The funds can be drawn down for any use. What we are talking about now is Brazil paying for Chinese goods with reals and China paying for Brazilian goods with renminbi.”

Henrique Meirelles and Zhou Xiaochuan, governors of the two countries’ central banks, were expected to meet soon to discuss the matter, the official said.

Mr Zhou recently proposed replacing the US dollar as the world’s leading currency with a new international reserve currency, possibly in the form of special drawing rights (SDRs), a unit of account used by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Mr Zhou said the goal would be to create a reserve currency “that is disconnected from individual nations”.

In September, Brazil and Argentina signed an agreement under which importers and exporters in the two countries may make and receive payments in pesos and reals, although they may also continue to use the US dollar if they prefer.

An aide to Mr Lula da Silva on his visit to Beijing said the political will to enact a similar deal with China was clearly present. “Something that would have been unthinkable 10 years ago is a real possibility today,” he said. “Strong currencies like the real and the renminbi are perfectly capable of being used as trade currencies, as is the case between Brazil and Argentina.”

In what was interpreted as a sign of Chinese concern about the future of the dollar, the governor of China’s central bank proposed in March that the US dollar be replaced as the world’s de-facto reserve currency.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency ”that is disconnected from individual nations” and modelled on the International Monetary Fund’s special drawing rights, or SDRs.

Economists have argued that while the SDR plan is unfeasible now, bilateral deals between Beijing and its trading partners could act as pieces in a jigsaw designed to promote wider international use of the ­renminbi.

Any move to make the renminbi more acceptable for international trade, or to help establish it as a regional reserve currency in Asia, could enhance China’s political clout around the world.

 

[Edward Campbell]

Enough words; actions speak....

http://www.ft.com/cms/s/0/996b1af8-43ce-11de-a9be-00144feabdc0.html?nclick_check=1

I invite members to refresh their memories about the Chinese proposal which is, essentially, to make the existing Special Drawing Rights (an internationally recognized  unit of account, already) into a reserve currency.

 

[a_majoor]

Indeed. This activity (direct use of Chinese currency in bilateral trade) seems to be a step in the road to displacing the USD. This could have serious implications for Canada as an international trading nation: since much of our trade is with the US and our currency holdings are necessarily USD; will we be at a grave disadvantage when trying to trade with the rest of the world that does not use USD as the reserve currency?

Economists have argued that while the SDR plan is unfeasible now, bilateral deals between Beijing and its trading partners could act as pieces in a jigsaw designed to promote wider international use of the ­renminbi.

 

[Edward Campbell]

The “solution” to Canada’s US trade dilemma is simple:

First: shades of  the 1988 election campaign, follow the advice of the Liberal campaign ad and erase the border by harmonizing import rules and standards (relatively easy as they are about 95% common now) and harmonizing immigration and tourism regulations (more difficult but nothing like really hard to do); and

Second: to pick up on one of Trudeau’s inept acts, develop second and third and fourth markets with Asia, especially China, and Europe and Latin America, and so on. Chrétien/Martin/Manley wanted to do this but Canadian industrial “leadership” is notoriously risk averse, lazy and short sighted. Harper/Flaherty/Day are less enthusiastic about trade and commerce – probably because they let grade school ideology get in the way of the brains one must believe they have.

How much of which currencies we hold in reserve is not terribly important.

There is nothing special about having one reserve currency. We could have two or three or more, even, eventually, when the Chinese central bank is worthy of the respect it demands, the RMB. If/when one has multiple reserve currencies then pooling them into a tradable SDR might make sense.

 

[CougarKing]

This latest update, in the wake of the Sri Lankan victory of over the Tamil Tigers, shows that Beijing not only has had a role in that victory, but continues to work behind the scenes in competing with India in this part of the world.

THE pitiless success of Sri Lanka's military offensive delivers one salutary lesson: if you have China as an ally, you can afford to ignore pressure from anywhere else.

President Mahinda Rajapaksa's Government has won China's financial, military and diplomatic support - along with the confidence to brush off Western protests.

[SNIP]

As well as diplomatic cover, China gave Sri Lanka $1.3 billion of aid last year. The air force was given six F7 jet fighters as a gift, and the army received $50 million of Chinese ordnance in 2007.

What has Sri Lanka given in return? The answer is that China has acquired a strategic ally near the crucial Indian Ocean shipping lanes along which energy supplies from the Middle East are carried. Beijing is now building a port on Sri Lanka's southern coast that could serve as a naval base...


http://www.smh.com.au/world/military-emboldened-by-beijings-embrace-20090519-be7k.html

 

[a_majoor]

When China figures out how to escape the debt trap, things will be very bad for the rest of us. If the US repudiates their debt (possibly as early as 2016 when Social Security and Medicare become insolvent) then things will be very bad for China.....

http://www.ft.com/cms/s/0/cb2e1262-48c3-11de-8870-00144feabdc0.html?nclick_check=1

Beijing is caught in 'trap' over dollar
By Jamil Anderlini in Beijing

Published: May 25 2009 03:00 | Last updated: May 25 2009 03:00

China's official foreign exchange manager is still buying record amounts of US government bonds, despite Beijing's increasingly vocal fear of a dollar collapse, according to officials and analysts.

In recent months, senior Chinese officials, including Premier Wen Jiabao, have repeatedly signalled their concern that US policies could lead to a collapse in the dollar and global inflation.

But Chinese and western officials in Beijing say China is caught in a "dollar trap" and has little choice but to keep pouring the bulk of its growing reserves into the US Treasury, which remains the only market big enough and liquid enough to support its huge purchases.

In March alone, China's direct holdings of US Treasury securities rose by $23.7bn (£14.9bn) to reach a new record high of $768bn, according to preliminary US data, allowing China to retain its title as the biggest creditor of the US government.

"Because of the sheer size of its reserves Safe [China's State Administration of Foreign Exchange] will immediately disrupt any other market it tries to shift into in a big way and could also collapse the value of its existing reserves if it sold too many dollars," said a western official, who spoke on condition of anonymity.

The composition of China's reserves is a state secret but dollar assets are estimated to comprise as much as 70 per cent of the $1,953bn total. China owns nearly a quarter of the US debt held by foreigners, according to US Treasury data.

The collapse of Fannie Mae and Freddie Mac, the US mortgage financiers, last summer prompted Safe to adjust its strategy and buy far more short-term US government securities, instead of longer-maturity bonds and notes.

But Safe has not fundamentally changed its strategy of allocating the bulk of its burgeoning foreign exchange reserves to US Treasury securities, a western adviser familiar with Safe thinking told the Financial Times.

He said Safe traders were "very negative" on sterling because of expectations of renewed weakness of the UK currency, but Safe was neutral on the euro and bullish on the Australian dollar.

The pound ended last week at its strongest since December, shrugging off a warning over the UK's soaring public debt from ratings agency Standard & Poor's.

The US dollar fell to its lowest level of the year against major currencies last week. Treasury yields spiked to six-month highs as investors focused on the willingness of creditors to fund a deficit that was expected to be about 13 per cent of GDP this year.

China's buying of US debt helps Washington fund its soaring deficit and there is no indication that Beijing will shy away from purchases, the Obama administration's budget chief said last week.

 

[a_majoor]

Remembering when freedom almost broke out....

http://www.forbes.com/2009/05/27/tiananmen-square-anniversary-mao-opinions-columnists-china.html

Freedom's Edge
Remembering Tiananmen Square
Claudia Rosett, 05.28.09, 12:00 AM EDT
Twenty years later, we recall lessons of freedom and tyranny.

Next week brings the 20th anniversary of China's Tiananmen Square uprising--or rather, of its suppression, on June 4, when China's government sent in troops to crush the democracy movement then blooming out of Beijing.

How should we remember that day?

In Beijing, it was a day of horror. I was there, as a reporter, and during a night lit up in memory with flame and tracer bullets, watched troops and armored personnel carriers move toward the square--as street protesters set fire to barricades, and then, unarmed and overwhelmed by the guns of the People's Liberation Army, fell back. In the early hours of the morning, I watched a few thousand protesters make a last stand in the square, weaponless and surrounded on three sides by thousands of AK-47-toting soldiers. Shortly before dawn, I saw those troops, on foot and in tanks, force the remaining protesters out.

I saw buses and trucks burned, banners crumpled on the pavement and people shot. The number killed that day, as China's communist government took back its despotic control of Beijing, remains one of the mysteries of the People's Republic--estimated at hundreds, maybe thousands.

But those horrors are not what gave Tiananmen its compelling place in modern history. There was far more at work here than any straightforward arithmetic of death. After all, the high-end estimate of the number killed in the Tiananmen uprising is dwarfed many times over by the millions of Chinese who died under the horrific communist experiment of Chairman Mao: forcibly collectivized, rusticated, starved, executed outright or dispatched to the torments of China's prison camps, the laogai.

What gave Tiananmen its historic heft was the movement that brought millions into the streets, not only in Beijing, but in other major cities like Shanghai, Chengdu, Guangzhou. The precise point of conflict was the yearning for individual liberty and the crushing reply of the despotic state.

Out of this confrontation came some of the modern era's most haunting images of the struggle for freedom: the sea of banners and the Chinese statue of liberty--or the goddess of democracy, as its builders called it--erected in Tiananmen Square itself, holding a torch in both hands, facing the huge portrait of Mao, which still hangs over the main gate to the old imperial Forbidden City.

All this was then summed up by that astounding scene--as the army consolidated its control over the city--of a lone man, at the edge of Tiananmen Square, stopping a column of tanks.

But today, 20 years later, is this anything more than fading history?

Did it matter? That lone man stopped the tanks, but not for long. He has vanished, and China's despotic one-party state carries on. Does Tiananmen today add up to anything more than a collection of memories? It is of obsessive interest to a number of scholars, to many who were there, to the families of those who were killed--but is it otherwise irrelevant to the world, or even to China, today?

Since 1989, layer upon layer of Tiananmen has been peeled back, examined, debated. Student leaders of the time have escaped China and told their tales. The Chinese government has pushed out assorted versions of its own, including a book-length photo essay, published for wide consumption shortly after June 4, 1989. Its English version opens with the almost wistful sentence: "In 1989 when spring was passing to summer, a shocking turmoil happened in Beijing, which attracted the close attention of people at home and abroad." Documents have emerged--"The Tiananmen Papers," published in English translation in 2001--providing windows on the party deliberations.

On my desk right now is the recently published Prisoner of the State, the secret journal of the late Chinese premier Zhao Ziyang, whose sympathy with the Tiananmen protesters, and push for reform, landed him under house arrest in China for the rest of his life, from 1989 until his death in 2005.

As details have emerged, and the years have gone by, experts of many stripes have questioned whether the Tiananmen uprising was really about democracy; whether the uprising, if not stopped, might have derailed China's economic progress; and whether China was "ready" for democracy.

But cut through the debate and hypotheticals, and I'd say at least two enduring and important messages came out of Tiananmen. Both sorely need remembering, especially as the world today seems to be losing its bearings on the immense value of individual freedom. That applies to an alarming extent even in America, where President Obama instinctively defaults to the policies of a statist, cradle-to-grave collective, while moving human rights abroad onto the foreign policy back burners in a push to "engage" with despots from Iran to Syria to nuclear-testing, missile-launching North Korea, as well as China.

The first of these messages is that the Tiananmen uprising did not occur in a vacuum. It mattered greatly that as 1989 dawned, Ronald Reagan had just finished his second term as a U.S. president unapologetic about America's values of capitalism and freedom. He was willing to stand up to the Soviet Union, build up America's defenses and demand that Mikhail Gorbachev tear down the Berlin Wall.

In this way, Reagan reversed the totalitarian spread abroad, during which the apologist policies of Jimmy Carter were answered in 1979 by Iran's Islamic revolution, and the Soviet invasion of Afghanistan. By the late 1980s, dictatorships were falling, withering, coming unglued. In the Philippines, in 1986, Ferdinand Marcos had departed. In South Korea, in 1987, despotism gave way to democracy. And the Republic of China on Taiwan lifted martial law and began evolving at speed toward the democracy it is today.

Around the globe, the push for democracy seemed contagious. In the Soviet bloc, the countries of Eastern Europe were shaking loose. The Soviet Union itself, immersed in Mikhail Gorbachev's perestroika attempt to keep the evil empire together, was just 18 months from collapse. In Myanmar--or Burma as we then called it--thousands of democratic protesters took to the streets in 1988. They were gunned down, their leaders killed, confined, silenced.

But out of Burma had come unmistakable stories of heroism and calls for freedom. Their neighbors took note. One of the signals flashed around the globe was that individuals isolated and silenced by repressive regimes were far from alone in their desire for something better. For America to serve as standard-bearer of that message really did matter.

So came the spring of 1989, and in China, home to roughly one-fifth of humanity, the people spoke. And that brings me to the second message I glean today from the Tiananmen uprising of 20 years ago.

Since the founding in 1949 of the People's Republic, that 1989 groundswell was the only chance that China's people have ever enjoyed to speak their minds openly, to organize massively as they saw fit, to stand in the center of their own capital in huge numbers and call on their government to account. They seized it with both hands.

From a government that fed them lies and propaganda, they demanded truth. In a country where all power belonged to one party, they demanded the rights of democracy. They asked for the chance to honor the best in themselves--and for that, they demanded the rights to be free to speak and free to choose.

If you have ever looked at that famous photo of the lone man in the square, facing a column of tanks, and been deeply moved, then I would say you have understood the heartfelt cry we now refer to by the shorthand of Tiananmen.

Whatever the complex forces still playing out beneath the surface in China, that uprising was a message about the universal desire for freedom, a message with which--however muffled it may often seem--it would be richly rewarding to keep faith.

Claudia Rosett, a journalist-in-residence with the Foundation for Defense of Democracies, writes a weekly column on foreign affairs for Forbes.com.

 

[Yrys]

Hong Kong holds Tiananmen vigil, BBC News


Hong Kong Tiananmen Vigil Is Enormous and Somber, NY times

Tens of thousands of people took part in a candlelight vigil at Hong Kong's Victoria Park
on Thursday to mark the 20th anniversary of the crackdown on the pro-democracy
movement in Beijing's Tiananmen Square in 1989.

HONG KONG — Throngs of men, women and children gathered at a park here on Thursday evening
for an enormous, somber candlelight vigil to mark the 20th anniversary of the Tiananmen Square
killings.

The organizers said that 150,000 people joined the vigil, tying the record set by the first anniversary
vigil in 1990 and dwarfing every vigil held since then. The police estimated the crowd at 62,800, their
largest estimate for any vigil except in 1990, which they put at 80,000.

Even before the vigil began at 8 p.m., the tens of thousands of people assembled represented the largest
crowd for the annual event here in recent years. The only crowd since the early 1990s that came remotely
close was in 2004, when the fifteenth anniversary of the military crackdown coincided with a surge in
pro-democracy sentiment in Hong Kong.

Around the park on Thursday, numerous banners in Chinese demanded the vindication of the students and
other Beijing residents who perished during the Chinese government crackdown against the protesters.
There were people of all ages, from grey-haired retirees to young children whose parents accompanied
them to explain why they felt so deeply about an event that took place before they were born.

Yvonne Chow, a middle-aged social worker, said that she had come to the vigil every year for two
decades and was heartened to see the turnout on Thursday night. “I am very happy that people have
not forgotten the massacre in Tiananmen on June 4,” she said. “I am very sad because it destroyed
our hopes for democracy.”

Brian Cha, a 35-year-old interior designer, said that while the twentieth anniversary was an important one,
he also came because he was angered by recent comments by Donald Tsang, Hong Kong’s chief executive,
who suggested that critics of the crackdown should also take into account China’s many successes since
1989.

Carrie Ho, a 35-year-old marketer, said that she came to the annual vigil for only the second time partly
because of the Hong Kong government’s decision to bar some activists from entering the territory in recent
weeks. The government’s action undermined freedom in the territory, she said.

In 2004, organizers estimated the crowd at 82,000, though police then gave a lower estimate of 48,000. That
had been the largest vigil since 1991, when 100,000 attended. Heavy rainstorms dumped 1.45 inches of rain
on Hong Kong early Thursday morning, but the streets dried and the skies cleared through the day. The
crowds gathered under cloudless skies and a nearly full moon that rose past the skyscrapers to shine down
among the park’s palm trees.

When a large crowd showed up in 2004, it was after public pressure had forced the government to retreat
from plans to impose stringent internal security legislation sought by Beijing. The local government has not
sought since then to reintroduce the legislation. The push for democracy has lost some of its impetus in
Hong Kong over the past five years, as the economy has improved and as Mr. Tsang, who is more politically
adept, has taken office.

The success of Hong Kong residents in halting the internal security legislation in 2004, however, had an
indirect affect on allowing the vigil here to grow to the huge size it was this year. “Prisoner of the State,”
the secret journal of Zhao Ziyang, the general secretary of the Chinese Communist Party in the two years
leading up to the Tiananmen Square crackdown, has just been published here and has immediately sold out.
Mr. Zhao’s posthumous revelations about discord at the top of the Communist Party on how to respond to
the student protests — he opposed the crackdown — have revived discussion of the events 20 years ago
and Chinese-language copies of the book from Hong Kong are said to have been smuggled to the mainland.

In an addition to the usual schedule of the vigil, the organizers played an excerpt from a recording that
Mr. Zhao made of his journal. Mr. Zhao defended the students in Tiananmen Square, saying that they
wanted the Chinese Communist Party to correct its wrongs but did not seek to overthrow it.

Bao Pu, one of the three translators and editors of the book, said in a lunch speech at the Foreign
Correspondents’ Club here on Thursday that it would have been much harder to publish the book
here if the internal security legislation had been approved. He attributed the government’s retreat
to a huge march here on July 1, 2003, with a crowd that police put at 350,000 and organizers at
up to 700,000.

“Those people who were on the streets that day made a contribution,” Mr. Bao said.

 

[Yrys]

China's Tiananmen generation speaks, BBC News


Police Swarm Tiananmen Square to Bar Protests, NY Times

Police stopped journalists from reporting near Tiananmen gate,
across from Tiananmen Square, in Beijing on Thursday.

BEIJING — China blanketed Tiananmen Square with police officers Thursday, determined to prevent
any commemoration of the 20th anniversary of a military crackdown on pro-democracy protesters
that left hundreds dead.

Visitors to the sprawling plaza in central Beijing were stopped at checkpoints and searched, and
foreign television crews and photographers were firmly turned away. Uniformed and plainclothes
officers, easily identifiable by their similar shirts, seemingly outnumbered tourists.

A few pursued television cameramen with opened umbrellas trying to block their shots — a comical
dance that was broadcast on CNN and BBC. There was no flicker of protest. Other than the intense
police presence and the government’s blockage of some popular Internet services, the scorchingly
hot day passed like any other in the capital.

The scene was vastly different in Hong Kong, where throngs gathered at a park here on Thursday
evening for an enormous, somber candlelight vigil to mark the 20th anniversary of the Tiananmen
Square killings. The organizers said that 150,000 people joined the vigil, tying the record set by
the first anniversary vigil in 1990 and dwarfing every vigil held since then. The police estimated
the crowd at 62,800, their largest estimate for any vigil except in 1990, which they put at 80,000.

Hong Kong, returned by Britain to Chinese rule in 1997, is still semi-autonomous and is the only
place in China where large public gatherings are allowed to mark the anniversaries of the 1989
killings. The peaceful assemblage spilled out into nearby streets, shutting down traffic. Inside
Victoria Park, thousands listened to songs and speakers who recounted the events on the night
of the crackdown. A half-hour into the vigil, the lights in the park were extinguished and the
attendees lit a forest of white candles in inverted conical paper shields.

Around the park on Thursday, numerous banners in Chinese demanded the vindication of the
students and other Beijing residents who perished during the Chinese government crackdown
against the protesters. There were people of all ages, from grey-haired retirees to young
children whose parents accompanied them to explain why they felt so deeply about an event
that took place before they were born.

Gary Leung, a 42-year-old interior designer, came with his two daughters, aged 8 and 4. “I
want to see Tiananmen vindicated,” he said. “I feel very old — I hope the apology will come
before I die, and if not, my children will continue the struggle.”

China’s government has tried hard over the years to obliterate the memory of the huge student-
led protests that shook the Communist Party and captivated the world for weeks. An official
reacted angrily Thursday to a call by Secretary of State Hillary Rodham Clinton for a full public
accounting of the incident. “The U.S. action makes groundless accusations against the Chinese
government,” a Foreign Ministry spokesman, Qin Gang, told reporters at a regular briefing.
“We express strong dissatisfaction.“The party and government have already come to a c
onclusion on the relevant issue,” he said. “History has shown that the party and government
have put China on the proper socialist path that serves the fundamental interests of the
Chinese people.”

In a statement Wednesday, Mrs. Clinton urged China to publish the names of the dead, missing
or detained when the military crushed the protest, saying an accounting would help China “to
learn and to heal.” “A China that has made enormous progress economically and is emerging
to take its rightful place in global leadership should examine openly the darker events of its
past,” her statement said. She also called on Chinese authorities to release all prisoners still
jailed for taking part in the demonstrations and to stop harassing bereaved relatives, who
have formed a group called Tiananmen Mothers.

The president of Taiwan, Ma Ying-jeou, who has fostered closer ties to the mainland, also urged
China to confront the episode. “This painful period of history must be faced with courage and
cannot be intentionally ducked,” he said in an unusually strong statement.

Their remarks contrasted with the enforced public silence throughout China. There was no mention
of the day’s significance in Thursday’s Beijing newspapers. The state-run mass-circulation China
Daily led with a story about job growth signaling China’s economic recovery.

Access was blocked to popular Internet services like Twitter, as well as to many university message
boards. The home pages of a mini-blogging site and a video-sharing site warned users they would
be closed through Saturday for “technical maintenance.”

Some Internet users tried to evade the censors by referring to June 4 as May 35 on electronic bulletin boards or message sites. Others proposed wearing white, the Chinese traditional color of mourning, as a silent form of protest.

One government notice about the need to seek out potential troublemakers apparently slipped onto the
Internet by mistake, remaining just long enough to be reported by Agence France-Presse. “Village cadres
must visit main persons of interest and place them under thought supervision and control,” read the order
to Guishan township, about 870 miles from Beijing.

In a report released Thursday, the rights group Chinese Human Rights Defenders said 65 activists in nine
provinces have been subjected to official harassment to keep them from commemorating the anniversary.
Ten have been taken into police custody since late May, the group said. Dozens of others, mostly from
Beijing, are either under police guard or have been forced to leave their homes, according to the report.

Jiang Qisheng was imprisoned for four years in 1999 after he published a letter asking the government to
reassess the June 4th crackdown. “They started watching me in my apartment building on May 15,” he said
in a telephone interview Thursday morning from his Bejing apartment.

Ding Zilin, a retired professor and activist whose son was killed during the crackdown, told The Associated
Press: “They won’t even allow me to go out and buy vegetables,” she said. “They’ve been so ruthless to us
that I am utterly infuriated.”

A former key student leader of the demonstrations, Wu’er Kaixi, was detained Wednesday night at the
airport in Macao, a special administrative region in China. On Thursday afternoon he was sent back to
Taiwan, where he lives with his wife and two children. Mr. Wu’er, now a 41-year-old investment banker,
said he wanted to surrender to Chinese authorities and face trial because he has not seen his parents
in 20 years. “I also want to be in a courtroom so that I can talk,” he said in an interview Wednesday
night from an airport detention room. “We dissidents in exile, that’s what we do,” he said. “We try
very hard to come home, all of us, but the door is shut very tightly.”

Zhang Jing and Xiyun Yang contributed research, and Keith Bradsher and Mark McDonald
contributed reporting from Hong Kong.