Your new post is loading...
Your new post is loading...
No logic on China MacroBusiness (blog) A far greater irony is that many in the west who fear a Chinese economic collapse usually end up pointing the finger at China's political system and the lack of private enterprise or competition...
But back to the Four Corners story. I had a few other problems with the coverage, which like most economic reporting was quite superficial and lacked a rigorous foundation of analysis. Here are just a few:
Most funds for the Chinese stimulus came from borrowing. This is bad.
Of course funds came from borrowing. This is neither good nor bad. The detrimental effects of debt that we now acknowledge are usually related to debt used for speculation rather than real investment, yet the whole segment was devoted to identifying just how much real investment there is in China.This rate of investment is unsustainable
Chinese investment share of GDP is around 50%, potentially 54%, up from around 43% of GDP in the period prior to the financial crisis. Many commentators saw the pre-crisis levels as unsustainable as well. Certainly this level is high, but remember that the longer this lasts, the wealthier China will be and the more easily it will be able to handle a large-scale economic transition. There was no consideration of what sort of transition the Communist Party might have in mind to edge down from these levels, just as there was no consideration of how the Party created such high levels of investment.The rest of the world was unable to conduct stimulus on a similar scale
This is another contradictory claim. For some reason, China, still a poor country in per capita terms and one with apparently gross political disfunction from the entrenched rent-seeking Communist party, was the only one who could save the world from the financial crisis. Similar levels of public investment could be made in Europe or the United States if the political will was there.Shadow banking is a problem because debts are hidden
What we didn’t really see is a view on what would be different if debts were not hidden? There seems to be no consensus on what it means in any case, and very little understanding of the political willingness of the Chinese Communist party to use their monetary system for their social, economic and political goals. The substance of this and other criticisms of China boiled down to ‘debt is bad’. Ignoring of course the international imbalances and the massive debts much of the west have with China.Housing oversupply is 15%
This was strange. Surely more housing per person is a good thing. Some may be empty at the moment, but at some point there will be incentives for these home owners to occupy or rent these homes. And if you are thinking that they need lots of maintenance and might fall down before they are occupied, then you’ve identified another activity that can help in the transition to lower investment – maintaining current investments.
The author concludes that China was the only one who could save the west from the crisis, but now they will be unable to save themselves :
"But from my view most of the opinions in this documentary were blind repetition of contradictory views – that China was the only one who could save the west from the crisis, but now they will be unable to save themselves; that the Chinese political system was able to radically control production to maintain growth and employment, but now won’t be able to; that the answer to the problem that China does not yet have is to make the choices that the west has made, which didn’t stop them from having severe financial crises with lingering social impacts."
Sticking to its traditional policy of non-interference, China has adopted a cautious stance on the tug of war over Ukraine. Faced with pressing separatist threats and energy needs, Central Asia would be another matter.
The puzzling crisis that is gripping Ukraine, with Russia annexing the Crimean peninsula after the shift of power in Kiev from the Moscow-leaning government of ousted president Victor Yanukovych to a Western-backed leadership, could lead to a misalignment of interests between the Kremlin and Beijing - something new when it comes to geopolitical competition that sees the Russian President Vladimir Putin face off with the United States and European Union (EU).
Over the past decade, China and Russia have often joined hands in torpedoing Western initiatives regarding a wide range of armed conflicts and international crises, not least vetoing several United Nations Security Council resolutions against the Syrian regime of Bashar al-Assad and "rogue" states such as Iran, Sudan, Myanmar and North Korea.
The Chinese leadership has repeatedly stated that it will not interfere in Ukraine's domestic affairs and has called for dialogue to resolve the ongoing dispute. In this regard, it has put forward a proposal to create an international coordination mechanism committed to favoring a political way forward and has urged the international financial bodies to facilitate Kiev's economic recovery.
China is Ukraine's third-largest commercial partner after the European Union and Russia. Total trade in goods between the two countries was worth more than 8 billion USD in 2012, according to data from Eurostat and the International Monetary Fund (IMF).
The Middle Kingdom is the biggest buyer of Ukrainian weapons. Kiev exported 690 million USD in arms and equipment to China only in 2012, according to the Stockholm International Peace Research Institute (SIPRI), and it is worth noting that the first aircraft carrier of the Chinese People's Liberation Army Navy (PLAN), Liaoning, is in reality a refurbished Ukrainian vessel.
Well written by Emanuele Scimia , who is a journalist and geopolitical analyst based in Italy.
North Korea reportedly test-fires 16 more short-range rockets into the Sea of Japan.
A South Korean military official, speaking on condition of anonymity, said North Korea fired the short-range rockets into the Sea of Japan between about 1:00 a.m. and 2:30 a.m. local time on Sunday (1600 GMT Saturday).
In a similar move on Saturday, Pyongyang test-fired 30 short-range missiles into the Sea of Japan amid calls by Washington and Seoul to stop the so-called acts of provocation.
North Korea has frequently announced that its missile tests are solely for the purpose of self-defense. Last week, Pyongyang said it would also strengthen its nuclear deterrence for self-defense in the face of US threats.
A standoff with the Philippines appeared more important for China’s Coast Guard than a search for survivors. - By Bill Hayton
China’s response to the disappearance of Flight MH370 has been an impressive deployment of a combined flotilla of military and civilian ships. At the same time voices in China’s official media have criticized the Malaysian-led operation. But a closer look at China’s response raises some interesting questions about its government’s choice of priorities. In the crucial first few days of the search for the airliner and the 239 people on board, Beijing prioritized its territorial battle with the Philippines over the hunt for possible survivors.
Flight MH370 disappeared from civilian radar screens over the South China Sea, between Malaysia and Vietnam in the early hours of Saturday March 8, local time, but the world was not alerted until the plane failed to land in Beijing at 6:30 a.m. Shortly afterwards a commercial bulk carrier, the Tai Shun Hai operated by COSCO, which happened to be sailing nearby, changed course and, on Sunday, became the first Chinese vessel to arrive in the area where the plane was thought to have crashed.
During the course of Saturday, several Chinese government ships were tasked to the scene. The first to actually join the search was China Coast Guard vessel 3411, described in official media as being, “on duty in nearby sea areas.” According to the official news agency Xinhua, this vessel reached Vietnamese waters at 1 p.m. on Sunday, about 36 hours after the plane was declared missing. A Chinese frigate, the Mianyang, “which was on a mission in the Nansha [Spratly islands’] waters when receiving the command”, according to Xinhua, “left for the suspected area at about 11:50 pm Saturday night.” It arrived there at 3:50 a.m. on Monday.
Bill Hayton is the author of South China Sea: Dangerous Ground, to be published later this year by Yale University Press.
Bill Hayton's ominous conclusion : We now know that there was no crash site in the South China Sea. But what if there had been? What if, by some miracle, a group of survivors had been clinging to a life raft in the waters between Malaysia and Vietnam? That two-day delay in reaching the search area could have been the difference between life and death. China’s Coast Guard appears to believe that grabbing territory is more important than that.
Analysis By Irina Sukhoparova
Chinese authorities have turned out to be at the crossroads with no clear strategy regarding the Ukrainian crisis, as any definite stance would have a negative impact on relations with one of its main partners.
From the first days Ukrainian turmoil has gone beyond Ukrainian borders attracting more and more countries, parties involved and influencing various aspects of relations between nations. While the fiercest battle has broken out between the US/EU and Russia, with West taking up economic and diplomatic arms against Russia, little was said about Chinese government caught in between two poles.
China is claiming hundreds of islands and reefs, along with millions of square kilometers of ocean, from Japan, the Philippines, Malaysia and Vietnam.
by EDWARD N. LUTTWAK
China is claiming hundreds of islands and reefs, along with millions of square kilometers of ocean, from Japan, the Philippines, Malaysia and Vietnam. It also claims most of the Indian state of Arunachal Pradesh. For the countries resisting Chinese demands, events in Ukraine cannot be reassuring. It is already clear that Russian President Vladimir Putin will achieve his aim of changing the borders -- and will not be satisfied with just the region of Crimea.
Putin's plan is to separate all the territory east of the Dnieper River into a new state, "Novy Russia," that could become the Russian Federation's 22nd republic. This territory on the east bank of the Dnieper is many times larger than the Transnistria ministate Russia seized from the Republic of Moldova. Transnistria is also separated from Russia proper, while Novy Russia would seamlessly extend Russian territory down to the Black Sea, including Crimea.
Given the advance warning -- all the detailed planning, down to the design of a Novy Russia flag, could not be kept secret -- the failure to anticipate Putin's move or at least react effectively is very disappointing. First came the empty words: European prime ministers all seemed to use the same speechwriter, because they all said the seizure of Crimea was "unacceptable." Then, by ruling out any counter-move, they made it clear they would, in fact, accept it.
Carl Bildt, Sweden's foreign minister, tweeted his opposition to Russia's actions. One doubts the tweet terrified Putin.
The truth is that these days, only Germany counts in Europe, and Chancellor Angela Merkel has no intention of imposing economic sanctions on Russia.
U.S. Secretary of State John Kerry did not do any better, resorting to the childish playground threat of not inviting Putin to the next G-8 meeting -- soon to be the G-7, perhaps.
President Barack Obama, for his part, had a long telephone conversation with Putin -- at the end of which the Russian president issued a pair of noes: no, he would not withdraw from Crimea, and no, he would not accept the removal of his favorite Ukrainian president by the Kiev mob.
Further EDWARD N. LUTTWAK refers to President Obama as the "Off-duty Policeman" who is both " tired and disappointed:
"It is obvious by now that Obama is tired and disappointed. If he were a British or Japanese prime minister, his colleagues would vote him out, allowing him to rest. But in the U.S. system he must serve out his full four years, as if it were a prison sentence."
Edward N. Luttwak is a senior associate for the Center for Strategic and International Studies. He has served in the U.S. as a consultant to the Office of the Secretary of Defense, the National Security Council, the U.S. Department of State, the U.S. Army, Navy and Air Force. He has also advised a number of allied governments as well as international corporations and financial institutions.
India’s armed forces, the world’s third largest active military, have set up “China cells” tasked to develop a better understanding of the country’s northeastern neighbour as a new round of border talks have failed to find a lasting solution to...
All western countries and China’s neighbours have much more valuable economic interests in China than the west did with Russia during the Cold War years. They cannot afford for these economic and financial links to unwind without causing severe damage to their own economies
Both Russia and China feel themselves under threat from the US, and their people are clearly behind their governments on this. Not without reason. NATO has pushed itself up to Russia’s borders. China feels encircled by US naval deployments armed with nuclear weapons in the East China and South China seas, together with the US’s wide network of defence relationships with China’s neighbours. If it comes to war, the US could incinerate many Chinese cities before China realised it was under attack and could launch its own modest armoury of nuclear missiles.
China may be a capitalist state now but many of its views are still hostage to old time Marxist views, which leads many to think that the west seeks to exploit the rest of the world. This leads them to conclude that, as China rises, the US will feel compelled to resist — ironically a conclusion that many conservative western analysts share.
China may not be able to project much long distance naval power but it can nearer home with its growing fleet of quiet submarines and surface ships. These will stymie some of the US’s power at a time of a fall in US military spending. In the jargon this means “sea denial” rather than “sea control”. It is unlikely in the foreseeable future that China will be able to threaten its immediate neighbours. Nevertheless, China has or will soon have enough naval strength to remind the US that any serious conflict could quickly lead to all out war.
The US may not have primacy any longer but it will long be powerful enough to put a halt to a desire for hegemony on China’s part although there is little or no evidence that China has such ambition. At most, China wants to see the Monroe Doctrine.
"Both Russia and China feel themselves under threat from the US, and their people are clearly behind their governments on this."
"China may be a capitalist state now but many of its views are still hostage to old time Marxist view"
"The balance of power is beginning to shift in China’s favour. It has been able to redeploy forces, once in the north aimed at Russia, to other parts of China. "
China's growing near water fleet means “sea denial” rather than “sea control” to US navy.
"Clearly, the US should do all it can to avoid conflict at sea. There are no US interests in the western Pacific that would make it worth it."
The train travelled nearly 11,000 km through Central Asia, Russia and eastern Europe to Germany on what is called the “Yuxinou” rail line.
1] CHINA’S RAILROADS
During his swing through Europe last week, China’s President Xi Jinping had time to stop at Duisburg, a major inland port and industrial hub in Germany. Xi was there to receive a train full of goods that had left Chongqing in southwestern China a fortnight earlier. The train travelled nearly 11,000 km through Central Asia, Russia and eastern Europe to Germany on what is called the “Yuxinou” rail line that was established in 2011 by a group of Chinese companies. Travelling by the traditional sea route through the Indian Ocean, the containers would have taken three more weeks to reach Germany.
The Yuxinou railway is the world’s second longest rail link, 2,000 km shorter than the one that connects Germany with Shanghai.
The Yuxinou rail is a big boost to China’s emerging industrial zones in landlocked southwestern regions of the country that are too far from Shanghai.
Xi’s presence at Duisburg helped showcase the president’s ambitious strategy of reviving the historic Silk Road that connected ancient China with Mediterranean Europe. Over the last one year, Xi has unveiled a plan to build a new Silk Road industrial belt between China and Central Asia, approved the development of a trans-Karakoram corridor through Pakistan, proposed transport links with Myanmar, Bangladesh and India, and called for a maritime silk route connecting the littorals of the Pacific and Indian Oceans. Beijing is also pushing for highspeed railway lines between China and Southeast Asia and building new rail corridors in East and Central Africa.
Xi’s vigorous rail diplomacy brings to mind the expansive railroad construction by the European great powers in Asia and Africa during the 19th and early 20th centuries. Railways then were about integrating far-flung colonial frontiers, projecting military power, and gaining access to natural resources and markets. If building railways has long disappeared as a critical feature of great-power strategies, Xi has put it right back at the very centre of China’s grand strategy in the 21st century.
2] RAILWAY NATIONALISM
Xi’s plans to build new “Iron Silk Roads” traversing the length and breadth of Africa, Eurasia and Southeast Asia are built on the foundation of a dramatic expansion of China’s national railway system over the last three decades. China’s rail network was at 27,000 km in 1949; it is now at more than 110,000 km. Last year, it had plans to invest more than $100 billion in railways. After initial imports of highspeed rail technologies, China has become a leader in the domain and is offering to build fast train networks in America and Europe.
Railways have been at the very heart of modern Chinese nationalism. For Sun Yat Sen, the founder of the Chinese Republic in early 20th century, the railways were about modernisation, industrialisation and, above all, national unification. Inspired by America’s transcontinental railway system, Sun sought to replicate it in China. Looking way ahead of his time, Sun dreamt of connecting China’s rail networks with those of Europe, the Indian subcontinent, the Middle East and Africa. A century later, Sun’s communist successors are close to realising that vision.
A must read by C. Raja Mohan' s fortnightly column, "The Great Game Folio" in the Indian Express is a must read for china watchers.
The author in conclusion compares India's dismal railroad expansion to the $100nbillion invested by the China in railroads.
"China has quadrupled its rail network since 1949, India has added barely 11,000 km to the rail network of nearly 54,000 km it had inherited from the British Raj"
"China’s rail network was at 27,000 km in 1949; it is now at more than 110,000 km. Last year, it had plans to invest more than $100 billion in railways."
Beijing's 'salami slicing' strategy speeds up in South China Sea The Nation The Second Thomas Shoal is the latest focus of Beijing's carve-up; Asean remains divided as contested maritime territory slips away
Recent tension in the South China Sea over the Second Thomas Shoal indicates rising Chinese assertiveness in its maritime claims. It could also prompt Washington to play a more active role in constraining Beijing's behaviour in the disputed waters.
Darshana M Baruah concludes:
"As Beijing's "salami slicing" gathers speed it is more important than ever for Asean to show it solidarity and stand up to its bigger neighbour, China. As it is unlikely that the disputes will be resolved in the near future, all countries should now vigorously push for a Code of Conduct (COC) in the South China Sea to avoid any miscalculations and military confrontations. "
Darshana M Baruah is a Junior Fellow at the Observer Research Foundation (ORF), New Delhi, and the associate editor of the ORF South China Sea Monitor.
Philip Bowring says for both Russia and China, each with its own racial cauldron, any redrawing of national borders based on ethnicity may set a dangerous precedent
With his actions in Ukraine, Vladimir Putin has opened a large can of worms with long-term global consequences, not least for Russia and China. He has simultaneously challenged two aspects of the world order set at the end of the second world war and the dismantling of European empires: the permanence of boundaries of states with sovereignty protected by the United Nations; and the inadmissibility of ethnicity as the primary identifier of states.
There have been many instances of interference by one country in another, not least by the US in Iraq. But Crimea is unique as an overt territorial expansion by a significant country.
Of course, Crimea was part of Russia, with a largely Russian-speaking population, until Soviet leader Nikita Khrushchev transferred it to Ukraine, presumably never contemplating the possibility of Ukraine becoming genuinely independent of Moscow.
But Putin has also set himself up as defender of the interests of ethnic Russians in Ukraine more broadly. This is a dangerous precedent for several reasons. Firstly, it suggests that acquisition of Russian-majority regions in eastern and southern Ukraine will sooner or later become a target for further Russian expansion, or that Moscow will use these people to disrupt an already chaotic Ukraine.
Far-sighted Ukrainians might do better to let these regions go now, but nationalism, not rationalism, rules on both sides of the border.
The lessons for China by Philip Bowring : "This all has lessons for China. Its acquiescence in Russia's action is contrary to its long-held commitment to the principle of non-intervention. For now, it sees advantage in what is a setback for the West.
However, Putin's actions raise two fundamental questions for China. First, will it now go down the road of self-proclaimed protector of ethnic Chinese everywhere, particularly in Southeast Asian countries with significant minorities? If so, will that increase its influence in the region or simply antagonise 500 million neighbours of Malay and Vietnamese origin, and the like?
The Malaysia Airlines plane saga sparked demands that China take the lead in the search because most of the passengers were Chinese citizens and ethnic Chinese from Malaysia. Judging by some mainland media, Chinese often assume Chinese ethnicity must equate with loyalty to the "motherland", that is, Beijing. Insults hurled at former US ambassador Gary Locke as a "banana" - yellow outside, white inside - show how prevalent racial assumptions are in China. Religion forms an additional barrier, given the fear and disdain that so many Russians and Chinese have for their Muslim compatriots.
China's sheer size compared with its southern neighbours gives it enormous clout to impose its will. Yet, like for the Russians, demography, once the spur to expansion and colonisation, now works in favour of its neighbours."
President Xi Jinping now heads up another important new leading group, further cementing his grip on power.
China has created a new leading group for reforming the military, according to state media.
On Saturday, Xinhua and other Chinese state media outlets reported that the first plenary meeting of the leading group for deepening reform on national defense and the military had been held. The new leading group will be led by President Xi Jinping, who already chairs the Central Military Commission (CMC). The new leading group is organized under the CMC.
A communiqué issued following the new leading group’s first meeting said that the goal should be to build an army that “obeys the Party’s command, is capable of winning battles and has a sound work style.” Xi has used similar language in the past.
Xi has also been active in promoting his favorite generals to high level positions. This is reflected in the new leading group on military reform, which will have two PLA generals, Fan Changlong and Xu Qiliang, as its deputies. Both men also serve as vice chairmen of the CMC, and were promoted to that position immediately before the 18th Party Congress where Xi assumed control of the CMC, indicating that they are close to Xi personally. Fan’s promotion in particular came as a surprise given that he was not even a member of the CMC before becoming one of its three vice-chairmen (two vice-chairmen come from the PLA). Appointing them as the leading group’s deputies also indicates the importance Xi is placing on the issue of military reform.
With this move Xi Jinping will succeed in making the PLA a truly professional and world class Military. Very impressive indeed.
Do not forget that Xi has made military reform an important part of his tenure as CMC chairman and General Secretary of the Chinese Communist Party.
She met China's president and first lady, toured a palace and played a little Ping-Pong.
Michelle Obama was greeted here first by clear air and a blue sky, a rarity and coincidence that locals celebrated. And second by President Xi Jinping and his wife, and Obama’s counterpart, Peng Liyuan, who hosted Obama for the day.
Xi met Obama Friday evening before the two first ladies had dinner and watched a traditional Chinese cultural performance at Diaoyutai State Guesthouse, which is used by Chinese officials to host visiting heads of state.
"I cherish my sound working relationship and personal friendship I already established with your husband," Xi told Obama through a translator, and also noted that he and President Obama stay in close touch between phone conversations and correspondence.
It was Obama's first time meeting Xi, and the cap of a busy first day in China. She began her day with Peng, who has been called China's first real first lady, at Beijing Normal School, a high school that prepares its students for study abroad.
Peng selected the school, which has a relationship with Sidwell Friends — the private school that Sasha and Malia Obama attend. Students from the Washington, D.C. school participate in an exchange program with the Beijing high school, and Malia saw one of her classmates on the tour.
At turns, the two first ladies appeared stiff together as they walked through the school, with Obama leaning over to a translator rather than chatting with Peng. But they had hours together to work out the awkwardness and later made small talk as Peng took Obama through the Forbidden City, an ancient emperor's palace in central Beijing.
"In China, we have an ancient idiom, which means when two people meet for the first time, they may feel as if they have known each other for many years," Peng said as she formally welcomed Obama.
Back to "Ping-Pong" Diplomacy ?
"She met China's president and first lady, toured a palace and played a little Ping-Pong."
Map above via the Economist:
The Kachin dilemma :Over the border, the Kachin conflict causes headaches for China
Myanmar’s northeast:China’s version of Crimea? by Nay Tun Naing
Reports are circulating that Chinese authorities proposed to the Myanmar government before the end of last year that Wa soldiers be assigned to the Kyaukphyu-Kunming oil pipeline project to take care of security.
The source was reportedly someone who monitors military affairs near the China-Myanmar border area. But the report, which has not been confirmed, also said that the Myanmar government refused the Chinese proposal.
The Kyaukphyu-Kunming gas pipeline passes through central Myanmar and is connected to Kunming in China. It is still too early to say whether the project will be a stable investment. The project was announced despite widespread public opposition. Due to a strong campaign against the project, conflicts and disagreements related to the construction of the gas pipeline are now occurring between the company and local residents.
Battles are now taking place along northern Shan State, through which the pipeline is expected to pass while extending the military’s strength.
The Chinese authorities, of course, do not want to see any more unrest about the pipeline, which will directly support Chinese interests. That is why, according to political analysts, China thought that soldiers from the Wa Solidarity Party, which is strongly influenced by the China, would be useful for maintaining pipeline security.
Based on the mutual understanding between Myanmar and China, the Chinese authorities pledged that Wa ethnic leaders would participate in talks and sign the nationwide ceasefire agreement, according to someone who monitors military affairs.
Despite all the instability, the gas pipeline project is not the only major infrastructure project China is pushing in Myanmar. Kyaukphyu-Kunming is only one project in the Chinese development strategy. As a second phase, China is striving to build the Kyaukphyu-Kunming railroad project. That is why the two countries have signed a Memorandum of Understanding-MoU.
On the other hand, the future of the Wa nationals is worrisome because the Wa are generally understood to be under Chinese influence. The United Wa State Army (UWSA), one of the most powerful armies among the ethnic armed groups, is now receiving Chinese aid.
Although the two sides have denied any such financial support, research has confirmed that it happened.
Some Chinese authorities met with the Wa leaders in Kunming of China last December. During a meeting of the Wa Solidarity Party held earlier this year, party leaders born in Myanmar had been substituted for Chinese leaders.
Mr Nay Tun Naing the author correctly points out that "Kyaukphyu becomes an important port in the string of pearls strategy. Oil and gas can be transported from offshore blocks in Myanmar. The Kyaukphyu-Kunming gas pipeline was built crossing the inland of Myanmar. An express railroad was also prepared. This project becomes the opening step in the string of pearls strategy."