China is no 2 to US in economic terms. Soon (if not already) it will be no 2 in military terms as well.
04/01/2014
Guangdong drug villagers wary days after big police raid | South China Morning Post
Five days after a huge pre-dawn raid in which police seized three tonnes of crystal meth, an uneasy quiet has descended on Boshe, a Guangdong village of 14,000.
Evidence of the crackdown can be seen throughout the community – empty houses with smashed windows, a police car at the entrance of the village and suspicious locals.
The few residents who will speak say many people vanished in the darkness when helicopters and 3,000 paramilitary troops and police officers raided the village, arresting 182 suspects.
More than a fifth of the households were suspected to be involved in or linked to the production and trafficking of drugs.
via Guangdong drug villagers wary days after big police raid | South China Morning Post.
04/01/2014
Chinese warship in Cyprus to aid Syrian chemical weapons removal | Reuters
A Chinese frigate which will help escort Syria\’s stockpile of chemical weapons out of the country docked in Cyprus on Saturday as part of a delayed international mission.
The Yancheng, a missile frigate, will accompany a Norwegian-Danish convoy which is in international waters off Syria, waiting for the go-ahead from international watchdogs overseeing the removal of the chemical arsenal.
The mission to ship chemicals from Syria has missed its December 31 target date and Chinese and Cypriot officials said it was unclear exactly when it would begin.
via Chinese warship in Cyprus to aid Syrian chemical weapons removal | Reuters.
03/01/2014
China is No. 1 risk for world economy: George Soros – The Tell – MarketWatch
Don’t worry too much about the U.S. or Europe, says George Soros.
The major uncertainty facing the world today is China, writes the billionaire investor in a column for the Project Syndicate website. He says: “There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years.”
The People’s Bank of China moved to rein in debt in 2012, but then the world’s No. 2 economy experienced “real distress,” Soros writes. So China’s Communist Party reasserted its supremacy, ordering steelmakers to restart their furnaces and bankers to ease credit.
China’s economy turned around, and party leaders also announced major reforms in November. “These developments are largely responsible for the recent improvement in the global outlook,” Soros says.
What happens next? The 83-year-old Hungarian-American sees two possibilities:
“A successful transition in China will most likely entail political as well as economic reforms, while failure would undermine still-widespread trust in the country’s political leadership, resulting in repression at home and military confrontation abroad.”
Beyond China, Soros argues that a lack of proper global governance is the “other great unresolved problem.” That could continue indefinitely, while the Chinese conundrum will come to a head in the next few years, he says.
via China is No. 1 risk for world economy: George Soros – The Tell – MarketWatch.
03/01/2014
China’s Runaway Train Is Running Out of Track – Bloomberg
A financial drama is unfolding in China as the new year begins. Last week, for the second time in six months, interest rates in the critical interbank lending market spiked above 10 percent, prompting fears of a liquidity crisis that would trigger mass defaults and cripple the world’s second-largest economy.
Western investors largely ignored the cash crunch and failed to grasp its potential significance. Although the situation has largely eased after the People’s Bank of China hastily injected at least $55 billion into the market, that isn’t the end of the story. These repeated crises are a sign that the foundations of China’s investment-driven growth model are crumbling — with unsettling implications for the rest of the global economy.
To those who wrote off China’s first banking seizure in June as a fluke, this latest episode appeared to come out of nowhere. They cast about for explanations: Perhaps some seasonal surge in cash withdrawals was to blame, or the U.S. Federal Reserve’s decision to taper its bond-buying policy. Optimists assumed the PBOC was tightening credit on purpose, as a warning to banks to rein in unsafe lending practices. With inflation at manageable levels, they reasoned, the People’s Bank of China had plenty of room to loosen monetary policy again and ease the cash crunch.
In fact, loose monetary policy is the problem, not the solution. Two simple words — bad debt — are the key to understanding why China has too much money, yet not enough. In the years since the global financial crisis, China has racked up impressive growth in gross domestic product by engineering an investment boom, fueled by a surge in easy credit. Total debt has risen sharply, from 125 percent of GDP in 2008 to 215 percent in 2012. Credit has spiraled to $24 trillion from $9 trillion at the end of 2008. That’s an additional $15 trillion – – the size of the entire U.S. commercial banking sector — lent out in just five years.
A lot of that money has gone into projects whose purpose was to inflate the country’s economic statistics, not to generate a return. Officially, China’s banks report a nonperforming loan ratio of less than 1 percent. In reality, they are rolling over huge amounts of bad debt, both on their own books and by repackaging it into retail investment products — many of them extremely short-term — that promise ever higher rates of return.
China’s banks can hide bad debt by playing this shell game, yet that doesn’t change the fact that they’re not getting their money back. With their capital locked up in existing projects, the only way they can finance the next round of big investments — and keep China’s GDP growth rates from collapsing — is by expanding credit. More and more of that new credit is now eaten up paying imaginary returns on the growing pile of bad debt.
This year, total credit in China grew about 20 percent, from an extremely high base — hardly tight money. Yet the cash needs of China’s banks aren’t what they seem. In addition to its declared balance sheet, each bank is juggling a host of dubious assets and hidden cash obligations (in the form of quasi-deposits) on what amounts to a “shadow” balance sheet. Rein in credit growth, even modestly, and there isn’t enough to go around.
That’s what Chinese authorities discovered in June, and again last week. In both instances, the People’s Bank of China didn’t take away the punch bowl by tightening credit, it merely tried to resist handing over an even bigger punch bowl. The result, both times, was a near-meltdown in the interbank lending market that threatened to unleash a cascade of defaults throughout the economy. Nor have the signs of financial stress been limited to the interbank market: Over the past few months, yields on Chinese government and corporate bonds have steadily risen, even as the economy slows.
The PBOC could, and did, halt the immediate liquidity crisis by injecting more cash. But in doing so, it effectively cedes control over monetary policy to the shadow banks. Runaway lending continues, bad debts mount even higher, and the need for more cash to paper over losses becomes that much more acute. Far from solving the problem, pumping in more cash just kicks the can farther down a dead-end street.
The implications of this brewing storm are bigger than many global investors realize. China’s credit-fueled investment boom has been a driver of metals prices and machinery exports. China has become the world’s largest automobile market, its largest oil importer, and its largest buyer of gold. Although foreign banks have relatively little direct exposure to Chinese financial markets, capital flows into and out of the mainland are potentially large enough to have a significant impact on asset classes not normally associated with China. A financial train wreck would send tremors through global markets.
The detailed blueprint for market reform published by the Communist Party in November encouraged many. China’s leaders clearly recognize that its economy needs to move in a new direction. But the first crucial step, weaning China away from its addiction to debt-fueled stimulus, is proving a lot harder than many imagined. China’s leaders are riding a runaway train that they don’t quite know how to stop. And they’re running out of track.
via China’s Runaway Train Is Running Out of Track – Bloomberg.
03/01/2014
Rubber Duck bounces back in Taiwan after exploding on New Year’s Eve | South China Morning Post
A giant yellow inflatable duck which exploded on New Year’s Eve returned to a Taiwan port on Friday after it was repaired and cleaned, organisers said.
Hundreds turned out in Keelung on the north of the island to welcome back the 18-metre-tall duck following two days of maintenance after it burst and deflated into a floating yellow disc on Tuesday.
It was the second time that a replica of the bath toy had burst while on show in Taiwan. The duck exploded just hours before crowds gathered to count down the New Year.
“The warmest welcome for the little yellow duck to come back to Keelung port. I am very excited and happy all over again,” fan Mandy Liu wrote on a Facebook page created for the Keelung exhibition.
Another fan, Wu Hsien-che, wrote: “We should pray to the gods and ghosts to ensure the exhibition can go on smoothly.”
The duck burst because of rising pressure caused by rapid temperature changes. Organisers had planned to stay open past midnight in anticipation of a large New Year’s crowd.
The Central News Agency cited an eyewitness as saying the rubber bird might have fallen victim to eagles which scratched it with their claws.
Devices have since been put inside the duck for 24-hour monitoring of temperature and pressure, organiser Huang Jing-tai told reporters.
Since 2007 the duck designed by Dutch artist Florentijn Hofman – which is 16.5 metres tall – has travelled to 13 cities in nine countries, including Brazil, Australia and Hong Kong, on its journey around the world.
via Rubber Duck bounces back in Taiwan after exploding on New Year’s Eve | South China Morning Post.
03/01/2014
Chinese helicopter saves 52 in Antarctica – Chinadaily.com.cn
All 52 passengers stranded on the Russian research ship Akademik Shokalskiy in Antarctica for nine days were rescued by a Chinese helicopter on Thursday.
The helicopter from the Chinese icebreaker Xuelong, or Snow Dragon, transferred the passengers to an ice floe close to Aurora Australis, an Australian Antarctic supply ship.
\”I think everyone is relieved and excited to be going on to the Australian icebreaker and then home,\” Chris Turney, leader of the Russian expedition, told the Associated Press by satellite phone from the Russian vessel, which has been stuck in the ice since Christmas Eve.
He posted on Twitter that the helicopter had arrived at the Akademik Shokalskiy, saying \”huge thanks to all\”.
The helicopter Xueying 12, or Snow Eagle 12, made six trips to pick up all the passengers and their luggage.
The passengers comprised scientists, tourists and journalists who were scheduled to follow in the footsteps of Australian Douglas Mawson and his 1911-14 expedition.
via Chinese helicopter saves 52 in Antarctica – Chinadaily.com.cn.
02/01/2014
BBC News – How Auld Lang Syne stormed China
Another intriguing cross-cultural anomaly is the British comedy film “Dinner for One” made in the days of black and white movies. It is a New Year’s Eve must for German TV watchers and also enjoyed by Dutch and many Nordic countries. See – http://en.wikipedia.org/wiki/Dinner_for_One and watch it: http://www.youtube.com/watch?v=6lzQxjGL9S0
The film concludes with a catchphrase all Germans know and sometimes use when appropriate: “The same procedure next year? The same procedure every year.”
One significant difference is that whereas Auld Lang Syne is still popular in the land of its birth (Scotland and UK), Dinner for One is – sadly – largely unknown in Britain.
“Auld Lang Syne is the simple Scottish folk song that has stormed the world. To mark the New Year, the unmistakable strains of Auld Lang Syne will be heard around the globe. The song, written by the Scottish poet Robert Burns, is a firm favourite in the English-speaking world. But perhaps less well-known is its huge popularity in China. The song is known as You Yi Di Jiu Tian Chang or Friendship Forever and Ever.
Most Chinese people could probably hum the tune and sing a few lines of it in Mandarin, but very few are able to sing the whole song. And even fewer have any idea about the song\’s origins.
The song is frequently played at school and university graduations, other formal gatherings, as well as parties. But as for the Chinese New Year, Auld Lang Syne, rarely gets a look in. The Chinese have their song to mark the occasion – Nan Wang Jin Xiao (Unforgettable Tonight).
But how on earth did the Scottish song catch on in the most populous nation on the planet?
A large part of the reason appears to be the Hollywood movie, Waterloo Bridge, made in 1940. It was a love story set amid war. During one beautiful scene in Waterloo Bridge, the two stars of the film dance to Auld Lang Syne.
The film was hugely popular in China at the end of the Second World War. It was then revived in the 1980s when the film was dubbed for a Chinese audience and widely played in the cinemas. For an older generation, it is considered a classic.
It\’s believed that because of the film, Auld Lang Syne is now widely taught in Chinese primary schools and high schools.
While the lyrics may be different here, the tune and the sentiment of the song remain very much the same.”
via BBC News – How Auld Lang Syne stormed China.
02/01/2014
China denounces U.S. for sending Uighur ‘terrorists’ to Slovakia | Reuters
China\’s Foreign Ministry criticized the United States on Thursday for sending the last three Uighur Chinese inmates at the Guantanamo Bay detention center to Slovakia, saying they were \”terrorists\” who posed a real security danger.
Yusef Abbas, Saidullah Khalik, and Hajiakbar Abdul Ghuper are the last of 22 Muslim minority Chinese nationals to be moved from the Guantanamo Bay military prison in Cuba, according to the Pentagon.
Slovakia\’s Interior Ministry confirmed that it would take in the three. Uighurs are a Turkic-speaking Muslim people from China\’s far western region of Xinjiang.
Chinese Foreign Ministry spokesman Qin Gang said the three were members of the separatist East Turkestan Islamic Movement, which Beijing labels a terror group.
\”They are genuine terrorists. They not only threaten China\’s security, they will threaten the security of the country that receives them,\” he told a daily news briefing.
\”China hopes that the relevant country … does not give asylum to terrorists, and sends them back to China as soon as possible.\”
Qin added that China did not appreciate a recent U.S. State Department call for Chinese security forces to exercise restraint following the latest outbreak of violence in Xinjiang, also blamed by Beijing on \”terrorists\”.
\”These remarks neglect the facts and are feeble,\” he said. \”We urge the United States to abandon their double standards when it comes to terrorism, and immediately stop saying one thing and doing another, to avoid sending the wrong message to violent terrorist forces.\”
via China denounces U.S. for sending Uighur ‘terrorists’ to Slovakia | Reuters.
02/01/2014
Taiwan’s Ma says ending China standoff a must for the economy | Reuters
Ending Taiwan\’s political standoff with mainland China is necessary to boost Taiwan\’s sagging economy and to help it integrate more effectively with the region, the island\’s president, Ma Ying-jeou, said.
China considers Taiwan a renegade province and has not ruled out the use of force to bring the island under its control. Economic ties, however, have grown considerably in recent years, especially since Ma took office in 2008.
In October, Chinese President Xi Jinping said a political solution to the standoff could not be postponed forever. But Ma later said he saw no urgency for political talks and wanted to focus on trade.
\”I fully understand that if the Taiwan economy is to expand further, we need to end the cross-strait standoff,\” Ma was quoted as saying in a statement posted on the Presidential Office\’s website.
The statement did not explain what concrete steps would be taken to end an impasse that has existed since Chiang Kai-shek and his ruling Nationalist Party fled from the mainland to Taiwan at the end of China\’s civil war in 1949.
Ma opened Taiwan to trade with China when he took office in 2008 and they have since signed economic agreements that have made mainland China Taiwan\’s largest trading partner.
But booming trade has not led to progress on political reconciliation or a lessening of military readiness on both sides.
via Taiwan’s Ma says ending China standoff a must for the economy | Reuters.
CHINDIA ALERT: You'll be living in their world, very soon 