http://www.atimes.com/atimes/China/GL21Ad01.html
China lays down gauntlet in energy war
By F William Engdahl
On December 15, the state-owned China National Petroleum Corp (CNPC) inaugurated an oil pipeline running from Kazakhstan to northwest China. The pipeline will undercut the geopolitical significance of the Washington-backed Baku-Tbilisi-Ceyhan (BTC)oil pipeline which opened this past summer amid big fanfare and support from Washington.
The geopolitical chess game for the control of the energy flows of Central Asia and overall of Eurasia from the Atlantic to the China Sea is sharply evident in the latest developments.
Making the Kazakh-China oil pipeline link even more politically interesting, from the standpoint of an emerging Eurasian move towards some form of greater energy independence from Washington, is the fact that China is reportedly considering asking Russian companies to help it fill the pipeline with oil, until Kazakh supply is sufficient.
Initially, half the oil pumped through the new 200,000 barrel-a-day pipeline will come from Russia because of insufficient output from nearby Kazakh fields, Kazakhstan's Vice Energy Minister Musabek Isayev said on November 30 in Beijing. That means closer China-Kazakhstan-Russia energy cooperation - the nightmare scenario of Washington.
Simply put, the United States stands to lose major leverage over the entire strategic Eurasian region with the latest developments. The Kazakh developments also have more than a little to do with the fact that the Washington war drums are beating loudly against Iran.
The new China pipeline runs 962 kilometers (598 miles) and will take China a third of the way to Kashagan in the Caspian Sea, one of the world's largest accessible oil reserves. Kashagan is the largest new oil discovery in decades and exceeds the size of the North Sea. This is a major reason Washington has such a strong interest in supporting democratic regime change in the Central Asia region of late.
In the next 10 years, Kazakhstan plans to almost triple oil production, prompting the landlocked nation to seek new export routes because the country wants to avoid pipelines through Russia and excessive Russian dependence. China is now among Kazakhstan's major target markets.
Best public estimates are that Kazakhstan has 35 billion barrels of discovered oil reserves, twice the amount in the North Sea, and may hold about three times more, according to a Kazakh government report released on November 18 in London. German oil engineers have privately reported that recent drilling by Italy's AGIP, the current oil consortium leader for Kashagan, a huge field offshore Kazakhstan southwest of Tengiz, has confirmed enormous oil deposits there.
The government of President Nursultan Nazarbayev plans to produce 3.6 million barrels a day of oil from all fields in Kazakhstan, onshore and off, by 2015. For 2005, they expect to average about 1.3 million barrels a day, making Kazakhstan far larger than Azerbaijan, and second in oil production of the former Soviet states only to Russia.
The December 15 opening of the new Kazakh-China pipeline was a major event for Beijing. Zhang Guobao, vice chairman of the National Development and Reform Commission, China's top economic planning agency, attended the opening. CNPC has invested more than $2.6 billion in Kazakhstan since 1997.
Beijing takes the geopolitical prize
In October, Beijing scored a second major geopolitical coup when China completed a $4.18 billion takeover of PetroKazakhstan Inc. It was, in a sense, revenge on Washington for the blocking of the China acquisition of Unocal. US oil majors had made major efforts to lock up Kazakhstan oil after discovery of major oil offshore in the Kashagan field. They failed. ExxonMobil was charged with bribery of Kazakh officials to win a presence in the Kazakh oil business, and a senior Mobil executive was later jailed on US tax evasion in New York tied to the Kazakh bribery payments.
Nazarbayev enjoys good relations with Russia's President Vladimir Putin. He was general secretary of the Communist Party when Kazakhstan was part of the USSR, and is regarded as a sly fox in terms of dealing with Moscow, while also keeping a clear distance from Moscow.
In October, Russia's Lukoil failed in its bid to buy up the Kazakh state oil company, PetroKazakhstan, in a privatization. Nazarbayev indicated a major geopolitical shift in strategy, compared with a decade or more ago, when it appeared that Washington was to be the major foreign ally of Nazarbayev. At that time Secretary of State Condoleezza Rice's company, Chevron, became the lead oil contractor and operator in the Kazakh Tengiz oil field. That was just after the breakup of the Soviet Union and the US oil presence in Kazakhstan was a major US political priority supported by the Bill Clinton administration.
The Chevron Tengizchevoil consortium formed the Caspian Pipeline Consortium (CPC) in 1993 amid great fanfare. After years of haggling with the Kazakh government, Chevron finally constructed a pipeline from Tengiz on the Caspian's northeastern shore to the Russian port of Novorossiysk on the Black Sea. Following years of pressure, most members of the CPC group, including Chevron and Oman Oil Co, decided to not pursue future expansions of the CPC line.
Now, a decade later and with the scope of Kazakh oil deposits dwarfing any in the region, with its recent confirmed drillings in the Kashagan field, Nazarbayev has scored a political balance of power coup by turning to Beijing.
In October, Nazarbayev announced that CNPC had won the bid to buy PetroKazakhstan. What will be important to watch, now that Nazarbayev won re-election on December 4, further extending his 14-year reign, is to what extent Washington begins to play up "human rights abuses" by Nazarbayev.
A fledgling "Orange" revolution a la Ukraine has sprung up behind opposition candidate Zharmakhan Tuyakbai and his party, For a Just Kazakhstan. He came in second with 6.6% of the vote and cried fraud, but Washington's and the US media response were muted this time. Rice, in a major trip to shore up sagging US influence in Central Asia on October 10-13, held a private meeting with Tuyakbai. He is clearly being groomed for a possible future role, but clearly not yet.
Washington suffers strategic setback
A major setback for Washington's Eurasian encirclement strategy vis-a-vis China and Russia came several months ago when Uzbekistan's autocratic president Islam Karimov told Washington it could no longer use the Karshi-Khanabad military air base in southeast Uzbekistan, a major piece in Washington's Eurasian chess board play, put into place after September 11, 2001.
Since strong US protest over the government's bloody suppression of protests against a state trial of alleged Islamic fundamentalists in Andijan last May, Karimov's relations with Washington have deteriorated. Karimov's decision to move so aggressively was no doubt influenced by the successful March "Tulip" revolution which toppled Askar Akayev in neighboring Kyrgystan and set the stage for the July election of opposition and US-backed candidate Kurmanbek Bakiev.
On July 29, Karimov announced he was evicting the US entirely from the airbase with a January 2006 exit date. In October, the US Senate, as retaliation, voted not to pay $23 million in base user fees to Uzbekistan for past use. Moscow and Beijing have both moved into the vacuum. A look at the map will indicate why. Uzbekistan is strategic for control or to prevent control by foreign powers such as Washington, of Central Asia and pipeline routes linking Russia, China and Kazakhstan. In October 2004, Moscow secured a long-term military base agreement to station troops in Dushanbe, the capital of nearby Tajikistan, a move by Russia to limit the spread of Washington-backed "color revolutions" in the region.
That appeared to redraw the Eurasian geostrategic map in Moscow's favor, with the recent US loss of Uzbekistan. Uzbekistan is now effectively Russia's main ally in Central Asia.
Washington's position in Eurasia and its future relations with Kazakhstan suddenly assumed high priority. Clearly, the Bush administration decided the time was not ripe to try a full-blown "Orange" revolution in Kazakhstan this month, at least not until Washington's position in the region was stronger. That was a clear purpose of the October Rice visit.
But now with the strong geopolitical turn of Nazarbayev toward playing Beijing to offset potential Washington domination in the region, the situation has begun to change dramatically. A year ago, China attempted to buy out a 16% share in the Kashagan consortium from British Gas, which was willing to sell. That sale was blocked by US consortium member ExxonMobil, the company subsequently charged with bribery and convicted. Now China has opened an oil flow out of Kazakhstan to the East, not the West.
This has major strategic implications for the future of the Washington-backed BTC oil pipeline. That pipeline was built by the Caspian Oil Consortium headed by British Petroleum, and was backed by both Clinton and George W Bush, despite the fact that it was the most costly and least viable oil route out of the Caspian.
Former US national security advisor Zbigniew Brzezinski had been the chief Washington lobbyist advocating the BTC route to circumvent Russia. Its construction was undertaken on the assumption that it would carry not only Baku oil, but also a major share of Kazakh oil from Tengiz and offshore Kashagan oil fields. Oops!
A larger China energy strategy
The December China-Kazakhstan pipeline opening is one part of a massive Chinese plan to secure as much Kazakh oil riches as possible.
The Chinese plan to connect several pieces of infrastructure - part Soviet-built, part Chinese-built - then reverse the flow of some of them and forge a new export corridor stretching from Kazakhstan's oil-rich Caspian basin, including Kashagan, through a series of western and central-Kazakh oil zones, and ultimately into China. With completion of this major project, China will for the first time have secured a source of imported energy not vulnerable to US aircraft carrier battle groups, as is the case with present oil deliveries from the Persian Gulf and Sudan.
Before opening the new pipeline, China imported only 25,000 bpd from Kazakhstan. Once the link between Kenkiyak and Kumkol is finished, connecting existing infrastructure near the Caspian with the portion inaugurated on December 15, the project will pump 1 million bpd. That would be about 15% of China's crude oil needs.
China then plans to tap into production from dozens of Kazakh sites it has acquired during the past several years. This is oil that currently goes west, or north through Russia.
Beijing still prefers the color 'red'
Beijing has also studied the Washington-backed series of regime changes across Central Asia and the "color revolutions" from Georgia to Ukraine and most recently Kyrgystan, and has evidently decided to "nip in the bud" any similar non-governmental organization efforts within China, or in areas strategic to long-term China energy security.
Kyrgystan's "Tulip" revolution last July sounded alarm bells in Beijing. Possible Chinese pipeline links to Kazakhstan, Turkmenistan, Iran and or Russia would clearly be threatened by a ring of new pro-North Atlantic Treaty Organization neighbors and states between western China and its potential oil sources. Their alarm led to warmer ties between Uzbekistan's Karimov and Beijing in recent months, as well as an invitation from Moscow-tied Belarus President Yuri Lukashenko.
The Washington journal Foreign Policy ran a short item in its October edition by an apparent Chinese dissident. The article, titled, "China's Color-Coded Crackdown", is worth quoting:
In China's halls of power, the fall of post-Soviet authoritarian regimes has raised the uncomfortable specter of a Chinese popular uprising. According to the Hong Kong-based Open magazine, a report by Chinese President Hu Jintao, titled "Fighting the People's War Without Gunsmoke", is guiding the Chinese Communist Party's "counterrevolution" offensive. The report, disseminated inside the party, outlines a series of measures aimed at nipping a potential Chinese "color revolution" in the bud.
Some Chinese apparently call it the Battle of the Two Georges - George Bush and global financier George Soros. The Foreign Policy piece continues:
Perhaps the most telling sign of China's concern has been its crackdown on non-governmental organizations (NGOs). Beijing believes that international organizations, especially advocacy NGOs, have acted as Washington's "black hands" behind the recent regime changes in Central Asia. A recent issue of a biweekly journal run by the Communist Party Propaganda Department referred to Washington's "$1 billion annual budget for global democratization" and identified NGOs such as the International Republican Institute, the National Endowment for Democracy (NED), the US Institute of Peace and the Open Society Institute as organizations that "brainwash" local people and train political oppositions.
In late August, ahead of a visit by the UN high commissioner for human rights, Chinese police raided the office of the Empowerment and Rights Institute, a human rights group supported by the NED. A new regulation offering more freedom to NGOs was initially expected later this year. No longer. The Ministry of Civil Affairs has now stopped processing registration applications, effectively freezing many groups' operations. Instead, the only government offices taking an interest in NGOs are the national security agency [China's secret police] and public security forces.
Both have launched investigations into local NGOs. Some senior Chinese managers working for international NGOs have been called in for "private talks" with authorities, though no related arrests or detentions have been reported. Some NGO offices have had plainclothes security officers show up in an effort to clandestinely ferret out information on foreign staff and organizations. Environmental groups have been singled out for a massive government survey, most likely because they have angered powerful agencies by successfully initiating public debates on controversial issues, such as genetically modified foods and huge dam projects, and because only around 10% of green groups are currently registered with the state.
Meanwhile, Beijing has commissioned researchers from several provincial academies of social science to study the activities of NGOs in China. NGO publications such as directories experienced unexpectedly strong sales in recent months, as they no doubt became convenient study tools. Likewise, experts have been dispatched to Central Asia to study how those color revolutions first sprung roots. In a May 19 Politburo meeting, senior administrators from the Chinese Academy of Social Sciences, where foreign research funds are usually well received, were reminded of the "acute and complicated struggle in the ideological realm in the new millennium". In other words, be careful about the political implications of your research.
According to sources in Beijing, final decisions on the government's approach to NGOs will be made in a November meeting of the State Council, China's highest executive body. As long as the clouds of color revolution are hovering over Central Asia - some, for example, expect storms in Belarus - the Chinese government will stay on high alert ... Beijing's moves against the country's NGO community remain largely unnoticed outside China. If the international community wants an open and democratic China, it should pay more attention to the survival and growth of Chinese liberal institutions. Otherwise, the country will be destined to remain the same shade of red.
Beijing-Tehran-Moscow
At the end of 2004, Beijing signed a $70 billion energy agreement with Tehran, China's largest Organization of Petroleum Exporting Countries energy deal to date. China's state Sinopec agreed to buy 250 million tons of LNG over 30 years from Iran, as well as to develop the giant Yadavaran field. That agreement covered the comprehensive development by Sinopec of the giant Yadavaran gas field, construction of a related petrochemical and gas industry including pipelines.
As part of the huge Iran-China economic cooperation agreement, China's state-run military construction company, NORINCO, will expand the Tehran Metro underground.
A second phase in the Iran-China strategic energy cooperation will involve constructing a pipeline in Iran to take oil some 386 kilometers to the Caspian Sea, there to link up with the planned pipeline from China into Kazakhstan.
On signing the deal, Iran's Petroleum Minister announced that Tehran would like to see China replace Japan as Iran's largest oil importer. As well, Iran has what are estimated to be the world's second largest reserves of natural gas after Russia. Iran is a place of enormous strategic importance to China, to Japan, to Russia, to the European Union, and for all these reasons, to Washington as well.
Iran supplies about 14% of China's oil. Along with Russia, China has been involved since the late 1990s in supplying nuclear technology to Tehran. In 1997, Beijing, under Washington pressure, nominally agreed to stop nuclear-related shipments to Iran, but the flows are believed continuing as the Iran relation is strategic and critical to China's energy security.
China, a veto member of the UN Security Council, has repeatedly called for the issue of Iranian nuclear development to be dealt with by the International Atomic Energy Agency (IAEA). The IAEA's chief, Nobel Peace Prize awardee, Mohamed ElBaradei, has earned the enmity of Washington war hawks for his open declarations of lack of evidence in both Iraq and now of Iranian atomic bomb capability.
Given the nature of the Bush administration's rush to war in Iraq in 2003, where China had a major stake in oil development, and the subsequent US blocking of other Chinese attempts at securing energy independence, including Unocal, it is not surprising that Beijing is taking extraordinary measures to secure its long-term oil and gas supply.
Energy is the Achilles' heel of China's economic growth. Beijing knows that only too well. So does Washington. A decision by Washington to take military action against Iran now would pull a far larger cast of actors into the fray than Iraq.
F William Engdahl is author of the book, A Century of War: Anglo-American Oil Politics and the New World Order from Pluto Press Ltd. He can be contacted via his website, www.engdahl.oilgeopolitics.net.
(Copyright 2005 F William Engdahl)
Full Version: Eye on China and Taiwan
Common Ground Common Sense > Issues that Affect Our Lives > Foreign Policy and National Defense > Foreign Policy & National Defense Issues Archive
Interview: U.S. Ambassador James Lilley
By Toshiyuki Hayakawa
The Sekai Nippo
Published December 22, 2005
WASHINGTON -- Ambassador James Lilley, senior fellow of the American Enterprise Institute (AEI), expressed his observations on China and the U.S.-China relationship in a recent interview with the Japanese daily, Sekai Nippo. Ambassador Lilley was U.S. ambassador to the People's Republic of China from 1989-1991 and to the Republic of Korea from 1986-1989. He also served as assistant secretary of defense for international affairs from 1991-1993.
Q: How would you evaluate the U.S.-China summit held in Beijing last month?
A: Let me start this way. Summitry is very important to maintain the Sino-American relationship. That has been the case since the beginning in 1971, when Henry Kissinger went to China and met with Chou En-lai and Kissinger went in 1972 and met with Chairman Mao and Chou En-lai. So from the beginning whether it's Nixon, Ford, Carter, Reagan, Bush I, Clinton, or Bush II, you need to maintain the summit meeting in order to advance and sustain the relationship. The meeting in Beijing was a part of the process. It's not a question of win or lose, good or bad. It is an essential process to sustain the relationship at a high level.
Q: What is the Bush administration's policy on China now? Last month the Wall Street Journal used the term "congagement (combination of containment and engagement)." Is this a correct description of the policy?
A: I think that this is a relationship that is so complex in its many, many ways that you can't sum it up in one word. I think that's very dangerous and misleading to do that. What you have to do is to look at all the levels of the relationship, whether it's security, drugs, counterterrorism, North Korea, the Taiwan Strait, South East Asia, or oil. All these things are involved. So how can you say "congagement"?
So it's a mix of a positive and negative relationship, as it always has been. So I think it's more accurate to say the positive side is making progress on currency manipulation, the trade deficit of the United States, market access, transparency of the Chinese system, or intellectual property rights. These are major economic issues that we need to keep continuously discussing with Chinese and the basic work is done between [U.S. Trade Representative Robert B.] Zoellick and [Chinese Deputy Foreign Minister] Dai Bingguo.
Q: I think China will have greater influence in the world within the next ten to twenty years. Does the U.S. government have a long term China strategy?
A: I think your assumption that China will be the major force in the world in ten or twenty years is not certain. There is probably an equal chance that China will not be that way. So you have to prepare for one positive contingency and one negative one.
Now you want to talk about the positive one, China may become a great power in ten or twenty years. That's the possibility. Economic growth, modernization of the military, projection of themselves on the international political scene--all these things are happening. That's true.
At the same time, if you look at the other side, you will see that in China there are major domestic problems. Not the least of which is corruption and internal dissent and violence, demonstrations involving agriculture, industry, religious movements, and others in China. It is a very challenging situation for the Chinese leadership. They must spend the great deal of time, dealing with these problems. And you need to deal with these problems in stable environments, which means it's important that you reach understandings with the United States.
Our position is that we should advance the economic agenda by leveling the playing field with China. That's one consideration. Number two, watching the Chinese military modernization, it is necessary for the United States to prepare for a stronger, more modern Chinese military power, which is focused on the U.S. and Japan. So we have to deal with both contingencies--that they may come up and be a real challenge militarily in ten to twenty years or they may not.
Q: China calls its rising power "peaceful development." But China is continuing a rapid military build-up. Can we believe the words "peaceful development"?
A: There is an obvious contradiction between military modernization and peaceful development. The Chinese say that modernization is proceeding very slowly and is a way short of the United States power. That's what they say. So therefore their military modernization presents no threat, it's a defensive move. That's what they say.
However, if you examine their purchases of submarines, [and] aircraft, or the kinds of cruise missiles, you can see that this is actually a more offensive posture. So you cannot really accept what they are saying. Especially since they have made statements about their budget, which we believe are not accurate. It's a part of their strategy to keep their military buildup secret.
On the other hand, we are saying that their military buildup presents a problem and we should have joint discussions on [the] implications of that. We will be frank with them. They will be frank with us. I don't think that [will] lead anywhere very soon. But there are possibilities.
Q: China gives high priority to the reinforcement of their navy. Will the Chinese become a threat to the U.S. Navy and Japanese Maritime Self-Defense Forces in future?
A: I think that's the wrong word. I don't think you should probably say threat right away. That's a very easy word to use. My sense is it represents more of a challenge. It's a competitor. It is developing systems that are aimed at you and us. There is no question about that. We have looked at their maneuvers and their deployments, and this bears out this statement. We put that in our defense white paper if you've read it.
Their emphasis is clearly on the navy, as you said. They are focusing more on the navy, the strategic missile force and air defense, these three things. It looks they're the priorities there. This means that the Chinese are looking more towards a buffer zone around China, including Taiwan and possibly power projection into the Western Pacific, South China Sea and the Indian Ocean. It looks this way because they need to protect their sea-lanes for energy reasons. They can't really do that in the face of American and Japanese power. They don't see it will be able to do that. But they will keep trying.
Q: China strongly opposes Japanese Prime Minister Koizumi's visit to the Yasukuni shrine [dedicated to Japan's war dead]. What do you think about the Japan-China history issue?
A: China has a view on Japan in terms of pre-World War II Japanese behavior. They have not dealt with Japan after 1945--the 55 to 60 years since 1945 which projects a powerful, democratic, economically successful Japan--which has not been at all threatening to its neighbors. It seems to me that it is very important that China focuses on that aspect of Japan and moves away from spending their time on pre-1945 Japan. Having said that, there is also a problem in the Yasukuni shrine business, which the Chinese find useful in mobilizing its own people, in expressing its outrage and in making common cause with the Koreans. So it serves their tactical purposes, and it taps into a general xenophobia in China about foreign powers. So it has multi-purposes.
One the other hand, the Japanese-Chinese economic relationship is strong. It is built on comparative advantage and mutual dependency. And there is a great deal to link the Japanese culture with Chinese culture, if you go beyond the period prior to World War I and World War II. If you look at the Japanese-Chinese relationship since 1945, you do find certain periods of getting along. For instance, in 1972 Japan normalized its relationship with China. At that time there was friendship, connection, visits, summitry--all those sort of things happened. But it seems that for various reasons that has not proceeded.
Q: China has a very big role in North Korean nuclear issue. However I have the impression that China has failed to persuade North Korea. Is China doing so to keep a political card against U.S.?
A: I think if you examine it, you have to look at North Korea through Chinese eyes, not through Japanese eyes or American eyes. You look at it through Chinese eyes. And they see it differently. What do they see? They want to see the North Korean regime survive. They will put food and energy into the country, no matter how distasteful it is, to keep it alive. Why? Because if the country collapses, as it could, it will lead to 4 million refugees in Manchuria, which will be very destabilizing for China.
Number two, if North Korea collapses, you might see those nuclear weapons, chemical weapons, biological weapons and long range missiles fall into the hands of North Korean military warlords. At least Kim Jong-Ill's regime, distasteful as it is, has some form of control. If it breaks up, you could have a warlord here and a warlord there, getting these weapons and using them for blackmail purposes. That is something China does not want.
Number 3, China does not want to see a unified Korea under Seoul allied to the United States with the American troops on the Yellow River. That is why they fought a war in 1950, and they're still saying this is unacceptable. So China is increasing its leverage in South Korea to the point where they are not where we are yet but they are getting there. They will not really make a major concession to North Korea until they feel their power in the South matches ours or exceeds ours.
So for the time being you see the Chinese playing a game. The weapons of mass destruction are not their first priority, although they say clearly they're against them, which they are. But there are these other considerations, which I've just talked to you about, which influence the way they act.
By Toshiyuki Hayakawa
The Sekai Nippo
Published December 22, 2005
WASHINGTON -- Ambassador James Lilley, senior fellow of the American Enterprise Institute (AEI), expressed his observations on China and the U.S.-China relationship in a recent interview with the Japanese daily, Sekai Nippo. Ambassador Lilley was U.S. ambassador to the People's Republic of China from 1989-1991 and to the Republic of Korea from 1986-1989. He also served as assistant secretary of defense for international affairs from 1991-1993.
Q: How would you evaluate the U.S.-China summit held in Beijing last month?
A: Let me start this way. Summitry is very important to maintain the Sino-American relationship. That has been the case since the beginning in 1971, when Henry Kissinger went to China and met with Chou En-lai and Kissinger went in 1972 and met with Chairman Mao and Chou En-lai. So from the beginning whether it's Nixon, Ford, Carter, Reagan, Bush I, Clinton, or Bush II, you need to maintain the summit meeting in order to advance and sustain the relationship. The meeting in Beijing was a part of the process. It's not a question of win or lose, good or bad. It is an essential process to sustain the relationship at a high level.
Q: What is the Bush administration's policy on China now? Last month the Wall Street Journal used the term "congagement (combination of containment and engagement)." Is this a correct description of the policy?
A: I think that this is a relationship that is so complex in its many, many ways that you can't sum it up in one word. I think that's very dangerous and misleading to do that. What you have to do is to look at all the levels of the relationship, whether it's security, drugs, counterterrorism, North Korea, the Taiwan Strait, South East Asia, or oil. All these things are involved. So how can you say "congagement"?
So it's a mix of a positive and negative relationship, as it always has been. So I think it's more accurate to say the positive side is making progress on currency manipulation, the trade deficit of the United States, market access, transparency of the Chinese system, or intellectual property rights. These are major economic issues that we need to keep continuously discussing with Chinese and the basic work is done between [U.S. Trade Representative Robert B.] Zoellick and [Chinese Deputy Foreign Minister] Dai Bingguo.
Q: I think China will have greater influence in the world within the next ten to twenty years. Does the U.S. government have a long term China strategy?
A: I think your assumption that China will be the major force in the world in ten or twenty years is not certain. There is probably an equal chance that China will not be that way. So you have to prepare for one positive contingency and one negative one.
Now you want to talk about the positive one, China may become a great power in ten or twenty years. That's the possibility. Economic growth, modernization of the military, projection of themselves on the international political scene--all these things are happening. That's true.
At the same time, if you look at the other side, you will see that in China there are major domestic problems. Not the least of which is corruption and internal dissent and violence, demonstrations involving agriculture, industry, religious movements, and others in China. It is a very challenging situation for the Chinese leadership. They must spend the great deal of time, dealing with these problems. And you need to deal with these problems in stable environments, which means it's important that you reach understandings with the United States.
Our position is that we should advance the economic agenda by leveling the playing field with China. That's one consideration. Number two, watching the Chinese military modernization, it is necessary for the United States to prepare for a stronger, more modern Chinese military power, which is focused on the U.S. and Japan. So we have to deal with both contingencies--that they may come up and be a real challenge militarily in ten to twenty years or they may not.
Q: China calls its rising power "peaceful development." But China is continuing a rapid military build-up. Can we believe the words "peaceful development"?
A: There is an obvious contradiction between military modernization and peaceful development. The Chinese say that modernization is proceeding very slowly and is a way short of the United States power. That's what they say. So therefore their military modernization presents no threat, it's a defensive move. That's what they say.
However, if you examine their purchases of submarines, [and] aircraft, or the kinds of cruise missiles, you can see that this is actually a more offensive posture. So you cannot really accept what they are saying. Especially since they have made statements about their budget, which we believe are not accurate. It's a part of their strategy to keep their military buildup secret.
On the other hand, we are saying that their military buildup presents a problem and we should have joint discussions on [the] implications of that. We will be frank with them. They will be frank with us. I don't think that [will] lead anywhere very soon. But there are possibilities.
Q: China gives high priority to the reinforcement of their navy. Will the Chinese become a threat to the U.S. Navy and Japanese Maritime Self-Defense Forces in future?
A: I think that's the wrong word. I don't think you should probably say threat right away. That's a very easy word to use. My sense is it represents more of a challenge. It's a competitor. It is developing systems that are aimed at you and us. There is no question about that. We have looked at their maneuvers and their deployments, and this bears out this statement. We put that in our defense white paper if you've read it.
Their emphasis is clearly on the navy, as you said. They are focusing more on the navy, the strategic missile force and air defense, these three things. It looks they're the priorities there. This means that the Chinese are looking more towards a buffer zone around China, including Taiwan and possibly power projection into the Western Pacific, South China Sea and the Indian Ocean. It looks this way because they need to protect their sea-lanes for energy reasons. They can't really do that in the face of American and Japanese power. They don't see it will be able to do that. But they will keep trying.
Q: China strongly opposes Japanese Prime Minister Koizumi's visit to the Yasukuni shrine [dedicated to Japan's war dead]. What do you think about the Japan-China history issue?
A: China has a view on Japan in terms of pre-World War II Japanese behavior. They have not dealt with Japan after 1945--the 55 to 60 years since 1945 which projects a powerful, democratic, economically successful Japan--which has not been at all threatening to its neighbors. It seems to me that it is very important that China focuses on that aspect of Japan and moves away from spending their time on pre-1945 Japan. Having said that, there is also a problem in the Yasukuni shrine business, which the Chinese find useful in mobilizing its own people, in expressing its outrage and in making common cause with the Koreans. So it serves their tactical purposes, and it taps into a general xenophobia in China about foreign powers. So it has multi-purposes.
One the other hand, the Japanese-Chinese economic relationship is strong. It is built on comparative advantage and mutual dependency. And there is a great deal to link the Japanese culture with Chinese culture, if you go beyond the period prior to World War I and World War II. If you look at the Japanese-Chinese relationship since 1945, you do find certain periods of getting along. For instance, in 1972 Japan normalized its relationship with China. At that time there was friendship, connection, visits, summitry--all those sort of things happened. But it seems that for various reasons that has not proceeded.
Q: China has a very big role in North Korean nuclear issue. However I have the impression that China has failed to persuade North Korea. Is China doing so to keep a political card against U.S.?
A: I think if you examine it, you have to look at North Korea through Chinese eyes, not through Japanese eyes or American eyes. You look at it through Chinese eyes. And they see it differently. What do they see? They want to see the North Korean regime survive. They will put food and energy into the country, no matter how distasteful it is, to keep it alive. Why? Because if the country collapses, as it could, it will lead to 4 million refugees in Manchuria, which will be very destabilizing for China.
Number two, if North Korea collapses, you might see those nuclear weapons, chemical weapons, biological weapons and long range missiles fall into the hands of North Korean military warlords. At least Kim Jong-Ill's regime, distasteful as it is, has some form of control. If it breaks up, you could have a warlord here and a warlord there, getting these weapons and using them for blackmail purposes. That is something China does not want.
Number 3, China does not want to see a unified Korea under Seoul allied to the United States with the American troops on the Yellow River. That is why they fought a war in 1950, and they're still saying this is unacceptable. So China is increasing its leverage in South Korea to the point where they are not where we are yet but they are getting there. They will not really make a major concession to North Korea until they feel their power in the South matches ours or exceeds ours.
So for the time being you see the Chinese playing a game. The weapons of mass destruction are not their first priority, although they say clearly they're against them, which they are. But there are these other considerations, which I've just talked to you about, which influence the way they act.
http://www.globalresearch.ca/index.php?con...&articleId=1562
Central Asia, Washington and Beijing Energy Geo-politics
by F. William Engdahl
On December 15, the state-owned China National Petroleum Corp. (CNPC) inaugurated an oil pipeline running from Kazakhstan to northwest China. That pipeline will undercut the geopolitical significance of the Washington-backed Baku-Tbilisi-Ceyhan oil pipeline which opened this past summer amid big fanfare and support from Washington. The geopolitical chess game for the control of the energy flows of Central Asia and overall of Eurasia from the Atlantic to the China Sea is sharply evident in the latest developments.
Making the Kazakh-China oil pipeline link even more politically interesting, from the standpoint of an emerging Eurasian move towards some form of greater energy independence from Washington, is the fact that China is reportedly considering asking Russian companies to help it fill the pipeline with oil, until Kazakh supply is sufficient. Initially, half the oil pumped through the new 200,000 barrel-a-day pipeline will come from Russia because of insufficient output from nearby Kazakh fields, Kazakhstan's Vice Energy Minister Musabek Isayev said Nov. 30 in Beijing.
That means closer China-Kazakh-Russia energy cooperation--the nightmare scenario of Washington geopolitical strategists such as Zbigniew Brzezinski or Henry Kissinger.
Simply put, Washington stands to lose major leverage over the entire strategic Eurasian region with the latest developments. The Kazakh developments also likely has more than a little to do with the fact that the Washington war drums are suddenly beating more loudly against Iran.
The new China pipeline runs 962-kilometers (598-miles) and will take China a third of the way to Kashagan in the Caspian Sea, one of the world's largest accessible oil reserves. Kashagan is the largest new oil discovery in decades and exceeds the size of the North Sea. This is a major reason Washington has such a strong interest in supporting democratic regime change in the Central Asia region of late.
In the next 10 years, Kazakhstan plans to almost triple oil production, prompting the landlocked nation to seek new export routes because the country wants to avoid pipelines through Russia and excessive Russian dependence. China is now among Kazakhstan's major target markets.
Best public estimates are that Kazakhstan has 35 billion barrels of discovered oil reserves, twice the amount in the North Sea, and may hold about three times more, according to a Kazakh government report released Nov. 18 in London. German oil engineers have privately reported that recent drilling by Italy’s AGIP, the current oil consortium leader for Kashagan, a huge field offshore Kazakhstan southwest of Tengiz, has confirmed enormous oil deposits there.
The Government of President Nursultan Nazarbayev plans to produce 3.6 million barrels a day of oil from all fields in Kazakhstan, onshore and off, by 2015. For 2005, they expect to average about 1.3 million barrels a day, making Kazakhstan far larger than Azerbaijan, and second in oil production of the former Soviet states only to Russia. (Source: Stratfor)
The December 15 opening of the new Kazakh-China pipeline was a major event for Beijing. Zhang Guobao, vice chairman of the National Development and Reform Commission, China's top economic planning agency, attended the opening. China National Petroleum has invested more than $2.6 billion in Kazakhstan since 1997.
Beijing takes the geopolitical prize
In October this year, Beijing scored a second major geopolitical coup when China completed a $4.18 billion takeover of PetroKazakhstan Inc. It was, in a sense, revenge on Washington for the blocking of the China acquisition of Unocal. US oil majors had made major efforts to lock up Kazakhstan oil after discovery of major oil offshore in the Kashagan field. They failed. ExxonMobil was charged with bribery of Kazakh officials to win presence in the Kazakh oil business, and a senior Mobil executive was later jailed on US tax evasion in New York tied to the Kazakh bribery payments.
Nazarbayev enjoys good relations with Russia’s Putin. He was General Secretary of the Communist Party when Kazakhstan was part of the USSR, and is regarded as a sly fox in terms of dealing with Moscow, while also keeping a clear distance from Moscow.
In October, Russia’s Lukoil failed in its bid to buy up the Kazakh state oil company, PetroKazakhstan, in a privatization. Nazarbayev indicated a major geopolitical shift in strategy, compared with a decade or more ago, when it appeared that Washington was to be the major foreign ally of Nazarbayev. At that time Condoleezza Rice’s company, Chevron, became the lead oil contractor and operator in the Kazakh Tengiz oil field. That was just after the breakup of the Soviet Union and US oil presence in Kazakhstan was a major US political priority supported by the Clinton Administration.
The Chevron Tengizchevoil consortium formed the Caspian Pipeline Consortium (CPC) in 1993 amid great fanfare. After years of haggling with the Kazakh government, Chevron finally constructed a pipeline from Tengiz on the Caspian's northeastern shore to the Russian port of Novorossiysk on the Black Sea. Following years of pressure, most members of the CPC group, including Chevron and Oman Oil Co. decided to not pursue future expansions of the CPC line.
Today, a decade later and with the scope of Kazakh oil deposits dwarfing any in the region, with its recent confirmed drillings in Kashagan field, Nazarbayev has scored a political balance of power coup by turning now to Beijing.
In October, Nazarbayev announced that China National Petroleum Corporation had won the bid to buy PetroKazakhstan. What will be important to watch, now that Nazarbayev won re-election on December 4, further extending his 14-year reign, is to what extent Washington begins to play up ‘human rights abuses’ by Nazarbayev.
A fledgling ‘Orange Revolution’ copycat opposition has sprung up behind opposition candidate, Zharmakhan Tuyakbai, and his party, ‘For A Just Kazakhstan.’ He came in second with 6.6% and cried fraud, but Washington and US media response was muted. US Secretary of State Rice, in a major trip to shore up sagging US influence in Central Asia on October 10-13, had held a private meeting with Tuyakbai. He is clearly being groomed for possible future role.
Washington suffers strategic setback
A major setback for Washington’s Eurasian encirclement strategy vis-à-vis China and Russia came several months ago when Uzbekistan’s autocratic President, Islam Karimov, told Washington it could no longer use the Karshi-Khanabad military air base in southeast Uzbekistan, a major piece in Washington’s Eurasian chess board play put into place after September 11, 2001.
Since strong US protest over the Government’s bloody suppression of protests against a state trial of alleged Islamic fundamentalists in Andijan last May, Karimov’s relations to Washington have chilled and Putin has moved skillfully to fill Uzbekistan’s power vacuum. Karimov’s decision to move so aggressively was no doubt influenced by the successful March 2005 ‘Tulip Revolution,’ which toppled President Askar Akayev in neighboring Kyrgystan and set the stage for the July election of opposition and US-backed candidate, Kurmanbek Bakiev.
On July 29, Karimov announced he was evicting the US entirely from the airbase with a January 2006 exit date. In October the US Senate, as retaliation, voted not to pay $23 million in base user fees to Uzbekistan for past use. Moscow and Beijing have both moved into the vacuum. A look at the map will indicate why. Uzbekistan is strategic for control or to prevent control by foreign powers such as Washington, of Central Asia and pipeline routes linking Russia, China, Kazakhstan. In October 2004, Moscow secured a long-term military base agreement to station thousands of Russian troops in the capital, Dushanbe, a move by Washington to limit the spread of Washington-backed ‘color revolutions’ in the region.
That appeared to redraw the Eurasian geo-strategic map in Moscow’s favor with the recent US loss of Uzbekistan. Uzbekistan is now effectively Russia's main ally in Central Asia.
Washington’s position in Eurasia and its future relations with Kazakhstan suddenly assumed high priority. Clearly, the Bush Administration decided time was not ripe to try a full-blown Orange Revolution, a la Ukraine, in Kazakhstan this month, at least not until Washington’s position in the region was stronger. That was a clear purpose of the October Rice visit.
But now with the strong geopolitical turn of Nazarbayev toward playing Beijing and China to offset potential Washington domination in the region, the situation has begun to change dramatically. A year ago, China attempted to buy out the 16% share in the Kashagan consortium from British Gas which was willing to sell. That sale was blocked at the time by US consortium member ExxonMobil, the company subsequently charged with bribery and convicted. Now China has opened an oil flow out of Kazakhstan to the East, not the West. (Source: Stratfor)
This has major strategic implications as well for the future of the Washington-backed Baku-Tbilisi-Ceyhan (BTC) oil pipeline. That pipeline, recall, was built by the Caspian Oil Consortium headed by British Petroleum, and was backed by both Bill Clinton and George W. Bush, in the face of strong charges that it was the most costly and least viable oil route out of the Caspian. Zbigniew Brzezinski was the chief Washington lobbyist advocating the BTC route to circumvent Russia. Its construction was undertaken on the assumption that it would carry not only Baku oil, but also a major share of Kazakh oil from Tengiz and offshore Kashagan oil fields. Oops!...
A larger China energy strategy
The December China-Kazakh pipeline opening is one part of a massive Chinese plan to secure as much of Kazakhstan's oil riches as possible.
The Chinese plan aims to connect several pieces of infrastructure -- some Soviet-built, some Chinese-built -- then reverse the flow of some of them and forge a new export corridor stretching from Kazakhstan's oil-rich Caspian basin, including Kashagan, through a series of western- and central-Kazakh oil zones, and ultimately into China. With completion of this major project, China will for the first time have secured a source of imported energy not vulnerable to US aircraft carrier battle groups, as is the case with oil deliveries from the Persian Gulf and Sudan at present.
Before opening the new pipeline, China imported only 25,000 bpd from Kazakhstan. Once the link between Kenkiyak and Kumkol is finished, connecting existing infrastructure near the Caspian with the portion inaugurated Dec. 15, the project will pump 1 million bpd. That would be about 15 percent of China crude oil needs.
China then plans to tap into production from dozens of Kazakh sites they have acquired during the past several years. This is oil that currently goes west, or north through Russia.
Beijing still likes the color ‘red’
Beijing has also studied the Washington-backed series of regime change across Central Asia and the Color Revolutions from Serbia to Georgia to Ukraine and most recently Kyrgystan, and has evidently decided to ‘nip in the bud’ any similar NGO efforts within China, or in areas strategic to long-term China energy security. Kyrgystan’s ‘Tulip Revolution’ last July sounded alarm bells in Beijing. Possible Chinese pipeline links to Kazakhstan, Turkmenistan, Iran and or Russia would clearly be threatened by a ring of new pro-NATO neighbors and states between western China and its potential oil sources.
Their alarm led to warmer ties between Uzbekistan’s Karimov and Beijing in recent months, as well as an invitation of Moscow-tied Belarus President, Yuri Lukashenko. The Washington journal, Foreign Policy, ran a short item in its October 2005 edition by an apparent Chinese dissident. The article, titled, ‘China’s Color-Coded Crackdown,’ states:
‘In China’s halls of power, the fall of post-Soviet authoritarian regimes has raised the uncomfortable specter of a Chinese popular uprising. According to the Hong Kong-based Open magazine, a report by Chinese President Hu Jintao, titled ‘Fighting the People’s War Without Gunsmoke’, is guiding the Chinese Communist Party’s ‘counterrevolution’ offensive. The report, disseminated inside the party, outlines a series of measures aimed at nipping a potential Chinese ‘color revolution’ in the bud.’
Some Chinese apparently call it the Battle of the Two Georges-- George Bush and George Soros.
The Foreign Policy piece continues, ‘Perhaps the most telling sign of China’s concern has been its crackdown on nongovernmental organizations (NGOs). Beijing believes that international organizations, especially advocacy NGOs, have acted as Washington’s ‘black hands’ behind the recent regime changes in Central Asia. A recent issue of a biweekly journal run by the Communist Party Propaganda Department referred to Washington’s ‘$1 billion annual budget for global democratization’ and identified NGOs such as the International Republican Institute, the National Endowment for Democracy (NED), the U.S. Institute of Peace, and the Open Society Institute as organizations that ‘brainwash’ local people and train political oppositions. In late August, ahead of a visit by the U.N. high commissioner for human rights, Chinese police raided the office of the Empowerment and Rights Institute, a human rights group supported by the NED.
‘A new regulation offering more freedom to NGOs was initially expected later this year. No longer. The Ministry of Civil Affairs has now stopped processing registration applications, effectively freezing many groups’ operations. Instead, the only government offices taking an interest in NGOs are the national security agency (China’s secret police) and public security forces. Both have launched investigations into local NGOs. Some senior Chinese managers working for international NGOs have been called in for “private talks” with authorities, though no related arrests or detentions have been reported. Some NGO offices have had plainclothes security officers show up in an effort to clandestinely ferret out information on foreign staff and organizations. Environmental groups have been singled out for a massive government survey, most likely because they have angered powerful agencies by successfully initiating public debates on controversial issues, such as genetically modified foods and huge dam projects, and because only around 10 percent of green groups are currently registered with the state.
Meanwhile, Beijing has commissioned researchers from several provincial academies of social science to study the activities of NGOs in China. NGO publications such as directories experienced unexpectedly strong sales in recent months, as they no doubt became convenient study tools. Likewise, experts have been dispatched to Central Asia to study how those color revolutions first sprung roots. In a May 19 Politburo meeting, senior administrators from the Chinese Academy of Social Sciences, where foreign research funds are usually well received, were reminded of the “acute and complicated struggle in the ideological realm in the new millennium.” In other words, be careful about the political implications of your research.
According to sources in Beijing, final decisions on the government’s approach to NGOs will be made in a November meeting of the State Council, China’s highest executive body. As long as the clouds of color revolution are hovering over Central Asia—some, for example, expect storms in Belarus—the Chinese government will stay on high alert…Beijing’s moves against the country’s NGO community remain largely unnoticed outside China. If the international community wants an open and democratic China, it should pay more attention to the survival and growth of Chinese liberal institutions. Otherwise, the country will be destined to remain the same shade of red.’
Beijing-Teheran-Moscow
At the end of 2004, Beijing signed a $70 billion energy agreement with Teheran, China’s largest OPEC energy deal to date. Sinopec agreed to buy 250 million tons of LNG over 30 years from Iran, as well as to develop the giant Yadavaran field. That agreement covered the comprehensive development by China’s state Sinopec of the giant Yadavaran gas field, construction of a related petrochemical and gas industry including pipelines. As part of the huge Iran-China economic cooperation agreement, China’s state-run military construction company, NORINCO, will expand the Teheran Metro underground.
A second phase in the Iran-China strategic energy cooperation involves constructing a pipeline in Iran to take oil some 386 kilometers to the Caspian Sea, there to link up with the planned pipeline from China into Kazakhstan. Indeed, the
At that time, Iran’s Petroleum Minister announced that Teheran would like to see China replace Japan as Iran’s largest oil importer. As well, Iran has what are estimated to be the world’s second largest reserves of natural gas after Russia. It is a place of enormous strategic importance to China, to Japan, to Russia, to the European Union, and for all these reasons, to Washington as well.
Iran supplies 14% of China’s oil. Along with Russia, China has been involved since the late 1990’s in supplying nuclear technology to Teheran. In 1997 Beijing under Washington pressure nominally agreed to stop shipments, but the flows are believed continuing as the Iran relation is strategic and critical to China energy security. China, a veto member of the UN Security Council has repeatedly called for the issue of Iranian nuclear development to be dealt with by the International Atomic Energy Agency, whose chief, Nobel Peace Prize awardee, Mohamed ElBaradei, has earned the enmity of Washington war hawks for his open declarations of lack of evidence in both Iraq and now Iran of atomic bomb capability.
Given the nature of the Bush Administration’s rush to war in Iraq in 2003, where China had a major stake in oil development, and the subsequent US blocking of other Chinese attempts at securing energy independence including Unocal, it is not surprising that Beijing is taking extraordinary measures to secure its long-term oil and gas supply.
Energy is the Achilles Heel of China’s economic growth. Beijing knows that only too well. So does Washington. A decision to take military action against Iran would pull a far larger cast of actors into the fray than Iraq.
Global research Contributing Editor F. William Engdahl is author of the book, ‘A Century of War: Anglo-American Oil Geopolitics and the New World Order, Pluto Press Ltd. And can be contacted via his website, www.engdahl.oilgeopolitics.net.
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The url address of this article is: www.globalresearch.ca/index.php?context=viewArticle&code=%20EN20051219&articleId=1562
Central Asia, Washington and Beijing Energy Geo-politics
by F. William Engdahl
On December 15, the state-owned China National Petroleum Corp. (CNPC) inaugurated an oil pipeline running from Kazakhstan to northwest China. That pipeline will undercut the geopolitical significance of the Washington-backed Baku-Tbilisi-Ceyhan oil pipeline which opened this past summer amid big fanfare and support from Washington. The geopolitical chess game for the control of the energy flows of Central Asia and overall of Eurasia from the Atlantic to the China Sea is sharply evident in the latest developments.
Making the Kazakh-China oil pipeline link even more politically interesting, from the standpoint of an emerging Eurasian move towards some form of greater energy independence from Washington, is the fact that China is reportedly considering asking Russian companies to help it fill the pipeline with oil, until Kazakh supply is sufficient. Initially, half the oil pumped through the new 200,000 barrel-a-day pipeline will come from Russia because of insufficient output from nearby Kazakh fields, Kazakhstan's Vice Energy Minister Musabek Isayev said Nov. 30 in Beijing.
That means closer China-Kazakh-Russia energy cooperation--the nightmare scenario of Washington geopolitical strategists such as Zbigniew Brzezinski or Henry Kissinger.
Simply put, Washington stands to lose major leverage over the entire strategic Eurasian region with the latest developments. The Kazakh developments also likely has more than a little to do with the fact that the Washington war drums are suddenly beating more loudly against Iran.
The new China pipeline runs 962-kilometers (598-miles) and will take China a third of the way to Kashagan in the Caspian Sea, one of the world's largest accessible oil reserves. Kashagan is the largest new oil discovery in decades and exceeds the size of the North Sea. This is a major reason Washington has such a strong interest in supporting democratic regime change in the Central Asia region of late.
In the next 10 years, Kazakhstan plans to almost triple oil production, prompting the landlocked nation to seek new export routes because the country wants to avoid pipelines through Russia and excessive Russian dependence. China is now among Kazakhstan's major target markets.
Best public estimates are that Kazakhstan has 35 billion barrels of discovered oil reserves, twice the amount in the North Sea, and may hold about three times more, according to a Kazakh government report released Nov. 18 in London. German oil engineers have privately reported that recent drilling by Italy’s AGIP, the current oil consortium leader for Kashagan, a huge field offshore Kazakhstan southwest of Tengiz, has confirmed enormous oil deposits there.
The Government of President Nursultan Nazarbayev plans to produce 3.6 million barrels a day of oil from all fields in Kazakhstan, onshore and off, by 2015. For 2005, they expect to average about 1.3 million barrels a day, making Kazakhstan far larger than Azerbaijan, and second in oil production of the former Soviet states only to Russia. (Source: Stratfor)
The December 15 opening of the new Kazakh-China pipeline was a major event for Beijing. Zhang Guobao, vice chairman of the National Development and Reform Commission, China's top economic planning agency, attended the opening. China National Petroleum has invested more than $2.6 billion in Kazakhstan since 1997.
Beijing takes the geopolitical prize
In October this year, Beijing scored a second major geopolitical coup when China completed a $4.18 billion takeover of PetroKazakhstan Inc. It was, in a sense, revenge on Washington for the blocking of the China acquisition of Unocal. US oil majors had made major efforts to lock up Kazakhstan oil after discovery of major oil offshore in the Kashagan field. They failed. ExxonMobil was charged with bribery of Kazakh officials to win presence in the Kazakh oil business, and a senior Mobil executive was later jailed on US tax evasion in New York tied to the Kazakh bribery payments.
Nazarbayev enjoys good relations with Russia’s Putin. He was General Secretary of the Communist Party when Kazakhstan was part of the USSR, and is regarded as a sly fox in terms of dealing with Moscow, while also keeping a clear distance from Moscow.
In October, Russia’s Lukoil failed in its bid to buy up the Kazakh state oil company, PetroKazakhstan, in a privatization. Nazarbayev indicated a major geopolitical shift in strategy, compared with a decade or more ago, when it appeared that Washington was to be the major foreign ally of Nazarbayev. At that time Condoleezza Rice’s company, Chevron, became the lead oil contractor and operator in the Kazakh Tengiz oil field. That was just after the breakup of the Soviet Union and US oil presence in Kazakhstan was a major US political priority supported by the Clinton Administration.
The Chevron Tengizchevoil consortium formed the Caspian Pipeline Consortium (CPC) in 1993 amid great fanfare. After years of haggling with the Kazakh government, Chevron finally constructed a pipeline from Tengiz on the Caspian's northeastern shore to the Russian port of Novorossiysk on the Black Sea. Following years of pressure, most members of the CPC group, including Chevron and Oman Oil Co. decided to not pursue future expansions of the CPC line.
Today, a decade later and with the scope of Kazakh oil deposits dwarfing any in the region, with its recent confirmed drillings in Kashagan field, Nazarbayev has scored a political balance of power coup by turning now to Beijing.
In October, Nazarbayev announced that China National Petroleum Corporation had won the bid to buy PetroKazakhstan. What will be important to watch, now that Nazarbayev won re-election on December 4, further extending his 14-year reign, is to what extent Washington begins to play up ‘human rights abuses’ by Nazarbayev.
A fledgling ‘Orange Revolution’ copycat opposition has sprung up behind opposition candidate, Zharmakhan Tuyakbai, and his party, ‘For A Just Kazakhstan.’ He came in second with 6.6% and cried fraud, but Washington and US media response was muted. US Secretary of State Rice, in a major trip to shore up sagging US influence in Central Asia on October 10-13, had held a private meeting with Tuyakbai. He is clearly being groomed for possible future role.
Washington suffers strategic setback
A major setback for Washington’s Eurasian encirclement strategy vis-à-vis China and Russia came several months ago when Uzbekistan’s autocratic President, Islam Karimov, told Washington it could no longer use the Karshi-Khanabad military air base in southeast Uzbekistan, a major piece in Washington’s Eurasian chess board play put into place after September 11, 2001.
Since strong US protest over the Government’s bloody suppression of protests against a state trial of alleged Islamic fundamentalists in Andijan last May, Karimov’s relations to Washington have chilled and Putin has moved skillfully to fill Uzbekistan’s power vacuum. Karimov’s decision to move so aggressively was no doubt influenced by the successful March 2005 ‘Tulip Revolution,’ which toppled President Askar Akayev in neighboring Kyrgystan and set the stage for the July election of opposition and US-backed candidate, Kurmanbek Bakiev.
On July 29, Karimov announced he was evicting the US entirely from the airbase with a January 2006 exit date. In October the US Senate, as retaliation, voted not to pay $23 million in base user fees to Uzbekistan for past use. Moscow and Beijing have both moved into the vacuum. A look at the map will indicate why. Uzbekistan is strategic for control or to prevent control by foreign powers such as Washington, of Central Asia and pipeline routes linking Russia, China, Kazakhstan. In October 2004, Moscow secured a long-term military base agreement to station thousands of Russian troops in the capital, Dushanbe, a move by Washington to limit the spread of Washington-backed ‘color revolutions’ in the region.
That appeared to redraw the Eurasian geo-strategic map in Moscow’s favor with the recent US loss of Uzbekistan. Uzbekistan is now effectively Russia's main ally in Central Asia.
Washington’s position in Eurasia and its future relations with Kazakhstan suddenly assumed high priority. Clearly, the Bush Administration decided time was not ripe to try a full-blown Orange Revolution, a la Ukraine, in Kazakhstan this month, at least not until Washington’s position in the region was stronger. That was a clear purpose of the October Rice visit.
But now with the strong geopolitical turn of Nazarbayev toward playing Beijing and China to offset potential Washington domination in the region, the situation has begun to change dramatically. A year ago, China attempted to buy out the 16% share in the Kashagan consortium from British Gas which was willing to sell. That sale was blocked at the time by US consortium member ExxonMobil, the company subsequently charged with bribery and convicted. Now China has opened an oil flow out of Kazakhstan to the East, not the West. (Source: Stratfor)
This has major strategic implications as well for the future of the Washington-backed Baku-Tbilisi-Ceyhan (BTC) oil pipeline. That pipeline, recall, was built by the Caspian Oil Consortium headed by British Petroleum, and was backed by both Bill Clinton and George W. Bush, in the face of strong charges that it was the most costly and least viable oil route out of the Caspian. Zbigniew Brzezinski was the chief Washington lobbyist advocating the BTC route to circumvent Russia. Its construction was undertaken on the assumption that it would carry not only Baku oil, but also a major share of Kazakh oil from Tengiz and offshore Kashagan oil fields. Oops!...
A larger China energy strategy
The December China-Kazakh pipeline opening is one part of a massive Chinese plan to secure as much of Kazakhstan's oil riches as possible.
The Chinese plan aims to connect several pieces of infrastructure -- some Soviet-built, some Chinese-built -- then reverse the flow of some of them and forge a new export corridor stretching from Kazakhstan's oil-rich Caspian basin, including Kashagan, through a series of western- and central-Kazakh oil zones, and ultimately into China. With completion of this major project, China will for the first time have secured a source of imported energy not vulnerable to US aircraft carrier battle groups, as is the case with oil deliveries from the Persian Gulf and Sudan at present.
Before opening the new pipeline, China imported only 25,000 bpd from Kazakhstan. Once the link between Kenkiyak and Kumkol is finished, connecting existing infrastructure near the Caspian with the portion inaugurated Dec. 15, the project will pump 1 million bpd. That would be about 15 percent of China crude oil needs.
China then plans to tap into production from dozens of Kazakh sites they have acquired during the past several years. This is oil that currently goes west, or north through Russia.
Beijing still likes the color ‘red’
Beijing has also studied the Washington-backed series of regime change across Central Asia and the Color Revolutions from Serbia to Georgia to Ukraine and most recently Kyrgystan, and has evidently decided to ‘nip in the bud’ any similar NGO efforts within China, or in areas strategic to long-term China energy security. Kyrgystan’s ‘Tulip Revolution’ last July sounded alarm bells in Beijing. Possible Chinese pipeline links to Kazakhstan, Turkmenistan, Iran and or Russia would clearly be threatened by a ring of new pro-NATO neighbors and states between western China and its potential oil sources.
Their alarm led to warmer ties between Uzbekistan’s Karimov and Beijing in recent months, as well as an invitation of Moscow-tied Belarus President, Yuri Lukashenko. The Washington journal, Foreign Policy, ran a short item in its October 2005 edition by an apparent Chinese dissident. The article, titled, ‘China’s Color-Coded Crackdown,’ states:
‘In China’s halls of power, the fall of post-Soviet authoritarian regimes has raised the uncomfortable specter of a Chinese popular uprising. According to the Hong Kong-based Open magazine, a report by Chinese President Hu Jintao, titled ‘Fighting the People’s War Without Gunsmoke’, is guiding the Chinese Communist Party’s ‘counterrevolution’ offensive. The report, disseminated inside the party, outlines a series of measures aimed at nipping a potential Chinese ‘color revolution’ in the bud.’
Some Chinese apparently call it the Battle of the Two Georges-- George Bush and George Soros.
The Foreign Policy piece continues, ‘Perhaps the most telling sign of China’s concern has been its crackdown on nongovernmental organizations (NGOs). Beijing believes that international organizations, especially advocacy NGOs, have acted as Washington’s ‘black hands’ behind the recent regime changes in Central Asia. A recent issue of a biweekly journal run by the Communist Party Propaganda Department referred to Washington’s ‘$1 billion annual budget for global democratization’ and identified NGOs such as the International Republican Institute, the National Endowment for Democracy (NED), the U.S. Institute of Peace, and the Open Society Institute as organizations that ‘brainwash’ local people and train political oppositions. In late August, ahead of a visit by the U.N. high commissioner for human rights, Chinese police raided the office of the Empowerment and Rights Institute, a human rights group supported by the NED.
‘A new regulation offering more freedom to NGOs was initially expected later this year. No longer. The Ministry of Civil Affairs has now stopped processing registration applications, effectively freezing many groups’ operations. Instead, the only government offices taking an interest in NGOs are the national security agency (China’s secret police) and public security forces. Both have launched investigations into local NGOs. Some senior Chinese managers working for international NGOs have been called in for “private talks” with authorities, though no related arrests or detentions have been reported. Some NGO offices have had plainclothes security officers show up in an effort to clandestinely ferret out information on foreign staff and organizations. Environmental groups have been singled out for a massive government survey, most likely because they have angered powerful agencies by successfully initiating public debates on controversial issues, such as genetically modified foods and huge dam projects, and because only around 10 percent of green groups are currently registered with the state.
Meanwhile, Beijing has commissioned researchers from several provincial academies of social science to study the activities of NGOs in China. NGO publications such as directories experienced unexpectedly strong sales in recent months, as they no doubt became convenient study tools. Likewise, experts have been dispatched to Central Asia to study how those color revolutions first sprung roots. In a May 19 Politburo meeting, senior administrators from the Chinese Academy of Social Sciences, where foreign research funds are usually well received, were reminded of the “acute and complicated struggle in the ideological realm in the new millennium.” In other words, be careful about the political implications of your research.
According to sources in Beijing, final decisions on the government’s approach to NGOs will be made in a November meeting of the State Council, China’s highest executive body. As long as the clouds of color revolution are hovering over Central Asia—some, for example, expect storms in Belarus—the Chinese government will stay on high alert…Beijing’s moves against the country’s NGO community remain largely unnoticed outside China. If the international community wants an open and democratic China, it should pay more attention to the survival and growth of Chinese liberal institutions. Otherwise, the country will be destined to remain the same shade of red.’
Beijing-Teheran-Moscow
At the end of 2004, Beijing signed a $70 billion energy agreement with Teheran, China’s largest OPEC energy deal to date. Sinopec agreed to buy 250 million tons of LNG over 30 years from Iran, as well as to develop the giant Yadavaran field. That agreement covered the comprehensive development by China’s state Sinopec of the giant Yadavaran gas field, construction of a related petrochemical and gas industry including pipelines. As part of the huge Iran-China economic cooperation agreement, China’s state-run military construction company, NORINCO, will expand the Teheran Metro underground.
A second phase in the Iran-China strategic energy cooperation involves constructing a pipeline in Iran to take oil some 386 kilometers to the Caspian Sea, there to link up with the planned pipeline from China into Kazakhstan. Indeed, the
At that time, Iran’s Petroleum Minister announced that Teheran would like to see China replace Japan as Iran’s largest oil importer. As well, Iran has what are estimated to be the world’s second largest reserves of natural gas after Russia. It is a place of enormous strategic importance to China, to Japan, to Russia, to the European Union, and for all these reasons, to Washington as well.
Iran supplies 14% of China’s oil. Along with Russia, China has been involved since the late 1990’s in supplying nuclear technology to Teheran. In 1997 Beijing under Washington pressure nominally agreed to stop shipments, but the flows are believed continuing as the Iran relation is strategic and critical to China energy security. China, a veto member of the UN Security Council has repeatedly called for the issue of Iranian nuclear development to be dealt with by the International Atomic Energy Agency, whose chief, Nobel Peace Prize awardee, Mohamed ElBaradei, has earned the enmity of Washington war hawks for his open declarations of lack of evidence in both Iraq and now Iran of atomic bomb capability.
Given the nature of the Bush Administration’s rush to war in Iraq in 2003, where China had a major stake in oil development, and the subsequent US blocking of other Chinese attempts at securing energy independence including Unocal, it is not surprising that Beijing is taking extraordinary measures to secure its long-term oil and gas supply.
Energy is the Achilles Heel of China’s economic growth. Beijing knows that only too well. So does Washington. A decision to take military action against Iran would pull a far larger cast of actors into the fray than Iraq.
Global research Contributing Editor F. William Engdahl is author of the book, ‘A Century of War: Anglo-American Oil Geopolitics and the New World Order, Pluto Press Ltd. And can be contacted via his website, www.engdahl.oilgeopolitics.net.
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China economy even larger than thought :
China said Tuesday that its economy was far bigger than previously estimated and that new figures suggested it had probably passed France, Italy and Britain to become the world's fourth-largest economy.
http://www.iht.com/articles/2005/12/20/business/chicon.php
China said Tuesday that its economy was far bigger than previously estimated and that new figures suggested it had probably passed France, Italy and Britain to become the world's fourth-largest economy.
http://www.iht.com/articles/2005/12/20/business/chicon.php
The Nuclear Problem and Our Pal Beijing
(David E. Sanger, New York Times)
Sunday, January 1
Consumed by its response to 9/11, the Bush administration rarely focused on China in its first term. Now "later" has arrived.
The biggest test of Washington-Beijing realpolitik in 2006 may be North Korea and Iran. For the first time, the White House finds itself deeply dependent on the active help of China's leaders. If it has any hope of stopping the nuclear programs in Pyongyang and Tehran, it needs Beijing's leverage. Unfortunately for Mr. Bush, the interests of China and the United States are quite different.
So far the Chinese have only been willing to act as a neutral broker as chair of the "six-party talks," cajoling both Mr. Bush and President Kim Jong Il of North Korea to sign up to a vague set of principles' for a nuclear-free Korean peninsula. "What they won't do is threaten the North with any pain," like cutting oil supplies, noted a senior administration official involved in the talks. "So we're in a kind of stalemate."
(David E. Sanger, New York Times)
Sunday, January 1
Consumed by its response to 9/11, the Bush administration rarely focused on China in its first term. Now "later" has arrived.
The biggest test of Washington-Beijing realpolitik in 2006 may be North Korea and Iran. For the first time, the White House finds itself deeply dependent on the active help of China's leaders. If it has any hope of stopping the nuclear programs in Pyongyang and Tehran, it needs Beijing's leverage. Unfortunately for Mr. Bush, the interests of China and the United States are quite different.
So far the Chinese have only been willing to act as a neutral broker as chair of the "six-party talks," cajoling both Mr. Bush and President Kim Jong Il of North Korea to sign up to a vague set of principles' for a nuclear-free Korean peninsula. "What they won't do is threaten the North with any pain," like cutting oil supplies, noted a senior administration official involved in the talks. "So we're in a kind of stalemate."
China Urges N.Korea, US to Work Out Differences
(Reuters)
Thursday, January 5
China urges North Korea and the United States to work out their problems in order to make progress in talks on dismantling the North's nuclear weapons programs, a Foreign Ministry spokesman said on Thursday.
The two Koreas, the United States, Japan, Russia and China agreed at talks in Beijing in September on a broad set of principles aimed at having the arms programs scrapped in return for aid and friendly ties.
The talks have since hit a snag, with the main protagonists, Pyongyang and Washington, sparring over the North's alleged illegal activities to finance its weapons programs.
(Reuters)
Thursday, January 5
China urges North Korea and the United States to work out their problems in order to make progress in talks on dismantling the North's nuclear weapons programs, a Foreign Ministry spokesman said on Thursday.
The two Koreas, the United States, Japan, Russia and China agreed at talks in Beijing in September on a broad set of principles aimed at having the arms programs scrapped in return for aid and friendly ties.
The talks have since hit a snag, with the main protagonists, Pyongyang and Washington, sparring over the North's alleged illegal activities to finance its weapons programs.
China signals reserves switch away from dollar
By Geoff Dyer in Shanghai and Andrew Balls in Washington
Published: January 5 2006 20:13 | Last updated: January 6 2006 02:43
China indicated on Thursday it could begin to diversify its rapidly growing foreign exchange reserves away from the US dollar and government bonds – a potential shift with significant implications for global financial and commodity markets.
Economists estimate that more that 70 per cent of the reserves are invested in US dollar assets, which has helped to sustain the recent large US deficits. If China were to stop acquiring such a large proportion of dollars with its reserves – currently accumulating at about $15bn (€12.4bn) a month – it could put heavy downward pressure on the greenback.
In a brief statement on its website, the government's foreign exchange regulator said one of its targets for 2006 was to “improve the operation and management of foreign exchange reserves and to actively explore more effective ways to utilise reserve assets”.
It went on: “[The objective is] to improve the currency structure and asset structure of our foreign exchange reserves, and to continue to expand the investment area of reserves.
“We want to ensure that the use of foreign exchange reserves supports a national strategy, an open economy and the macro-economic adjustment."
The announcement came from the State Administration of Foreign Exchange (Safe). It gave no more details about whether this meant a big shift in the investment strategy for Chinese reserves, which according to local press reports reached nearly $800bn at the end of last year and are expected by economists to near $1,000bn this year.
The regulator also said it would end quotas on the amount of foreign currency Chinese companies can acquire to invest in overseas assets, a decision that removes a bureaucratic hurdle facing companies that plan to make international acquisitions.
The statement comes at a time of growing debate in China on how the reserves are invested. Some economists have called on Beijing to use the funds to finance infrastructure investment and clean up state-owned companies, or to invest in higher-yielding assets rather than financing US borrowing.
However, according to Stephen Green, economist for Standard Chartered in Shanghai, although the language was “vague”, Thursday's statement was the first time Safe has publicly indicated a shift away from dollar assets.
“It is a subtle but clear signal that they are interested in moving away from the US dollar into other currencies, and are interested in setting up some kind of strategic commodity fund, maybe just for oil, but maybe for other commodities,” he said.
The Group of Seven leading industrialised economies has repeatedly called for an adjustment in global trade imbalances, including a rise in the renminbi. The US has expressed frustration that China has not allowed its currency to rise significantly after last July’s 2 per cent revaluation. That saw China move from a dollar peg to managing its currency against a basket of currencies, potentially allowing the renminbi to rise against the dollar.
John Snow, US Treasury secretary, speaking earlier on Thursday, repeated his call for China to allow the renminbi to rise against the dollar. “The trade deficit is influenced by lots of things, differential growth rates, differential savings rates and investment rates and so on. But clearly, getting the [Chinese currency] more appropriately valued will be helpful to the global adjustment process,” he said.
However, some economists believe it would be a mistake for China to shift its reserves into domestic investment or other asset classes.
By Geoff Dyer in Shanghai and Andrew Balls in Washington
Published: January 5 2006 20:13 | Last updated: January 6 2006 02:43
China indicated on Thursday it could begin to diversify its rapidly growing foreign exchange reserves away from the US dollar and government bonds – a potential shift with significant implications for global financial and commodity markets.
Economists estimate that more that 70 per cent of the reserves are invested in US dollar assets, which has helped to sustain the recent large US deficits. If China were to stop acquiring such a large proportion of dollars with its reserves – currently accumulating at about $15bn (€12.4bn) a month – it could put heavy downward pressure on the greenback.
In a brief statement on its website, the government's foreign exchange regulator said one of its targets for 2006 was to “improve the operation and management of foreign exchange reserves and to actively explore more effective ways to utilise reserve assets”.
It went on: “[The objective is] to improve the currency structure and asset structure of our foreign exchange reserves, and to continue to expand the investment area of reserves.
“We want to ensure that the use of foreign exchange reserves supports a national strategy, an open economy and the macro-economic adjustment."
The announcement came from the State Administration of Foreign Exchange (Safe). It gave no more details about whether this meant a big shift in the investment strategy for Chinese reserves, which according to local press reports reached nearly $800bn at the end of last year and are expected by economists to near $1,000bn this year.
The regulator also said it would end quotas on the amount of foreign currency Chinese companies can acquire to invest in overseas assets, a decision that removes a bureaucratic hurdle facing companies that plan to make international acquisitions.
The statement comes at a time of growing debate in China on how the reserves are invested. Some economists have called on Beijing to use the funds to finance infrastructure investment and clean up state-owned companies, or to invest in higher-yielding assets rather than financing US borrowing.
However, according to Stephen Green, economist for Standard Chartered in Shanghai, although the language was “vague”, Thursday's statement was the first time Safe has publicly indicated a shift away from dollar assets.
“It is a subtle but clear signal that they are interested in moving away from the US dollar into other currencies, and are interested in setting up some kind of strategic commodity fund, maybe just for oil, but maybe for other commodities,” he said.
The Group of Seven leading industrialised economies has repeatedly called for an adjustment in global trade imbalances, including a rise in the renminbi. The US has expressed frustration that China has not allowed its currency to rise significantly after last July’s 2 per cent revaluation. That saw China move from a dollar peg to managing its currency against a basket of currencies, potentially allowing the renminbi to rise against the dollar.
John Snow, US Treasury secretary, speaking earlier on Thursday, repeated his call for China to allow the renminbi to rise against the dollar. “The trade deficit is influenced by lots of things, differential growth rates, differential savings rates and investment rates and so on. But clearly, getting the [Chinese currency] more appropriately valued will be helpful to the global adjustment process,” he said.
However, some economists believe it would be a mistake for China to shift its reserves into domestic investment or other asset classes.
TAIWAN NEWS
- Taiwan Has Produced Three Prototypes Of Cruise Missile: Jane's
http://www.spacewar.com/news/Taiwan_Has_Pr...sile_Janes.html
Taipei (AFP) Jan 08, 2006 - Taiwan has produced three prototypes of a new cruise missile which could be used to strike the east coast of rival China, an authoritative defence magazine said.
- Taiwan Has Produced Three Prototypes Of Cruise Missile: Jane's
http://www.spacewar.com/news/Taiwan_Has_Pr...sile_Janes.html
Taipei (AFP) Jan 08, 2006 - Taiwan has produced three prototypes of a new cruise missile which could be used to strike the east coast of rival China, an authoritative defence magazine said.
- China's Growth Could Be Fatal For The Planet's Environment
http://www.terradaily.com/news/Chinas_Grow...The_Planet.html
Washington (AFP) Jan 06, 2006 - The pace of China's economic growth poses a dire threat for the planet unless Beijing and other industrial countries change their outdated model of production and consumption, an environmental activist warned.
- Sino-India Trade To Reach New High
http://www.terradaily.com/news/Sino_India_...h_New_High.html
http://www.terradaily.com/news/Chinas_Grow...The_Planet.html
Washington (AFP) Jan 06, 2006 - The pace of China's economic growth poses a dire threat for the planet unless Beijing and other industrial countries change their outdated model of production and consumption, an environmental activist warned.
- Sino-India Trade To Reach New High
http://www.terradaily.com/news/Sino_India_...h_New_High.html
China Losing Confidence in the Dollar
By Peter S. Goodman
Washington Post Foreign Service
Monday, January 9, 2006; 3:51 PM
SHANGHAI, Jan. 9 -- As China's industrial juggernaut has flooded foreign ports with cheap factory-made goods in recent years, its central bank coffers have filled with the bounty flowing back to these shores -- a stash of foreign exchange now exceeding $800 billion. China's leaders have steadily invested the bulk in one primary vehicle: the U.S. dollar.
But on Monday came the latest recent sign that China has grown worried about tying its savings so closely to the dollar, a currency that many economists think is due for a fall. A senior economist at China's State Council -- the equivalent of the cabinet -- said in an interview that China is moving toward a new policy of buying fewer U.S. Treasury bills while shifting slightly toward buying assets that trade in other currencies.
China now boasts the world's second-largest stock of foreign exchange reserves after Japan, and with roughly three-fourths of those holdings now invested in the U.S. dollar and dollar-backed assets such as bonds and real estate, even a slight shift in the composition of China's investments could push the value of the greenback down, some analysts said.
The comments of the senior economist, made on condition of anonymity because he is not authorized to speak to the press, confirmed an analysis in Monday's Shanghai Securities News stating that China is inclined to shift some its savings into other currencies such as the euro and the yen, or into major purchases of commodities such as oil for a long-discussed strategic energy reserve.
In a report circulated this week, Stephen Green, senior economist with Standard Chartered Bank in Shanghai, identified several signals that China is intent on limiting its exposure to the dollar -- not least, a recent pledge from the State Administration of Foreign Exchange to "actively explore more efficient use of our foreign exchange reserves."
"We believe this adds to the downside pressure [the U.S. dollar] is currently facing," Green wrote. "It is the first official expression from SAFE that they are looking at switching away" from the dollar.
The comments on SAFE's Web site reinforced earlier public warnings from Yu Yongding, an economist on the monetary policy committee of China's central bank, that the country's reserves are now vulnerable to a drop in the value of the dollar.
"The general trend for the U.S. dollar is continuously weakening," Yu said, speaking to reporters on the sidelines of a conference in Beijing last month. "Countries with huge foreign exchange reserves will have their assets shrunken."
Last week, Hu Xiaolian, director of the foreign exchange administration, said China plans to "optimize the structure" of its reserves. Analysts took that to mean China would pursue a higher return that it can get from holding dollars by diversifying its reserves.
Many economists anticipate a significant slide in the value of the dollar if the United States' trade and fiscal deficits continue growing. In recent years, the dollar has been propped up by aggressive purchases by China, Japan and oil-exporting countries. Some economists warn that this has made U.S. prosperity dependent on the willingness of foreign powers to continue financing America's profligate ways. If foreigners lose their appetite for U.S. Treasuries, the dollar would drop, increasing the cost of imported goods in the United States and likely forcing the U.S. Federal Reserve to lift interest rates, perhaps bursting what is widely seen as an investment bubble in the real estate market, sending prices plummeting.
But some economists say this analysis is flawed: Were China and Japan to engineer a significant fall in the dollar, those nations would suffer the consequences -- sharply diminished exports as American lose spending power, plus a drop in the value of their dollar assets.
"It is thus extremely unlikely that China would do anything to harm its own balance sheet," wrote Stephen Jen, an economist with Morgan Stanley, in a research note distributed Monday.
China continues to amass foreign exchange reserves at a pace of roughly $15 billion per month, a pace that would see it exceed $1 trillion later this year.
Warnings about an impending Chinese sell-off in dollars emerged in July, as China slightly altered the way it sets the value of its currency, the yuan, bumping it up against the dollar by about 2 percent. At the time, China announced that it would gradually allow greater movement in the exchange rate -- something that has yet to materialize -- while also shifting from a system in which the yuan moves with changes in the dollar to one where it tracks a basket of currencies including the yen, the euro, the Hong Kong dollar and the South Korean won.
The move temporarily muted criticism on Capitol Hill from those who accuse China of currency manipulation, asserting that an artificially low yuan has made China's goods unfairly cheap on world markets. But as the implications of the new currency policy rippled out, some analysts suggested that China would thereafter have less need for dollars and greater need for the other currencies in the new basket, sending the greenback down and risking higher U.S. interest rates that would dampen economic growth.
China sought to quash such talk. In September, a senior central bank official told a ballroom full of international executives gathered in Beijing that China would not sell significant quantities of U.S. bonds, cognizant that such a move would "cause the price to plunge."
Special correspondent Eva Woo contributed to this report.
By Peter S. Goodman
Washington Post Foreign Service
Monday, January 9, 2006; 3:51 PM
SHANGHAI, Jan. 9 -- As China's industrial juggernaut has flooded foreign ports with cheap factory-made goods in recent years, its central bank coffers have filled with the bounty flowing back to these shores -- a stash of foreign exchange now exceeding $800 billion. China's leaders have steadily invested the bulk in one primary vehicle: the U.S. dollar.
But on Monday came the latest recent sign that China has grown worried about tying its savings so closely to the dollar, a currency that many economists think is due for a fall. A senior economist at China's State Council -- the equivalent of the cabinet -- said in an interview that China is moving toward a new policy of buying fewer U.S. Treasury bills while shifting slightly toward buying assets that trade in other currencies.
China now boasts the world's second-largest stock of foreign exchange reserves after Japan, and with roughly three-fourths of those holdings now invested in the U.S. dollar and dollar-backed assets such as bonds and real estate, even a slight shift in the composition of China's investments could push the value of the greenback down, some analysts said.
The comments of the senior economist, made on condition of anonymity because he is not authorized to speak to the press, confirmed an analysis in Monday's Shanghai Securities News stating that China is inclined to shift some its savings into other currencies such as the euro and the yen, or into major purchases of commodities such as oil for a long-discussed strategic energy reserve.
In a report circulated this week, Stephen Green, senior economist with Standard Chartered Bank in Shanghai, identified several signals that China is intent on limiting its exposure to the dollar -- not least, a recent pledge from the State Administration of Foreign Exchange to "actively explore more efficient use of our foreign exchange reserves."
"We believe this adds to the downside pressure [the U.S. dollar] is currently facing," Green wrote. "It is the first official expression from SAFE that they are looking at switching away" from the dollar.
The comments on SAFE's Web site reinforced earlier public warnings from Yu Yongding, an economist on the monetary policy committee of China's central bank, that the country's reserves are now vulnerable to a drop in the value of the dollar.
"The general trend for the U.S. dollar is continuously weakening," Yu said, speaking to reporters on the sidelines of a conference in Beijing last month. "Countries with huge foreign exchange reserves will have their assets shrunken."
Last week, Hu Xiaolian, director of the foreign exchange administration, said China plans to "optimize the structure" of its reserves. Analysts took that to mean China would pursue a higher return that it can get from holding dollars by diversifying its reserves.
Many economists anticipate a significant slide in the value of the dollar if the United States' trade and fiscal deficits continue growing. In recent years, the dollar has been propped up by aggressive purchases by China, Japan and oil-exporting countries. Some economists warn that this has made U.S. prosperity dependent on the willingness of foreign powers to continue financing America's profligate ways. If foreigners lose their appetite for U.S. Treasuries, the dollar would drop, increasing the cost of imported goods in the United States and likely forcing the U.S. Federal Reserve to lift interest rates, perhaps bursting what is widely seen as an investment bubble in the real estate market, sending prices plummeting.
But some economists say this analysis is flawed: Were China and Japan to engineer a significant fall in the dollar, those nations would suffer the consequences -- sharply diminished exports as American lose spending power, plus a drop in the value of their dollar assets.
"It is thus extremely unlikely that China would do anything to harm its own balance sheet," wrote Stephen Jen, an economist with Morgan Stanley, in a research note distributed Monday.
China continues to amass foreign exchange reserves at a pace of roughly $15 billion per month, a pace that would see it exceed $1 trillion later this year.
Warnings about an impending Chinese sell-off in dollars emerged in July, as China slightly altered the way it sets the value of its currency, the yuan, bumping it up against the dollar by about 2 percent. At the time, China announced that it would gradually allow greater movement in the exchange rate -- something that has yet to materialize -- while also shifting from a system in which the yuan moves with changes in the dollar to one where it tracks a basket of currencies including the yen, the euro, the Hong Kong dollar and the South Korean won.
The move temporarily muted criticism on Capitol Hill from those who accuse China of currency manipulation, asserting that an artificially low yuan has made China's goods unfairly cheap on world markets. But as the implications of the new currency policy rippled out, some analysts suggested that China would thereafter have less need for dollars and greater need for the other currencies in the new basket, sending the greenback down and risking higher U.S. interest rates that would dampen economic growth.
China sought to quash such talk. In September, a senior central bank official told a ballroom full of international executives gathered in Beijing that China would not sell significant quantities of U.S. bonds, cognizant that such a move would "cause the price to plunge."
Special correspondent Eva Woo contributed to this report.
In Asia, English is useful but Mandarin is rising
English used to be the language to learn, but Chinese is now seen as
the new dialect of diplomacy. By Simon Montlake
http://www.csmonitor.com/2006/0112/p01s03-woap.html?s=hns
English used to be the language to learn, but Chinese is now seen as
the new dialect of diplomacy. By Simon Montlake
http://www.csmonitor.com/2006/0112/p01s03-woap.html?s=hns
- China's Developing World Energy Strategy
http://www.terradaily.com/news/Chinas_Deve...y_Strategy.html
- Beijing Faces Daunting Developmental Challenges
http://www.terradaily.com/news/Beijing_Fac...Challenges.html
-
http://www.terradaily.com/news/Chinas_Deve...y_Strategy.html
- Beijing Faces Daunting Developmental Challenges
http://www.terradaily.com/news/Beijing_Fac...Challenges.html
-
Head of Taiwan's "Executive Yuan" quits Xinhua
Head of Taiwan's "Executive Yuan" Frank Hsieh announced his resignation on Tuesday, paving the way for a "cabinet" reshuffle. Frank Hsieh has come under pressure to resign since the Democratic 3. "I thank Chen Shui-bian for agreeing to accept my resignation last night," Frank Hsieh told a news conference.
Head of Taiwan's Executive Yuan Frank Hsieh announces his resignation during a news conference in Taipei, Taiwan January 17, 2006. (Photo: Reuters)
Frank Hsieh has been hurt by scandals surrounding the construction of a subway system in the southern city of Kaohsiung. He was the city's mayor before he became the head of Taiwan's "Executive Yuan" last February.
Taiwan's prime minister resigns Aljazeera.net
Taiwan's Premier Resigns as Chen Hardens China Stance Bloomberg
BBC News - Financial Times - Taipei Times - eTaiwan News - all 118 related »
Head of Taiwan's "Executive Yuan" Frank Hsieh announced his resignation on Tuesday, paving the way for a "cabinet" reshuffle. Frank Hsieh has come under pressure to resign since the Democratic 3. "I thank Chen Shui-bian for agreeing to accept my resignation last night," Frank Hsieh told a news conference.
Head of Taiwan's Executive Yuan Frank Hsieh announces his resignation during a news conference in Taipei, Taiwan January 17, 2006. (Photo: Reuters)
Frank Hsieh has been hurt by scandals surrounding the construction of a subway system in the southern city of Kaohsiung. He was the city's mayor before he became the head of Taiwan's "Executive Yuan" last February.
Taiwan's prime minister resigns Aljazeera.net
Taiwan's Premier Resigns as Chen Hardens China Stance Bloomberg
BBC News - Financial Times - Taipei Times - eTaiwan News - all 118 related »
- BMD Focus: The Missiles Of Taiwan
http://www.spacewar.com/reports/BMD_Focus_..._Of_Taiwan.html
Washington (UPI) Jan 19, 2006 - Taiwan's decision to produce no less than 500 cruise missiles capable of threatening southern China dramatically escalates its missile arms race with the People's Republic of China and may tempt China toward taking preemptive military action in the 2008-2010 period.
http://www.spacewar.com/reports/BMD_Focus_..._Of_Taiwan.html
Washington (UPI) Jan 19, 2006 - Taiwan's decision to produce no less than 500 cruise missiles capable of threatening southern China dramatically escalates its missile arms race with the People's Republic of China and may tempt China toward taking preemptive military action in the 2008-2010 period.
- Social Unrest In China On The Rise
http://www.spacewar.com/reports/Social_Unr...n_The_Rise.html
Beijing (AFP) Jan 19, 2006 - The number of "public order disturbances" in China rose by 6.6 percent to 87,000 last year, the government said Thursday, providing further evidence of the nation's growing social unrest.
- China Hosts Nuclear Talks With US And NKorean Envoys
http://www.spacewar.com/reports/China_Host...ean_Envoys.html
- Taiwan Releases Sat Photos Of Chinese Military Bases
http://www.spacewar.com/reports/Taiwan_Rel...tary_Bases.html
http://www.spacewar.com/reports/Social_Unr...n_The_Rise.html
Beijing (AFP) Jan 19, 2006 - The number of "public order disturbances" in China rose by 6.6 percent to 87,000 last year, the government said Thursday, providing further evidence of the nation's growing social unrest.
- China Hosts Nuclear Talks With US And NKorean Envoys
http://www.spacewar.com/reports/China_Host...ean_Envoys.html
- Taiwan Releases Sat Photos Of Chinese Military Bases
http://www.spacewar.com/reports/Taiwan_Rel...tary_Bases.html
Chinese ambassador underlines significance of Saudi king's visit Xinhua
Chinese Ambassador in Riyadh Wu Chunhua has highly evaluated the significance of Saudi King Abdullah bin Abdul-Aziz's visit to China, saying it will surely push the Sino-Saudi cooperation to a new level. It is King Abdullah's first official visit to another country since he succeeded to the throne last year, Wu said in a recent interview with Xinhua, adding Abdullah also became the first Saudiking to visit China since the two countries established diplomatic relations in 1990. King Abdullah arrived in Beijing on Sunday, kicking off his three-day state visit to China as guest of President Hu Jintao. During his stay in Beijing, Chinese President Hu, top legislator Wu Bangguo and Premier Wen Jiabao will meet or hold talks with him respectively for an exchange of views on such issues as the further expansion of bilateral cooperation in energy,economic and trade areas. The two sides are expected to sign a package of accords on economic and technical cooperation. Thanks to joint efforts, the two countries' friendly relations developed rapidly and have reached their best time so far, the Chinese ambassador said. In the political field, China and Saudi Arabia have no fundamental conflicts but reciprocal cooperation and the common will to further develop the cooperative relations, Wu said. Holding identical or similar views on many international and regional issues, such as on Iraq, both sides make close consultations and coordination on these issues, and support each other on the issues of human rights and the war on terror, the ambassador added. Economically, the two countries are strongly supplementary, having a broad space for boosting trade. China has become Saudi Arabia's fourth largest importer and the fifth largest exporter, while Saudi Arabia has become China's tenth largest importer and the biggest oil supplier. In addition to oil trade, both countries have also begun mutual investment in the energy sector, and such cooperation has taken ona good momentum. The Chinese ambassador said China is willing to join hands with Saudi Arabia to strengthen friendship and extend cooperation. He believes that the prospects of bilateral ties will be brighter in the future.
On PM-Saudi King agenda: terrorism, defence, energy Indian Express
Saudi Arabia May Tap Rising Demand for Oil in China, India Bloomberg
Channel News Asia - CNN International - Financial Express - Taipei Times - all 177 related »
Chinese Ambassador in Riyadh Wu Chunhua has highly evaluated the significance of Saudi King Abdullah bin Abdul-Aziz's visit to China, saying it will surely push the Sino-Saudi cooperation to a new level. It is King Abdullah's first official visit to another country since he succeeded to the throne last year, Wu said in a recent interview with Xinhua, adding Abdullah also became the first Saudiking to visit China since the two countries established diplomatic relations in 1990. King Abdullah arrived in Beijing on Sunday, kicking off his three-day state visit to China as guest of President Hu Jintao. During his stay in Beijing, Chinese President Hu, top legislator Wu Bangguo and Premier Wen Jiabao will meet or hold talks with him respectively for an exchange of views on such issues as the further expansion of bilateral cooperation in energy,economic and trade areas. The two sides are expected to sign a package of accords on economic and technical cooperation. Thanks to joint efforts, the two countries' friendly relations developed rapidly and have reached their best time so far, the Chinese ambassador said. In the political field, China and Saudi Arabia have no fundamental conflicts but reciprocal cooperation and the common will to further develop the cooperative relations, Wu said. Holding identical or similar views on many international and regional issues, such as on Iraq, both sides make close consultations and coordination on these issues, and support each other on the issues of human rights and the war on terror, the ambassador added. Economically, the two countries are strongly supplementary, having a broad space for boosting trade. China has become Saudi Arabia's fourth largest importer and the fifth largest exporter, while Saudi Arabia has become China's tenth largest importer and the biggest oil supplier. In addition to oil trade, both countries have also begun mutual investment in the energy sector, and such cooperation has taken ona good momentum. The Chinese ambassador said China is willing to join hands with Saudi Arabia to strengthen friendship and extend cooperation. He believes that the prospects of bilateral ties will be brighter in the future.
On PM-Saudi King agenda: terrorism, defence, energy Indian Express
Saudi Arabia May Tap Rising Demand for Oil in China, India Bloomberg
Channel News Asia - CNN International - Financial Express - Taipei Times - all 177 related »
Reports: China-Saudi energy talks CNN International
Saudi King Abdullah was meeting Monday with Chinese leaders in Beijing, where he was expected to sign agreements on energy cooperation and trade, reports said. The three-day visit was expected to sign agreements on energy cooperation and trade, reports said. The three-day visit was the first by a Saudi ruler since the two countries formed diplomatic relations in 1990, and comes as China tries to secure overseas oil and gas reserves for its power-hungry economy. Abdullah, who arrived in China on Sunday, was scheduled to meet with President Hu Jintao on Monday and discuss cooperation in energy and trade, the official Xinhua News Agency said. Total trade between the two countries -- much of it Saudi oil bought by China -- grew by 59 percent in the first 11 months of 2005 to US$14 billion (euro11.6 billion), according to China's Foreign Ministry. China, the world's No. 2 oil consumer, has been aggressively seeking to strengthen relationships with major oil suppliers as it grows more heavily reliant on oil imports. An agreement to be signed during Abdullah's visit would call for increased cooperation and joint investment in oil, natural gas and mineral deposits, the Dow Jones financial newswire reported. The report did not specify any financial details and the Saudi Embassy in Beijing said it had no information on the King's visit. Abudullah was also scheduled to meet with No. 2 Communist Party leader, Wu Bangguo, and Premier Wen Jiabao, on Tuesday. Saudi Arabia accounts for about 17 percent of China's imported oil.
Saudi Arabia May Tap Rising Demand for Oil in China, India Bloomberg
Saudi-Chinese Relations: Energy First, but Not Last Arab News
Khaleej Times - Xinhua - Hindustan Times - Indian Express - all 187 related »
Saudi King Abdullah was meeting Monday with Chinese leaders in Beijing, where he was expected to sign agreements on energy cooperation and trade, reports said. The three-day visit was expected to sign agreements on energy cooperation and trade, reports said. The three-day visit was the first by a Saudi ruler since the two countries formed diplomatic relations in 1990, and comes as China tries to secure overseas oil and gas reserves for its power-hungry economy. Abdullah, who arrived in China on Sunday, was scheduled to meet with President Hu Jintao on Monday and discuss cooperation in energy and trade, the official Xinhua News Agency said. Total trade between the two countries -- much of it Saudi oil bought by China -- grew by 59 percent in the first 11 months of 2005 to US$14 billion (euro11.6 billion), according to China's Foreign Ministry. China, the world's No. 2 oil consumer, has been aggressively seeking to strengthen relationships with major oil suppliers as it grows more heavily reliant on oil imports. An agreement to be signed during Abdullah's visit would call for increased cooperation and joint investment in oil, natural gas and mineral deposits, the Dow Jones financial newswire reported. The report did not specify any financial details and the Saudi Embassy in Beijing said it had no information on the King's visit. Abudullah was also scheduled to meet with No. 2 Communist Party leader, Wu Bangguo, and Premier Wen Jiabao, on Tuesday. Saudi Arabia accounts for about 17 percent of China's imported oil.
Saudi Arabia May Tap Rising Demand for Oil in China, India Bloomberg
Saudi-Chinese Relations: Energy First, but Not Last Arab News
Khaleej Times - Xinhua - Hindustan Times - Indian Express - all 187 related »
Zoellick to raise nuclear stand-offs in China
Tue Jan 24, 2006 12:27 AM ET
BEIJING (Reuters) - The nuclear stand-offs with Iran and North Korea were high on the agenda as U.S. Deputy Secretary of State Robert Zoellick began talks on Tuesday with senior Chinese officials in Beijing.
The two sides, which have often sparred over human rights, trade and China's military build-up, were also expected to discuss bilateral relations and preparations for a "strategic dialogue" later this year.
"We hope to improve the bilateral strategic dialogue in order to improve mutual understanding and mutual trust," Premier Wen Jiaobao said at the start of discussions with Zoellick, who was also due to meet Foreign Minister Li Zhaoxing.
A speech Zoellick made in September that called on China to treat itself -- and be treated by other countries -- as a key "stakeholder" in international trade and diplomatic relations has been read by Chinese analysts as a key Washington statement on often rocky relations between the two sides.
"China is an important country that is emerging and we are urging (it) to try to play a role as a responsible stakeholder in the international system," Zoellick told reporters in Tokyo before leaving for Beijing.
But there he said the Beijing talks would focus on two issues where China has resisted U.S. calls to work fully in concert with Washington: Iran's nuclear plans and North Korea, whose leader Kim Jong-il visited China this month.
"I'm interested in learning from my Chinese colleagues about not only their discussions with Kim Jong-il but what that trip is signifying in terms of North Korea's possible interest in economic reform," Zoellick said.
China is the host of six-party talks, which include the United States, North Korea, South Korea, Japan and Russia, aimed at ending Pyongyang's nuclear weapons ambitions.
China has proposed that the stalled talks resume early next month, a proposal that the United States also favors, Kyodo news agency reported on Saturday, citing an unnamed U.S. official.
China is also a permanent member of the United Nations Security Council, and so has the power to thwart moves to refer Iran and its nuclear program to the Security Council for possible sanctions.
Chinese officials have said they want Iran to resolve the nuclear stand-off through negotiations with Britain, France and Germany.
In his three days in China, Zoellick is also scheduled to visit Chengdu, the capital of Sichuan province in the southwest, on Wednesday.
China announced a human case of bird flu infection in Chengdu late on Monday, but a U.S. embassy spokeswoman said Zoellick's trip would go ahead.
--------------------------------------------------------------------------------
© Reuters 2006. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
Tue Jan 24, 2006 12:27 AM ET
BEIJING (Reuters) - The nuclear stand-offs with Iran and North Korea were high on the agenda as U.S. Deputy Secretary of State Robert Zoellick began talks on Tuesday with senior Chinese officials in Beijing.
The two sides, which have often sparred over human rights, trade and China's military build-up, were also expected to discuss bilateral relations and preparations for a "strategic dialogue" later this year.
"We hope to improve the bilateral strategic dialogue in order to improve mutual understanding and mutual trust," Premier Wen Jiaobao said at the start of discussions with Zoellick, who was also due to meet Foreign Minister Li Zhaoxing.
A speech Zoellick made in September that called on China to treat itself -- and be treated by other countries -- as a key "stakeholder" in international trade and diplomatic relations has been read by Chinese analysts as a key Washington statement on often rocky relations between the two sides.
"China is an important country that is emerging and we are urging (it) to try to play a role as a responsible stakeholder in the international system," Zoellick told reporters in Tokyo before leaving for Beijing.
But there he said the Beijing talks would focus on two issues where China has resisted U.S. calls to work fully in concert with Washington: Iran's nuclear plans and North Korea, whose leader Kim Jong-il visited China this month.
"I'm interested in learning from my Chinese colleagues about not only their discussions with Kim Jong-il but what that trip is signifying in terms of North Korea's possible interest in economic reform," Zoellick said.
China is the host of six-party talks, which include the United States, North Korea, South Korea, Japan and Russia, aimed at ending Pyongyang's nuclear weapons ambitions.
China has proposed that the stalled talks resume early next month, a proposal that the United States also favors, Kyodo news agency reported on Saturday, citing an unnamed U.S. official.
China is also a permanent member of the United Nations Security Council, and so has the power to thwart moves to refer Iran and its nuclear program to the Security Council for possible sanctions.
Chinese officials have said they want Iran to resolve the nuclear stand-off through negotiations with Britain, France and Germany.
In his three days in China, Zoellick is also scheduled to visit Chengdu, the capital of Sichuan province in the southwest, on Wednesday.
China announced a human case of bird flu infection in Chengdu late on Monday, but a U.S. embassy spokeswoman said Zoellick's trip would go ahead.
--------------------------------------------------------------------------------
© Reuters 2006. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
--------------------------------------------------------------------------------
January 25, 2006
Version of Google in China Won't Offer E-Mail or Blogs
By DAVID BARBOZA
SHANGHAI, Jan. 24 - Google is bringing a special version of its powerful search engine to China, leaving behind two of its most popular features in the United States.
In an effort to cope with China's increasingly pervasive Internet controls, Google said Tuesday that it would introduce a search engine here this week that excludes e-mail messaging and the ability to create blogs.
Google officials said the new search engine, Google.cn, was created partly as a way to avoid potential legal conflicts with the Chinese government, which has become much more sophisticated at policing and monitoring material appearing on the Internet.
Web sites have exploded in popularity in a country eager for freer flow of information. But Web portals and search engines trying to win Chinese users face a significant balancing act: they do not want to flout government rules and guidelines that restrict the spread of sensitive content, but they want to attract users with interesting content.
One result has been that search engines and Web portals have censored their sites and cooperated with Chinese authorities. Indeed, the move to create a new site comes after Google itself, as well as Yahoo and Microsoft, have come under scrutiny over the last few years for cooperating with the Chinese government to censor or block online content.
Currently, people in China use Google by accessing its global engine, Google.com. But industry experts say that the site is often not accessible from inside China, possibly because it is blocked by Chinese authorities culling what is deemed to be sensitive or illegal information.
Google's new Chinese platform, which will not allow users to create personal links with Google e-mail or blog sites, will comply with Chinese law and censor information deemed inappropriate or illegal by the Chinese authorities. This approach might help the company navigate the legal thickets that competitors have encountered in China.
Foreign companies say they must abide by Chinese laws and pass personal information about users on to the Chinese government. In one case two years ago, Yahoo provided information that helped the government convict a Chinese journalist, who was sentenced to 10 years in prison, on charges of leaking state secrets to a foreign Web site.
Another challenge, though, is trying to attract Chinese users to a censored engine. Google officials conceded that the company was struggling to balance the need to bolster its presence in the China market with the increasingly stringent regulations that govern Internet use here.
"Google is mindful that governments around the world impose restriction on access to information," a senior executive wrote, responding to questions. "In order to operate from China, we have removed some content from the search results available on Google.cn, in response to local law, regulation or policy. While removing search results is inconsistent with Google's mission, providing no information (or a heavily degraded user experience that amounts to no information) is more inconsistent with our mission."
The Chinese government has been particularly strict in recent years about filtering antigovernment news and opinion pieces from the Web and blocking Web sites or blogs that question governmental authority.
The government also has employed a variety of techniques to control what appears on the Web - temporarily blocking sites, redirecting viewers to government-controlled sites and even shutting sites altogether. Government officials have even been able to block references to specific words, like Tibet, Falun Gong and Tiananmen Square.
A year ago, when Google first started a Chinese-language version of its global service, the company filtered out and omitted some news sources that were already being blocked in China. The company said at the time: "There is nothing Google can do about it."
Now, Google officials say they hope they have struck the right compromise. The new site will improve access and speed up regular search engine service in a country where Internet traffic is skyrocketing, even if that service is limited in scope, the company said.
China has more than 100 million Internet users, making it second only to the United States in Web surfers; and blogging, podcasting, playing online games and surfing the Web are wildly popular.
Google says it plans to disclose when information has been blocked or censored from its new site, just as it does in the United States, Germany and other countries.
The regular Google.com site, based outside China, will continue to be available for access from China.
Difficulties using the site have put Google at a disadvantage in China, where the Google.com site had lost ground to a Chinese rival, Baidu.com, which went public last year.
Baidu is called the Chinese Google, and Google even has a stake in the company. But officials at Google say that recently they have been losing share in China, partly because of difficulty people had using Google.com.
The Paris-based group Reporters Without Borders, which tracks the activities of Western technology companies seeking to do business with repressive regimes, condemned the Google-China deal as "hypocrisy" and called it "a black day for freedom of expression in China" in a statement published on its Web site.
"The firm defends the rights of U.S. Internet users" the statement added, "but fails to defend its Chinese users against theirs."
Copyright 2006The New York Times Company Home Privacy Policy Search Corrections XML Help Contact Us Work for Us Site Map Back to Top
January 25, 2006
Version of Google in China Won't Offer E-Mail or Blogs
By DAVID BARBOZA
SHANGHAI, Jan. 24 - Google is bringing a special version of its powerful search engine to China, leaving behind two of its most popular features in the United States.
In an effort to cope with China's increasingly pervasive Internet controls, Google said Tuesday that it would introduce a search engine here this week that excludes e-mail messaging and the ability to create blogs.
Google officials said the new search engine, Google.cn, was created partly as a way to avoid potential legal conflicts with the Chinese government, which has become much more sophisticated at policing and monitoring material appearing on the Internet.
Web sites have exploded in popularity in a country eager for freer flow of information. But Web portals and search engines trying to win Chinese users face a significant balancing act: they do not want to flout government rules and guidelines that restrict the spread of sensitive content, but they want to attract users with interesting content.
One result has been that search engines and Web portals have censored their sites and cooperated with Chinese authorities. Indeed, the move to create a new site comes after Google itself, as well as Yahoo and Microsoft, have come under scrutiny over the last few years for cooperating with the Chinese government to censor or block online content.
Currently, people in China use Google by accessing its global engine, Google.com. But industry experts say that the site is often not accessible from inside China, possibly because it is blocked by Chinese authorities culling what is deemed to be sensitive or illegal information.
Google's new Chinese platform, which will not allow users to create personal links with Google e-mail or blog sites, will comply with Chinese law and censor information deemed inappropriate or illegal by the Chinese authorities. This approach might help the company navigate the legal thickets that competitors have encountered in China.
Foreign companies say they must abide by Chinese laws and pass personal information about users on to the Chinese government. In one case two years ago, Yahoo provided information that helped the government convict a Chinese journalist, who was sentenced to 10 years in prison, on charges of leaking state secrets to a foreign Web site.
Another challenge, though, is trying to attract Chinese users to a censored engine. Google officials conceded that the company was struggling to balance the need to bolster its presence in the China market with the increasingly stringent regulations that govern Internet use here.
"Google is mindful that governments around the world impose restriction on access to information," a senior executive wrote, responding to questions. "In order to operate from China, we have removed some content from the search results available on Google.cn, in response to local law, regulation or policy. While removing search results is inconsistent with Google's mission, providing no information (or a heavily degraded user experience that amounts to no information) is more inconsistent with our mission."
The Chinese government has been particularly strict in recent years about filtering antigovernment news and opinion pieces from the Web and blocking Web sites or blogs that question governmental authority.
The government also has employed a variety of techniques to control what appears on the Web - temporarily blocking sites, redirecting viewers to government-controlled sites and even shutting sites altogether. Government officials have even been able to block references to specific words, like Tibet, Falun Gong and Tiananmen Square.
A year ago, when Google first started a Chinese-language version of its global service, the company filtered out and omitted some news sources that were already being blocked in China. The company said at the time: "There is nothing Google can do about it."
Now, Google officials say they hope they have struck the right compromise. The new site will improve access and speed up regular search engine service in a country where Internet traffic is skyrocketing, even if that service is limited in scope, the company said.
China has more than 100 million Internet users, making it second only to the United States in Web surfers; and blogging, podcasting, playing online games and surfing the Web are wildly popular.
Google says it plans to disclose when information has been blocked or censored from its new site, just as it does in the United States, Germany and other countries.
The regular Google.com site, based outside China, will continue to be available for access from China.
Difficulties using the site have put Google at a disadvantage in China, where the Google.com site had lost ground to a Chinese rival, Baidu.com, which went public last year.
Baidu is called the Chinese Google, and Google even has a stake in the company. But officials at Google say that recently they have been losing share in China, partly because of difficulty people had using Google.com.
The Paris-based group Reporters Without Borders, which tracks the activities of Western technology companies seeking to do business with repressive regimes, condemned the Google-China deal as "hypocrisy" and called it "a black day for freedom of expression in China" in a statement published on its Web site.
"The firm defends the rights of U.S. Internet users" the statement added, "but fails to defend its Chinese users against theirs."
Copyright 2006The New York Times Company Home Privacy Policy Search Corrections XML Help Contact Us Work for Us Site Map Back to Top
January 25, 2006
Chinese Economy Grows to 4th Largest in the World
By KEITH BRADSHER
HONG KONG, Jan. 25 The Chinese economy grew 9.9 percent last year, the third year in a row of roughly 10 percent growth, government statisticians announced in Beijing on Wednesday.
The Chinese statistics, showing a national economic output of $2.26 trillion, sent China soaring past France, Britain and Italy to become the world's fourth-largest economy, after the United States, Japan and Germany.
Some economists adjust China's figures for the low value of its currency and low domestic prices to suggest that if valued at Western prices, China's output has surpassed Germany's as well.
From the clumps of tall cranes that dot the skylines of Chinese cities to the shopping malls packed with buyers to the containers full of exported shirts, toys and other goods that clog Chinese docks, the economy is growing so fast that some experts suggested on Wednesday that China may even have underestimated the true level of growth. A figure of 10 percent or higher might send prices even higher for oil and other commodities that China imports, and might prompt the United States to make even stronger demands that China's currency be allowed to rise appreciably in value against the dollar, said Stephen Green, a China economist with Standard Chartered.
China, like most countries, calculates economic output mainly from data supplied by factories and other producers. But the government's own data on spending by the government, investors, consumers and foreign buyers suggests that the true rate of growth last year may have been as high as 15 percent, Mr. Green said.
Rising exports in particular have helped lift China to an average annual growth rate of 9.6 percent over the past quarter of a century. But economists said that Wednesday's figures showed that consumer spending was becoming increasingly important as well.
Liang Hong, an economist in the Goldman Sachs office here, noted that retail sales in China climbed 12.5 percent last year. "We believe domestic demand will increasingly become a much more important driver for growth and China will become a more positive force for global demand in the coming years," she said in a research report.
But some experts continue to question whether China is too reliant on investment spending and whether too much of that investment involves ill-considered splurges on new factories and the latest equipment even in industries like auto manufacturing and steel making, where overcapacity is becoming a serious problem.
China has been gradually whittling away the serious problem of non-performing loans at state-owned banks. But China remains heavily dependent on continued heavy borrowing by companies to build ever more factories and apartment buildings even as they struggle to earn enough profit on their existing facilities to repay previous loans.
"Given the evidence of deteriorating investment efficiency, China needs to rebalance its growth by shifting away from investment towards consumption," said Qu Hongbin, the senior economist for China at HSBC.
Strong Chinese demand for new power plants, cranes, high-speed locomotives and trucks has fueled a boom in Chinese imports of these and other kinds of capital equipment from Germany and Japan in particular. Tao Dong, the chief Asia economist for Credit Suisse, said that a detailed analysis showed that exports to China were playing a critical role in recent signs of a revival in the German and Japanese economies.
"China has become one of the forces lifting these two countries out of recession," he said.
The economic figures released on Wednesday are so strong that they suggest the Chinese economy may even be reaccelerating this winter despite the government's efforts to discourage property speculation through tax changes and administrative measures, Mr. Tao said. One reason for the economy's strength is that the People's Bank of China, the central bank, has only raised its benchmark interest rate by slightly over a quarter of a percentage point in the last three years, even as the Federal Reserve has pushed through 13 quarter-point increases.
Despite China's relatively lax monetary policy, there has been little sign of inflation in recent months, as competition from new factories has held down prices for manufactured goods while steep rises in real estate prices have moderated.
Many consumer-oriented service businesses are now running at capacity as a result. Mr. Tao said that when he visited Beijing last week, he had to call seven high-end restaurants before he could find one that had a table free for dinner.
"After six restaurants turned me down, I said 'gee, the economy is booming.' " he recalled.
Copyright 2006The New York Times Company
Chinese Economy Grows to 4th Largest in the World
By KEITH BRADSHER
HONG KONG, Jan. 25 The Chinese economy grew 9.9 percent last year, the third year in a row of roughly 10 percent growth, government statisticians announced in Beijing on Wednesday.
The Chinese statistics, showing a national economic output of $2.26 trillion, sent China soaring past France, Britain and Italy to become the world's fourth-largest economy, after the United States, Japan and Germany.
Some economists adjust China's figures for the low value of its currency and low domestic prices to suggest that if valued at Western prices, China's output has surpassed Germany's as well.
From the clumps of tall cranes that dot the skylines of Chinese cities to the shopping malls packed with buyers to the containers full of exported shirts, toys and other goods that clog Chinese docks, the economy is growing so fast that some experts suggested on Wednesday that China may even have underestimated the true level of growth. A figure of 10 percent or higher might send prices even higher for oil and other commodities that China imports, and might prompt the United States to make even stronger demands that China's currency be allowed to rise appreciably in value against the dollar, said Stephen Green, a China economist with Standard Chartered.
China, like most countries, calculates economic output mainly from data supplied by factories and other producers. But the government's own data on spending by the government, investors, consumers and foreign buyers suggests that the true rate of growth last year may have been as high as 15 percent, Mr. Green said.
Rising exports in particular have helped lift China to an average annual growth rate of 9.6 percent over the past quarter of a century. But economists said that Wednesday's figures showed that consumer spending was becoming increasingly important as well.
Liang Hong, an economist in the Goldman Sachs office here, noted that retail sales in China climbed 12.5 percent last year. "We believe domestic demand will increasingly become a much more important driver for growth and China will become a more positive force for global demand in the coming years," she said in a research report.
But some experts continue to question whether China is too reliant on investment spending and whether too much of that investment involves ill-considered splurges on new factories and the latest equipment even in industries like auto manufacturing and steel making, where overcapacity is becoming a serious problem.
China has been gradually whittling away the serious problem of non-performing loans at state-owned banks. But China remains heavily dependent on continued heavy borrowing by companies to build ever more factories and apartment buildings even as they struggle to earn enough profit on their existing facilities to repay previous loans.
"Given the evidence of deteriorating investment efficiency, China needs to rebalance its growth by shifting away from investment towards consumption," said Qu Hongbin, the senior economist for China at HSBC.
Strong Chinese demand for new power plants, cranes, high-speed locomotives and trucks has fueled a boom in Chinese imports of these and other kinds of capital equipment from Germany and Japan in particular. Tao Dong, the chief Asia economist for Credit Suisse, said that a detailed analysis showed that exports to China were playing a critical role in recent signs of a revival in the German and Japanese economies.
"China has become one of the forces lifting these two countries out of recession," he said.
The economic figures released on Wednesday are so strong that they suggest the Chinese economy may even be reaccelerating this winter despite the government's efforts to discourage property speculation through tax changes and administrative measures, Mr. Tao said. One reason for the economy's strength is that the People's Bank of China, the central bank, has only raised its benchmark interest rate by slightly over a quarter of a percentage point in the last three years, even as the Federal Reserve has pushed through 13 quarter-point increases.
Despite China's relatively lax monetary policy, there has been little sign of inflation in recent months, as competition from new factories has held down prices for manufactured goods while steep rises in real estate prices have moderated.
Many consumer-oriented service businesses are now running at capacity as a result. Mr. Tao said that when he visited Beijing last week, he had to call seven high-end restaurants before he could find one that had a table free for dinner.
"After six restaurants turned me down, I said 'gee, the economy is booming.' " he recalled.
Copyright 2006The New York Times Company
January 25, 2006
In Beijing, U.S. Envoy Says Iran Strategies Differ
By JOSEPH KAHN
CHENGDU, China, Jan. 25 — China and the United States want to prevent Iran from acquiring nuclear weapons, but their "approach may differ" on the best tactics to achieve that result, Deputy Secretary of State Robert B. Zoellick said after a round of meetings on the subject in Beijing.
His comments suggested that China, despite heavy lobbying, had left some doubts as to whether it is prepared to back a proposal by Britain, France and Germany, supported by the United States, to get the United Nations Security Council involved in deciding how to handle Iran's nuclear program, including whether to impose sanctions.
Mr. Zoellick said that in the talks, he stressed his view that the United States and China have a common interest in preventing Iran from developing atomic weapons, including their mutual concern about energy security in the Middle East.
He said he felt China shared those "core principles."But he called the diplomatic discussions fluid and said there were still differences over what steps should be taken to respond to what Western powers say is a covert program by Iran to build nuclear bombs.
"It would not surprise me that China would not want to take exactly the same course as the EU-3 and the U.S.," Mr. Zoellick said during a brief stop in this southwestern Chinese city after meeting Prime Minister Wen Jiabao and Li Zhaoxing, China's foreign minister, in Beijing. The EU-3 refers to Britain, France and Germany.
He added, "We will see how close we can come."
China is considered crucial if foreign powers hope to successfully pressure Iran. As a permanent member of the Security Council, China could use its veto power to scuttle any sanctions. Both Europe and the United States have argued that diplomatic steps to constrain Iran's nuclear program will have greater effect if both China and Russia support them.
But China has longed opposed the use of sanctions in international affairs and has argued that continued negotiations are the best way to resolve the nuclear dispute in Iran, as well as the one involving its neighbor, North Korea.
The foreign ministers of Britain, France, Germany, Russia and China and Secretary of State Condoleezza Rice will meet in London on Monday in an effort to resolve their differences on how best to proceed. A similar meeting there last week led to an agreement to call an emergency session of the 35-nation board of the International Atomic Energy Agency on Feb. 2, but no agreement on what would happen then.
A spokesman for China's foreign ministry, Kong Quan, repeated on Tuesday that China prefers to steer Iran back to the bargaining table rather than to talk about penalties for not complying with its commitments to the International Atomic Energy Agency.
Mr. Kong said China is "conscientiously studying" a draft proposal by the European countries to have the atomic energy agency refer the matter to the Security Council, and he did not rule out supporting the proposal.
"But on the other hand, we believe that further applying diplomatic efforts and diplomatic means to resolve the Iranian nuclear issue remain relatively suitable and better options," he told a regular news briefing.
Iran supplies about 12 percent of China's oil imports, which have become increasingly crucial to its booming economy, and the two nations have signed agreements to boost oil and gas shipments in coming years.Chinese foreign policy experts say Beijing has signaled a greater willingness to discuss imposing sanctions on Iran than on North Korea, which has openly acknowledged defying international agreements to pursue atomic weapons.
That may be partly because China has not traditionally sought to exert as much sway in the Middle East as it has in North Korea and because Iran recently broke off negotiations with Europe over its nuclear program, provoking a relatively sharp reaction from Beijing.
But they say it remains an open question whether China will back strong-arm tactics against Iran, abstain from any decision on the matter or, in a move that could put it in conflict with other major powers, to reject the use of sanctions altogether.
So far, Russia's reluctance to consider Security Council action means that China is not alone in opposing the United States on its call for sanctions. Russia has joined Beijing in calling for more talks, and in Moscow today, President Vladimir V. Putin proposed the creation of an international center for uranium enrichment that would allow countries to develop nuclear power programs without the risk that they could lead to nuclear weapons.
Mr. Putin said such a center would be run under the control of the International Atomic Energy Agency, according to the state news agency. He said he would make the proposal to the Group of 8, the club of the world's eight leading industrialized nations. Mr. Putin is serving as the group's president this year.
The proposal expands on an offer Mr. Putin made to Iran last month to enrich Iran's uranium at a jointly owned center in Russia as a way of heading off a showdown over Tehran's nuclear ambitions. Iran's top nuclear negotiator, Ali Larijani, said in Moscow today that he had a "positive" view of the proposal, although officials in Tehran have insisted that such a plan would be acceptable only if it was in addition to enrichment facilities within Iran.
Mr. Zoellick, who has organized an ongoing diplomatic dialogue with his Chinese counterparts designed to address the major strategic concerns on both sides, has urged China to be more assertive with Iran as a way of showing that it intends to play a constructive role in world affairs to match its growing economic clout.
In an address on Sino-American relations last fall, Mr. Zoellick said China should consider itself a "stakeholder" in world affairs and do more to coordinate its actions with the United States, stop nuclear proliferation, support world trade, explain its military buildup and address humanitarian concerns in reclusive African and Asian countries where it has influence.
Mr. Zoellick visited Chengdu, he said, to underscore historic ties between the United States and China. He stopped by a reserve where China breeds pandas that it lends to friendly nations, including the United States. The deputy secretary, wearing a blue smock and plastic gloves, embraced a female cub named Jing Jing, literally hugging the panda.
Later, he said Chinese officials frequently tell him that they are focused primarily on addressing internal political and social problems, including a recent surge in social unrest, and that they do not intend to compete with the United States for influence far from their own shores.
But Mr. Zoellick said he emphasized in his discussions that China has already advanced beyond the stage where it can play down its international importance.
"It is a sign of China's success that it cannot help but influence world events," Mr. Zoellick said. "Inaction is a form of action."
John O'Neil contributed reporting from New York for this article.
Copyright 2006The New York Times Company
In Beijing, U.S. Envoy Says Iran Strategies Differ
By JOSEPH KAHN
CHENGDU, China, Jan. 25 — China and the United States want to prevent Iran from acquiring nuclear weapons, but their "approach may differ" on the best tactics to achieve that result, Deputy Secretary of State Robert B. Zoellick said after a round of meetings on the subject in Beijing.
His comments suggested that China, despite heavy lobbying, had left some doubts as to whether it is prepared to back a proposal by Britain, France and Germany, supported by the United States, to get the United Nations Security Council involved in deciding how to handle Iran's nuclear program, including whether to impose sanctions.
Mr. Zoellick said that in the talks, he stressed his view that the United States and China have a common interest in preventing Iran from developing atomic weapons, including their mutual concern about energy security in the Middle East.
He said he felt China shared those "core principles."But he called the diplomatic discussions fluid and said there were still differences over what steps should be taken to respond to what Western powers say is a covert program by Iran to build nuclear bombs.
"It would not surprise me that China would not want to take exactly the same course as the EU-3 and the U.S.," Mr. Zoellick said during a brief stop in this southwestern Chinese city after meeting Prime Minister Wen Jiabao and Li Zhaoxing, China's foreign minister, in Beijing. The EU-3 refers to Britain, France and Germany.
He added, "We will see how close we can come."
China is considered crucial if foreign powers hope to successfully pressure Iran. As a permanent member of the Security Council, China could use its veto power to scuttle any sanctions. Both Europe and the United States have argued that diplomatic steps to constrain Iran's nuclear program will have greater effect if both China and Russia support them.
But China has longed opposed the use of sanctions in international affairs and has argued that continued negotiations are the best way to resolve the nuclear dispute in Iran, as well as the one involving its neighbor, North Korea.
The foreign ministers of Britain, France, Germany, Russia and China and Secretary of State Condoleezza Rice will meet in London on Monday in an effort to resolve their differences on how best to proceed. A similar meeting there last week led to an agreement to call an emergency session of the 35-nation board of the International Atomic Energy Agency on Feb. 2, but no agreement on what would happen then.
A spokesman for China's foreign ministry, Kong Quan, repeated on Tuesday that China prefers to steer Iran back to the bargaining table rather than to talk about penalties for not complying with its commitments to the International Atomic Energy Agency.
Mr. Kong said China is "conscientiously studying" a draft proposal by the European countries to have the atomic energy agency refer the matter to the Security Council, and he did not rule out supporting the proposal.
"But on the other hand, we believe that further applying diplomatic efforts and diplomatic means to resolve the Iranian nuclear issue remain relatively suitable and better options," he told a regular news briefing.
Iran supplies about 12 percent of China's oil imports, which have become increasingly crucial to its booming economy, and the two nations have signed agreements to boost oil and gas shipments in coming years.Chinese foreign policy experts say Beijing has signaled a greater willingness to discuss imposing sanctions on Iran than on North Korea, which has openly acknowledged defying international agreements to pursue atomic weapons.
That may be partly because China has not traditionally sought to exert as much sway in the Middle East as it has in North Korea and because Iran recently broke off negotiations with Europe over its nuclear program, provoking a relatively sharp reaction from Beijing.
But they say it remains an open question whether China will back strong-arm tactics against Iran, abstain from any decision on the matter or, in a move that could put it in conflict with other major powers, to reject the use of sanctions altogether.
So far, Russia's reluctance to consider Security Council action means that China is not alone in opposing the United States on its call for sanctions. Russia has joined Beijing in calling for more talks, and in Moscow today, President Vladimir V. Putin proposed the creation of an international center for uranium enrichment that would allow countries to develop nuclear power programs without the risk that they could lead to nuclear weapons.
Mr. Putin said such a center would be run under the control of the International Atomic Energy Agency, according to the state news agency. He said he would make the proposal to the Group of 8, the club of the world's eight leading industrialized nations. Mr. Putin is serving as the group's president this year.
The proposal expands on an offer Mr. Putin made to Iran last month to enrich Iran's uranium at a jointly owned center in Russia as a way of heading off a showdown over Tehran's nuclear ambitions. Iran's top nuclear negotiator, Ali Larijani, said in Moscow today that he had a "positive" view of the proposal, although officials in Tehran have insisted that such a plan would be acceptable only if it was in addition to enrichment facilities within Iran.
Mr. Zoellick, who has organized an ongoing diplomatic dialogue with his Chinese counterparts designed to address the major strategic concerns on both sides, has urged China to be more assertive with Iran as a way of showing that it intends to play a constructive role in world affairs to match its growing economic clout.
In an address on Sino-American relations last fall, Mr. Zoellick said China should consider itself a "stakeholder" in world affairs and do more to coordinate its actions with the United States, stop nuclear proliferation, support world trade, explain its military buildup and address humanitarian concerns in reclusive African and Asian countries where it has influence.
Mr. Zoellick visited Chengdu, he said, to underscore historic ties between the United States and China. He stopped by a reserve where China breeds pandas that it lends to friendly nations, including the United States. The deputy secretary, wearing a blue smock and plastic gloves, embraced a female cub named Jing Jing, literally hugging the panda.
Later, he said Chinese officials frequently tell him that they are focused primarily on addressing internal political and social problems, including a recent surge in social unrest, and that they do not intend to compete with the United States for influence far from their own shores.
But Mr. Zoellick said he emphasized in his discussions that China has already advanced beyond the stage where it can play down its international importance.
"It is a sign of China's success that it cannot help but influence world events," Mr. Zoellick said. "Inaction is a form of action."
John O'Neil contributed reporting from New York for this article.
Copyright 2006The New York Times Company
January 25, 2006
China Overestimated Number of People With AIDS, Report Says
By REUTERS
Filed at 1:38 a.m. ET
BEIJING, Jan 25 (Reuters) - China lowered its estimate of the number of HIV/AIDS victims in the country by nearly 30 percent on Wednesday but experts warned against complacency, saying the figure was still rising with people unaware of the dangers.
Almost 200 people a day were infected with HIV last year in China and the disease was now moving from high-risk groups like sex workers and intravenous drug users into the general population, health experts said.
The number of people living with HIV/AIDS was estimated at 650,000, down from a 2003 estimate of 840,000, according to figures released jointly by China's Ministry of Health, the World Health Organisation and the Joint UN Programme on HIV/AIDS.
There were also about 70,000 new HIV infections in 2005, around 10,000 more than in 2003, though health experts said they did not have the exact figures.
"Make no mistake, China's AIDS epidemic is growing," Henk Bekedam, the World Health Organisation's representative in China, told a news conference. "There is no room for complacency and there is no time to waste.
"In China, public awareness of HIV/AIDS is still far too low, some might argue even dangerously low. Awareness campaigns must be stepped up quickly and significantly across the country."
Political sensitivity and social stigma still surround AIDS in China, and the government's slowness to acknowledge the epidemic contributed to its spread, especially in central Henan province, where in the 1990s millions sold blood to unsanitary clinics.
A joint publication from the WHO, the UN's AIDS programme and China's health ministry said one of the reasons the 2005 figure was lower because the estimate for those who developed AIDS from donating blood was originally too high.
But there are still reports of infected blood donors spreading the virus, including a recent case in the northeast province of Liaoning in which 23 people were infected before the donor was diagnosed with the disease.
Ministry of Health regulations that take effect in March will make collection centres responsible for the safety of blood and ban sales of donated blood to try to curb such cases.
SITUATION SERIOUS
Though improved data collection abilities also contributed to the lower estimate, this was still no cause to breath easier, experts said.
"We're getting a better picture of the AIDS situation in China, but that doesn't mean that the situation in improving," said Joel Rehnstrom, China country coordinator for UNAIDS.
"The epidemic therefore is equally or more serious than previously thought pretty much all over China," he said.
The United Nations has warned that China could have 10 million cases of HIV by 2010 unless it takes steps to educate the public and fight the epidemic, but the WHO says that figure is now likely outdated.
Still, experts have warned that China's increasingly mobile population faces a broader risk as more infections occur through drug injection and sexual contact.
Wednesday's joint statement said that in parts of Henan and the far-western border provinces of Yunnan and Xinjiang, HIV prevalence exceeded 1 percent among pregnant women.
"Surveillance data indicates that HIV is spreading from drug users, sex workers and their clients and other high-risk populations to the general population," it said.
Copyright 2006 Reuters Ltd.
China Overestimated Number of People With AIDS, Report Says
By REUTERS
Filed at 1:38 a.m. ET
BEIJING, Jan 25 (Reuters) - China lowered its estimate of the number of HIV/AIDS victims in the country by nearly 30 percent on Wednesday but experts warned against complacency, saying the figure was still rising with people unaware of the dangers.
Almost 200 people a day were infected with HIV last year in China and the disease was now moving from high-risk groups like sex workers and intravenous drug users into the general population, health experts said.
The number of people living with HIV/AIDS was estimated at 650,000, down from a 2003 estimate of 840,000, according to figures released jointly by China's Ministry of Health, the World Health Organisation and the Joint UN Programme on HIV/AIDS.
There were also about 70,000 new HIV infections in 2005, around 10,000 more than in 2003, though health experts said they did not have the exact figures.
"Make no mistake, China's AIDS epidemic is growing," Henk Bekedam, the World Health Organisation's representative in China, told a news conference. "There is no room for complacency and there is no time to waste.
"In China, public awareness of HIV/AIDS is still far too low, some might argue even dangerously low. Awareness campaigns must be stepped up quickly and significantly across the country."
Political sensitivity and social stigma still surround AIDS in China, and the government's slowness to acknowledge the epidemic contributed to its spread, especially in central Henan province, where in the 1990s millions sold blood to unsanitary clinics.
A joint publication from the WHO, the UN's AIDS programme and China's health ministry said one of the reasons the 2005 figure was lower because the estimate for those who developed AIDS from donating blood was originally too high.
But there are still reports of infected blood donors spreading the virus, including a recent case in the northeast province of Liaoning in which 23 people were infected before the donor was diagnosed with the disease.
Ministry of Health regulations that take effect in March will make collection centres responsible for the safety of blood and ban sales of donated blood to try to curb such cases.
SITUATION SERIOUS
Though improved data collection abilities also contributed to the lower estimate, this was still no cause to breath easier, experts said.
"We're getting a better picture of the AIDS situation in China, but that doesn't mean that the situation in improving," said Joel Rehnstrom, China country coordinator for UNAIDS.
"The epidemic therefore is equally or more serious than previously thought pretty much all over China," he said.
The United Nations has warned that China could have 10 million cases of HIV by 2010 unless it takes steps to educate the public and fight the epidemic, but the WHO says that figure is now likely outdated.
Still, experts have warned that China's increasingly mobile population faces a broader risk as more infections occur through drug injection and sexual contact.
Wednesday's joint statement said that in parts of Henan and the far-western border provinces of Yunnan and Xinjiang, HIV prevalence exceeded 1 percent among pregnant women.
"Surveillance data indicates that HIV is spreading from drug users, sex workers and their clients and other high-risk populations to the general population," it said.
Copyright 2006 Reuters Ltd.
Chinese woman dies from bird flu - WHO
January 25, 2006
BEIJING (Reuters) - A Chinese woman infected with bird flu, the country's 10th human bird flu victim, has died, the World Health Organization confirmed on Wednesday.
The 29-year-old woman surnamed Cao, who ran a shop in a farm goods market in Jinhua town in the southwestern province of Sichuan, died on Monday, Roy Wadia, a WHO spokesman in Beijing, said.
Cao fell ill with a fever on January 12 and had been receiving treatment in a hospital in the provincial capital, Chengdu. She was Sichuan's second human case of bird flu this month, after the Chinese health ministry announced last week that a 35-year-old woman from the province died of the disease on January 11.
To date, seven of the 10 Chinese people officially confirmed to have contracted bird flu have died.
China's Ministry of Health was not immediately available for comment.
In Cao's case, and most of China's other reported human bird flu infections, there was no officially confirmed outbreak of the H5N1 strain of bird flu among poultry in the area beforehand.
China, along with Vietnam, has suffered numerous outbreaks in poultry since October and Beijing has launched sweeping measures to stop the virus from spreading and infecting more people.
Experts believe the H5N1 virus is contracted through close contact with sick birds, and fear that as the virus spreads it will mutate to enable it to spread easily from human to human, sparking a pandemic that could claim many millions of lives.
© Copyright 2005 The New York Times Company
January 25, 2006
BEIJING (Reuters) - A Chinese woman infected with bird flu, the country's 10th human bird flu victim, has died, the World Health Organization confirmed on Wednesday.
The 29-year-old woman surnamed Cao, who ran a shop in a farm goods market in Jinhua town in the southwestern province of Sichuan, died on Monday, Roy Wadia, a WHO spokesman in Beijing, said.
Cao fell ill with a fever on January 12 and had been receiving treatment in a hospital in the provincial capital, Chengdu. She was Sichuan's second human case of bird flu this month, after the Chinese health ministry announced last week that a 35-year-old woman from the province died of the disease on January 11.
To date, seven of the 10 Chinese people officially confirmed to have contracted bird flu have died.
China's Ministry of Health was not immediately available for comment.
In Cao's case, and most of China's other reported human bird flu infections, there was no officially confirmed outbreak of the H5N1 strain of bird flu among poultry in the area beforehand.
China, along with Vietnam, has suffered numerous outbreaks in poultry since October and Beijing has launched sweeping measures to stop the virus from spreading and infecting more people.
Experts believe the H5N1 virus is contracted through close contact with sick birds, and fear that as the virus spreads it will mutate to enable it to spread easily from human to human, sparking a pandemic that could claim many millions of lives.
© Copyright 2005 The New York Times Company
China Reports Substantive Growth in 2005
By Claudia Blume
Hong Kong
25 January 2006
With growth of almost 10 percent in 2005, the Chinese economy continues to power ahead. China is now one of the world's top five economies.
Shanghai Stock Exchange
China's National Bureau of Statistics announced on Wednesday that the country's economy grew 9.9 percent last year. Gross domestic product totaled almost $2.3 trillion in 2005.
Analysts say the GDP figures indicate China has overtaken France to become the world's fifth largest economy. Some say it may even have pushed Britain from fourth place.
The 2005 growth was mainly driven by investment and exports. Exports increased by more than 28 percent to $762 billion last year, generating a record trade surplus of more than $100 billion.
The statistics bureau said investment, mainly in urban construction and infrastructure, accounted for nearly half of last year's economic expansion.
Qu Hongbin, a China economist in Hong Kong for the British bank HSBC, says China will only be able to sustain its economic growth if it gradually shifts its focus away from infrastructure investment. Qu believes the government needs to step up efforts to increase consumer spending, which is still very low compared with more developed economies.
"One reason the growth has been relying too much on the investment is that the government itself has put a lot of money in the construction project, but not enough in the social infrastructure, such as education, public health," said Qu Hongbin. "I think the government needs to correct, to readjust its old spending pattern, and that will have impact on the consumer spending and similar behavior over time."
Chinese officials acknowledge that economic planners still have to overcome many problems, especially in less developed rural areas, where two thirds of China's population lives.
And while its GDP has surpassed some of the world's largest economies, Qu points out that given China's 1.3 billion people, the country still remains poor.
China's economy has grown by more than nine percent a year for the past several years. Many economists fear that pace may be too rapid, and could lead to inflation or to the building of excess capacity in factories and property development. Both situations could lead to economic problems that could destabilize China's banks or cause a recession.
While the central government has tried to curb excess development and reckless bank lending, China's leaders are reluctant to cool off the economy very much. The country has tens of millions of unemployed people, and hundreds of millions of Chinese scrape along on less than $1 a day. Beijing leaders have made it clear they want to cut unemployment and poverty, to avoid causing social instability.
By Claudia Blume
Hong Kong
25 January 2006
With growth of almost 10 percent in 2005, the Chinese economy continues to power ahead. China is now one of the world's top five economies.
Shanghai Stock Exchange
China's National Bureau of Statistics announced on Wednesday that the country's economy grew 9.9 percent last year. Gross domestic product totaled almost $2.3 trillion in 2005.
Analysts say the GDP figures indicate China has overtaken France to become the world's fifth largest economy. Some say it may even have pushed Britain from fourth place.
The 2005 growth was mainly driven by investment and exports. Exports increased by more than 28 percent to $762 billion last year, generating a record trade surplus of more than $100 billion.
The statistics bureau said investment, mainly in urban construction and infrastructure, accounted for nearly half of last year's economic expansion.
Qu Hongbin, a China economist in Hong Kong for the British bank HSBC, says China will only be able to sustain its economic growth if it gradually shifts its focus away from infrastructure investment. Qu believes the government needs to step up efforts to increase consumer spending, which is still very low compared with more developed economies.
"One reason the growth has been relying too much on the investment is that the government itself has put a lot of money in the construction project, but not enough in the social infrastructure, such as education, public health," said Qu Hongbin. "I think the government needs to correct, to readjust its old spending pattern, and that will have impact on the consumer spending and similar behavior over time."
Chinese officials acknowledge that economic planners still have to overcome many problems, especially in less developed rural areas, where two thirds of China's population lives.
And while its GDP has surpassed some of the world's largest economies, Qu points out that given China's 1.3 billion people, the country still remains poor.
China's economy has grown by more than nine percent a year for the past several years. Many economists fear that pace may be too rapid, and could lead to inflation or to the building of excess capacity in factories and property development. Both situations could lead to economic problems that could destabilize China's banks or cause a recession.
While the central government has tried to curb excess development and reckless bank lending, China's leaders are reluctant to cool off the economy very much. The country has tens of millions of unemployed people, and hundreds of millions of Chinese scrape along on less than $1 a day. Beijing leaders have made it clear they want to cut unemployment and poverty, to avoid causing social instability.
- Davos Forum Opens With China And Global Economy In Spotlight
http://www.terradaily.com/reports/Davos_Fo..._Spotlight.html
Davos, Switzerland (AFP) Jan 25, 2006 - Power brokers from the worlds of business and politics opened their annual Davos forum Wednesday, with a strong emphasis on Asia's emerging giants and concern over the health of the global economy.
- US to conclude revamp of trade policy with China in weeks: official
http://www.sinodaily.com/2006/060125213426.ojut887s.html
- China's central economic planner signals doubling of incomes
http://www.sinodaily.com/2006/060125195036.9hlg3kz1.html
- China to drive world economy as US stumbles: economists
http://www.sinodaily.com/2006/060125172605.4mzoi4hy.html
http://www.terradaily.com/reports/Davos_Fo..._Spotlight.html
Davos, Switzerland (AFP) Jan 25, 2006 - Power brokers from the worlds of business and politics opened their annual Davos forum Wednesday, with a strong emphasis on Asia's emerging giants and concern over the health of the global economy.
- US to conclude revamp of trade policy with China in weeks: official
http://www.sinodaily.com/2006/060125213426.ojut887s.html
- China's central economic planner signals doubling of incomes
http://www.sinodaily.com/2006/060125195036.9hlg3kz1.html
- China to drive world economy as US stumbles: economists
http://www.sinodaily.com/2006/060125172605.4mzoi4hy.html
US Presses China On Global Trade, Rights Obligations
http://www.sinodaily.com/reports/US_Presse...bligations.html
Davos, Switzerland (AFP) Jan 26, 2006 - US Secretary of State Condoleezza Rice called Thursday on China to fulfill its obligations as a global player by allowing people to think freely and protecting intellectual property rights.
Analysis: China's Once-Latent Economic Past
http://www.sinodaily.com/reports/Analysis_...nomic_Past.html
China Puts Spin On Saudi Arabian Accords
http://www.sinodaily.com/reports/China_Put...an_Accords.html
Beijing (UPI) Jan 25, 2006 - China's foreign ministry offered few details Tuesday on agreements with Saudi King Abdullah during his first visit to the Chinese mainland, but relations seem poised for improvement.
Sino-Saudi Ties Focus On Energy Security
http://www.sinodaily.com/reports/Sino_Saud...y_Security.html
http://www.sinodaily.com/reports/US_Presse...bligations.html
Davos, Switzerland (AFP) Jan 26, 2006 - US Secretary of State Condoleezza Rice called Thursday on China to fulfill its obligations as a global player by allowing people to think freely and protecting intellectual property rights.
Analysis: China's Once-Latent Economic Past
http://www.sinodaily.com/reports/Analysis_...nomic_Past.html
China Puts Spin On Saudi Arabian Accords
http://www.sinodaily.com/reports/China_Put...an_Accords.html
Beijing (UPI) Jan 25, 2006 - China's foreign ministry offered few details Tuesday on agreements with Saudi King Abdullah during his first visit to the Chinese mainland, but relations seem poised for improvement.
Sino-Saudi Ties Focus On Energy Security
http://www.sinodaily.com/reports/Sino_Saud...y_Security.html
TAIWAN NEWS
Taiwan Apologizes For Mistakenly Releasing Suspected Spy For China
http://www.sinodaily.com/reports/Taiwan_Ap..._For_China.html
Taipei (AFP) Jan 26, 2006 - Taiwanese judicial authorities apologized Thursday for mistakenly releasing a man charged with spying for rival China.
Taiwan Apologizes For Mistakenly Releasing Suspected Spy For China
http://www.sinodaily.com/reports/Taiwan_Ap..._For_China.html
Taipei (AFP) Jan 26, 2006 - Taiwanese judicial authorities apologized Thursday for mistakenly releasing a man charged with spying for rival China.
China opposes sanctions against Iran - responding to tough US warning
January 27, 2006, 2:28 PM (GMT+02:00)
The use of sanctions to solve the dispute over Iran’s nuclear ambitions would complicate matters, the Chinese Foreign Ministry announced Thursday. The Chinese said Russia’s offer to enrich Iranian uranium in Russia should be considered.
This was Beijing’s response to tough American talk on the issue. Wednesday, Jan 25, deputy secretary of state Robert Zoellick warned China that it would be “extremely dangerous” for its oil supplies from the Middle East to allow Iran to develop nuclear weapons. He advised China to steer in a different direction.
China has so far withheld its support from the US-backed proposal to take Iran’s nuclear activities to the UN Security Council and holds its veto power over possible sanctions. Analysts say that China may abstain from voting rather than using its veto power.
Copyright 2000-2006 DEBKAfile. All Rights Reserved.
January 27, 2006, 2:28 PM (GMT+02:00)
The use of sanctions to solve the dispute over Iran’s nuclear ambitions would complicate matters, the Chinese Foreign Ministry announced Thursday. The Chinese said Russia’s offer to enrich Iranian uranium in Russia should be considered.
This was Beijing’s response to tough American talk on the issue. Wednesday, Jan 25, deputy secretary of state Robert Zoellick warned China that it would be “extremely dangerous” for its oil supplies from the Middle East to allow Iran to develop nuclear weapons. He advised China to steer in a different direction.
China has so far withheld its support from the US-backed proposal to take Iran’s nuclear activities to the UN Security Council and holds its veto power over possible sanctions. Analysts say that China may abstain from voting rather than using its veto power.
Copyright 2000-2006 DEBKAfile. All Rights Reserved.
Lots On China, Few Star Names As Davos Forum Wraps Up
http://www.sinodaily.com/reports/Lots_On_C...m_Wraps_Up.html
Davos, Switzerland, Jan 29 (AFP) Jan 29, 2006 - The Davos forum of political and business leaders wrapped up Sunday after five days of high-profile networking dominated by China's growing clout, even if star names were in short supply.
http://www.sinodaily.com/reports/Lots_On_C...m_Wraps_Up.html
Davos, Switzerland, Jan 29 (AFP) Jan 29, 2006 - The Davos forum of political and business leaders wrapped up Sunday after five days of high-profile networking dominated by China's growing clout, even if star names were in short supply.
China To Produce Gas From Disputed Field Soon
http://www.sinodaily.com/reports/China_To_...Field_Soon.html
http://www.sinodaily.com/reports/China_To_...Field_Soon.html
Taiwan Leader Considers Dropping Reunification Unit
http://www.sinodaily.com/reports/Taiwan_Le...ation_Unit.html
Taipei, Jan 29 (AFP) Jan 29, 2006 - Taiwan's President Chen Shui-bian said Sunday he would "seriously consider" abolishing a council and guidelines on the island's eventual reunification with China.
http://www.sinodaily.com/reports/Taiwan_Le...ation_Unit.html
Taipei, Jan 29 (AFP) Jan 29, 2006 - Taiwan's President Chen Shui-bian said Sunday he would "seriously consider" abolishing a council and guidelines on the island's eventual reunification with China.
http://www.atimes.com/atimes/China/HB01Ad01.html
COMMENTARY
Reviving the China threat
By Gregory Clark
(Republished with permission from Japan Focus)
"I recognize that it [China] is becoming a considerable threat."
- Japanese Foreign Minister Taro Aso
For some of us in the China-watching business (I have been there for more than 40 years), there has always been a China "threat". It began with the 1950-53 Korean civil war, which initially had nothing to do with China.
Indeed, if any outside power was involved in North Korea's attack
on its rival government in the South, it was the Soviet Union, not China. The communist regime in Beijing had just come to power after a protracted civil war with the rival Kuomintang (KMT) regime. Its troops were being moved to the south of the country, far from Korea, in preparation for the final attack on the KMT enemy, which had fled to Taiwan.
Even so, Beijing was blamed. As punishment, Washington withdrew its earlier pledge not to get involved in China's civil war and called for a KMT counterattack against the mainland.
It would also threaten Beijing more directly, by sending troops close to China's border with Korea in late 1950. When China then moved its own troops into Korea, the China-threat people moved into high gear. Images of hordes of Chinese troops relentlessly pushing US forces southward down the Korean Peninsula followed by two years of military stalemate were to lay the groundwork for two decades of US and other Western policies calling for the containment and non-recognition of Beijing.
The next China threat was supposed to operate via the overseas Chinese in Southeast Asia. Coping with that "threat" meant the West had to prop up a range of incompetent, corrupt rulers in the area, and intervene cruelly to suppress revolts by local Chinese against discrimination in Malaya and then in Sarawak.
It also meant that the United States, Britain and Australia would work very hard to prevent the 1959 election of an intelligent Chinese, Lee Kwan Yew, to the Singapore premiership. Lee was seen, amazingly, as a front for Beijing and Chinese communism. The three Western powers threw their support and secret funds behind Lee's pro-Western rival, Lim Yew Hock, whom Lee easily defeated. (Lee subsequently sent Lim as ambassador to Canberra, where he served for some months before abandoning his embassy and disappearing into a Sydney red-light area, leading to his recall.)
The China-threat lobby moved into overdrive over Vietnam in the early 1960s. There a civil war in the South supported by North Vietnam was denounced by Washington and Canberra as the first step in Beijing's planned "aggression" into Southeast Asia - despite the fact that as in Korea, Moscow's support for the pro-communist side in that civil war was much greater than China's. However, Beijing's rhetoric supporting the war was seen as proof of China's guilt.
One result was that, in 1964, I had the task of accompanying an Australian foreign minister, Paul Hasluck, in a foolish, US-instigated bid to persuade the Soviet Union to side with the West against those aggressive Chinese. The US, and Australia, had decided that the Sino-Soviet polemics of the time proved that Moscow was on the side of moderation and detente with the West while Beijing was committed to aggressive support for pro-communist revolts worldwide.
Hasluck labored on about how China was threatening not just Asia but also Soviet territories in Central Asia and the Far East. He gave up only after being told bluntly by the Soviet prime minister, Alexei Kosygin, that Moscow was doing all it could to help North Vietnam in its just struggle against US imperialism, would continue to do so, and would like to see Beijing doing a lot more.
In 1962, as China desk officer in Canberra, I had to witness an extraordinary attempt to label as unprovoked aggression a very limited and justified Chinese counterattack against an Indian military thrust across the Indian-claimed borderline in the North East Frontier Area.
Threat scenarios then had China seeking ocean access via the Bay of Bengal. The London Economist even had Beijing seeking to move south via Afghanistan.
Then came the allegations that China was seeking footholds in Laos, northern Thailand and Myanmar - all false. US, British and Australian encouragement for the 1965 massacre of up to half a million left-wing supporters in Indonesia was also justified as needed to prevent China from gaining a foothold there.
So too was the United States' and Australia's 1975 approval for Indonesia's brutal invasion and takeover of East Timor. Both saw Fretilin, then the main political party opposed to the Portuguese colonial regime and seeking independence, as a dangerous left-wing grouping that might turn to China for support.
Beijing's moves to prevent Taiwan independence have also been condemned as aggressive, despite the fact that every Western nation, including the US, has formally recognized or accepted that Taiwan is part of a nation called China in which Beijing's is the sole legitimate government.
China's efforts to assert control over Tibet were also branded as aggression, even though Tibet has never been recognized as an independent entity. True, many have the right to be upset over the crude way in which Beijing asserted control over Tibet. But many also forget that some of that crudity was the result of an abortive attempt by the US Central Intelligence Agency and New Delhi to stir up a revolt in the area.
The cruelty and damage caused by China's Great Leap Forward in the late 1960s, the Cultural Revolution in the late '70s, and the Tiananmen massacre of 1989 also provoked alarm among some China watchers. But these were internal, not external, events.
And so it continues to the present day. With the alleged Soviet threat to Japan having evaporated, we now have an army of Japanese and US hawks - Foreign Minister Taro Aso included - ramping up China as an alleged threat to Japan and the Far East.
Much is made of Beijing's recent increases in military spending. But those increases began from a very low base; until recently its military was largely concerned with running companies and growing its own vegetables. Today Beijing faces a US-Japan military buildup in East Asia for which the spending far exceeds China's. Tokyo and Washington have a strategic military alliance that specifically targets China over Taiwan, and possibly other parts of East Asia. For Beijing to ignore these facts would be surprising, to say the least.
The US and Japan justify this military buildup partly as needed to contain the potential threat from China. And if the Chinese military were placing bases and sending spy planes and ships close to the US coast, were encouraging Hawaiian independence, and were bombing US embassies, the US role in that buildup might be justified. But so far that has not happened.
All at sea about maritime boundaries
The China "threat" to Japan is supposed to involve maritime borders in the East China Sea. Tokyo has unilaterally decreed that its exclusive economic zone (EEZ) in that area extends to the median line between the Chinese coastline and the Ryukyu Islands. It claims sole right to develop potential oil and gas reserves in this claimed EEZ and its strategists urge punitive action against any Chinese challenge to that right. Even Chinese developments on the Chinese side of that median line are threatened on the basis that they might take gas from underground reserves on the Japanese side of the claimed line.
Beijing disputes Tokyo's EEZ claim. It says the continental shelf extending all the way to the Okinawa Trough, or well within the EEZ claimed by Japan, should be the basis for deciding the EEZ boundary. But it makes no move to assert control over the disputed area. Instead it calls for agreement on joint undersea development in the area between the two rival claim lines, at least until the rival claims have been settled.
Who is right? The 1982 United Nations Law of the Sea Convention (UNCLOS) that created the EEZ concept simply says international law should be the basis for deciding conflicting claims. But international law is vague. In the past it endorsed the continental-shelf approach as the main basis for delimiting maritime boundaries. But recently it has begun to favor the median- or equidistance-line approach. However, it also goes on to say that any equidistance approach should be equitable to both sides. One example of equity in the equidistance approach was the recent Libya/Malta judgment in which Libya was favored because of its greater land mass. In this as in several other similar cases, the International Court of Justice has ruled that "the equidistance line is not mandatory or binding". It says that the "proportionality of coastlines" is also a factor.
In theory at least, this proportionality ruling would seem to favor China. The pending Australia-East Timor agreement also raises doubts about Japan's blunt rejection of Beijing's proposals. The continental shelf was the basis for the original Australian-Indonesian maritime boundary agreement reached back in 1972. It favored Australia greatly, since the Timor Trough that defines the shelf runs close to the Indonesian and Timorese coastlines.
Then as extensive oil and gas reserves were found on the shelf between Australia and East Timor (which was incorporated forcefully into Indonesia in 1975), there were demands for the equidistance line to be used. When East Timor ga
COMMENTARY
Reviving the China threat
By Gregory Clark
(Republished with permission from Japan Focus)
"I recognize that it [China] is becoming a considerable threat."
- Japanese Foreign Minister Taro Aso
For some of us in the China-watching business (I have been there for more than 40 years), there has always been a China "threat". It began with the 1950-53 Korean civil war, which initially had nothing to do with China.
Indeed, if any outside power was involved in North Korea's attack
on its rival government in the South, it was the Soviet Union, not China. The communist regime in Beijing had just come to power after a protracted civil war with the rival Kuomintang (KMT) regime. Its troops were being moved to the south of the country, far from Korea, in preparation for the final attack on the KMT enemy, which had fled to Taiwan.
Even so, Beijing was blamed. As punishment, Washington withdrew its earlier pledge not to get involved in China's civil war and called for a KMT counterattack against the mainland.
It would also threaten Beijing more directly, by sending troops close to China's border with Korea in late 1950. When China then moved its own troops into Korea, the China-threat people moved into high gear. Images of hordes of Chinese troops relentlessly pushing US forces southward down the Korean Peninsula followed by two years of military stalemate were to lay the groundwork for two decades of US and other Western policies calling for the containment and non-recognition of Beijing.
The next China threat was supposed to operate via the overseas Chinese in Southeast Asia. Coping with that "threat" meant the West had to prop up a range of incompetent, corrupt rulers in the area, and intervene cruelly to suppress revolts by local Chinese against discrimination in Malaya and then in Sarawak.
It also meant that the United States, Britain and Australia would work very hard to prevent the 1959 election of an intelligent Chinese, Lee Kwan Yew, to the Singapore premiership. Lee was seen, amazingly, as a front for Beijing and Chinese communism. The three Western powers threw their support and secret funds behind Lee's pro-Western rival, Lim Yew Hock, whom Lee easily defeated. (Lee subsequently sent Lim as ambassador to Canberra, where he served for some months before abandoning his embassy and disappearing into a Sydney red-light area, leading to his recall.)
The China-threat lobby moved into overdrive over Vietnam in the early 1960s. There a civil war in the South supported by North Vietnam was denounced by Washington and Canberra as the first step in Beijing's planned "aggression" into Southeast Asia - despite the fact that as in Korea, Moscow's support for the pro-communist side in that civil war was much greater than China's. However, Beijing's rhetoric supporting the war was seen as proof of China's guilt.
One result was that, in 1964, I had the task of accompanying an Australian foreign minister, Paul Hasluck, in a foolish, US-instigated bid to persuade the Soviet Union to side with the West against those aggressive Chinese. The US, and Australia, had decided that the Sino-Soviet polemics of the time proved that Moscow was on the side of moderation and detente with the West while Beijing was committed to aggressive support for pro-communist revolts worldwide.
Hasluck labored on about how China was threatening not just Asia but also Soviet territories in Central Asia and the Far East. He gave up only after being told bluntly by the Soviet prime minister, Alexei Kosygin, that Moscow was doing all it could to help North Vietnam in its just struggle against US imperialism, would continue to do so, and would like to see Beijing doing a lot more.
In 1962, as China desk officer in Canberra, I had to witness an extraordinary attempt to label as unprovoked aggression a very limited and justified Chinese counterattack against an Indian military thrust across the Indian-claimed borderline in the North East Frontier Area.
Threat scenarios then had China seeking ocean access via the Bay of Bengal. The London Economist even had Beijing seeking to move south via Afghanistan.
Then came the allegations that China was seeking footholds in Laos, northern Thailand and Myanmar - all false. US, British and Australian encouragement for the 1965 massacre of up to half a million left-wing supporters in Indonesia was also justified as needed to prevent China from gaining a foothold there.
So too was the United States' and Australia's 1975 approval for Indonesia's brutal invasion and takeover of East Timor. Both saw Fretilin, then the main political party opposed to the Portuguese colonial regime and seeking independence, as a dangerous left-wing grouping that might turn to China for support.
Beijing's moves to prevent Taiwan independence have also been condemned as aggressive, despite the fact that every Western nation, including the US, has formally recognized or accepted that Taiwan is part of a nation called China in which Beijing's is the sole legitimate government.
China's efforts to assert control over Tibet were also branded as aggression, even though Tibet has never been recognized as an independent entity. True, many have the right to be upset over the crude way in which Beijing asserted control over Tibet. But many also forget that some of that crudity was the result of an abortive attempt by the US Central Intelligence Agency and New Delhi to stir up a revolt in the area.
The cruelty and damage caused by China's Great Leap Forward in the late 1960s, the Cultural Revolution in the late '70s, and the Tiananmen massacre of 1989 also provoked alarm among some China watchers. But these were internal, not external, events.
And so it continues to the present day. With the alleged Soviet threat to Japan having evaporated, we now have an army of Japanese and US hawks - Foreign Minister Taro Aso included - ramping up China as an alleged threat to Japan and the Far East.
Much is made of Beijing's recent increases in military spending. But those increases began from a very low base; until recently its military was largely concerned with running companies and growing its own vegetables. Today Beijing faces a US-Japan military buildup in East Asia for which the spending far exceeds China's. Tokyo and Washington have a strategic military alliance that specifically targets China over Taiwan, and possibly other parts of East Asia. For Beijing to ignore these facts would be surprising, to say the least.
The US and Japan justify this military buildup partly as needed to contain the potential threat from China. And if the Chinese military were placing bases and sending spy planes and ships close to the US coast, were encouraging Hawaiian independence, and were bombing US embassies, the US role in that buildup might be justified. But so far that has not happened.
All at sea about maritime boundaries
The China "threat" to Japan is supposed to involve maritime borders in the East China Sea. Tokyo has unilaterally decreed that its exclusive economic zone (EEZ) in that area extends to the median line between the Chinese coastline and the Ryukyu Islands. It claims sole right to develop potential oil and gas reserves in this claimed EEZ and its strategists urge punitive action against any Chinese challenge to that right. Even Chinese developments on the Chinese side of that median line are threatened on the basis that they might take gas from underground reserves on the Japanese side of the claimed line.
Beijing disputes Tokyo's EEZ claim. It says the continental shelf extending all the way to the Okinawa Trough, or well within the EEZ claimed by Japan, should be the basis for deciding the EEZ boundary. But it makes no move to assert control over the disputed area. Instead it calls for agreement on joint undersea development in the area between the two rival claim lines, at least until the rival claims have been settled.
Who is right? The 1982 United Nations Law of the Sea Convention (UNCLOS) that created the EEZ concept simply says international law should be the basis for deciding conflicting claims. But international law is vague. In the past it endorsed the continental-shelf approach as the main basis for delimiting maritime boundaries. But recently it has begun to favor the median- or equidistance-line approach. However, it also goes on to say that any equidistance approach should be equitable to both sides. One example of equity in the equidistance approach was the recent Libya/Malta judgment in which Libya was favored because of its greater land mass. In this as in several other similar cases, the International Court of Justice has ruled that "the equidistance line is not mandatory or binding". It says that the "proportionality of coastlines" is also a factor.
In theory at least, this proportionality ruling would seem to favor China. The pending Australia-East Timor agreement also raises doubts about Japan's blunt rejection of Beijing's proposals. The continental shelf was the basis for the original Australian-Indonesian maritime boundary agreement reached back in 1972. It favored Australia greatly, since the Timor Trough that defines the shelf runs close to the Indonesian and Timorese coastlines.
Then as extensive oil and gas reserves were found on the shelf between Australia and East Timor (which was incorporated forcefully into Indonesia in 1975), there were demands for the equidistance line to be used. When East Timor ga