Archive for ‘GeoPolitics’

03/06/2013

China not disputing Japan sovereignty over Okinawa

Reuters: “China does not dispute Japanese sovereignty over Okinawa and recent comments in Chinese newspapers merely reflects the views of some academics, a senior Chinese military leader said on Sunday.

China's People's Liberation Army (PLA) Deputy Chief of General Staff, Lieutenant General Qi Jianguo, adjusts his headset before speaking at the fourth plenary session of the 12th International Institute for Strategic Studies (IISS) Asia Security Summit: The Shangri-La Dialogue, in Singapore June 2, 2013. REUTERS/Edgar Su

“China’s position has not changed… Scholars can put forth any idea they want and they do not represent the views of the Chinese government,” the deputy chief of general staff of the Chinese People’s Liberation Army, Lieutenant General Qi Jianguo, told delegates at a security conference in Singapore.

China’s state-owned People’s Daily last month published an article by two academics that said Okinawa was part of an island chain that used to be a vassal of imperial Chinese dynasties before it was annexed by Japan in the 19th century, implicitly asserting Chinese claims over the island.

Okinawa, host to the bulk of up to 50,000 U.S. military personnel in Japan, is the largest island in the Ryukyu chain, which extends south towards Taiwan.

China is already involved in a tense dispute with Japan over the latter’s move last year to nationalise the nearby Senkaku islets, which the Chinese call Diaoyu, which sits astride key shipping lanes and undersea energy resources.

That row has escalated in recent months to the point where both sides have scrambled fighter jets while patrol ships shadow each other in nearby seas, raising worry that an unintended collision or other incident could lead to a broader clash.”

via China not disputing Japan sovereignty over Okinawa | Reuters.

03/06/2013

Nuclear weapons: India keeps pace with Pakistan, but focuses on China

Times of India: “China, India, and Pakistan all added 10 to 20 nuclear weapons to their arsenal last year even as the top four nuclear nations — US, Russia, UK and France — appear determined to retain their nuclear arsenals indefinitely even if they didn’t add to their inventory, the Swedish arms watchdog Sipri said in its 2013 handbook released this weekend.

NPT Nuclear Weapon States (China, France, Russ...

NPT Nuclear Weapon States (China, France, Russia, United Kingdom, US) Non-NPT Nuclear Weapon States (India, Israel, North Korea, Pakistan) States accused of having nuclear weapons programs (Iran, Syria, Saudi Arabia) States formerly possessing nuclear weapons program (Photo credit: Wikipedia)

Sipri’s world nuclear forces chart showed India bumping up its nuclear warheads from 80-100 in 2012 to 90-110 in 2013, keeping pace with Pakistan, which went from 90-110 weapons to 110-120. China meantime went from 240 nuclear weapons in 2012 to 250 in 2013, while France and UK froze their arsenals at 300 and 225 weapons respectively, as did Israel at 80 weapons.

Russia and the USA were the only two countries reducing their inventories of strategic nuclear weapons under the terms of the Treaty on Measures for the Further Reduction and Limitation of Strategic Offensive Arms (New START) as well as retiring ageing and obsolescent weapons. However, Sipri said, they, along with the three other recognized nuclear powers, France, Britain and China, are either deploying new nuclear weapon delivery systems or have announced programs to do so, and appear determined to retain their nuclear arsenals indefinitely.

As a result, although the total number of nuclear weapons in the world dropped from approximately 19000 in 2012 to 17265 in 2013, there was little to inspire hope that the nuclear weapon-possessing states are genuinely willing to give up their nuclear arsenals, the Sipri report said.”

via Nuclear weapons: India keeps pace with Pakistan, but focuses on China – The Times of India.

01/06/2013

Yuan may continue to appreciate

China Daily: “The yuan may be trading at below 6.1 against the US dollar as the Chinese currency continues to rise in the next few months, said a currency analyst at DBS Bank.

Yuan may continue to appreciate

A trader with an Asian bank in Shanghai said that the yuan’s valuation has peaked for a few days, while sales of dollars are easing.

An employee from the Industrial and Commercial Bank of China is counting the renminbi and Japanese yen in Huaibei, Anhui province, on May 17. The yuan has gained some 20 percent against the yen since the beginning of the year. Woo He / For China Daily

“Most of my peers working in Shanghai share the opinion that in the short term the renminbi may further appreciate against the US dollar,” the trader said.

China’s central bank, the People’s Bank of China, set the yuan’s midpoint at a record-high level of 6.1796 against the US dollar, while the spot yuan closed at 6.1345 per dollar on Friday.

It has been 12 months since Japan’s yen and China’s yuan became directly convertible, and the yuan has gained some 20 percent against the yen since the beginning of the year.

The appreciation of the yuan and the depreciation of the yen may cast risks to China’s currency as it’s the only currency which lacks the elasticity of East Asian economies, wrote Liu Yuhui, a financial researcher at the Chinese Academy of Social Sciences in an article published on Tuesday.

“It has been very difficult for us to guarantee orders from Japan these days because our price advantage disappeared,” said Yuan Hongtao, owner of a Hangzhou-based plastic production company, which exports some 40 percent of its products to Japan.

Analysts said that policymakers now have to figure out ways to help companies grow, as the renminbi is increasingly going global.

“While the benefits of direct convertibility between the renminbi and other currencies are obvious, including cutting the costs of exchange and reducing the risks brought by the fluctuation of the US dollar, it can also bring some risks to companies and regions in China whose growth is driven by foreign trade,” said Liu Yang, a foreign exchange analyst with Shanghai Gaofu Consultancy.

Currently, the yuan is directly convertible to the yen and the Australian dollar. New Zealand and China are in an early stage of negotiations for direct convertibility of each other’s currencies, according to a Reuters report on May 26.

“One important step to make the renmibi more internationalized is to use more yuan in direct investment overseas”, said Nathan Chow, vice-president and economist of group research with DBS Bank (Hong Kong) Ltd.

Chow said that only about 6 percent of China’s outbound direct investment uses renminbi, while 36 percent of foreign direct investment in China uses renminbi.

If regulations on ODI using renminbi are eased, a large amount of yuan will be released to overseas markets and help divert risks of the fluctuation of the US dollar, which is being used for foreign exchange reserves, said Chow.

He added that more big corporations may want to issue dim sum bonds — yuan-denominated bonds issued in Hong Kong — as the renminbi bond market grew significantly this year, driven by lower funding costs, improved macroeconomic conditions and the heightened expectations for yuan appreciation.

“Despite all these factors, market facilities for renminbi bonds still have a lot of catching up to do. Decision makers and financial institutions need to work closer with corporations, while continuing to improve the fundraising infrastructure in offshore renminbi centers such as Hong Kong and Singapore,” he said.

The yuan had appreciated 1.72 percent against the dollar since the beginning of the year, following a moderate gain of 1.03 percent throughout 2012.”

via Yuan may continue to appreciate |Economy |chinadaily.com.cn.

See also:

29/05/2013

Indian PM meets Japanese Emperor, discusses bilateral ties

Times of India: “Prime Minister Manmohan Singh on Wednesday called on Japanese Emperor Akihito and discussed bilateral ties and issues of mutual interest.

Singh accompanied by his wife Gursharan Kaur met the Emperor and the Empress of Japan at the luncheon at Imperial Palace ahead of his meeting with Prime Minister Shinzo Abe.

Emperor Akihito and Empress Michiko of Japan.

Emperor Akihito and Empress Michiko of Japan. (Photo credit: Wikipedia)

Singh, who is on a three-day visit to Japan to strengthen bilateral strategic ties, yesterday said India sees Japan as a “natural and indispensable partner” in its quest for stability and peace in Asia.

Noting that India and Japan are among the major actors in this region, he said, “It is our responsibility to foster a climate of peace, stability and cooperation and to lay an enduring foundation for security and prosperity”.

“India’s relations with Japan are important not only for our economic development, but also because we see Japan as a natural and indispensable partner in our quest for stability and peace in the vast region in Asia that is washed by the Pacific and Indian Oceans,” he said.

“Our relationship with Japan has been at the heart of our Look East Policy,” Singh said.”

via PM meets Japanese Emperor, discusses bilateral ties – The Times of India.

28/05/2013

* China Building Beachhead in Europe With $5 Billion Belarus City

Business Week: “China is building an entire city in the forests near the Belarusian capital Minsk to create a manufacturing springboard between the European Union and Russia.

China Building Beachhead in Europe With $5 Billion Belarus City

Belarusian President Aleksandr Lukashenko allotted an area 40 percent larger than Manhattan around Minsk’s international airport for the $5 billion development, which will include enough housing to accommodate 155,000 people, according to Chinese and Belarusian officials.

Lukashenko, who’s led his former Soviet state of 9.5 million for two decades, is turning to China to help revive a $60 billion economy that’s needed $6.5 billion of bailouts from the International Monetary Fund and Russia since 2009. The hub will put Chinese exporters within 170 miles of EU members Poland and Lithuania and give them tax-free entry into Russia and Kazakhstan, which share a customs union. It will also let them draw from a workforce that’s 99.6 percent literate and makes $560 a month on average, half the Polish wage.

“This is a unique project,” Gong Jianwei, China’s ambassador to Belarus, said on state television May 17, after the project won regulatory approval. “Nobody will be able to build anything like this industrial park anywhere else in Europe anymore. The infrastructure is so powerful.”

The “modern city on the Eurasian continent,” as it’s called in marketing documents, will be built around the M1 highway that links Moscow and Berlin via Belarus and Poland. A speed-rail network will tie the airport to the center of the city, which will be powered by a $10 billion nuclear plant, Belarus’s first, which Russia agreed to finance and build by 2018. The first stage of the park is scheduled to be completed by 2020, with the second stage taking another 10 years.”

via China Building Beachhead in Europe With $5 Billion Belarus City – Businessweek.

25/05/2013

* China seals first free-trade deal with Switzerland

Will this be the first of many FTAs?  Will the floodgates be opened?

BBC: “China has signed the framework of a free-trade agreement with Switzerland, which could become Beijing’s first such deal with a major Western economy.

Chinese secretary of trade and Swiss economy minister sign memorandum of understanding of free trade on 24 May

The signing ceremony took place during an official visit by Chinese Premier Li Keqiang to Switzerland.

Bilateral trade between the two countries is worth $26bn through imports and exports of watches, medicines, textiles and dairy products.

Mr Li said he hoped the deal would be felt beyond Switzerland’s borders.

“This free-trade deal is the first between China and a continental European economy, and the first with one of the 20 leading economies of the globe,” Mr Li told reporters after the two countries signed the preliminary agreement.

“This has huge meaning for global free-trade,” he added.

For his part, Swiss President Ueli Maurer described the agreement as a “real milestone”.

China is Switzerland’s third biggest trading partner after the European Union and America, with exports to China of watches, pharmaceuticals and machinery amounting to over $22bn.

It is no coincidence that China’s premier made Switzerland his first stop on his brief European tour, the BBC’s Imogen Foulkes in Berne says.

China has hinted it could also make Switzerland its financial centre of choice, if Beijing allows offshore trading of its currency, the yuan, she adds.”

via BBC News – China seals first free-trade deal with Switzerland.

23/05/2013

* China to lend $580 mln for Sri Lanka development projects

China is past-master at geopolitics. India is a novice.

Reuters: “China Development Bank Corporation will lend $580 million to Sri Lanka to help implement key infrastructure projects, a government document released on Wednesday showed.

English: Location map of Sri Lanka. Equirectan...

English: Location map of Sri Lanka. Equirectangular projection. Strechted by 101.0%. Geographic limits of the map: N: 10.2° N S: 5.5° N W: 79.2° E E: 82.3° E Made with Natural Earth. Free vector and raster map data @ naturalearthdata.com. (Photo credit: Wikipedia)

The loan will bring CDB’s total lending to Sri Lanka to more than $1.4 billion. China’s increasing influence in the island nation has stoked concerns in neighbouring India.

According to the document, $300 million of the loan will be spent on developing roads and $200 million on water supply projects, with the rest going to the national business school.

It said CDB had already extended $652 million for road development projects and $214 million for an irrigation project.

The loan announcement comes ahead of a four-day official visit to China by Sri Lankan President Mahinda Rajapaksa.

The $59 billion economy has increasingly relied on China for financing and technical expertise for reconstruction projects following the end of its long civil war in May 2009.

In March, China’s Export-Import Bank agreed a $278.2 million loan to finance a rail track to a port Beijing is building in Sri Lanka’s deep south of Hambantota.

China has loaned $1.5 billion for the port’s construction and $209 million for a nearby airport.

Similar port developments from Myanmar to Pakistan have raised Indian fears about Chinese political and military influence, but Rajapaksa has rejected such concerns, saying China’s presence in Sri Lanka is strictly business-related.”

via China to lend $580 mln for Sri Lanka development projects | Reuters.

See also: https://chindia-alert.org/political-factors/geopolitics-chinese/

19/05/2013

* China Premier Li Keqiang in India for first foreign trip

BBC: “China‘s Premier Li Keqiang is travelling to India in the first stop of his maiden foreign trip since taking office.

Chinese and Indian flags flie in New Delhi on 18 May 2013

Upon his arrival in Delhi, Premier Li will hold talks with Prime Minister Manmohan Singh, followed by dinner at the Indian leader’s residence.

Border tensions and trade ties are expected to be among the issues discussed by the two men.

The neighbours are the world’s two most populous countries.

Beijing hopes the visit will help build trust and a new strategic partnership to the benefit of both countries, China’s official news agency Xinhua said.

Delhi thought “very highly” of Mr Li’s decision to make India his first foreign stop and the aim of the talks was to “enhance trust”, Indian foreign ministry spokesman Syed Akbaruddin said.

A decades-long border dispute flared up last month after India accused Chinese troops of crossing the countries’ de facto border in the Himalayas.

The dispute over the territory in the Ladakh region has dogged the two countries since the 1950s.

Boosting trade ties is also expected to dominate the talks. China is already one of India’s top trading partners and both countries have already agreed a new $100bn (£65bn) bilateral trade target for 2015.

Premier Li will spend three days in India before travelling on to Pakistan, Switzerland and Germany.”

via BBC News – China Premier Li Keqiang in India for first foreign trip.

15/05/2013

* Arctic Council to rule on observer status for China

FT: “The Arctic is at the centre of a global geopolitical battle as China, India and Japan attempt to join the main body involved in setting the rules for future development of the polar region.

Oil drilling in the Arctic seas has become a highly contentious issue.

At a meeting in Kiruna in northern Sweden on Wednesday and Thursday, ministers from the five Nordic countries, the US, Canada and Russia will decide whether to let 14 countries and organisations gain the status of “observer” to the Arctic Council.

China is the most controversial name on the list, but its candidacy has the support of all the Nordic countries.

Canada and Russia have expressed concerns about further opening up the council, which already has six European countries as observers as well as various intergovernmental and non-government organisations. The US has said it is undecided over the decision, which needs unanimity.

The Arctic is viewed as an increasingly strategic area due to the presence of many resources such as oil, as well as the possibility of quicker shipping routes between Europe and Asia as the ice in the polar region continues to melt.

China, Japan, South Korea, Singapore, India, the EU, Italy and Greenpeace are among the bodies applying at the twice yearly summit for observer status, which would allow them to attend all meetings but not participate in the ministerial conferences.

The council, which was launched in 1996 and serves as a body for international rulemaking on the Arctic.

In a sign of the importance the US is now according the Arctic, secretary of state John Kerry arrived on Tuesday in Sweden for talks first in Stockholm with the government and then in Kiruna.

China has heavily wooed Nordic countries such as Iceland, with which it signed the first free-trade agreement with a European country last month.

Oil exploration in the Arctic has proved to be incredibly difficult, but more than a fifth of the world’s undiscovered oil and gas reserves is thought to be in the region, and there is also great scope for mining of various minerals in places such as Greenland, northern Sweden and Finland.

A northern sea route through the Arctic to the north of Russia could cut several weeks off shipping times and thousands of kilometres off distances between Europe and Asia, especially in the summer, which experts think could soon be ice-free in parts of the region.”

via Arctic Council to rule on observer status for China – FT.com.

14/05/2013

* India and China; making up, but what about trade?

FT: “Salman Khurshid, India’s foreign minister, is back from a trip to China last week, happy to see the end of a tense stand-off over a long-running border dispute. Settling that issue will re-open the way for a planned visit by Chinese Premier Li Keqiang to India and allow the two countries to concentrate on the big topic on Khurshid’s agenda: trade.

But here, too, relations between the region’s big powers are not entirely friendly.

Back in November 2011, India and China set a target for bilateral trade of $100bn for 2015. That’s quite a leap from $2.3bn a decade ago and marks a concrete step in bringing the two nations closer together.

But the balance of trade is strongly in China’s favour. Now Kurshid has put the November 2011 agreement “on pause” until the imbalance is resolved.

According to India’s department of commerce, India’s exports to China in April to December 2012 were worth $9.7bn. In the same period, China’s exports to India were worth $41.2bn – a bilateral trade deficit for India of $31.5bn, nearly a quarter of India’s entire trade deficit in the period.

Khurshid claimed not to have minced his words:

We said that let the trade imbalance be addressed upfront as an urgent priority, and then of course we can move to the next stage which is the regional trading arrangement.

What does the minister want from China? One target is better market access, especially for India’s IT and pharmaceuticals companies. Indian business leaders complain that exports to China would be much greater if China’s big state owned enterprises could be persuaded to source from foreign suppliers.

But others say a lack of competitiveness among Indian manufacturers contributes to the problem.

“China has a very competitive manufacturing sector that is able to produce at a large scale pretty efficiently and for reasonable prices,” says Louis Kuijs, chief China economist at RBS.

“Sometimes we would be inclined to think there is a lot of [Chinese] government policy behind this. People point to the subsidies that China’s government has given to industries in the past and companies having preferential access to loans. But in the bigger scheme of things, those subsidies aren’t the driving force. China is a bit ahead in industrialisation and has becomes very competitive globally.”

Kuijs doesn’t think this is about to change. Chinese manufacturers do good business in India in both consumer goods and capital goods. And he takes the view that, despite the current cyclical slowdown, both consumption and infrastructure investment will remain robust in India, so demand for Chinese products will continue to grow.

A little tinkering on a calculator provides a bit of good news for Indian trade, however. According to data from the World Trade Organization, India’s global merchandise exports grew faster than China’s between 2005 and 2012. Over the seven-year period, India’s exports grew at an average 18.3 per cent a year, against a figure of 16.3 per cent for China and 9.4 per cent for the world as a whole.

So, Indian exports are growing relatively quickly. But China’s lower growth comes from a far higher base. In 2012, China exported goods worth more than $2tn while India’s exports were worth $293bn. Even with their faster rate of growth, it will take a long time for India’s exporters to catch up on China’s lead.”

via India and China; making up, but what about trade? | beyondbrics.

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