Archive for ‘GeoPolitics’

16/12/2013

U.S. offers new assistance to Vietnam to patrol seas | Reuters

Sounds to me like “pouring oil on troubled waters”!

“The United States on Monday offered fresh financial assistance to Vietnam to boost maritime security on its borders, which comes as regional tension grows with China over territorial claims in the South China Sea.

A Vietnamese naval soldier stands quard at Thuyen Chai island in the Spratly archipelago January 17, 2013. REUTERS/Quang Le

On his first visit to Vietnam as secretary of state, John Kerry denied the new assistance had anything to do with China although he called for \”intensified negotiations and diplomatic initiatives\” between China and Japan on resolving differences in the East China Sea.

He repeated that the United States did not recognize a new air defense zone announced by China this month over the East China Sea.

via U.S. offers new assistance to Vietnam to patrol seas | Reuters.

15/12/2013

BBC News – North Korea ‘summons business people from China’

North Korean business people are being recalled from China following the execution of top official, Chang Song-thaek, says a South Korean report.

Kim Jong-un (North Korean leader) – centre, black coat; Hwang Pyong-so (Vice-departmental director of Party Central Committee) - far left, civilian clothes; Choe Ryong-hae, (Vice-marshal of the armed forces) - third from left, holding little green book; Jang Jong-nam (New defence minister) - 4th from left, holding big notes

Leader Kim Jong-un may be purging associates of Mr Chang, who was in charge of economic ties with China.

Mr Kim has been pictured by state media for the first time since the execution of Mr Chang, his uncle.

The South Korean government believes Kim Jong-un is trying to consolidate his power through a reign of terror.

The execution of the leader\’s uncle on Friday raised international concern about the stability of the nuclear-armed state.

North Korea has summoned back business people working out of the north-eastern Chinese cities of Shenyang and Dandong, sources told the South Korean news agency Yonhap.

They are in China to enhance bilateral trade and investment.

Another source told the agency Pyongyang planned to bring all officials and staff home from China in stages.

It appeared to be a crackdown on those perceived as loyal to Mr Chang, Yonhap said.

It could also be another sign that Mr Chang\’s downfall reflected discomfort at his enthusiasm for Chinese-style economic reform.

There have been other reports over recent days about officials being recalled to North Korea from abroad.

via BBC News – North Korea ‘summons business people from China’.

15/12/2013

BBC News – China’s Jade Rabbit rover rolls on to Moon’s surface

For those not familiar with Chinese mythology, what the Western people call the ‘man on the moon’, the Chinese call ‘ the rabbit on the moon’.  See – http://en.wikipedia.org/wiki/Moon_rabbit

China\’s Jade Rabbit robot rover has driven off its landing module and on to the Moon\’s surface.

Moon

The robotic vehicle rolled down a ramp lowered by the lander and on to the volcanic plain known as Sinus Iridum.

Earlier on Saturday, the landing module containing the rover fired its thrusters to perform the first soft landing on the Moon since 1976.

The touchdown in the Moon\’s northern hemisphere marks the latest step in China\’s ambitious space programme.

The lander will operate there for a year, while the rover is expected to work for some three months.

The Chang\’e-3 mission landed some 12 days after being launched atop a Chinese-developed Long March 3B rocket from Xichang in the country\’s south.”

via BBC News – China’s Jade Rabbit rover rolls on to Moon’s surface.

14/12/2013

U.S., Chinese warships narrowly avoid collision in South China Sea | Reuters

A U.S. guided missile cruiser operating in international waters in the South China Sea was forced to take evasive action last week to avoid a collision with a Chinese warship maneuvering nearby, the U.S. Pacific Fleet said in a statement on Friday.

A helicopter hovers over the Ticonderoga-class guided missile cruiser USS Cowpens in the northern Gulf March 12, 2003. REUTERS/Paul Hanna

The incident came as the USS Cowpens was operating near China\’s only aircraft carrier, the Liaoning, and at a time of heightened tensions in the region following Beijing\’s declaration of an Air Defense Identification Zone farther north in the East China Sea, a U.S. defense official said.

Another Chinese warship maneuvered near the Cowpens in the incident on December 5, and the Cowpens was forced to take evasive action to avoid a collision, the Pacific Fleet said in its statement.

via U.S., Chinese warships narrowly avoid collision in South China Sea | Reuters.

14/12/2013

Susan Rice Attempts to Solve the Japan-China Deadlock – FPIF

Sending Caroline Kennedy, a household name in the United States, to Japan as the ambassador indicates that President Obama has realized there is no better choice than using the tension in East Asia to capture and retain the attention of the American public to his amazing skills in handling Asia. While the jingoistic heat may stay for a while, the White House will cool it down soon.

Trans-Asian Railway

In 1940, the GDP (in US$ billion) of Germany, Japan, the UK and the U.S. amounted to US$387, $192, $316 and $943 respectively, with a ratio between the two Axis and the two Allied powers at 0.4599:1. In 2012, the GDP of China, Japan and the U.S. amounted to $8,358, $5,960 and $15,685 billion respectively, with a ratio between China and the U.S.-Japan team at 0.3861:1.  The GDP per capita of the U.S. in 2012 was US$49,965 and that of Japan was US$46,720, but the Chinese figure was merely US$6,188 which was less than 7% of the U.S.-Japan combined total.

Strategically speaking, without Taiwan as the “unsinkable aircraft carrier”, China’s air force is fragile around the islands in dispute, not to mention their wide generational gap behind the U.S. fighters.  Even laymen know that when Boeing is promoting the latest model—787 Dreamliner, China is still at the infant stage of manufacturing passenger jets. In terms of national strength and technology, China cannot match with the United States. The current hawkish talks will no doubt help newspapers sell better and online journals attract more eyeballs but insiders and military experts know that this confrontational game is asymmetrical. Nevertheless, both Tokyo and Beijing benefit from playing this game for domestic politics consideration in due course.

Prime Minister Shinzo Abe can make the best use of it to consolidate the public support for his Liberal Democratic Party during the newly won 4-year term at the House of Representatives by proving that his party is more protective of Japan’s national interest than the Democratic Party of Japan whose leaders like Naoto Kan and Yukio Hatoyama appeared to be weak at the bargaining table during their governance 2009-12.

To the Chinese Communist Party, the Sino-Japanese tension is the most gifted justification for fostering patriotism and weakening the idolization of the West by some netizens and scholars. All the parties in power know that this confrontational show will not lead to any combat and will not last long. When the calculation and pressure for election campaigning in Japan subside after 2016, serious negotiation will resume. Both sides do not want to see long-term shrinkage of trade volume and cannot afford to leave the crude and gas under the sea untouched forever. In fact, a delegation of leading Japanese business leaders, including Fujio Cho (honorary chairman of Toyota Motors) and Hiromasa Yonekura (honorary chairman of Nippon Steel and Sumitomo Metals) is having a week-long stay in Beijing to try to open the door for peace by meeting at least the Chinese Vice-Premier Wang Yang who is in charge of trade and commerce.

This 2014-16 period will therefore be the show time for the White House to mastermind the progress towards a warm feeling for talks. National Security Advisor Susan Rice revealed a hint on how the U.S. could pave the way for a Japan-China deal in her Georgetown University script. In the eighth paragraph of the speech titled “America’s Future in Asia”, she began by saying that when “it comes to China, we seek to operationalize a new model of major power relations” and then brought the audience to the Korean Peninsula, Iran, Afghanistan, “Sudan”, “sub-Saharan Africa” and even benefits of “the peoples of Africa”. Why is Africa dragged into this already complicated problem in a speech supposed to be on America-Asia when “it comes to China”?

Knowing that China is not just rushing to complete the 80,900-km Trans-Asian Railway project and the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor, but also going to provide US$1 trillion of financing to Africa in the years to 2025 through the state-owned banks including the Eximbank to further increase the Chinese stakes in this under-developed continent, Washington could bargain for favors towards the U.S., Japan and even the Philippines by offering, say, ‘less barriers’ to China’s advancement to Africa. To China, the natural resources in western Asia, Latin America and Africa represent the lion share of the commodities the 1.3 billion population needs. Here is the simple equation Susan Rice is going to show the pragmatic Chinese helmsman rulers: In the wake of China’s no match for the military strength of the U.S. worldwide, a smaller share in the east (East Asia) plus a larger (or less costly) share in the west (western Asia and Africa) can yield the same amount of sum in the end.  It is how and why a deal is possible.

via Susan Rice Attempts to Solve the Japan-China Deadlock – FPIF.

11/12/2013

India and China Move Ahead in the Asian Space Race – Businessweek

It’s been a rough year for the government of Indian Prime Minister Manmohan Singh. Economic growth has cratered and the currency has wobbled. The Hindu nationalist party just clobbered Singh’s Congress Party in state-level elections and opposition leader Narendra Modi is the favorite to replace Singh in nationwide elections in the first half of 2014.

Engineers working on the Mars orbiter at the Indian Space Research Organization in Bangalore

Amid all the gloom, Singh and the rest of India just received some much-needed good news. The country has an ambitious program to explore space, and today the government-run mission control announced that India’s first mission to Mars had cleared a major obstacle on its way to the Red Planet. The Mars Orbiter, informally dubbed the Mangalyaan, successfully carried out its first Trajectory Correction Manoeuvre (TCM), the Indian Space Research Organization said on its official website. That keeps the Mangalyaan on track to reach Mars by September next year.

India’s Mars probe (PDF) is the country’s entry in an Asian space race; for those of you keeping score, the Indians win points for aiming farthest. Japan in September launched the Epsilon rocket, designed to be an inexpensive way to put satellites into earth orbit. China is shooting for the moon, having launched its first lunar rover mission on Dec. 2. South Korea in January launched its first space rocket and last month unveiled plans for a lunar mission (albeit one that won’t launch until 2020).

via India and China Move Ahead in the Asian Space Race – Businessweek.

09/12/2013

Guest post: Senkaku – accelerating the China relocation trade? | beyondbrics

The debate continues on the motivations and risks of China’s decision on November 23 to announce an East China Sea Air Defence Identification Zone (ADIZ) which critically includes the disputed Senkaku Islands (know in China as Daioyu). There is little dispute that the standoff between China, Japan and the US has the capacity to escalate into something much more dangerous unless US Vice-President Joe Biden’s recent Asia trip is effective in ratcheting down tensions.

Has China miscalculated in terms of the rapid US response of B52 bomber sorties over the disputed Islands or prospective US naval deployment build-up in the region? Or is this the preliminary phase of a much longer-term slow creep by China in fulfilling its ambitions in establishing a more dominant regional role? Vietnam, the Philippines, Taiwan, Malaysia and Brunei (all US allies) are – like Japan – enmeshed in arguments with Beijing over relatively minor but potentially strategic bits of maritime real estate. Does the US administration have the willingness to back its allies on all fronts

Others have argued that the new Chinese leadership under President Xi Jinping are using nationalist sentiment to distract the Chinese public from the growth slowdown as well as solidify support among the Chinese military. Meanwhile Japan has been busily building up mutual defence and security ties across southeast Asia, and with Australia and India, as a hedge against Beijing. The state visit of the Japanese Emperor to India to has taken on even more significance.

While the geopolitical dynamics remain fluid and uncertain, a more definite consequence of the dispute may well be to accelerate the China relocation macro theme with major implications for FDI flows in the rest of the region. Up until now the primary motivation for foreign companies with large scale manufacturing operations to relocate from China has been the rapid rise in Chinese labour costs and the growing signs of worker shortages. The case was made most effectively by former World Bank Chief Economist Justin Yifu Lin (see Chandra, Lin and Wang (2012)) who suggested that:

industrial upgrading has increased wages and is causing China to graduate from labor-intensive to more capital-and technology-intensive industries. These industries will shed labor and create a huge opportunity for lower wage countries to start a phase of labor-intensive industrialization.

This process, which they called the Leading Dragon Phenomenon, offers an unprecedented opportunity to low-income countries where the industrial sector is underdeveloped and investment capital and entrepreneurial skills are leading constraints to manufacturing. They also note that low income countries such can seize the opportunity and resolve the constraints by attracting some of the FDI flowing currently from China, India and Brazil into the manufacturing sectors of other developing countries.

So the relocation of factories as a result of China economic rebalancing is a multi-year structural trend that is likely to be the dominant macro theme for developing economies for the next decade and beyond. But it is becoming more apparent that political risk mitigation in the face of resurgent Chinese regional territorial ambitions and aggressiveness will re-inforce the macroeconomic justification for diversifying away from China. Japanese outward FDI has increased for two years in succession, with 2012 the second highest increase in history ($122.4bn, an increase of 12.5 per cent over the previous year). Japan’s total outward FDI stock exceeded $1tn. However what is more interesting, as illustrated in the diagram below, is that Japan’s FDI flow to ASEAN has grown relative to that towards China.

Even if it’s a remote scenario, what if accidental engagement between Japanese and Chinese fighters in the newly announced ADIZ rapidly escalated into a more serious conflict or even declaration of war? The hundreds of billions of dollars of Japanese investment into factories in China would appear at risk. Even if we exclude the expropriation of factories directly, at the very minimum, the experience of Chinese nationalist protests over the Yasukune shrine visits by Japanese politicians or in the more distant past the US bombing of the Chinese embassy in Belgrade are clearly risks that policy makers and boards of Japanese multinationals must be increasingly worried about. And, unlike Chinese holdings of US treasuries that could be liquidated reasonably quickly, albeit potentially at the risk of self-destructively causing a meltdown in global financial markets, FDI in factory assets is, by its very nature, immobile. Moreover Japanese managers and workers in China would also be vulnerable. One might argue that there is a risk of a similar level of concern developing in Seoul or Taipei or perhaps even Washington.

via Guest post: Senkaku – accelerating the China relocation trade? | beyondbrics.

Ifty Islam is the managing partner of AT Capital in Dhaka, Bangladesh. Ifty.islam@ at-capital.com

08/12/2013

South Korea expands air defense zone to partially overlap China’s | Reuters

China two weeks ago that has sharply raised regional tensions.

Beijing\’s declaration of an air defense identification zone in an area that includes islands at the heart of a territorial dispute with Japan has triggered protests from the United States and its close allies Japan and South Korea.

Announcing the expansion of its own zone to include two territorial islands to the south and a submerged rock also claimed by China, South Korea\’s Defence Ministry said the move would not infringe on neighboring countries\’ sovereignty.

\”We believe this will not significantly impact our relationships with China and with Japan as we try to work for peace and cooperation in Northeast Asia,\” defence ministry head of policy Jang Hyuk told a briefing.

\”We have explained our position to related countries and overall they are in agreement that this move complies with international regulations and is not an excessive measure,\” he said, adding the ministry\’s top priority was to work with neighboring countries to prevent military confrontation.

via South Korea expands air defense zone to partially overlap China’s | Reuters.

03/12/2013

China’s yuan surpasses euro as 2nd most-used currency in trade finance: SWIFT | Reuters

China\’s yuan currency overtook the euro in October, becoming the second-most used currency in trade finance, global transaction services organization SWIFT said on Tuesday.

100 Yuan notes are seen in this illustration picture in Beijing November 5, 2013. REUTERS/Jason Lee

The market share of yuan usage in trade finance, or Letters of Credit and Collection, grew to 8.66 percent in October 2013. That improved from 1.89 percent in January 2012.

The yuan, also known as the renminbi, now ranks behind the U.S. dollar, which remains the leading currency with a share of 81.08 percent.

The top five countries using the yuan for trade finance in October were China, Hong Kong, Singapore, Germany and Australia, SWIFT said in a statement.

\”The RMB is clearly a top currency for trade finance globally and even more so in Asia,\” Franck de Praetere, SWIFT\’s Asia Pacific head of payments and trade markets said.

The RMB remained the 12th payments currency of the world, with a slightly decreased share of 0.84 percent compared with 0.86 percent in September.

RMB payments increased in value by 1.5 percent in October, while growth for all payments currencies was at 4.6 percent.

The world\’s second-largest economy is accelerating the pace of financial reform to promote its currency to international players beyond Hong Kong. China aims to lift the yuan\’s global clout and reduce its reliance on the U.S. dollar.

via China’s yuan surpasses euro as 2nd most-used currency in trade finance: SWIFT | Reuters.

01/12/2013

China, India spar over disputed border | Reuters

China on Saturday urged India not to aggravate problems on the border shared by the two nations, a day after the Indian president toured a disputed region and called it an integral part of the country.

China's President Xi Jinping (R) talks with India's Prime Minister Manmohan Singh (L) during a meeting at the Diaoyutai State Guesthouse in Beijing October 23, 2013. REUTERS/Peng Sun/Pool

The two countries, which fought a brief border war in 1962, only last month signed a pact to ensure that differences on the border do not spark a confrontation.

But Indian President Pranab Mukherjee\’s visit to the state of Arunachal Pradesh in the remote eastern stretch of the Himalayas that China claims as its own provoked a fresh exchange of words.

\”We hope that India will proceed along with China, protecting our broad relationship, and will not take any measures that could complicate the problem, and together we can protect peace and security in the border regions,\” China\’s official news agency, Xinhua, quoted Qin Gang, a spokesman of the country\’s Ministry of Foreign Affairs, as saying.

\”Currently Sino-India relations are developing favorably and both sides are going through special envoy meetings and amicable discussions to resolve the border dispute between our two countries.\”

Mukherjee was on a routine visit to Arunachal which has been part of the Indian state for decades, and where India has regularly been holding elections. But China has of late grown increasingly assertive and questioned New Delhi\’s claims over the territory, calling it instead South Tibet.

Mukherjee told members of the state\’s legislative assembly it was \”a core stakeholder in India\’s Look East foreign policy\” that intends to link the country\’s northeast with South East Asia.

\”We seek to make our neighbors partners in our development,\” Mukherjee said in Itanagar, the state capital. \”We believe that India\’s future and our own best economic interests are served by closer integration with Asia.\”

China lays claim to more than 90,000 sq km (35,000 sq miles) disputed by New Delhi in the eastern sector of the Himalayas, while India says China occupies 38,000 square km of its territory on the Aksai Chin plateau in the west.

via China, India spar over disputed border | Reuters.

Law of Unintended Consequences

continuously updated blog about China & India

ChiaHou's Book Reviews

continuously updated blog about China & India

What's wrong with the world; and its economy

continuously updated blog about China & India