China Digital Times

SECTION: World

• After The Olympics: The World in 2009

  

  The Economist released its annual predictions and insights for “The World in 2009″. Here is a summary of what the magazine foresees for China’s new agenda:

  

  - Policymakers will “strive to prevent economic growth from slowing too fast while curbing inflation” in accordance with the current stock market decline

  - The 20 year anniversary of the Tiananmen Square uprising will bring new demands for political change, both internally and externally. Internally will be the official 30 year commemorations of China’s “reform and opening” policy, and externally we’ll see hints at new reforms for the state media.

  - With the conclusion of the Olympics, there may be some political loosening. With the burden of feeling “constrained by a need to demonstrate a unity or purpose” alleviated, “the result could be a year of greater social turbulence.”

  - China’s relations with Taiwan will continue along its current path with “Taiwan’s President Ma Ying-jeou continu[ing] the efforts he has been making since his inauguration in May 2008 to defuse tensions with the mainland.”

  - Relations with Tibet will be particularly restless. As the 50th anniversary of the March 10th uprising comes closer, The Economist predicts there will be “recriminations” between China and the West if China cracks down on Tibetans’ efforts to mark the date.

  - January 1st will mark a new law taking effect that requires industries to cut water consumption and use more “clean energy” to promote a more “pro-green” image, but it will be “will be very reluctant to pledge any specific targets for cuts in carbon emissions” at the November 2009 meeting in Copenhagen.

  - China, with the help of Russia, may also send a probe to Mars in the later half of 2009.

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  • November 20, 2008 8:55 PM

• China Tightening Control in Tibet Region, Exiles Say

  

  As Tibetan exiles meet in Dharamsala, India to discuss their strategy in dealing with the Chinese government, Chinese officials have been keeping a tight rein on Tibetan areas. From the Los Angeles Times:

  Although it is difficult to say conclusively that the two events are linked, reports of tighter control, stepped-up patrols and increased paramilitary presence in Lhasa, the regional capital, and along major transport arteries coincide with a key strategy meeting attended by exiles in northern India this week.

  “We’ve monitored an even more intense crackdown in the past couple of weeks,” Kate Saunders, communication director with the advocacy group International Campaign for Tibet, said today. “The Chinese authorities have clearly been very rattled by the fact they were taken unaware this spring and summer.”

  Meanwhile, the Dalai Lama has called on his host country, India, to help Tibet. From Times of India:

  “India and Tibet is having the relationship of a ‘guru and chela’ (teacher and disciple) and when chela (disciple) is in trouble, the guru (teacher) must look after him,” the Nobel laureate said here.

  It has also been reported that a top policymaker for the Chinese government on Tibet has been fired, though the reasons are not yet clear. Reuters reports:

  Bi Hua was asked to step down recently as director of the No. 7 bureau of the Party’s United Front Work Department, the independent sources with knowledge of the case said, requesting anonymity for fear of repercussions.

  It was not clear what prompted Bi’s removal from the helm of the bureau, which oversees Tibetan affairs.

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  • November 20, 2008 1:35 PM

• China’s Hackers Stealing US Defence Secrets, Says Congressional Panel

  

  Owen Bowcott reports in the Guardian:

  China is stealing sensitive information from American computer networks and stepping up its online espionage, according to a US congressional panel.

  Beijing’s investment in rocket technology is also accelerating the militarisation of outer space and lifting it into the “commanding heights” of modern warfare, the advisory group claims. The strident warning, which may have a chilling effect on relations between the two Pacific powers, comes in the annual report of the US-China economic and security review commission due today.

  A summary of the study, released in advance, alleges that networks and databases used by the US government and American defence contractors are regularly targeted by Chinese hackers. “China is stealing vast amounts of sensitive information from US computer networks,” says Larry Wortzel, chairman of the commission set up by Congress in 2000 to investigate US-China issues.

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  • November 20, 2008 11:39 AM

• Once Denounced by Mao, Now at Rest in China

  

  John Leighton Stuart was an American born in China to missionary parents, and was the last U.S. ambassador to the country before ties were cut off in 1949. Forty-six years after his death, his wish to be buried in China has finally been fulfilled. From the New York Times:

  Mr. Stuart died in Washington in 1962. He had written in his will that he hoped his remains would some day be buried in China, where he had been born the son of Christian missionaries in 1876 and had helped found a prominent university, but where he was no longer welcome.

  For decades, the answer from Beijing seemed to be no.

  But on Monday, 46 years after his death and after years of sensitive negotiations about the political implications of such a burial, Mr. Stuart’s ashes were laid to rest at a cemetery near the eastern city of Hangzhou, about two hours south of Shanghai.

  A small ceremony honoring Mr. Stuart on Monday was attended by Chinese and American officials, including the mayor of Hangzhou and the United States ambassador, Clark Randt Jr., as well as several alumni of Yenching University in Beijing, the institution Mr. Stuart helped found.

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  • November 19, 2008 10:58 AM

• China Leader Set To Sign Peru Trade Deal

  

  The Financial Times reports that China is signing a new trade deal with Peru. President Hu Jintao arrives in Lima today for the Asia Pacific Economic Co-operation forum; he will be greeted by around twelve ministers and almost 600 business leaders. The chair of APEC’s advisory council, Juan Raffo says that China will soon overcome the US as its largest trading partner.

  Peruvian finance minister, Luis Valdivieso, explained to the Financial Times the important of diversifying its markets. “We are very concerned about the recession that is going on in the US [and] Europe and the slowdown in Japan. So for us, China becomes an important partner,” he said. “The US will remain an important partner because we are also starting to implement a free-trade agreement with them. I think what is important is that we diversify.”

  China now has 300 billion people that are comparable to citizens in the US and that figure is expected to grow. As Juan F. Raffo, the chair of the APEC business advisory board said, “Their 1.3bn citizens, minus the elderly, are sooner or later going to jump the fence and consume at developed-world levels.”

  China’s other investments in Peru include a $2.2 billion investment in the Toromocho copper mine.

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  • November 18, 2008 9:22 PM

• Chinese Automakers May Buy GM and Chrysler?

  

  With the U.S. auto industry in the midst of a crisis, Chinese media reports are saying that Chinese companies may buy up two giants, Chrysler and GM. From TheTruthAboutCars.com:

  Chinese carmakers SAIC and Dongfeng have plans to acquire GM and Chrysler, China’s 21st Century Business Herald reports today… The paper cites a senior official of China’s Ministry of Industry and Information Technology– the state regulator of China’s auto industry– who dropped the hint that “the auto manufacturing giants in China, such as Shanghai Automotive Industry Corporation (SAIC) and Dongfeng Motor Corporation, have the capability and intention to buy some assets of the two crisis-plagued American automakers.” These hints are very often followed with quick action in the Middle Kingdom. The hints were dropped just a few days after the same Chinese government gave its auto makers the go-ahead to invest abroad. And why would they do that?

  It is worth noting that this plan has not been mentioned widely (or at all) in the U.S. media reporting of the automakers’ current troubles. This article, from AP, talks about decreased sales in China as being one more nail in U.S. car makers’ coffins:

  The big automakers’ ability to weather the crisis hinges on drawing jittery customers like Yang back into dealerships, especially in China.

  The urgency is particularly acute for America’s big automakers — GM, Ford Motor Co. and Chrysler LLC — which have been battered by the U.S. economic meltdown and are lobbying the federal government for a $25 billion bailout that looks increasingly murky. GM has said it could run out of cash by year’s end without government aid.

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  • November 18, 2008 2:01 PM

• US Says Will Work with China on Product Safety

  

  In response to a spate of food safety controversies in recent years, the U.S. FDA will set up its first overseas office in China. From AP:

  U.S. Health and Human Services Secretary Mike Leavitt, speaking on the eve of opening of an FDA office in Beijing, said a new strategy was needed because the United States imported $2 trillion worth of goods a year, equal to four times the size of the Brazilian economy.

  “When one sees the enormity of that, it becomes clear you cannot inspect everything … we have to change our strategy from one of simple inspections at the border. We have to build quality into every product in every step of the process,” he told a news conference.

  The FDA office will be the first outside the United States and will be followed by two more in China this month and another one in India next month.

  Read also Xinhua’s report on this news, which says that China is also planning on setting up its own counterpart office in the U.S., though no date or location has been set yet.

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  • November 18, 2008 1:52 PM

• Opinion: America’s Own Melamine Woes

  

  James E. McWilliams, in an op-ed in The New York Times, wonders how America can blast lax Chinese regulations over melamine found in its food supply when America is hardly melamine free itself:

  For all the outrage about Chinese melamine, what American consumers and government agencies have studiously failed to scrutinize is how much melamine has pervaded our own food system. In casting stones, we’ve forgotten that our own house has more than its share of exposed glass.

  To be sure, in China some food manufacturers deliberately added melamine to products to increase profits. Makers of baby formula, for example, watered down their product, lowering the amount of protein and nutrients, then added melamine, which is cheap and fools tests measuring protein levels.

  But melamine is also integral to the material life of any industrialized society. It’s a common ingredient in cleaning products, waterproof plywood, plastic compounds, cement, ink and fire-retardant paint. Chemical plants throughout the United States produce millions of pounds of melamine a year.

  Given the pervasiveness of melamine, it’s always possible that trace elements will end up in food.

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  • November 17, 2008 10:03 PM

• China Hints at Aircraft Carrier Project

  

  The Financial Times reports that China may have plans to build an aircraft carrier:

  The comments from Major General Qian Lihua, director of the ministry’s Foreign Affairs Office, come amid heated speculation within China and abroad that the increasingly potent naval arm of the People’s Liberation Army has decided to develop and deploy its first aircraft carrier. Traditionally, a carrier would accompany and protect a battle group of smaller ships.

  The Pentagon said this year that China was actively engaged in aircraft carrier research and would be able to start building one by the end of this decade, while Jane’s Defence Weekly reported last month that the PLA was training 50 students to become naval pilots capable of operating fixed-wing aircraft from such a ship.

  Maj Gen Qian declined to comment directly on whether China had decided to build a carrier, but in the defence ministry’s most forthright statement yet on the issue he made clear that China had every right to do so.

  “The navy of any great power . . . has the dream to have one or more aircraft carriers,” he said in the interview, which aides said was the first arranged by the defence ministry on its own premises. “The question is not whether you have an aircraft carrier, but what you do with your aircraft carrier.”

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  • November 17, 2008 9:53 PM

• Chinese President on Cuban Visit

  

  President Hu Jintao has arrived in Cuba on his tour of Latin America. China is the island’s biggest trading partner after Venezuela. From the BBC:

  China has seen its trade with Latin American nations climb from $13bn in 2000 to more than $100bn in 2007.

  “My visit is aimed at increasing friendship and co-operation between our two nations, and working together with our Cuban comrades to build a promising future,” Mr Hu said in a statement. …

  China, a modern-day economic powerhouse in a world of financial uncertainty, sees Cuba with its need for investment and political support as an important ally in its long-range plans to strengthen and expand its ties with the rest of Latin America, he adds.

  After Cuba, Hu will head to Peru for the Apec (Asia-Pacific Economic Co-operation) summit in Lima. The AP’s Frank Bajak reports that China isn’t letting the global financial crisis get in the way of its ambitions in Latin America:

  China’s trade with Latin America was $102 billion last year, but already in the first nine months of this year it reached $111 billion, Chile’s ambassador to Beijing, Fernando Reyes, told The Associated Press. That compares with U.S.-Latin American trade of $560 billion last year.

  Hu’s government insists its interests are not just commercial. In its first policy paper on ties with the region, China’s foreign ministry suggested it might help Latin American countries reduce their debts. It also said it wants to help Latin American nations narrow the gap between rich and poor.

  To that end, China last month bought into the Interamerican Development Bank with a very modest $350 million investment for social, anti-poverty related projects. That compares to Washington’s 30 percent stake in a fund that exceeds $100 billion.

  The money may be small, but the symbolism is big: The United States isn’t the only world power Latin America can turn to for help.

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  • November 17, 2008 9:41 PM

• Bank of America to Pay $7 Billion for China Construction Stake

  

  Bloomberg reports on Bank of America’s decision to invest $7 billion into China Construction Bank:

  Bank of America, which is buying Merrill Lynch & Co., will boost the stake in China’s No. 2 bank to 19.13 percent from 10.8 percent, the Charlotte, North Carolina-based lender said today. It will buy shares from China SAFE Investments Ltd., a state investment arm that is the Beijing-based bank’s biggest stakeholder.

  Bank of America isn’t funding the purchase with proceeds from the government’s Troubled Asset Relief Program, or TARP, said spokesman Scott Silvestri. Merrill received $10 billion through the Treasury’s $250 billion bank-rescue package. …

  Bank of America first invested in China Construction in June 2005, buying a $3 billion stake before the lender was publicly listed. It invested another $1.9 billion in June. The value of its holding almost tripled, to $14.5 billion, as of Sept. 30, a regulatory filing showed.

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  • November 17, 2008 8:57 PM

• Study Abroad Flourishes, With China a Hot Spot

  

  According to a recent annual report by the Institute on International Education, last year saw strong growth among educational exchanges between the U.S. and China. From The New York Times:

  The number of Americans studying in China increased by 25 percent, and the number of Chinese students studying at American universities increased by 20 percent last year, according to the report, “Open Doors 2008.”

  “Interest in China is growing dramatically, and I think we’ll see even sharper increases in next year’s report,” said Allan E. Goodman, president of the institute. “People used to go to China to study the history and language, and many still do, but with China looming so large in all our futures, there’s been a real shift, and more students go for an understanding of what’s happening economically and politically.”

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  • November 17, 2008 8:44 PM

• US Man Admits Illegal Space Data Exports to China

  

  U.S. citizen Shu Quan-Sheng has entered a guilty plea in the case charging him with selling rocket technology to China in violation of U.S. law. Reuters reports:

  Shu admitted that from 2003 through October of 2007 he violated the U.S. arms export control law by providing China with assistance in the design and development of a cryogenic fueling system for space launch vehicles.

  He admitted that in 2003 he violated the same law by exporting to China military technical data from a document about designing and making a liquid hydrogen tank and various pumps, valves, filters and instruments.

  Shu also pleaded guilty to offering bribes of nearly $190,000 to Chinese government officials to win the award last year of a $4 million contract for a hydrogen liquefier project for a French company Shu represented, the department said.

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  • November 17, 2008 7:28 PM

• Team ‘Chimerica’

  

  Niall Ferguson, a professor of history at Harvard University, is the author most recently of “The Ascent of Money: A Financial History of the World.” He writes in the Washington Post:

  Future historians, I suspect, will look back on Saturday’s anticlimactic G-20 gathering in Washington less as Bretton Woods 2.0 and more as a rerun of the London Economic Conference of 1933. Back then, representatives of 66 nations completely failed to agree on a concerted international response to the Great Depression. The fault lay mainly with the newly elected U.S. president, Franklin D. Roosevelt, who vetoed European proposals for currency stabilization.

  This time around, it wasn’t the newly elected Democrat but the outgoing Republican who wielded the veto. Even before his counterparts reached Washington, President Bush made it clear that recent events had done nothing to diminish his faith in free markets and minimalist regulation. Over the weekend, it was the United States that resisted European calls for a new international regulatory body, opposed significant redefinition of the International Monetary Fund’s role and showed no interest in the idea of a global stimulus package.

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  • November 17, 2008 8:50 AM

• US Issues Alert Over Chinese Melamine

  

  The U.S. Food and Drug Administration has issued an alert after discovering melamine and cyanuric acid in Chinese food imports:

  The new alert from the US Food and Drug Administration (FDA) covers a range of Chinese products including drinks, sweets, baby and pet food.

  It also allows US inspectors to seize any Chinese products suspected of being contaminated.

  Any food items from China that contain milk will be stopped at the border and tested by U.S. authorities:

  Companies in the United States have recalled several products, including nondairy creamer and a type of candy, which are primarily sold in Asian markets, because of melamine concerns but to date the contamination here was not thought to be widespread.

  “We’re taking this action because it’s the right thing to do for the public health,” said Steven Solomon, an FDA deputy associate commissioner…

  The FDA routinely blocks imports of individual food products, but it is rare for the agency to block an entire category of foods from a particular country. Last year, the FDA blocked five types of farm-raised seafood as well as vegetable protein from China because of repeated instances of contamination from unapproved animal drugs and food additives.

  The Chinese government is still trying to repair domestic and international faith in Chinese food products.  Earlier this month, two milk inspectors for Mengniu, one of China’s largest dairy companies, were badly beaten during a safety check at one of their supplier’s:

  “According to an initial analysis, this incident was triggered by (Li’s) [the inspector's] decision that this truck’s milk was not in compliance,” it quoted an unnamed Mengniu official as saying.

  Li and another inspector, Zhang Liwei, were set on by a group of about five club-wielding men as they left work later that day.  Li was badly beaten, suffering numerous injuries over his body, including fractured vertebra, and was in a coma for “a long time”, [the China Youth Daily] said, without specifying Li’s current condition.  Neither victim could identify the milk supplier nor the attackers as both inspectors had only recently been rotated to Tangshan.

  Police were investigating, the paper said.

  An op-ed in the International Herald Tribune looks at China’s melamine crisis from the perspective of American agriculture:

  For all the outrage about Chinese melamine, what American consumers and government agencies have studiously failed to scrutinize is the place of melamine in America’s own food system. In casting stones, we’ve forgotten that our house has its own exposed glass.

  To be sure, in China some food manufacturers deliberately added melamine to products to increase profits. Makers of baby formula, for example, watered down their product, lowering the amount of protein and nutrients, then added melamine, which is cheap and fools tests measuring protein levels.

  But melamine is also integral to the material life of any industrialized society. It’s a common ingredient in cleaning products, waterproof plywood, plastic compounds, cement, ink and fire-retardant paint. Chemical plants throughout the United States produce millions of pounds of melamine a year.

  See past CDT posts for more information on the Sanlu milk scandal.

  [Image courtesy of the BBC.]

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  • November 16, 2008 9:13 PM