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Chinese Military,Political and Social Superthread

CougarKing

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Yet another concession on the part of Pres. Ma and the Guomindang to show that they are committed to reunifcation. :eek:

Taiwan to end conscription

http://www.straitstimes.com/Breaking%2BNews/Asia/Story/STIStory_347888.html

TAIPEI - TAIWAN will phase out its decades-old military conscription policy over the next five years, the defence minister said on Monday, amid warming ties with China.

Currently all men aged over 20 are required to do one year's military service.

But Defence Minister Chen Chao-min told reporters that the structure of Taiwan's military manpower will undergo a dramatic change over the next few years.


'From 2011, the number of conscripts will be reduced by at least 10 percent each year, to be replaced by professional soldiers,' Mr Chen said.

'That is to say, eventually, conscript measures will come to an end by 2014.' Critics have argued that the island's armed forces have struggled to enhance their defence capabilities because conscripts are unable to become proficient in high-tech weaponry in their short military service.

However, the new proposals sparked concerns over whether the defence ministry would be able to recruit sufficiently qualified professional soldiers at a monthly salary of NT$35,000 (S$1,550).

The plan to phase out conscription was a campaign pledge of President Ma Ying-jeou during the 2008 election.

The number of service personnel in Taiwan stands at around 275,000, down from a peak of 600,000 during the Cold War.

Taiwan's relatively large army is a legacy of decades of tensions with China, which has regarded the island as part of its territory awaiting reunification since the two sides split at the end of a civil war in 1949.

However, ties between Taiwan and China have improved dramatically since Mr Ma's Kuomintang party took office last May promising to boost cross-strait trade and tourism. -- AFP
 

tomahawk6

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An all volunteer force isnt advisable for Taiwan. Manpower costs would increase and the manpower pool of trained personnel will shrink to a level that would be dangerous.
 

medaid

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THAT... is the stupidest thing the Taiwanese government has ever done... and they've done MANY.

The quality of their soldiers have gone drastically down hill in the past 10yrs. With conscripted soldiers serving soft berths, and toned down the training standards. It's a sad day... really sad...
 

chanman

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1 year is pretty short as far as conscription goes, isn't it?  I think South Korea is two years, as is Singapore.
 

CougarKing

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Another sign of the continuing relationship between Islamabad and Beijing.

Chinese destroyer leaves for home after multinational exercise in Pakistan

http://www.app.com.pk/en_/index.php?option=com_content&task=view&id=70867&Itemid=2

BEIJING, March 14 (APP): Commander and Senior Captain of Chinese destroyer “Guangzhou” who took part in AMAN-09 exercise said Saturday that China sticks to its policy of peaceful development and the Chinese Navy hoped to broaden exchanges and cooperation with other navies.

Before departure from Karachi for home, in an interview on board the “Guangzhou”, Commander Senior Captain Chen Yueqi told Xinhua that China had sent its naval ship and a 12-member special force team to the AMAN 09 exercise.

He said that the purpose was only to show its goodwill for peace and its responsibility to maintain world peace and stability as a permanent member of the United Nations Security Council.

The Military Attache at the Chinese Embassy Major General Li Mengyan, Consul-General in Karachi Chen Shanmin and Rear Admiral of the Pakistani Navy Kamran were among some 150 Pakistani sailors and Chinese at the port to see off the Chinese ship and its sailors.

Earlier, a flag-lowering ceremony was held at the Pakistan Navy Dockyard, marking the end of Exercise AMAN 09.

From March 9 to 12, some 20 warships carried out exercises like going past mines, anti-terror operations, shooting floating objects, search and rescue, night encounter exercise, and cross deck landings by helicopter.
 

a_majoor

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China imposing fiscal discipline on the Obama administration?

http://www.powerlineblog.com/archives/2009/03/023061.php

Barack and Beijing

March 14, 2009 Posted by John at 6:52 PM

There's an adage that if you owe a bank a little money and can't pay it, you're in trouble. If you owe a bank a lot of money and can't pay it, the bank is in trouble. But what happens if you owe the bank a lot of money and can't pay it, but still need to borrow more?

That's the basic dynamic, I think, in our relationship with China. So far, China has been willing to lend us money to finance our debt--around a trillion dollars to date--and the Obama administration is counting on China to lend much more. This has been going on for a while, but for the first time, the Chinese are worried:

    Chinese Premier Wen Jiabao had said Friday he was concerned about the safety of the estimated $1 trillion his country has invested in U.S. government debt. China is Washington's biggest foreign creditor, and Obama's administration is counting on the Chinese to help pay for the $787 billion economic stimulus package by buying U.S. bonds.

    "Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen said. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets."

President Obama immediately rushed to assure the Chinese that their investment in America is safe:

    "There's a reason why even in the midst of this economic crisis you've seen actual increases in investment flows here into the United States," Obama said. "I think it's a recognition that the stability not only of our economic system, but also our political system, is extraordinary.

    "I think that not just the Chinese government, but every investor, can have absolute confidence in the soundness of investments in the United States," he added.

Of course, what the Chinese are worried about is not that the United States government will default on its bonds. That obviously won't happen. The Chinese concern, now being expressed openly for the first time, is that the U.S. will adopt the standard debtor's remedy of inflating its currency and paying back its debts in shrunken dollars. Why are the Chinese worried about this? Because Barack Obama's budget proposes to borrow trillions of dollars, injecting them into the U.S. economy without any offsetting wealth being created. The inevitable result, as any economist not in the pay of the Obama administration or the Democratic Party will tell you, is inflation. (Interpolation. The debt crisis is also affecting government employee pension plans to the tune of tens of billions of dollars of unfunded liabilities which Federal, State and Municipal Public Service Unions will insist be made up. Stae and Municipal governments are on the edge of bankruptcy, and if one goes over the edge, it could trigger a wave of defaults that bring down the US economy).

Some experts say that the Chinese are stuck, like the bank to whom you owe a lot of money you can't pay. Therefore, they shouldn't talk down the dollar lest they further devalue the trillion dollars' worth they already own:

    "I think they're clearly sending a signal to the U.S. that they're very concerned with how we're managing the (economic) crisis," said Steven Schrage, the director of the international business program at the Center for Strategic and International Studies. "I think they're also very concerned that this could lead to the helicopter jump of money generation, more cash and inflation. As a way out of the huge fiscal problems that we're going to be spending huge amounts ... which could weaken the value of the U.S. Treasuries they own."

    Schrage was referring to infamous comments made by Ben Bernanke, before he became chairman of the Federal Reserve, that in the event of a deep crisis the Fed could always shower money on the nation from helicopters.

    Still, Wen's criticism reflects a misunderstanding of China's own risks. In questioning the U.S. ability to make good on its debts, China threatens to undermine the value of the very assets it's holding.

That confidence may be misplaced, however. Barack Obama's budget contemplates that over the next five years, the federal government will borrow more money--run up more debt--than has been incurred during the entire history of the Republic, from George Washington to George Bush. It's easy to draw up a budget that contemplates debt if you're confident that someone is willing to lend you the money. In reality, though, the only plausible creditor is the Chinese.

With their shot over the bow, I think the Chinese are telling Obama that they don't like his budget. It is obvious to them that it will cause inflation, even if Obama himself doesn't understand the problem. Thus, I think they are telling Obama that they are willing to lend our government more money only if 1) the Obama administration follows a more responsible fiscal policy, and 2) in any event, they will insist on higher interest rates in the future to compensate themselves for the risk of inflation. I assume Obama will have to go along, since there seems no prospect of a Plan B.

How ironic: we American conservatives may well be in the position of hoping the "Communist" Chinese can impose fiscal discipline on our shamefully incompetent government.
 

CougarKing

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Just an update on the PRC presence in the South China Sea:

2-1.jpg

in Chinese map Xisha Islands

http://english.gov.cn/2009-03/17/content_1261548.htm

xin_592030617192015691515.jpg



China's largest fishery administration vessel, China Yuzheng 311, arrives in the Xisha Islands March 17, 2009. The vessel will patrol the South China Sea.(Xinhua Photo)


China's largest fishery administration vessel began patrolling the South China Sea Tuesday afternoon.

"China Yuzheng 311" will patrol the Xisha Islands such as Zhaoshu, Yongxing and the East Island to give Chinese fishermen in this area more powerful protection for their interests and safety, said Liu Guimao with the Administration of Fishery and Fishing Harbor Supervision for the South China Sea.

"Despite hot weather of nearly 30 degrees Celsius, the 311 crew was in good spirits and confident with their tasks," Liu told Xinhua.

"China Yuzheng 311" made a week-long voyage to the region from its home port in Guangzhou before arriving Tuesday noon. The vessel stopped at a naval base in Sanya in the southern Hainan Province last Thursday for supplies and set sail for the islands, which are about 180 nautical miles southeast of Hainan.

However, the vessel encountered a storm which delayed its arrival in the islands which was expected to be on Sunday, the vessel's captain, who preferred not to be named, told Xinhua.

With 112.68 meters in length, 15 meters in width, and a maximum displacement of 4,600 tonnes, the vessel is the largest of its kind in China.

Equipped with the Global Maritime Distress Safety System (GMDSS), an advanced communication system initiated by the International Maritime Organization (IMO), "China Yuzheng 311" can sail non-stop for 8,000 sea miles at a maximum speed of 22 knots. It was converted from a rescue vessel of Chinese navy

Wu Zhuang, director of the Administration of Fishery and Fishing Harbor Supervision for the South China Sea, said the vessel will escort Chinese ships around the islands where "fishing illegalities by neighboring countries are on the rise."

"China has indisputable sovereignty over the islands of the South China Sea and their adjacent waters," Foreign Ministry spokesman Qin Gang said Tuesday.

His comments came after he was asked to respond to accusations of China "flexing military might" by sending....

(...)
 

a_majoor

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China takes action against the escalating financial risks posed by the Obama administration. Is Canada in a position to limit our exposure?:

http://atimes.com/atimes/China_Business/KC18Cb01.html

China inoculates itself against dollar collapse
By W Joseph Stroupe
This article concludes a three-part report.

PART 1: Before the stampede
PART 2: The not-so-safe haven

There is mounting evidence that China's central bank is undertaking the process of divesting itself of longer-dated US Treasuries in favor of shorter-dated ones.

There is also mounting evidence that China's increasingly energetic new campaign of capitalizing on the global crisis by making resource buys across the globe may be (1) helping its central bank to decrease exposure to the dollar, while (2) simultaneously positioning China to make much greater profit on its investment of its reserves into hard assets whose prices are now greatly beaten down, while (3) also affording it greatly increased control of strategic resources and the geopolitical clout that goes with it. This is turning out to be a win-win-win situation for China as it capitalizes upon the important opportunities afforded it by the present global crisis.


The exact size and the precise composition of China's huge forex reserves, the exact degree of China's exposure to the dollar and its viable options, if any, in decreasing that exposure are matters of intense interest, because China's policies in this regard could have gargantuan implications for the US and the global financial systems and for the dollar.

One of the foremost experts who continues to research and track these matters is the highly respected Brad W Setser, a Fellow for Geoeconomics at the prestigious Council on Foreign Relations in New York. His work is providing significantly deeper insight into the size and composition of China's reserves and is affording the world a better view of that country's options in managing its reserves going forward and what the implications of those options might be.

Another expert whose ongoing work is also adding very important, deeper insight into such matters is the highly respected Rachel Ziemba, lead analyst on China and the oil exporting economies at the prestigious RGE Monitor, founded by Nouriel Roubini.

Drawing on the work of these two experts, let's examine the matter of the likely size and composition of China's forex reserves and its investment options going forward, and the probable implications of those options for the dollar.

The first issue is to determine the actual size of China's foreign exchange reserves. Its central bank officially confirms the current figure of about US$1.95 trillion. However, Setser's work reveals that China's actual reserves are significantly higher and may actually be as high as $2.4 trillion, according to his latest figures [1]. About $2.2 trillion of this total figure is easily identifiable, according to Setser, with the remaining $200 billion being his estimate of the amount currently held in China's state banks.

As for the issue of the composition of these reserves and its total exposure to the dollar, the most recent Treasury International Capital (TIC) report by the US Treasury has China's holdings of Treasuries at $696 billion as of the end of 2008. However, Setser's research indicates China's total holdings of US Treasuries is likely to be more than that figure, since some of the purchases of Treasuries by the UK and Hong Kong should actually be attributed to China's central bank. China also holds US government-sponsored agency debt (Fannie Mae and Freddie Mac paper) and corporate bonds, but the recent TIC reports indicate its central bank has been steadily divesting itself of these assets in favor of short-dated Treasuries.

As for China's purchases of Treasuries over the most recent three months (October - December of 2008), note this statement from Setser:
And over the past three months, almost all the growth in China's Treasury portfolio has come from its rapidly growing holdings of short-term bills not from purchases of longer-term notes.
Setser goes on to make the point that China's central bank is unquestionably divesting itself of the comparatively less-safe assets such as agency debt in favor of very short-dated Treasuries. The best estimates of the total exposure of China's central bank to dollar-denominated assets of all kinds is about 70%, or somewhere between $1.5 trillion and $1.7 trillion depending upon whether you use the $2.2 trillion figure or the $2.4 trillion figure for the total sum of China's reserves.

That uncomfortably high level of exposure to the dollar is what has been causing concern to flare in China most recently. A much more desirable figure, from China's standpoint, of its total exposure to the dollar would be 50% or less of its total reserves. A reserve composition of 50% dollars to 50% everything else is much safer because an excessive decline in the value of the dollar would tend to be offset by corresponding increases against the dollar in the value of the non-dollar assets comprising the rest of the reserves.

In order to get to that more desirable composition fairly quickly over the next several months, China would have to somehow divest itself of as much as $450 billion of its existing dollar-denominated assets, not purchase a significant amount of new dollar-denominated assets, and accomplish all this without triggering a global dollar panic. That's a very tall order indeed - but it is not by any means impossible. How so?

If we stand back to look at Setser's work from a distance, we see what appears to be a clear strategy on China's part that is potentially very compelling. The country has its official reserves, which it acknowledges now total about $1.95 trillion, and it also has its unofficial or secret reserves, which Setser estimates at about $450 billion at present.

Coincidentally (or perhaps not merely coincidentally) the secret reserves total about the same sum that China needs to divest itself of in order to reach the desired composition of its reserves noted in the previous paragraph - about $450 billion. At this point, recall the intriguing and potentially very important statement quoted earlier (see DOLLAR CRISIS IN THE MAKING, Part 2), a statement made by Fang Shangpu, deputy director of the State Administration of Foreign Exchange and reported by the Xinhua News Agency on February 18, 2009:
Fang Shangpu, deputy director of the State Administration of Foreign Exchange, noted Wednesday that the report released by the US Treasury of the amount of government bonds held by China included not only the investment from the reserves, but also from other financial institutions. It might be a hint that Chinese government is not holding as much US government bonds. [Italics added]

China is managing its foreign exchange reserves with a long-term and strategic view, Fang told a press briefing. "Whether China is to purchase, and to buy how much of the US government bonds will be decided according to China's need," Fang said. "We will make judgment based on the principle of ensuring safety and the value of the reserves," Fang said.
Is Fang Shangpu hinting that China has intentionally, as a deliberate strategy, divided its reserves into two general holdings, official and secret, and that SAFE (the State Administration of Foreign Exchange) has ensured that the composition of the official (government) holdings of the $1.95 trillion is such that its exposure to the dollar is not the roughly 70% assumed in the West, but rather something much closer to the desired target of 50%, while the secret reserves hold predominantly dollar-denominated assets?

If this is the case, then China could employ a number of schemes to clandestinely further reduce its total exposure to the dollar, using its secret reserves, all the while maintaining safety for the official reserves. Note Fang Shangpu's recent statement to the Wall Street Journal regarding how carefully, and with what foresight, China manages its reserve holdings:
"Since the subprime crisis evolved into the international financial crisis in September last year, we have executed the central authorities' plans to cope with the international financial crisis and launched the emergency response mechanism. We have closely followed developments, made timely adjustments to risk management, taken decisive and forward-looking measures to evaluate and remove risks ... "
Chinese officials have been painfully aware, for several years now, of the increasing risks of too great an exposure to the dollar. It simply isn't believable that their level of prudence and foresight in this regard was so low as to allow them to fail to formulate and execute strategies designed to limit that exposure to safer levels

than is presently assumed in the West. But if China has indeed prudently and deliberately structured its official reserves (now totaling $1.95 trillion) to be much less exposed to the dollar than is assumed in the West, while off-loading the riskier, dollar-denominated assets into its secret reserves, how might it propose to use those secret reserves to further decrease its exposure to the dollar?

Conversion into resource reserves
Enter China's resource buys. Several Chinese experts have been saying that China needs to spend a significant portion of its dollar-denominated reserves on hard assets, thereby further reducing its exposure to the dollar. It certainly appears that China is embarking upon just such a strategy.

According to research by Rachel Ziemba of RGE Monitor, in the first two months of 2009 alone China has already confirmed such deals for hard assets worth a total of over $50 billion [2]. Clearly, China is just now opening its global strategy of pursuing such resource buys at a time when the prices of hard assets are extremely attractive and many more such buys are in the offing. This is made evident by the recent February 23, 2009 report by China Daily which stated the following:

As part of the National Energy Administration's three-year plan for the oil and gas industry, the government is considering setting up a fund to support firms in their pursuit of foreign mergers and acquisitions, the report said.

Fang Shangpu, deputy director of SAFE, the State Administration of Foreign Exchange, said earlier this week that more measures will be introduced to support firms seeking to expand overseas.

Veteran analyst Han Xiaoping said the time is now ripe for China to convert some of its capital reserves into resource reserves, as global oil prices have fallen 70% since last year, to about $40 a barrel. [Italics added]

"We shouldn't miss this opportunity to use our foreign exchange reserves to build up our oil stocks," he said.

Jiang Jiemin, chairman of PetroChina, said recently: "The low share prices of some global resource companies provide us with some fresh opportunities."
RGE Monitor's Ziemba says the resource buys are a smart move now because they decrease the role of increasingly uncertain financial assets such as Treasuries, which now carry little profit appeal and diminishing appeal as safe stores of wealth, and increase the role of hard assets, which now carry an ever greater profit potential and a mounting appeal as safe stores of wealth: "For China, these investments seem to be a relatively efficient way to use its financial resources given the likely long-term appreciation of resource prices and uncertainty about financial assets."

Ziemba, in response to questions e-mailed to her, also alerts us to watch for forthcoming details about the currencies employed in China's resource buys. If these deals are being transacted largely in dollars, then she notes that there will likely be no negative near-term effect upon the dollar's role as the world's reserve currency. But if they are arranged outside of the dollar, it might well serve to undermine the dollar's international role to some extent.

However, it should be noted that almost no matter what currencies these resource buys are being transacted in, there does exist a potential negative impact for the dollar itself further down this path. How so?

Obviously, with China's uncomfortably large present exposure to the dollar, it is in its interests to concentrate on converting much of the dollar-denominated portion of its secret reserves into resources reserves. In other words, China will undoubtedly spend dollars, whether directly or indirectly, to fund its resource buys. But it must do so in a largely opaque manner that leaves little, if any trace in official data such as the US Treasury's TIC report. It will also be likely to be a net buyer of Treasuries, though nowhere near its 2008 pace, or else refrain from selling significant amounts of Treasuries, while it clandestinely reduces its exposure to the dollar. Otherwise, its actions could spark a dollar panic.

Increased buying of Treasuries by US citizens and investors, and by various foreign investors other than China, as the global crisis rapidly deepens and increases risk aversion, may likely take significant pressure off of China to soak up the huge issuance of new sovereign US debt now getting underway. That will help to provide breathing room for China to address its problem of reducing exposure to the dollar.

Whether China will approach the problem with a scheme of swaps amongst its various state-controlled entities and wealthy private Chinese investors, or by some other nearly opaque means, probably cannot be determined with any certainty at present. But it has undoubtedly worked out the problem of clandestinely converting significant sums of its dollar-denominated financial assets into hard assets without dumping Treasuries and triggering a dollar panic.

It is most unlikely, therefore, that its actions in this regard will be sufficiently proved before it has already succeeded in accomplishing its goals. Furthermore, since resource prices are now very attractive, China will certainly expand and accelerate its resource buys while prices remain attractive, converting ever-larger sums of its dollar-denominated reserves into resource reserves.

If China averaged a conversion of only $35 billion per month from dollars into resources, it could convert the entire $450 billion in little more than 12 months' time. Hence, I predict that the next eight to 15 months will provide China with sufficient time to bring its total exposure to the dollar much more in line with its strategic goals.

What about the problem of dealing with any ongoing accumulation of dollars? A number of analysts note that China's trade surplus is worsening even in the global slowdown because, while China's exports are falling, its imports are falling much faster. However, Chinese officials have made clear that they will use their reserve holdings to bolster imports, and that measure should alleviate China's need to accumulate large sums of dollars and other currencies in order to keep the yuan stable.

China is extremely unlikely, therefore, to accumulate dollars at anywhere near the rate at which it did in 2008. China is also funding its domestic stimulus package designed to spur domestic consumption. All these measures denote a much wiser use of its huge reserves and a steadily decreasing focus on the dollar. All in all, China looks set to weather the storm quite well in spite of some significant hardships along the way.

Summarizing the escalating risks of a dollar crisis
The bubble in US Treasuries is getting increasingly massive and unstable with each week that passes. Deepening global risk aversion is keeping investors lined up, so far, to buy Treasuries - especially short-dated ones. And the deepening economic crisis in the US is moving its own citizens to join in the buying spree.

If the Treasuries bubble persists for much longer, and especially if it continues to mount, the massive and dangerous distortions in the global financial system and the Treasuries-induced strangulation of its credit markets will only become more severe, likely leading to a meltdown somewhere in the emerging markets, one of whose effects will almost certainly spread to engulf the severely weakened Western European and US financial sectors and plunge particularly the US economy into a deep depression, with potent negative effects upon the dollar.

Such an eventuality will tend to force global investors to evaluate the safe-haven appeal of the dollar based much more on the fundamentals of the US economy, and that will portend a stampede out of the dollar and a potentially chaotic bursting of the massive Treasuries bubble. Hence, even if the US finds buyers for its huge sums of new sovereign debt now beginning to flood the markets, the picture does not look good for the dollar beyond the short term.

Obviously, if the US reaches the point where it fails to find sufficient buyers for its new flood of Treasuries, that will also become a perilous situation for the dollar and for the huge Treasuries bubble, which will almost certainly burst as global investors seek better stores of wealth in hard assets, following the lead of China's central bank.

Either way, the US is engaged in the implementation of extremely risky and potent inflationary, dollar-debasing policies, making a loss of global confidence in the dollar in the short to medium term a virtual certainty. Even if the massive spending does restore economic growth, the US economy is likely to remain very weak for some time. That will make it extremely difficult for the US Federal Reserve to tighten monetary policy to fight off the inevitable and potent inflation that will result from today's shortsighted policies.

When the Fed attempts to tighten, the US economy will likely be plunged into a second-round recession or depression, with obviously awful effects upon the dollar. But if the Fed fails to tighten sufficiently and quickly, runaway inflation will ravage the currency anyway.

Prudent, forward-looking Chinese officials have clearly assessed the entire situation as one demanding careful but swift action to ensure that its huge reserves are not imperiled by what has obviously become an untenable global rush into an unstable and perilous dollar bubble.

Hence, China's central bank is enacting with a sense of urgency prudent measures, both explicit and clandestine, to significantly decrease exposure to the dollar. If the details of such measures should become sufficiently public and should attract undue global attention before China accomplishes its goals, a dollar panic might be triggered.

This risk, though perhaps not major, does exist nonetheless, and it is significantly increasing as China undertakes new measures that might attract undue and unwanted global attention. However, it is also likely that China will enjoy cover and gain breathing space to enact its prudent measures while much of the rest of the world continues to rush into the bubble.

Notes
1. See "China's Record Demand for Treasuries in 2008", by Brad Setser, The Council on Foreign Relations.
2. See "China's Resource Buys" by Rachel Ziemba, RGE Monitor.

W Joseph Stroupe is a strategic forecasting expert and editor of Global Events Magazine online at www.globaleventsmagazine.com

(Copyright 2009 Global Events Magazine, All Rights Reserved.)

 

CougarKing

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Two very interesting articles that gives outsiders better insight into how the 3 predominantly Sinophone nations of East Asia- China , Taiwan, and Singapore- plan their defence strategies.

by Andrei Chang
Hong Kong (UPI) Jan 11, 2007
China, Taiwan and Singapore all share the Chinese language and culture. Yet due to their different positions in the international sphere and the capabilities of their respective military industries, the three have chosen very different military strategies and weapons systems. It is interesting to compare the three approaches.First, in terms of military strategy, China is now gradually transforming itself from the passive defense of the Cold War years to today's active defense, with balanced offensive and defensive capabilities. China's navy is also turning from coastal defense to offshore defense.

The two sides of the Taiwan Strait are now under abnormal adversarial conditions. Taiwan's strategic goal has changed from staging large-scale counterattacks on mainland China to engaging in a decisive battle away from Taiwan Island and establishing balanced offensive and defensive capabilities.

Singapore's approach is proactive defense, typical of a small country. Since Singapore is much better off than other countries in the region, and it has a sensitive historical relationship with Malaysia, Singapore's national defense policy has followed the dual-track principle of diplomacy and deterrence.

While building up formidable military strengths to dissuade potential enemies from reckless action, Singapore also tries to reinforce its national defense through diplomatic ties, hoping it will receive support from the outside world should the regional situation deteriorate. Singapore learned from the Iraqi invasion of Kuwait that wealth does not equal peace.

The military strategies and doctrines of Singapore and Taiwan are becoming increasingly close. Both are attempting to establish effective deterrence against potential adversaries through building up their military machines. Both also rely on the diplomatic or even military involvement of world powers should they face a protracted conflict.
By procuring large batches of arms and establishing special military ties with the United States, both Singapore and Taiwan hope to guarantee their own security, expecting that the United States would come to their rescue should a major conflict arise.

Singapore's practice of purchasing AIM-120C air-to-air missiles and storing these weapon systems in the United States is clearly an attempt to establish a tangible military alliance with the United States and to integrate diplomatic deterrence with military deterrence. If a conflict broke out, Singapore would inevitably ask the United States to deliver the weapon systems stored on U.S. territory, which would make it impossible for the United States to remain neutral.

Taiwan's approach in recent years has been more or less similar. For the same purpose, Singapore may also deposit the 66 Leopard 2A4 main battle tanks it procured from Germany in Australia, as a tactic to contain the latest move of the Malaysian army to import PT91M main battle tanks from Poland.

Secondly, Singapore hopes to win additional layers of protection through its "diplomatic deterrence" strategy. Through reinforcing its ties with Australia, Canada and the joint defense cooperation among the five ASEAN countries, Singapore intends to implement the strategy of multilayered diplomatic deterrence; that is, using different diplomatic deterrence strategies to deal with different adversaries.

In recent years, Taiwan has also sought to weaken the dominance of the United States in the dynamics of the Taiwan Strait and actively expand its military exchanges with Japan, Australia and India, with the same strategic objectives as Singapore.


Although China, Taiwan and Singapore all seek to balance their offensive and defensive capabilities, Singapore's navy and air force have the most advanced Western military technologies and the most formidable attack power in comparison with Taiwan and China. In other words, in implementing the strategy of balanced offensive and defensive deterrence, the Singaporean military forces place much greater emphasis on offensive operations than the Taiwanese and Chinese forces.

Singapore's "active defense" strategy is probably influenced by traditional British military ideology. Similar traces can be found in the military strategies of fellow former British colonies India and Pakistan. With the import of 12 plus 8 F-15ST fighters from the United States, Singapore has become the first of the three militaries to acquire joint direct attack munition bombs.

In addition, Singapore has acquired APG-63V3 active electronically scanned array radar systems ahead of Japan and Korea. The Singaporean air force is also equipped with 20 of the most powerful AN-64D attack helicopters in the region.

Because of the differences in the combat capabilities of their prospective adversaries, Taiwan and Singapore also have different deterrence strengths. The powerful offensive weapon systems mentioned above are already sufficient to give Singapore the capability to paralyze the enemy through pre-emptive standoff operations, which could be followed by diplomatic measures to resolve the conflict.

Singapore's latest replacements of military equipment, particularly in the navy and air force, show that the deterrence capability it aspires to is not directed solely at Malaysia. Thanks to the procurement of F-16 Block52 fighters and the KC-135R tanker, plus the fact that four E-2C aerial early-warning aircraft are already in service, the Singaporean air force can now project its power over almost all of Southeast Asia.


Singapore is already armed with 70 F-16 fighters, among which 62 are F-16 Block52s. These fighters are equipped with the Israeli Python-4 and AIM120C AAM. The Taiwanese air force also dreams of acquiring the F-16 Block52. Both the Singaporean and the Taiwanese air forces are equipped with AGM-65G infrared-guided anti-ship missiles.

Singapore is favored by the West and Russia and has experienced no restrictions in the import of arms. Unlike Taiwan, Singapore has access to diversified weapons sources. The Singaporean army is equipped with Russian Igla (SA-18) ground-to-air missiles, for example.

As for military cooperation between Singapore and Taiwan, there has been constant speculation and many unconfirmed reports about this. Sources say that Singapore's batch of SA-18 missiles was actually ordered by Taiwan. Both Taiwan and Singapore are now employing the French-made La Fayette guided missile frigates. The Singaporean variant of the La Fayette and the same model of FFG assembled indigenously are called the Delta Project, which has undergone major upgrading, but the price is said to be less than two-thirds the price Taiwan paid for its La Fayettes. Obviously the two received far different treatment in their purchase deals.
As a matter of fact, Israel has close ties with all three of the militaries under discussion. Singapore's ground forces, air force and navy use a lot of Israeli-made equipment. The Singaporean navy's "Victory" class missile patrol boats are equipped with the Barak I vertical launch surface-to-air systems made by Israel Aerospace Industries/Rafael, while the F-16 Block52 fighters of the Singaporean air force are equipped with Israeli-designed electronic warfare systems.


As is widely known, both Taiwan and Singapore have acquired Gabriel I surface-to-surface missiles from Israel's IAI. In addition, Singapore has also purchased submarines from Sweden. In 1990 Singapore received the first batch of two A17 submarines, and four Sjoormen-class submarines were delivered to Singapore in 2004. The Sjoormen submarine has a standard displacement of 1,130 tons. As a result, Singapore has become the first country in Southeast Asia with genuine underwater combat capability.

Since international attitudes toward Singapore have been the most open and favorable, it has had the broadest training opportunities for its military personnel. The pilots of the Singaporean air force not only receive training in the United States, they also actively participate in joint military exercises with India, Australia and other countries, including joint naval and air force operations. The Singaporean air force has even carried out confrontational exercises in which the Su-30MKI fighter planes faced Singapore's F-16 Block52s.


Taiwan military presents preventive doctrine toward China in Quadrennial Defense Review

http://www.taiwannews.com.tw/etn/news_content.php?id=893776&lang=eng_news&cate_img=1033.jpg&cate_rss=news_only_on_taiwannews

TAIPEI (Taiwan News) – Taiwan’s military will concentrate on a more preventive policy as relations with rival China improve, the Ministry of National Defense reportedly said in its first-ever Quadrennial Defense Review published Monday.

The document is the result of a legal amendment passed last year which requires the military to come up with such a report within 10 months of a new president taking office.

The basic principles of the new preventive defense doctrine were that Taiwan should not fire the first shot or launch the first attack, but use contact, communications, negotiations to protect the country, media reported.
“If war is unavoidable, then the military will make sure the enemy is unable to bite, unable to swallow, unable to beat us to pieces,” the document said according to quotes in the Chinese-language media.

Nevertheless, this would not mean that Taiwan’s military would seek to improve links with its Chinese counterpart on its own. Establishing mutual confidence-building measures was a job for the government, not for the military, officials told reporters.

The military would also focus efforts on how to respond to a military attack. Under the previous Democratic Progressive Party administration, the military emphasized the capability to keep a war outside Taiwan’s main island, with some reports saying the military would strike back at China by firing missiles at its main cities.
China has about 1,500 missiles targeted at Taiwan, and has been waging a robust campaign of military modernization led by the expansion of its budgets. China has also been preparing its military for the transformation from a purely continental force to a naval power capable of launching submarines and aircraft carriers.

As confirmed by government statements earlier this month, Taiwan wants to introduce all-volunteer armed forces by the end of 2014. The military’s total manpower should be cut to 215,000 at that time from the 275,000 listed in the current budget, Defense Minister Chen Chao-min said. He promised to cut the number of senior officers, often a point of criticism from lawmakers and defense experts.
The defense review proposed folding the existing six branches of the military into just three, the army, the air force and the navy. The military police will become part of the army but will still be entrusted with the protection of top officials such as the president.

Chen denied Monday that Taiwan’s defense was at risk because it was sending one out of its three Patriot missile units to the United States for upgrading. The two other sets could cover for the shortage, Chen told reporters.

Taiwan is also applying to purchase 66 F-16C/D fighter jets from the U.S. because the 150 F-16A/B planes it bought in 1992 are no longer deemed advanced enough to counter the Chinese threat. The new high-tech jets would cost an estimated US$4.9 billion, reports said.
Chen told lawmakers Taiwan would continue to develop Hsiung Feng IIE missiles as a purely defensive weapon needed to hit back after an eventual attack. If China didn’t attack Taiwan, then Taiwan wouldn’t use them, the minister said, emphasizing the military would never fire its missiles at civilian targets.

Experts associated with the opposition DPP said the government should pay more attention to “asymmetrical” or alternative military strategies used by weaker powers to defend themselves against strong opponents.
Upgrading reconnaissance, information gathering and missile defense were more important as ways to offset numerical shortcomings, said Michael Tsai, a former defense minister, now heading the Institute for Taiwan Defense and Strategic Studies.

He predicted the quantity and quality of China’s military would exceed Taiwan’s by 2010, causing a dangerous imbalance. Tsai questioned whether it was the right time to abolish military conscription.
 

Edward Campbell

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Recently some Chinese political scientists have examined the rise of several modern countries, specifically: Portugal, Spain, the Netherlands, the United Kingdom, France, Germany, Japan, Russia, and the United States. The scholars concluded that these nine nations shared a half dozen attributes that led to and sustained their relative success:

• Political Stability
• Military Strength
• Economic and Technological Success
• National Cohesiveness
• Cultural Creativity
• Magnetism

The last two, cultural creativity and “magnetism” combine to create what Joseph Nye has described as “soft power.”

Clearly not all of the countries examined had all of those attributes in great abundance but a couple, and only a couple - Britain and America, were able to possess and maintain all six for protracted periods.

Interestingly, the Chinese scholars identified military strength as a double edged sword – coupling it with an aggressive policy spelled defeat for Spain, France, Germany and Japan. Building it at the expense of other attributes led to the defeat of Russia while failing to build enough led to the demise of Portugal and the Netherlands.

The lesson some Chinese are drawing or, more specifically, want their fellows to draw is that China must amass and sustain all six attributes.

In many respects the first, political stability, may be the one which is most worrisome to Chinese leaders. Traditionally China is ruled or governed by those possessing the “mandate of heaven” - 天命 or Tiānmìng – which, unlike the European concept of the “divine right of kings” is highly conditional. The “mandate” is maintained only so long as the ruler/governor is wise and just – paralleling debates in ancient Greece about the nature of tyranny. While the Chinese “heaven” may, 2,500 years ago, have been a ‘place’ in the sky where gods lived it morphed over the millennia into a compound of all this spiritual and the whole universe. As the supreme “god” and, more importantly, source of all power and justice it is Tiān or 天 but it is also part of a “trinity” of three realms: heaven, earth and humanity.

(Parenthetically, the ruler of China is said to rule “all under heaven” or, for the Chinese, the whole of the civilized world. For many Chinese, educated, thoughtful Chinese, this translates into a “feeling” that China is “rightfully destined” to rule all of Asia and to lead the world. This is, subliminally, taught in most schools. In several visits I never missed the (usually decorative) map of the world centred on China, in bright red. The red faded away to pink or to other colours as one got father and father from China but the message, to hundreds of millions of school children, is that China is at the centre of a “red” world.)

Be that as it may, Chinese rulers/governors still need a “mandate” which the current crop believe is demonstrated by a peaceful, happy populace – evidenced by a lack of the sorts of popular revolts that were common over the past 2,000 years or so. But the Chinese leadership is poor at retail politics so it is unsure of its mandate – but afraid to adopt the sorts of democratic tools that make verifying the “mandate” so easy. Thus, even in the absence of open revolts, China is still not politically stable.

There are some tentative steps in the right direction: local elections that appear to be free and fair. The Chinese leadership hopes, I think, gradually to shift some decisions downwards from provincial and even national levels and, simultaneously, to allow – even encourage – free and open politics at local – village, town, district – level. It’s a gamble that may – or may not – pay off; it will be interesting to watch.

For now, China’s main weakness is in the political stability domain – at any given moment the government’s ‘control’ over China is impressive but the government lacks the most effective tools for determining the people’s wants and needs and for determining how ‘best’ to meet them: elected politicians who, of necessity, are in close contact with their constituents. 

An observer1 has suggested that China is trying to follow a path to global power that minimizes the requirement to build and maintain overwhelming military force à la the USA. Ramo suggest that China is emphasizing its economic and technological prowess and its well earned and carefully guarded reputation for non-intervention/respect for national sovereignty as the mainstays of a push for increased global influence. Another observer2  suggests that America is poorly positioned, strategically, to respond to an asymmetrical Chinese “charm offensive” that aims to supplant American influence – especially throughout Asia.

The Chinese have a cultural propensity towards the ‘long’ view – in contrast to the Euro-American preference ‘immediate’ results. This is part of a broader, more general, Asian conservatism – the sort of thing that leads to long, long periods of “stable” government in Asia’s functioning democracies3 and that “permits” dictatorships (as in China) that “serve” the immediate, physical and security needs of the people. But it is also a product of China’s own cultural heritage. The risk, in analyzing China, is that one mistakes patience for inactivity or uncertainty.

The Chinese military/security superstructure is changing rapidly. The PLA has been “professionalized” and the defence budget continues to grow at an impressive rate. China is building a large, balanced, effective navy4 that I am guessing will include, by circa 2035 a half dozen or so modern carrier battle groups5 and at least three or four brigade sized amphibious task forces. I’m also guessing that the Chinese, 25 years from now, will have comparable and compatible land and air forces making them a major, global power.

I think that a wholly asymmetrical approach based on an overwhelming preponderance of economic and “soft” power cannot work. I also think the Chinese leadership share this view and that they will take steps to increase their “hard” (military) power – for use on the global stage – but not to anything like the levels currently held by the USA..

Thus, China is likely, over the next half century and beyond, to possess all six of the factors which some Chinese scholars have identified as critical for the development and maintenance of great power. Some of these factors – especially those related to “soft power” are likely be abundant and well exercised. China’s “hard power” is growing quickly but I share the belief that China will not attempt to match the US bomber for bomber and so on – rather they will focus on a global power projection capability centred on their own back yard: East Asia, the Western Pacific and the Indian Ocean. This should be sufficient to neutralize America in a strategic sense.

I think China will try to create a Sinosphere (汉字文化圈 – the idea is well enough established in China to have its own title) embracing, at least, Taiwan (with a status similar to that enjoyed by Hong Kong) Burma, Vietnam, Korea and Japan. This implies loosening (not breaking) the ties Japan and Korea have with the USA and strengthening their social, cultural and economic ties with China.

(Singapore’s status as a “neutral” safe haven for business is likely to render it “safe” from too much Chinese influence. It also serves as a useful economic “safety valve” for all of Asia, including Hong Kong. If Singapore didn’t exist the Chinese would have to invent it.)

China’s weakest link will be political stability. The current regime, the Hóng (紅 or Red) Dynasty for want of a better name, wants to strengthen political stability by taking very tentative steps towards local democracy and counting on innate Chinese conservatism to bestow a continuing mandate on those who govern honourably and virtuously but, above all effectively.

(CougarDaddy or others will correct me if I’ve used Hóng and 紅 incorrectly.)

My guess is that we, the American led West, will have difficulty countering a Chinese “charm offensive” based on a mix of sharing economic and technological achievements and adhering to strict non-interference in the internal affairs of other independent states – and demanding the same in return. The West has a long tradition – going back a few centuries – of taking rather than sharing (although many will argue, with considerable merit, that Britain gave much more – in social, legal and political philosophy – than it ever took in gold, goods and slaves) and of “interfering” wherever and whenever it wanted. There is nothing to choose between Christian missionaries, opium traders and George W Bush: all used overwhelming military force to impose their will on unwilling “victims.”


-------------------------

1. Joshua Cooper Ramo in The Beijing Consensus
2. Fareed Zakaria in The Post American World
3. E.g. The Liberal Democratic Party in Japan has been in power nearly continuously for over 50 years and the People’s Action Party in Singapore celebrates its 50th year in power in 2009.
4. See US Congressional Research Service Report RL33153 dated 19 Nov 08
5. Three or four probably reserved for home waters and two or three regularly deployed to the Indian Ocean region – including the East coast of Africa – and the Western and South Pacific.


 

CougarKing

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Mr. Campbell, I will go further than merely agreeing with you by saying that the Sinosphere already exists, and has existed since China began exacting tribute from neighbouring nations since the Song, Yuan and Ming Dynasties, IIRC. How much of a cultural impact China has had on its neighbours cannot be denied, as demonstrated by the many residual influences of past interactions, such as the borrowed Chinese characters still in use by the Koreans and Japanese in their written languages, with the Japanese word for borrowed Chinese characters or Kanji/汉字 simply read as the word "Hanzi"/汉字 or Chinese characters in Mandarin.

Also, the Sinosphere does still exist today and its effect is all the more potent when you consider the "Hua Qiao/华侨" or the overseas Chinese who not only reside in many Southeast Asian countries, but also control two-thirds of the economy and 80% of the private sector in their adoptive countries. Their influence on their adoptive countries, which is disoproprotionate to their small numbers compared to the large native populations, definitely cannot be ignored. Consider that some have even used this wealth to participate in or at least influence the local politics; these powerhouse Chinese tycoon families, such as that led by Henry Sy or the Gokongwei family in the Philippines or comparable parallels in Indonesia, Malaysia and Thailand.

Interestingly, a large number of these Hua Qiao within these countries are also either mainly Cantonese-speakers from Guangdong and Hong Kong, or are Fujianese or Hokien speakers from Fujian province.

------------------------------------

Continuing on about what you said about China's, or rather the CCP's, overwhelming need to maintain political stability, this point has already been emphasized a number of times on this thread. Still, the CCP is looking toward Singapore's model of government as one alternative by way it can ensure its continued survival, as demonstrated by Bei Da professor Dr. Pan Wei when he pitched and discussed the "Rule of Law Regime" to our class of foreign students in my one  study abroad semester there (2003); he did mention that he was a consultant for the Chinese government in our class, which suggests that the CCP was strongly considering it. It would not be hard to see why the CCP would find such a the "Rule of Law Regime" attractive, since Singapore is not only arguably a predominantly Chinese society, but also because Singapore has effectively been a one-party system under Lee Kuan Yew's People Action Party (PAP).
----------------------------------------------------------------------

Btw, if you are going to use the word "hong"(2nd tone) meaning red to signify part of "Red Dynasty" you might as well use two words or two characters. Thus the words "hong cao/ts'ao" (both pinyin here are in 2nd tone or rising) or 紅朝 is the way to say/write it.

-------------------------------------------------------------------------

Lastly, I am also curious about what you think about the Taiwan government recently ending military conscription, which many see as yet another concession by Ma Ying Jieou's Guomindang government to continue the conciliatory stance toward the mainland? Furthermore, what do you think of the above article comparing the defence strategies of the PRC, Taiwan and Singapore in relation or in comparison to each other?
 

a_majoor

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WRT Taiwan, I suspect they are following the global trend towards smaller forces based on long service professionals. Can they do this and be successful? Maybe. Given the island is targeted by 800 to over 1000 missiles, large standing forces might not be the best way to go, so a small, professional military with the ability to operate under difficult conditions and apply asymmetric force against potential enemies seems to be the smart way to go.

China has its own asymmetric forces to apply against the West:

http://www.ft.com/cms/s/0/7851925a-17a2-11de-8c9d-0000779fd2ac.html?nclick_check=1

China calls for new reserve currency

By Jamil Anderlini in Beijing

Published: March 23 2009 12:16 | Last updated: March 24 2009 00:06

China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.

Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.

This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC. (Interpolation: If the Federal Reserve is not able to devalue the US deficit and debt through inflation, then the Administration and Congress cannot carry out their economic and political programs without risking catastrophic economic failure in the United States: imagine the cascade effect if Governments must declare bankruptcy due to the inability to service $12 trillion+ of debt. The resulting deflation won't be pretty either)

Although Mr Zhou did not mention the US dollar, the essay gave a pointed critique of the current dollar-dominated monetary system.

“The outbreak of the [current] crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system,” Mr Zhou wrote.

China has little choice but to hold the bulk of its $2,000bn of foreign exchange reserves in US dollars, and this is unlikely to change in the near future.

To replace the current system, Mr Zhou suggested expanding the role of special drawing rights, which were introduced by the IMF in 1969 to support the Bretton Woods fixed exchange rate regime but became less relevant once that collapsed in the 1970s.

Today, the value of SDRs is based on a basket of four currencies – the US dollar, yen, euro and sterling – and they are used largely as a unit of account by the IMF and some other international organisations.

China’s proposal would expand the basket of currencies forming the basis of SDR valuation to all major economies and set up a settlement system between SDRs and other currencies so they could be used in international trade and financial transactions.

Countries would entrust a portion of their SDR reserves to the IMF to manage collectively on their behalf and SDRs would gradually replace existing reserve currencies.

Mr Zhou said the proposal would require “extraordinary political vision and courage” and acknowledged a debt to John Maynard Keynes, who made a similar suggestion in the 1940s.

Copyright The Financial Times Limited 2009
 

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China voices on financial crisis


China voices: ' I feel the pressure'

As China's growth rate continues to slow, there are fears that its economy could be
heading for a severe downturn.

The BBC spoke to a shipping employee in Shenzhen and a geologist's assistant outside
Lhasa to find out how the financial crisis had affected their lives.


WANG HAO, GEOLOGICAL ASSISTANT, MU COUNTY, TIBET AUTONOMOUS REGION

_45124486_b3355bbd-106c-4202-bc17-35e8e201abde.jpg

Wang Hao

I work for a copper exploration company, a joint venture run by a British mining firm and
a Chinese mining bureau. I feel the economic pressure in this industry. Metal prices are
going down and I am worried that investors in Europe and the US will also reduce their
exploration activities in China.

What people think about the metal sector thousands of miles away affects my livelihood
here - even though I feel very removed from it. I work and live in an extremely rural
area. The scenery is beautiful, especially in the summertime. It's getting cold now and
the landscape is barren. We are planning to shut down the project temporarily because
it is simply too cold.

We look at areas with high grades of copper. A geologist can identify the grade of copper
from the appearance of outcrops on the land. But we are not a very big firm, our assets
are influenced by our investors.

China is an export-oriented country and manufacturing is big. The economic downturn could
have a big impact.

Food and commodity prices haven't changed hugely where I am because it is so rural here.
This is farming country and people here carry on with their lives. They eat the cattle and the
sheep they raise, they eat local vegetables. They seem quite self-sufficient. They have no idea
what is going on outside in the financial world, they have concerns such as the number of yaks
they can raise this year.

But when I go to the city, I hear people talking about the financial crisis. In Chengdu, I've heard
that real-estate companies are downsizing and house prices are getting lower.

We are getting very pessimistic; I think the government needs to introduce incentive policies and
co-operate with US and European governments. Otherwise, the economy in China could slump.

XIONG MING, SHIPPING EMPLOYEE, SHENZHEN

I've been working at the Dragongate Logistics shipping company for three years now.

We've seen dramatic changes to our export-related business here in Shenzhen since the global
financial downturn started. If you compare this year to last year, the volume of exports from
the port of Yatian has plunged.

Take our shipping company for example; this time last year, we were handling something like
100 to 200 containers a week, but this year, it has dropped by more than a half.

Export factories face a really depressing future. Unofficial estimates show that 20% of export
companies have closed down, the actual figure could be even higher.

Personally, my salary and those of my colleagues has been reduced by a quarter or more. This
time last year, I was earning between 10 and 20,000 RMB ($1,500 -$3,000) each month. Now I
don't even earn 10,000 RMB. Since the cost of living in Shezhen is relatively high, that affects
my life a lot.

Job-wise, the sense of crisis is constantly there because there is every chance that the company
will go under and you'll lose your job. You never know.
 

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China Urges New Money Reserve to Replace Dollar

China suggests switch from dollar

China's central bank has called for a new global reserve currency run by the International Monetary
Fund to replace the US dollar. Central bank governor Zhou Xiaochuan did not explicitly mention the
dollar, but said the crisis showed the dangers of relying on one currency.

With the world's largest currency reserves of $2tn, China is the biggest holder of dollar assets.
Its leaders have often complained about the dollar's volatility.

China has long been uneasy about relying on the dollar for trade and to store its reserves and
recently expressed concerns that Washington's efforts to rescue the US economy could erode
the value of the currency.

His speech was, unusually, published in both Chinese and English, signalling it was intended for
an international audience. "The outbreak of the crisis and its spillover to the entire world reflected
the inherent vulnerabilities and systemic risks in the existing international monetary system," said
Mr Zhou in an essay on the People's Bank of China website. Mr Zhou said the primacy of the US
currency in the financial system had led to increasingly frequent crises since the collapse in the
early 1970s of the system of fixed exchange rates.

On Tuesday, the dollar weakened against most major currencies following the announcement of
a US plan to buy up toxic debt.

'Light in tunnel'

Mr Zhou said the dollar could eventually be replaced as the world's main reserve currency by
the Special Drawing Right (SDR), which was created as a unit of account by the IMF in 1969.
"The role of the SDR has not been put into full play, due to limitations on its allocation and the
scope of its uses," he said. "However, it serves as the light in the tunnel for the reform of the
international monetary system."

The essay comes before the G20 summit in London on 2 April, at which reform of the international
financial system is top of the agenda.

"This confirms that China intends to play fully its role of global economic and political power
at the next G20 summit," said Sebastien Barbe, an analyst at French financial service firm
Calyon in Hong Kong.

CURRENCY RESERVES
- Foreign currency held by a government or a central bank
- Used to pay foreign debt obligations or influence exchange rates
- The dollar is viewed as the world's reserve currency as the vast
  majority of reserves are held in the US currency
- Smaller amounts are held in euros, pounds and yen
 

Edward Campbell

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CougarDaddy said:
Mr. Campbell, I will go further than merely agreeing with you by saying that the Sinosphere already exists, and has existed since China began exacting tribute from neighbouring nations since the Song, Yuan and Ming Dynasties, IIRC. How much of a cultural impact China has had on its neighbours cannot be denied, as demonstrated by the many residual influences of past interactions, such as the borrowed Chinese characters still in use by the Koreans and Japanese in their written languages, with the Japanese word for borrowed Chinese characters or Kanji/汉字 simply read as the word "Hanzi"/汉字 or Chinese characters in Mandarin.

Also, the Sinosphere does still exist today and its effect is all the more potent when you consider the "Hua Qiao/华侨" or the overseas Chinese who not only reside in many Southeast Asian countries, but also control two-thirds of the economy and 80% of the private sector in their adoptive countries. Their influence on their adoptive countries, which is disoproprotionate to their small numbers compared to the large native populations, definitely cannot be ignored. Consider that some have even used this wealth to participate in or at least influence the local politics; these powerhouse Chinese tycoon families, such as that led by Henry Sy or the Gokongwei family in the Philippines or comparable parallels in Indonesia, Malaysia and Thailand.

Interestingly, a large number of these Hua Qiao within these countries are also either mainly Cantonese-speakers from Guangdong and Hong Kong, or are Fujianese or Hokien speakers from Fujian province.

------------------------------------

Continuing on about what you said about China's, or rather the CCP's, overwhelming need to maintain political stability, this point has already been emphasized a number of times on this thread. Still, the CCP is looking toward Singapore's model of government as one alternative by way it can ensure its continued survival, as demonstrated by Bei Da professor Dr. Pan Wei when he pitched and discussed the "Rule of Law Regime" to our class of foreign students in my one  study abroad semester there (2003); he did mention that he was a consultant for the Chinese government in our class, which suggests that the CCP was strongly considering it. It would not be hard to see why the CCP would find such a the "Rule of Law Regime" attractive, since Singapore is not only arguably a predominantly Chinese society, but also because Singapore has effectively been a one-party system under Lee Kuan Yew's People Action Party (PAP).
----------------------------------------------------------------------

Btw, if you are going to use the word "hong"(2nd tone) meaning red to signify part of "Red Dynasty" you might as well use two words or two characters. Thus the words "hong cao/ts'ao" (both pinyin here are in 2nd tone or rising) or 紅朝 is the way to say/write it.

-------------------------------------------------------------------------

Lastly, I am also curious about what you think about the Taiwan government recently ending military conscription, which many see as yet another concession by Ma Ying Jieou's Guomindang government to continue the conciliatory stance toward the mainland? Furthermore, what do you think of the above article comparing the defence strategies of the PRC, Taiwan and Singapore in relation or in comparison to each other?


Thank you, CougarDaddy, for the explanation of Red; I was afraid I was using it incorrectly because my language skills are very rudimentary.

I will stick to the term Red Dynasty, however, on the understanding that Red signifies prosperity in Chinese folk culture, and it is prosperity and its fruits (social order, etc) that the Chinese leadership is “selling” to the Chinese people.

While I acknowledge the long history of the Sinosphere, I think the modern Red Dynasty wants to bring it back in a newer form: one based on economic  and cultural, even racial, interests. One might argue for something akin to the Greater Britain which, in 1897, the New York Times, described as being “so plainly destined to dominate the planet.”1. I’m sure the Chinese are not averse to the idea of leading a Greater China that would dominate the planet but I’m pretty certain that they want to dominate East Asia and the Western Pacific from - from the Arctic to  the Banda Sea – and sooner rather than later. Before the middle of this century – less time than it took the USA from fantasizing about being part of “Greater Britain” to actually being the world’s leading power.

Thucydides has dealt with Taiwan’s military reforms better than I could have done. I think there is a time for conscripted forces for some countries. Perhaps Singapore gets it about right with a system that was designed, back in the mid ‘60s, by Israelis. But Singapore is a very small country in a very rough neighbourhood with a traditional distaste for formal alliances.

I think we, the American led West, need to accustom ourselves to the notion that America cannot and will not sustain itself as the only significant global power. China aspires to and, almost certainly, will reach such a status. India might grow to become a very important regional power – counterbalancing both China and the USA in South Asia and the India Ocean. Europe is very unlikely, in my opinion to ever achieve the sort of unity necessary to become, in any unified way, a global “great power.”

But the Chinese strategy will not, I’m guessing be to try to match America tank for tank and missile for missile. Rather, China will try to weaken America’s “soft power” even as it works very hard to enhance its own. The goal will be leave America as a huge, powerful, but essentially, friendless giant while China will be seen, even in Europe, as a less threatening, more “responsible” global power – one with which all can treat fairly and without fear. But, remember, as Joseph Nye himself pointed out, “soft power” is useful only when it is supported by respectable hard power – one magnifies the other but while hard power can be used on its own the same is not true for the “soft” variety – something Pink Lloyd Axworthy either forgot or, more likely never learned at Princeton.

But it is “soft power,” that magnetism  and  cultural creativity stuff, coupled with a burgeoning economy – assuming China can sustain that year after year and decade after decade, à la the USA in the several decades following the 2nd World War- and a consistently non-interventionist foreign policy, that will be China’s primary “weapon.”


-------------------------
See: Mead, Walter Russell -  Special Providence, American Foreign Policy and How It Changed the World, Chap. 1, New York, 2001. The Greater Britain which the New York Times foresaw did, indeed, come to “dominate the planet” – but in the form of the USA with the Anglosphere and Western Europe in (often reluctant) tow.


 

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Jewish Han
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Anti-Colonialism
Success of Hong Kong, Singapore, Calcutta as well as Pre-Victorian Britain, Netherlands, Denmark and Sweden.

Cougardaddy's description of the Han in SE Asia in some ways reminded me of descriptions of the Jews.  "... the overseas Chinese who not only reside in many Southeast Asian countries, but also control two-thirds of the economy and 80% of the private sector in their adoptive countries. Their influence on their adoptive countries, which is disoproprotionate to their small numbers compared to the large native populations, definitely cannot be ignored. Consider that some have even used this wealth to participate in or at least influence the local politics; these powerhouse Chinese tycoon families, such as that led by Henry Sy or the Gokongwei family in the Philippines or comparable parallels in Indonesia, Malaysia and Thailand."

Judging from the reaction of locals in places like Burma and Indonesia perhaps the analogy is not so far-fetched.  Both countries have experienced "anti-Han" pogroms.  Often with suggestions of government support.  And both Jews and Han have reason to be suspicious of the intentions of the rest of the world.

I wonder if the Chinese, in reviewing the histories of successful hegemonies will head down the trail of Colonialism or take the opposite route.

There are many that would argue that Britain's downfall came as a result of a change of direction taken around the time of the Opium Wars. 

The "Improving" section of society, the Chartists or Manchester faction were determined that it was their duty to reform the benighted savage.  Much to the chagrin of the Commercial establishment. 

The Improving faction, who were in large part responsible for generating the unrest that resulted in the Indian Mutiny, and who were spurred on by that same rebellion, became the Victorian Imperialists.

In my view, the commercial establishment, derided as Little Englanders, found their outlets in Hong Kong, Singapore and Calcutta.  They sought not to create a military empire but merely create a secure trading environment.  The seas were their domain and the RN their arbiter.

Perhaps the Han could be convinced that they are better served NOT by trying to convince Tibetans, Burmans and Taiwanese that they are Lesser Han but instead rely on the internal cohesion that ties the Han just as it ties the Jews and used to tie the Scots.  (Had to get that reference in there  ;D ).

Britain would have been much better served if it had continued with its Pre-Victorian commercial empire.  Other examples of successful commercial economies include Pre-Restoration Netherlands, Denmark and Sweden..... and it could be argued that similar strategies are working for those countries today.



 

tomahawk6

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Chinese cities continue to have civil unrest and the government has warned of the likelihood of more violence.
 

CougarKing

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tomahawk6 said:
Chinese cities continue to have civil unrest and the government has warned of the likelihood of more violence.

Maybe the PAP and PLA will come in greater numbers?

From the AFP: Agence France-Presse - 3/25/2009 4:07 AM GMT

Call for calm after violent protest in China
Officials are scrambling to restore peace in a rural area of south China after a teenage brawl caused a violent riot with an angry mob setting a police station ablaze, state media said Wednesday.

Hundreds of people from a village in the tropical island province of Hainan gathered outside a local government building Monday claiming authorities had failed to properly intervene after the fight, the official China Daily said.

According to a local newspaper, the Hainan Daily, a student from one village had been slightly hurt by assailants that were suspected to be school children from a neighbouring village.

The student's relatives and friends subsequently descended on the local government building after going to the police, and the group attracted more and more onlookers, the local newspaper reported.

By Monday evening, the crowd had swelled to several hundred people, and some of the protesters set fire to parts of the local government and police buildings, and destroyed three cars and 10 motorcycles, the Hainan Daily said.

At least two bystanders were injured in the protest, the China Daily said.

Calm had since returned to the area, but financial losses from the protest were expected to exceed one million yuan (150,000 dollars), the paper reported.

China sees tens of thousands of demonstrations every year, many of which stem from dissatisfaction with local authorities.
 

Long in the tooth

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China's call for an artificial reserve currency is so ludicrous to be funny.  The US Dollar is just that for several reasons - it's very liquid and convertable, and the Americans have a vested (very) interest in maintaining the value of the currency.

The Chinese are free to hold any currency they like, just like you are I could.  The only major alternative is the Euro, but that is showing strains with various sections of Europe changing gears.

An artificial reserve currency, run presumably by the rocket surgeons at the UN, would have no one to be accountable to for it's security and convertability.  The UN would quickly debase the currency by printing money and we would be using the UN paper to wipe our backsides.

There's another reason why the dollar is the world reserve currency - it's because everyone else holds it too.  I'd be interested to see who would be running to cash their national currency in for the UN bills - it would probably be poor buggers from Rhodesia (did I write that?) I mean Zimbabwe.  And then the UN holdings would again be worthless.... unless you want to go back to a gold standard.  Then again, who does the UN steal the gold from?
 

tomahawk6

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http://www.defenselink.mil/news/newsarticle.aspx?id=53642

China’s Military Capabilities Continue to Grow, Report Says
By Jim Garamone
American Forces Press Service


WASHINGTON, March 25, 2009 – Transformation of the Chinese military has gained speed, but U.S. officials would like to see China become more transparent about military and security affairs, according to a report to Congress released today. Video

The report, called “Military Power of the People’s Republic of China,” provides some new details, “but there are no new, major strategic insights revealed or capabilities revealed,” Pentagon Press Secretary Geoff Morrell said today.

In the report, officials said that Chinese transparency has improved over the past year, “but much remains to be learned about China’s national and military strategies, progress and trends in its military modernization, and the related implications for regional security and stability.”

China’s increased military ability stems from the nation’s emergence as an economic superpower. With 8 percent per year economic growth, the Chinese have been able to invest significant sums in military modernization.

Morrell said the United States continues to ask for “more dialogue and transparency in our dealings with the Chinese government and military, all in an effort to reduce suspicions on both sides.”

The Chinese still look at transparency as “a transaction to be negotiated.” U.S. officials would like the Chinese to see transparency as a responsibility that accompanies the accumulation of national power. Without this transparency, conclusions in the report are subject to best guesses by U.S. experts.

To begin, the Chinese need to be more transparent in budgeting, the report says. The People’s Liberation Army budget has more than doubled since 2000 -- from $27.9 billion to $60.1 billion. Officials believe the Chinese are underreporting the amount they spend on security. The real budget in 2008 is probably between $105 billion and $150 billion, they said.

Llimited transparency can be dangerous and lead to instability. Also, the Chinese reluctance creates uncertainty and increases the potential for misunderstanding and miscalculation, U.S. officials say.

“The United States continues to work with our allies and friends in the region to monitor these developments and adjust our policies accordingly,” the report says.

Chinese military capabilities have increased tremendously. People’s Liberation Army officials have invested in the acquisition of advanced foreign weapons, and they have fueled hothouse growth in domestic defense industries. The Chinese military also has poured money into research and development. On top of this, there is a far-reaching organizational and doctrinal reform of the People’s Liberation Army.

“China’s ability to sustain military power at a distance remains limited, but its armed forces continue to develop and field disruptive military technologies, including those for anti-access/area-denial, as well as for nuclear, space and cyber warfare, that are changing regional military balances and that have implications beyond the Asia-Pacific region,” the report says.

China continues to put military pressure on Taiwan. “China’s armed forces are rapidly developing coercive capabilities for the purpose of deterring Taiwan’s pursuit of de jure independence,” the report says. More advanced missiles, more equipment and better-trained troops have deployed to the military regions opposite the island. The military balance in the region continues to shift in Beijing’s favor, the report says, and Taiwan no longer enjoys “air dominance” over the Taiwan Straits.

The capabilities the Chinese are putting in place “could in the future be used to pressure Taiwan toward a settlement of the cross-Strait dispute on Beijing’s terms while simultaneously attempting to deter, delay or deny any possible U.S. support for the island in case of conflict,” the report says.

Some of the Chinese capabilities have allowed the military to contribute to peacekeeping operations, humanitarian assistance, disaster relief and counter-piracy. “However, some of these capabilities, as well as other, more disruptive ones, could allow China to project power to ensure access to resources or enforce claims to disputed territories,” the report says.

The Chinese assert that the People’s Liberation Army is purely defensive and aimed solely at protecting China’s security and interests. “Over the past several years, China has begun a new phase of military development by beginning to articulate roles and missions for the PLA that go beyond China’s immediate territorial interests,” the report says. But these statements have not cleared up international community questions about the purposes and objectives of the PLA’s evolving doctrine and capabilities.

China has modernized its intercontinental ballistic missile arsenal with the deployment of DF-31 and DF-31A missiles, the report says. They also are readying to launch a new class of ballistic missile submarines soon, it says.

The Chinese military has worked to develop anti-access and area-denial weapons, the report says. This capability goes beyond the nation’s borders. China has developed the capability to hold surface ships, including aircraft carriers, at risk. The weaponry includes quiet submarines, advanced anti-ship cruise missiles, wire-guided and wake-homing torpedoes, or anti-ship ballistic missiles. They are working to deny use of shore-based airfields, secure bastions and regional logistics hubs via conventional ballistic missiles with greater ranges and accuracy, and land-attack cruise missiles, the report says.

The Chinese also can project air power using new advanced aircraft, advanced long-range surface-to-air missile systems, air surveillance systems and ship-borne air defenses, the report says. China’s space-based reconnaissance and positioning are leading to a precision-strike capability.

China still lags in developing an amphibious and airborne capability, airborne, air-to-air refueling, at-sea replenishment and joint integration, the report says.


 
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