http://www.smh.com.au/text/articles/2006/0...9964736756.html


Hamas hopes deal will end sanctions
Date: June 17 2006


Ed O'Loughlin Herald Correspondent in Gaza

THE Palestinian Government is hoping for a breakthrough "within the next week" to halt a drift towards economic ruin, civil conflict and another round of open warfare with Israel.

Dr Ahmed Yusef, a senior adviser to the Palestinian Authority Prime Minister, Ismail Haniyeh, said yesterday that the ruling party, Hamas, was very close to reaching a deal with the rival Fatah party whereby Hamas would for the first time recognise Israel and the need for peace talks.

In return, the Fatah leader, Mahmoud Abbas - the authority's directly-elected President - would abandon his threat to call a referendum to oblige Hamas to follow this course. Fatah would also agree to join a new, technocratic government replacing the one-party Hamas cabinet, currently shunned by most Western states because of its refusal to renounce armed struggle or recognise Israel.

Dr Yusef said that the deal would be based on the so-called "prisoners' initiative", a document drawn up by senior Palestinian prisoners in Israeli jails which calls for the recognition of Israel's right to exist in return for Israel's withdrawal from all the Arab territories it seized in 1967.

Hamas has until now refused to accept the 1993 Oslo Peace Accords, in which the then Fatah leader, Yasser Arafat, and the Israeli prime minister, Yitzhak Rabin, took the first steps towards an eventual "two-state solution".

Instead, the Hamas platform still calls for the destruction of the Jewish state and the reunification of all of historical Palestine under Islamic rule.

Until it imposed a unilateral ceasefire last year Hamas was the most determined and organised sponsor of resistance and terrorism against Israeli targets, responsible for suicide bomb attacks that killed hundreds of people.

Dr Yusef said that once agreement was reached between Hamas and all the other Palestinian factions Mr Abbas would be able to call for a renewed peace process and an end to Western and Israeli financial sanctions, which threaten the occupied territories with bankruptcy and even starvation.

While Hamas would renew its ceasefire under the new process it would not meet the demands of the so-called "quartet" of would-be peacemakers - the US, European Union, United Nations and Russia - that it renounce violence before aid to the Palestinians could resume.

"We have to prove to the world that we deserve to live in peace and security and to make sure that we are fighting the occupation in a better way; to fight with politics as well as with weapons," he said.

"We will try and use politics to see if they work, but if not we will have to return to resistance."

The Israeli Government, which wants to keep the Jordan Valley and colonised sections of the West Bank, has already rejected the prisoners' initiative as "irrelevant". The US Government, bound by a pro-Israeli Congress, also seems unlikely to endorse a new deal.

But the Palestinians hope that a Hamas-led push for a peaceful two-state solution could end the present crippling economic isolation and put pressure on Israel to return to negotiating a final settlement.




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http://www.smh.com.au/text/articles/2006/0...9964736774.html


China's toxic brew hits its neighbours
Date: June 17 2006


Keith Bradsher and David Barboza in Hanjing, China

ONE of China's lesser-known exports is a dangerous brew of soot, toxic chemicals and climate-changing gases from the smokestacks of coal-burning power plants.

In early April, a dense cloud of pollutants over northern China sailed to nearby Seoul, South Korea, sweeping along dust and desert sand before wafting across the Pacific. A US satellite spotted the cloud as it crossed the west coast of the US.

Researchers in California, Oregon and Washington noticed specks of sulfur compounds, carbon and other byproducts of coal combustion coating the silvery surfaces of their mountaintop detectors. These microscopic particles can work their way deep into human lungs, contributing to respiratory damage, heart disease and cancer.

Unless China finds a way to clean up its coal plants and the thousands of factories that burn coal, pollution will soar both at home and abroad.

The increase in global-warming gases from China's coal use will probably exceed that for all industrialised countries combined over the next 25 years, surpassing by five times the reduction in such emissions that the Kyoto Protocol seeks.

The sulfur dioxide produced in coal combustion poses an immediate threat to the health of China's citizens, contributing to about 400,000 premature deaths a year. It also causes acid rain that poisons lakes, rivers, forests and crops.

The sulfur pollution is so pervasive as to have an extraordinary side effect that is helping the rest of the world, but only temporarily: it actually slows global warming. The tiny, airborne particles deflect the sun's hot rays back into space.

But the cooling effect from sulfur is short-lived. By contrast, the carbon dioxide emanating from Chinese coal plants will last for decades, with a cumulative warming effect that will eventually overwhelm the cooling from sulfur and deliver another hefty kick to global warming.

A warmer climate could lead to rising sea levels, the spread of tropical diseases in previously temperate climates, crop failures in some regions and the extinction of many plant and animal species, especially those in polar or alpine areas.

Coal is a double-edged sword: the new Chinese economy's black gold and the fragile environment's dark cloud. China already uses more coal than the US, the European Union and Japan combined. And it has increased coal consumption 14 per cent in each of the past two years.

Large areas of north-central China have been devastated by the spectacular growth of the local coal industry. Severe pollution extends across Shanxi province, which produces even more coal.

Not long ago, the city of Datong, 260 kilometres west of Beijing and long the nation's coal capital, was branded one of the world's most-polluted cities.

Desert dust and particulate matter in the city has been known to force the pollution index into warning territory, above 300, which means people should stay indoors. On December 28, the index hit 350.

"The pollution is worst during the winter," said Ji Youping, a former coalminer who now works with a local environmental protection agency. "Datong gets very black. Even during the daytime, people drive with their lights on."

Of China's 10 most polluted cities, four, including Datong, are in Shanxi province. The coal-mining operations have damaged waterways and scarred the land. Because of intense underground mining, thousands of hectares are prone to sinking, and hundreds of villages are blackened with coal waste.

There is a Dickensian feel to much of the region and there are growing concerns about the impact of this coal boom on the environment. The Asian Development Bank says it is financing pollution control programs in Shanxi because the number of people suffering from lung cancer and other respiratory diseases has soared over the past 20 years. Yet even after years of clean-up efforts factories belch black smoke. Beijing has vowed to close the foulest factories, and shut down illegal mines, where some of the worst safety and environmental hazards are concentrated.

For all the worries about pollution from China, climate experts are loath to criticise the country without pointing out that the average American consumes more energy and is responsible for the release of 10 times as much carbon dioxide as the average Chinese.

The New York Times

In China, Dreams of Bright Ideas

By Edward Cody

SHANGHAI -- Wang Wei is busy trying to think up something new. In the next three months, he has to create an alluring, original haute couture collection aimed at a Paris show that could prove crucial in his quest for recognition among the deans of high fashion.

To view the entire article, go to http://www.washingtonpost.com/wp-dyn/conte...er=emailarticle

http://www.cdi.org/program/document.cfm?Do...ge=../index.cfm

June 14, 2006

Nonproliferation Sanctions: Treasury Department designates U.S. and Chinese companies under EO 13382 over missile-related and dual-use trade with Iran

The U.S. Treasury Department announced June 13, 2006, it has designated four Chinese companies, and one of the firms’ U.S. representative, under Executive Order (EO) 13382 for supplying missile-related and dual-use components to the Iranian military and other Iranian entities. The designation freezes the U.S. assets of the designees and prohibits U.S. persons (including corporations) from engaging in transactions with them.

Treasury indicates the four Chinese firms “have provided, or attempted to provide, financial, material, technological or other support for, or goods or services in support of” the Iranian buyers.[1]



Iran presently is reviewing an EU-U.S. proposal to give up proliferation-sensitive aspects of its nuclear program, with the Iranian matter also remaining before the UN Security Council (UNSC) and the International Atomic Energy Agency (IAEA) Board of Governors. China holds a veto on the UNSC.

Designees

Companies subject to the June 13, 2006, Treasury Department designation include:

Beijing Alite Technologies Company, Ltd. (ALCO)
LIMMT Economic and Trade Company, Ltd.
China National Precision Machinery Import/Export Corporation (CPMIEC)
China Great Wall Industry Corporation (CGWIC)
G.W. Aerospace, Inc., of Torrance, California, CGWIC’s U.S. representative office
Iranian entities

The five designated entities are said to have engaged in prohibited business with the following Iranian entities:

Aerospace Industries Organization (AIO), described as “a subsidiary of the Iranian Ministry of Defense and Armed Forces Logistics … the overall manager and coordinator of Iran's missile program, overseeing all of Iran's missile industries”
Shahid Hemmat Industrial Group (SHIG), described as being responsible for Iran's liquid-fueled ballistic missile programs, including:
the Shahab-III medium range ballistic missile, based on the North-Korean-designed No Dong missile (range at least 1300 km)
Shahid Bakeri Industrial Group (SBIG), described as an AIO affiliate involved in Iran's missile programs, producing weapons among which are included two capable of carrying at least chemical warheads:
the Fateh-110 missile (range 200 km)
Fajr rocket systems, a series of North Korean-designed rockets produced under license by SBIG (range 40-100 km)
All Three Iranian entities were included in the annex to EO 13382 by President George W. Bush.

EO 13382 Framework

EO 13382, addressing the proliferation of weapons of mass destruction (WMD) and their delivery systems, was signed by Bush to be effective June 29, 2005, under the


International Emergency Powers Act, 50 U.S.C. §§1701 et seq.
National Emergencies Act, 50 U.S.C. §§1601 et seq.
3 U.S.C §301, relating to the power of the President to delegate functions and authority to appointees holding positions subject to confirmation.
EO 13382 freezes U.S. assets of designated entities and prohibits U.S. persons from doing business with them. It also applies itself to mere attempts to evade or avoid the requirements of the Order, mere conspiracy to commit a violation, and not just regular business transactions but also donations to designated persons and entities.

EO 13382 sets out a list of designated entities in its own Annex and delegates to the secretary of state and the secretary of the treasury the authority to designate additional persons and entities, acting in consultation with each other, the attorney general, and other relevant agencies, when the designees have been involved with banned WMD or WMD delivery system proliferation.

Treasury Department WMD/nonproliferation sanctions are administered by the Office of Foreign Assets Control.

In addition to the five entities named on June 13, 2006, the Treasury Department has, acting under EO 13382, designated:

a Swiss individual and Swiss entity tied to North Korean proliferation activity (March 30, 2006);
two Iranian entities (Jan. 4, 2006), Novin Energy Company and Mesbah Energy Company; and
eight North Korean entities (Oct. 21, 2005).

State Department Sanctions

The Chinese firms designated by the Treasury Department on June 13, 2006, previously had been subjected to sanctions by the State Department under the Iran Nonproliferation Act of 2000, with one also having been subjected to an import ban under EO 12938 as amended (EO 12938 most recently was amended by EO 13382).

Further reading:

“Aerospace Industries Organization (AIO),” Jane’s FastTrack to Defence Industry, http://fasttrack.janes.com/janesdata/ft/19.../c00428609.html


“China’s Missile-Related Facilities/Organizations,” Nuclear Threat Initiative,

http://www.nti.org/db/china/mslorg.htm

“Executive Order: Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters,” text of EO 13382, June 29, 2005, http://www.whitehouse.gov/news/releases/20...6/20050629.html

“Iran Nonproliferation Act of 2000,” 50 U.S.C. 1701 note, June 7, 2006, http://www.state.gov/t/isn/c15234.htm (State Department chart listing dates of sanctions and links to Federal Register notices)


Iran Nonproliferation Act of 2000, Pub. L. 106-178, March 14, 2000,

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?
dbname=106_cong_public_laws&docid=f:publ178.106.pdf (text of Act)

Shirley A. Kan, “China and Proliferation of Weapons of Mass Destruction: Policy Issues,” Congressional Research Service, Jan. 31, 2006, http://fpc.state.gov/documents/organization/61496.pdf

"Nonproliferation: What You Need To Know About Treasury Restrictions: Executive Order 13382, "Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters"; the Weapons of Mass Destruction Trade Control Regulations (Part 539 of Title 31, C.F.R); and the Highly Enriched Uranium (HEU) Agreement Assets Control Regulations (Part 540 of Title 31, C.F.R)" Treasury Department, Office of Foreign Assets Control, June 13, 2006, http://www.treasury.gov/offices/enforcemen...ams/wmd/wmd.pdf


Judy Mathewson, “Chinese Companies Accused by U.S. of Helping Iran on Missiles,” Bloomberg, June 13, 2006, http://www.bloomberg.com/apps/news?pid=
10000080&sid=aSZ1QSUMm.ao&refer=asia

“Treasury Designates U.S. and Chinese Companies Supporting Iranian Missile Proliferation,” Treasury Department news release JS-4317, June 13, 2006, http://www.treas.gov/press/releases/js4317.htm

“US cites China firms for supporting Iran military,” Reuters, June 13, 2006, http://www.boston.com/news/world/asia/articles/2006/06/13/
us_cites_china_firms_for_supporting_iran_military/

“Weapons of Mass Destruction/Non-proliferation Sanctions,” Treasury Department, Office of Foreign Assets Control,http://www.treas.gov/offices/enforcement/ofac/programs/wmd/wmd.shtml
--------------------------------------------------------------------------------

[1] “Treasury Designates U.S. and Chinese Companies Supporting Iranian Missile Proliferation,” Treasury Department news release JS-4317, June 13, 2006, http://www.treas.gov/press/releases/js4317.htm


Author(s): Steven C. Welsh

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CHINA APPEARS ON THE HORIZON OF THE ARAB WORLD - SHERIF HAMDY (DAILY STAR, JORDAN, JUNE 23): Arab public diplomacy efforts with Latin America and China should not be viewed as a coincidence, as a shift in their relationship with Washington is forthcoming.
http://www.dailystar.com.lb/article.asp?ed...rticle_id=73390

HU JINTAO'S U.S. VISIT HIGHLIGHTS DEBT AND DIPLOMACY - PETER HERFORD (PUBLIC DIPLOMACY BLOG, USC CENTER ON PUBLIC DIPLOMACY, JUNE 20): The Chinese have gained a level of sophistication in spin and public relations that can match any government anywhere.
http://uscpublicdiplomacy.com/index.php/ne..._and_diplomacy/

CHINA'S SOFT-POWER DIPLOMACY IN AFRICA - ANTOANETA BEZLOVA (ASIA TIMES, JUNE 23)
http://atimes.com/atimes/China/HF23Ad01.html

http://www.defenselink.mil/
Military Power of the People’s Republic of China

A Report to Congress

Pursuant to the National Defense Authorization Act Fiscal Year 2000
Section 1202, “Annual Report on Military Power of the People’s Republic of China,” of the National Defense Authorization Act for Fiscal Year 2000, Public Law 106-65, provides that the Secretary of Defense shall submit a report “on the current and future military strategy of the People’s Republic of China. The report shall address the current and probable future course of military-technological development on the People’s Liberation Army and the tenets and probable development of Chinese grand strategy, security strategy, and military strategy, and of the military organizations and operational concepts, through the next 20 years.”


EXECUTIVE SUMMARY
China’s rapid rise as a regional political and economic power with global aspirations is an important element of today’s strategic environment – one that has signifi cant implications for the region and the world. The United States welcomes the rise of a peaceful and prosperous China. U.S. policy encourages China to rticipate as a responsible international stakeholder by taking on a greater share of responsibility for the health and success of the global system from which China has derived great benefi t.

China’s leaders face some important choices as its power and infl uence grow. These choices span a range of issues: challenges of China’s economic transition and political reform, rising nationalism, internal unrest, proliferation of dangerous technologies, adoption of international norms, and China’s expanding military
power.

The People’s Liberation Army (PLA) is in the process of long-term transformation from a mass army designed for protracted wars of attrition on its territory to a more modern force capable of fi ghting short duration, high intensity confl icts against high-tech adversaries. Today, China’s ability to sustain military power at a distance is limited. However, as the 2006 Quadrennial Defense Review Report notes, “China has the greatest potential to compete militarily with the United States and fi eld disruptive military technologies that could over time offset traditional U.S. military advantages.”

In the near term, China’s military build-up appears focused on preparing for Taiwan Strait contingencies, including the possibility of U.S. intervention. However, analysis of China’s military acquisitions suggest it is also generating capabilities that could apply to other regional contingencies, such as confl icts over resources
or territory.

The PLA’s transformation features new doctrine for modern warfare, reform of military institutions and personnel systems, improved exercise and training standards, and the acquisition of advanced foreign (especially Russian) and domestic weapon systems. Several aspects of China’s military development have
surprised U.S. analysts, including the pace and scope of its strategic forces modernization. China’s military expansion is already such as to alter regional military balances. Long-term trends in China’s strategic nuclear forces modernization, land- and sea-based access denial capabilities, and emerging precision-strike weapons have the potential to pose credible threats to modern militaries operating in the region.

China’s leaders have yet to adequately explain the purposes or desired end-states of their military expansion.

Estimates place Chinese defense expenditure at two to three times offi cially disclosed fi gures. The outside world has little knowledge of Chinese motivations and decision-making or of key capabilities supporting PLA modernization.

This lack of transparency prompts others to ask, as Secretary of Defense Rumsfeld did in June 2005: Why this growing investment? Why these continuing large and expanding arms purchases? Why these continuing robust deployments? Absent greater transparency, international reactions to China’s military growth will
understandably hedge against these unknowns.

http://today.reuters.com/business/newsArti...HINA-GDP-DC.XML

China is world's fourth-largest economy: World Bank
Mon Jul 3, 2006 4:32am ET

BEIJING (Reuters) - China has squeaked by Britain by the tinieEmail This Article | Print This st of margins to become the world's fourth-largest economy, according to the World Bank's latest calculations.

The World Bank said that by its official measure China produced $2.263825 trillion in output in 2005. That was just $94 million, or 0.004 percent, more than Britain.

China comfortably overtook Britain last year based on each country's gross domestic product converted into U.S. dollars at current exchange rates.

But the World Bank's widely watched ranking measures gross national income converted into dollars using the "Atlas" method of currency conversion, which smoothes out exchange rate fluctuations by using a three-year average.

Gross national income comprises gross domestic product plus net inflows of income such as rents, profits and salaries from abroad.

The United States, Japan and Germany remain the world's first-, second- and third-largest economies, respectively, according to the World Bank, which posted its 2005 rankings at the weekend on its Web site (www.worldbank.org).



© Reuters 2006. All Rights Reserved.

http://www.atimes.com/atimes/China/HG01Ad01.html

CHINA AND THE US
PART 2: The challenge of unilateralism
By Henry C K Liu

See also Part 1: The lame duck and the greenhorn

State policies or actions are deemed "unilateral" if they have significant impacts on people in other states but undertaken by a single state without the mandate of bilateral or multilateral treaties or in violation or defiance or rejection of such treaties.

US unilateralism did not start with the administration of President George W Bush. Its moralistic roots lie in Christian Right influence on US foreign policy after World War II, especially over policy on China. It was the ideological basis for the Cold War, with a self-righteous superpower leading subservient allies who did
not have the wherewithal to resist it. It has continued after the end of the Cold War even as allies attempt to assert increasing independence with the disappearance of perceived Soviet threat. The huge power differential between the US as the sole remaining superpower and its former subservient allies gave the United States a natural claim to, and de facto privilege of, unilateralism.

President Bill Clinton's decision to use military power to enforce moral imperialism in the Balkans was based on the view that "US citizens and interests are threatened in many arenas and across a wide spectrum of issues", in the words of then director of central intelligence George Tenet. These perceived perils as interpreted by US cultural preference range from regional conflicts and insurgency to terrorism and ethnic unrest and are viewed as direct threats to US national interests raised to the level of clear and present danger.

The interest of the United States in maintaining geopolitical stability is predicated on its being a superpower with global economic interests. The US aims to act unilaterally by maintaining a force structure that can conduct simultaneous expeditionary military operations in widely separated theaters around the world against multiple adversaries who may not even be natural allies. This is done by revising its Cold War alliances such as the North Atlantic Treaty Organization (NATO) from defensive to offensive regional military assets that the US can deploy at will to achieve its global geopolitical objectives.

The Clinton Doctrine
The Clinton Doctrine subscribes to the proposition that the best way to maintain stability in core regions of US interests such as Western Europe and Japan is to combat instability in periphery regions before it can intensify and spread. It was expressed in Clinton's February 26, 1999, speech in San Francisco: "The true measure of our interests lies not in how small or distant these places are ... The question we must ask is: What are the consequences to our security of letting conflicts fester and spread? ... Where our values and our interests are at stake, and where we can make a difference, we must be prepared to do so."

In response, neo-conservative commentator Charles Krauthammer wrote on March 29, 1999: "The Clinton Doctrine aspires to morality and universality. But foreign policy must be calculating and particular ... The essence of foreign policy is deciding which son of a bitch to support and which to oppose. One has to choose. A blanket anti-son-of-a-bitch policy, like a blanket anti-ethnic-cleansing policy, is soothing, satisfying and empty. It is not a policy at all but righteous self-delusion."

China is the key SOB nation that US neo-conservatives choose to oppose preemptively before it gets too powerful.

Clash of civilizations
There were other views. Barely two decades after the Cold War, Harvard historian Samuel P Huntington wrote in an article titled "The lonely superpower" in the March 1999 issue of Foreign Affairs: "The unipolar moment has passed. Even old allies stubbornly resist American demands, while many other nations view US policy and ideals as openly hostile to their own. Washington is blind to the fact that it no longer enjoys the dominance it had at the end of the Cold War. It must relearn the game of international politics as a major power, not a superpower, and make compromises. US policymaking should reflect rational calculations of power rather than a wish list of arrogant, unilateralist demands."

Yet Huntington had written in the Summer 1993 Foreign Affairs about the "clash of civilizations" that "the next pattern of conflict ... in this new world will not be primarily ideological or primarily economic. The great divisions among humankind and the dominating source of conflict will be cultural. Nation-states will remain the most powerful actors in world affairs, but the principal conflicts of global politics will occur between nations and groups of different civilizations. The clash of civilizations will dominate global politics. The fault lines between civilizations will be the battle lines of the future."

It is common after September 11, 2001, to focus Huntington's "clash of civilizations" theme on Islam-Christian conflict. Yet Huntington had a lot to say about Asia in general and China in particular. He quoted Massachusetts Institute of Technology political scientist Lucian Pye that China is "a civilization pretending to be a state". He credited common culture as "clearly facilitating the rapid expansion of the economic relations between the People's Republic of China and Hong Kong, Taiwan, Singapore and the overseas Chinese communities in other Asian countries. With the Cold War over, cultural commonalities increasingly overcome ideological differences, and mainland China and Taiwan move closer together. If cultural commonality is a prerequisite for economic integration, the principal East Asian economic bloc of the future is likely to be centered on China. This bloc is, in fact, already coming into existence."

Further on, Huntington wrote: "With the Cold War over, the underlying differences between China and the United States have reasserted themselves in areas such as human rights, trade and weapons proliferation. These differences are unlikely to moderate. A 'new cold war', Deng Xaioping reportedly asserted in 1991, is under way between China and America." Thus the recent speech by President Hu Jintao at Yale University during his visit to the United States on the peaceful attributes of Chinese civilization fell on deaf ears in the US.

Huntington pitted the West against a coalition of "Confucian-Islamic states". He saw the conflict between the West and the Confucian-Islamic states focusing "largely, although not exclusively, on nuclear, chemical and biological weapons, ballistic missiles and other sophisticated means for delivering them, and the guidance, intelligence and other electronic capabilities for achieving that goal". Contrary to evidence, Huntington claimed that "the West promotes non-proliferation as a universal norm and non-proliferation treaties and inspections as means of realizing that norm. It also threatens a variety of sanctions against those who promote the spread of sophisticated weapons and proposes some benefits for those who do not." He added, however, "The attention of the West focuses, naturally, on nations that are actually or potentially hostile to the West."

Huntington went on:
The non-Western nations, on the other hand, assert their right to acquire and to deploy whatever weapons they think necessary for their security. They also have absorbed, to the full, the truth of the response of the Indian defense minister when asked what lesson he learned from the Gulf War: "Don't fight the United States unless you have nuclear weapons." Nuclear weapons, chemical weapons and missiles are viewed, probably erroneously, as the potential equalizer of superior Western conventional power. China, of course, already has nuclear weapons; Pakistan and India have the capability to deploy them. North Korea, Iran, Iraq, Libya and Algeria appear to be attempting to acquire them. A top Iranian official has declared that all Muslim states should acquire nuclear weapons, and in 1988 the president of Iran reportedly issued a directive calling for development of "offensive and defensive chemical, biological and radiological weapons."
Huntington identified the sustained expansion of China's military power and its means to create military power as centrally important to the development of counter-West military capabilities. According to Huntington, a Confucian-Islamic military connection has thus come into being, designed to promote acquisition by its members of the weapons and weapons technologies needed to counter the military power of the West. The Huntington clash-of-civilizations world view defines the West's enemies not by what they do, but by who they are. Such a view does not lead to world peace unless all non-Western civilizations are wiped off the face of the Earth.

Bush unilateralism
Critics have cited the US decisions under the Bush administration to withdraw from the ABM (Anti-Ballistic Missile) Treaty, to violate commitments to the Non-Proliferation Treaty (NPT), to reject the Kyoto Protocol, to invade Iraq without United Nations approval and to make other hegemonic military-geopolitical-economic moves as evidence of US unilateralism, ie, a general lack of support for multilateral arms control and global-warming agreements, and a blatant disregard for the UN and other multilateral institutions or international consensus.

The cool reception Bush received during his September 2004 address to the 59th session of the UN General Assembly was a reflection of how unpopular US unilateralism had become among the international community. The US military invasion of Iraq without UN authorization was viewed by many as a defiance of international law, and the unilateral action solicited strong opposition from many governments around the world, including traditional US allies.

UN Secretary General Kofi Annan called on the world to respect UN authority during his address on the same day as Bush's. Annan, in an interview with the British Broadcasting Corp, unambiguously pointed out that any decisions on military action in Iraq should have been made by the UN Security Council and not made unilaterally by a single country. He also criticized Bush's unilateral policy on Iraq by saying that the war violated the UN Charter and was illegal.

The Kyoto Protocol, opened for signature on December 11, 1997, was signed by 141 nations, including all European and all other developed industrial nations except the US and Australia. The pact went into effect on February 16, 2005, and will expire in 2012. US vice president Al Gore was a main participant in putting the Kyoto Protocol together in 1997. President Clinton signed the agreement in 1997, but the US Senate refused to ratify it, citing potential damage to the US economy as required by compliance, and because it excluded certain developing countries, including India and China, from having to comply with new emissions standards immediately.

Bush made campaign promises in 2000 to regulate carbon dioxide as a pollutant. However, as one of the first acts of his presidency, Bush pulled the US out of the Kyoto accords, dismissing it as too costly, and described it as "an unrealistic and ever-tightening straitjacket". Lately, the White House has even questioned the validity of the science behind global warming, and claimed that millions of jobs would be lost if the US joined in this world pact, ignoring the larger economic loss from pollution-related health costs and reduction in life expectancy.

China, despite being in the pollution-intensive phase of transitional industrialization, signed the Kyoto pact on May 29, 1998. Then-premier Zhu Rongji announced on September 3, 2002, at the World Summit on Sustainable Development that China had approved the Kyoto Protocol to the United Nations Framework Convention on Climate Change. The Chinese ambassador to the United Nations deposited the instrument of approval of the Kyoto Protocol with the UN secretary general on August 30.

US policy officially acknowledges that multilateralism is "a core principle in negotiations in the area of disarmament and non-proliferation with a view to maintaining and strengthening universal norms and enlarging their scope" - as stated in UN General Assembly Resolution 56/24 T, which also underlined the fact that "progress is urgently needed in the area of disarmament and non-proliferation in order to help maintain international peace and security and to contribute to global efforts against terrorism". Yet the US asserts that although maintaining international peace and security is its primary goal and overall purpose, in the final analysis preserving national security is equally necessary and essential. "Mutual advantage" is a key factor, for any arms-control treaty must enhance the security of all states. Richard Haass, president of the Council on Foreign Relations since July 2003, and former US State Department policy planning head under Colin Powell, described Bush administration support of certain multilateral regimes and organizations but not others as "multilateralism a la carte".

The five-year review conference for the Treaty on the Non-Proliferation of Nuclear Weapons held from May 2-27, 2005, at the UN in New York had a contentious and unproductive outcome. Most participant governments wanted the agenda to mention the decisions made in the Year 2000 Review Conference, including "the unequivocal undertaking by the nuclear-weapon states to accomplish the total elimination of their nuclear arsenals" (Point 6 of the "Thirteen Steps"). However, the US after September 11, 2001, unilaterally considers the Year 2000 commitments as inoperative relics of a foregone era and refuses to agree to any new agenda mentioning total nuclear elimination.

Nuclear terrorism
Nuclear terrorism has until recently been a theme only for sensational movies. The possible ways that terrorists could obtain nuclear weapons through manufacture, purchase or theft were difficult and involved formidable challenges and risks, as well as financial and technical resources beyond the reach of typical terrorists, who were more likely to employ simpler means. Nevertheless, preventing terrorists from acquiring nuclear material or other radioactive material from power plants, research facilities, hospitals, industry, or insecure nuclear-weapons facilities has become a top priority for all governments.

Responding to this threat, the International Atomic Energy Agency (IAEA) board of governors in March 2002 approved an Action Plan to Combat Nuclear Terrorism. A number of states pledged specific sums of money, including Australia (US$100,000), Britain ($350,000), Japan ($500,000), the Netherlands (250,000 euros), Slovenia (14,000 euros), the US ($1 million), to a fund set up to support a plan designed to upgrade worldwide protection against acts of terrorism involving nuclear and other radioactive materials. This amount is a fraction of what is needed to make a top-budget movie.

In approving the plan, the IAEA board recognized that the first line of defense against nuclear terrorism is the strong physical protection of nuclear facilities and materials. A number of other member states announced in-kind support to the plan, including Finland, France, Germany, India, Romania and Turkey. Other countries expressed hope to finance or provide support to the plan in the near future. During the Preparatory Committee Sessions for the 2005 NPT Review Conference and at the Review Conference, many states party and the representatives from the IAEA emphasized the importance of strengthening safeguards of nuclear materials given the increase in the perceived threat of nuclear terrorism. Such concerns are not reflected in the meager funding.

Technological imperative ordains that terrorists would eventually acquire highly enriched uranium and use this fissile material to make simple, portable nuclear explosive devices. In this context, the IAEA highlighted the importance of ensuring comprehensive and effective physical protection of nuclear material. The Convention on the Physical Protection of Nuclear Material (CPPNM), opened for signature at Vienna and at New York on March 3, 1980, covers physical protection during international transport, and other IAEA-issued standards provide countries with guidelines on ways to voluntarily secure their nuclear and radioactive materials. However, mandatory and legally binding international standards for the physical protection of nuclear material within a state do not exist. In July 2005, parties to the convention agreed on major changes to make it legally binding for states party to protect nuclear facilities and material for states' peaceful use, storage, and transport. To bring the changes into effect, ratification by two-thirds of the state parties is required.

The US ratified the convention on December 13, 1982. China acceded to the convention on January 10, 1989. On July 12, 1994, China formulated the "Regulations Governing the Protection of Nuclear Materials in Kind During International Transportation", pursuant to its obligations under the convention. The regulations came into effect on September 15, 1994. The regulations include provisions on: requiring that the competent state authorities approve all international transportation of nuclear materials; instituting a licensing system, under which without state approval no one can possess, transfer, or transport nuclear materials; requiring that the competent state authorities approve any passage and transportation of nuclear materials in China; investigating any unauthorized acceptance, possession, transfer, replacement, and disposal of nuclear materials; and making illegal the stealing or acquiring of nuclear materials through fraud and extortion.

The regulations also cover the responsibilities, management, protection categories and measures, and legal responsibilities of the relevant Chinese bodies in charge of nuclear transportation. On April 9, 1996, China ratified the Convention on Nuclear Safety, and the US did so three years later, on April 11, 1999.

Increasing security concerns over nuclear terrorism demand more international cooperation. The "G8 Global Partnership Against the Spread of Weapons of Mass Destruction" adopted at the Gleneagles Summit of the Group of Eight in June 2005 renewed the pledged $20 billion over a period of 10 years to 2012 to secure nuclear and radioactive materials around the world, initially in Russia. State parties to the NPT have generally supported this initiative. Moreover, UN Security Council Resolution 1540, adopted in April 2004, requires state parties to criminalize proliferation of weapons of mass destruction and their delivery systems by non-state actors as an essential undertaking to reduce the dangers of proliferation of WMD to terrorist groups.

Since the NPT was primarily designed to deal with states, it has very little capacity to deal with the new threat coming from non-state actors using nuclear weapons, or material and technology to develop improvised nuclear explosive devices. To prevent and respond to this new threat more promptly, states party to the NPT are advised to pursue unilateral, bilateral, and multilateral counter-terrorism measures to augment the NPT regime.

Non-proliferation and unilateral proliferation
The United States, as the mainstay of the non-proliferation regime, nevertheless has unilaterally broadened its own strategy for unilateral use of nuclear weapons and is moving toward unilateral development of new weapons. Together with unilateral missile defense development and unilateral moves toward weaponization of space, the US message to the non-nuclear-weapon countries is that it does not rely on the multilateral NPT for security, but instead on its own new "Star Wars" weapon systems and unilateral adoption of preemptive offensive strategy, which then raises questions on the need for and the effectiveness of the multilateral NPT.

Multilateral non-proliferation has since been sustained only by inertia rather than forward movement. Global non-proliferation has come to mean non-proliferation only in the rest of the world outside the US and only in states that the US views with displeasure. At any rate, US security is no longer directly tied to non-proliferation, which has been transformed into a US geopolitical pretext for aggression, much like the defense of democracy.

Several states that the US considers safe allies, such as Israel, South Africa until the end of apartheid and possibly Japan, have been granted stealth status on the non-proliferation screen, with India now selected as a preferred candidate for US geopolitical exceptionalism. Selective proliferation is now a device to enhance US security.

All nuclear programs are secret
Every country that has successfully developed nuclear weapons did so in secret, not only from other governments but from other legitimate branches of their own governments.

The US Manhattan Project was carried out in secret without congressional debate, nor was its use on Japan decided by broad consensus. Nuclear arms and strategy are extraterritorial to US democratic processes. Both France and the United Kingdom launched their nuclear programs with limited cabinet involvement and no parliamentary debate. The Soviet and Chinese programs were initiated under direct secret orders from the highest levels in the ruling party and government. India announced its program with a nuclear test in 1974 that was a surprise even to many in its own government; Pakistan similarly in 1998; Israel still refuses to confirm officially that its program exists; South Africa dismantled its secret weapons program only after the end of apartheid. Programs in Australia, Switzerland, Germany, Sweden, South Korea and Taiwan are conducted in great secrecy, while the existence of such programs is treated as open secrets to secure maximum geopolitical effect.

Today Japan is known to have a large stock of weapon-usable plutonium (45,000 kilograms and growing) as well as the most advanced missile technology. This is the result of deliberate policy established in the late 1960s. Poised to be able to cross the technical threshold of actual weapons production and missile assembly on short notice, Japan has already become a de facto nuclear-weapon state, with the capability of producing deliverable atomic bombs within a matter of months if not weeks.

Chinese caution on pushing the United States militarily from East Asia is predicated on the prospect of a nuclear-armed Japan coming out from under the US nuclear umbrella. Militarists in Japan would welcome such a development as they argue that the US nuclear umbrella in the final analysis is designed to protect only US national interests, which would be inevitably and increasingly incongruent with Japanese national interests as time moves on. Arms control for a non-nuclear Japan is one of the key convergence points in US-China national interests.

North Korea and Iran
North Korea and Iran, the two remaining members of George W Bush's "axis of evil" now that regime change has been accomplished in evil Iraq with US occupation, have emerged as key issues in the survival of the 38-year-old NPT regime. For achieving US objectives on both "rogue" nations, US-China cooperation is one of the basic prerequisites for success.

The North Korea situation is historically tied to Taiwan. A quarter of a century after the US normalized its relations with China on January 1, 1979, US-China relations are still plagued by residual Cold War issues of war and peace that were created five decades ago at the beginning of the Korean War. Among these are the linked problems of Taiwan and Korea - two unfinished civil wars in Asia into which the US injected itself at the beginning of the first large-scale armed conflict in the Cold War and linked as key elements in its policy of global containment of communist expansion.

The Taiwan issue was created by the US in response to an escalation of the Korean civil war. It is not surprising, therefore, that the recurring crisis over renewed Chinese war warnings on escalating Taiwan maneuvers toward independence is also linked to a mounting crisis over the North Korean nuclear-weapons program (see Cold War links Korea, Taiwan, January 7, 2004).

Taipei Times Washington correspondent Charles Snyder reported that the Pentagon has developed a comprehensive operational plan to defend Taiwan in case of an attack from mainland China. The plan, officially designated "Oplan 5077-04", is run by the US Pacific Command headquartered in Honolulu, Hawaii. It includes provisions for the possible use of nuclear weapons, involving not only US Pacific forces but also US troops and equipment worldwide, with potentials for a global conflict that would likely involve Russia, which sees US control over China as a direct threat to its own security.

Non-proliferation challenges facing China and US
At its inception on July 1, 1968, the NPT reflected the international consensus that the spread of nuclear weapons to more states was contrary to the promotion of international peace and security. The treaty, taking force with the deposit of US ratification on March 5, 1970, obligates the five then-acknowledged nuclear-weapon states (the US, Russia, the United Kingdom, France and China) not to transfer nuclear weapons, other nuclear explosive devices, or their technology to any non-nuclear-weapon state. Non-nuclear-weapon states party undertake not to acquire or produce nuclear weapons or nuclear explosive devices.

In 1992, China acceded to the NPT on March 9 and France acceded on August 3. In 1996, Belarus joined Ukraine and Kazakhstan in removing and transferring to Russia the last of the remaining former Soviet nuclear weapons located within their territories, and each of these nations has become a non-nuclear-weapon state party to the NPT. In June 1997 Brazil became a state party to the NPT.

Today, the number of states known to possess usable nuclear arsenals is only three more than the original five of the NPT. Those three additional nuclear-weapon states - India, Pakistan and Israel - are now also the only states in the world not to have joined the NPT. Cuba's recent accession brought in the last non-nuclear-weapon state; North Korea joined but withdrew from the NPT on January 10, 2003, and now claims also to possess nuclear weapons.

Meanwhile, the arsenals of the US and Russia have shrunk from their combined Cold War peak of 65,000 warheads to fewer than 20,000, with that number set to shrink further under the Moscow Treaty on Strategic Offensive Reductions entered into on May 24, 2002, by Presidents Bush and Vladimir Putin, calling for reduction of the combined strategic nuclear warheads of the two nations to a level of 1,700-2,200 by December 31, 2012, a level nearly two-thirds below current levels.

In its December 2003 White Paper on Non-proliferation Policy and Measures, China states that "China stands for the attainment of the non-proliferation goal through peaceful means, ie on the one hand, the international non-proliferation mechanism must be continually improved and export controls of individual countries must be updated and strengthened, and, on the other hand, proliferation issues must be settled through dialogue and international cooperation ... Unilateralism and double standards must be abandoned, and great importance should be attached and full play given to the role of the United Nations."

The document pointed out that China "will constantly increase consultations and exchanges with multinational non-proliferation mechanisms, including the Nuclear Suppliers Group, the Missile Technology Control Regime (MTCR), the Australia Group, and the Wassenaar Arrangement [on Export Controls for Conventional Arms and Dual-Use Goods and Technologies]", dropping previous criticism of these export-control arrangements for their exclusive and discriminatory nature. The 2003 document increased the level of transparency of China's export-control system, detailing the process and criteria for China's export-control decisions, and specified the role and responsibilities of key institutional participants within the process.

Chinese arms-control advocates have since become frustrated at the Bush administration's reluctance publicly to acknowledge improvements in China's non-proliferation behavior, and the continuing use of sanctions by the US as a method of coercing Chinese entities to refrain from proliferation transfers, particularly with regard to North Korea and Iran. The 2003 white paper aimed to illustrate the progress made in China's attitude and behavior, notwithstanding the record of relentless US anti-China policy on global dual-use technology sanctions not only from itself but also from its reluctant allies in the European Union, and its blatant unilateral abuse of the multilateral non-proliferation regime to further its own national geopolitical advantage.

Focus on missile defense
Two years later, China's State Council on September 1, 2005, issued a new white paper titled "China's Endeavors for Arms Control, Disarmament and Non-Proliferation", in which opposition to US "unilateralism" was deleted. In it place is a more positive statement: "The international community is in favor of maintaining multilateralism." The emphasis shifted to a new focus:
China does not wish to see a missile-defense system produce negative impact on global strategic stability, bring new unstable factors to international and regional peace and security, erode trust among big powers, or undermine legitimate security interests of other countries. China is even more reluctant to see some countries cooperate in the missile-defense field to further proliferate ballistic-missile technology. China believes that relevant countries should increase transparency in their missile-defense program for the purpose of deepening trust and dispelling misgivings. As the Taiwan question involves its core interests, China opposes the attempt by any country to provide help or protection to the Taiwan region of China in the field of missile defense by any means.
This is a direct reference to the US-proposed US-Japan-Taiwan theater missile defense system.

Many reports by technical and strategic experts on the waste and futility of efforts to develop a missile-defense system have appeared in print. Technologically, the system's difficulty, to shoot a speeding bullet with another bullet, or to shoot a shower of smart bullets that can turn corners and release decoys with a counter-shower of smarter bullets, appears to be technically insurmountable and economically inefficient even if the technological hurdles could be overcome theoretically in controlled test conditions.

The complexity ratio faced by the defense in overcoming the continually upgradable offense is exponential, so that the offense will always have the advantage of outmaneuvering the defense. And success in defense depends on total effectiveness, while success in offense requires only a statistical advantage. If only one missile out of a thousand slips through, the game is lost.

On a common-sense level, the concept borders on pure stupidity. Any child who watches Western movies knows that in a gunfight, the aim is to shoot the shooter, not the bullet from his gun. For the US, the missile shooter in the Taiwan Strait theater is China. When Bush proclaims that the US would defend Taiwan "by any means necessary", it can only mean an attack on the Chinese mainland over an issue that China considers its own internal affair, a view shared by the late US president Richard Nixon and his secretary of state, Henry Kissinger, in the Shanghai Communique of February 1972. For China, Bush's hostile and belligerent posture over Taiwan is not a good basis for peaceful bilateral relations.

The whole missile-defense issue, a component of the full nuclear-non-proliferation issue, is shaping up to be a game of non-existent weapon systems in the hands of "rogue" states becoming real in the mind of the US political leadership, with the fantasized threat to be neutralized by a non-operational defense system in the hands of science-fiction superpower super-hawks. It is a fear-mongering game of political shadow-boxing, pitting fantasized threats against a fantasy technology to conduct a ritual dance of psychological chicken for geopolitical gain (see Hollow US defense for an empty threat, June 24).

The US aims to make the world safe from nuclear weapons that would take alleged rogue nations another decade to produce with a defense system that would take the US another decade to perfect. In the meantime, the US will knock off a few unarmed "dictators" for good measure in the name of freedom, along with a few hundred thousand innocent civilians as unavoidable but acceptable collateral damage. The scale is fast tilting as to who will end up having killed more Iraqi citizens, the Saddam Hussein regime during its allegedly evil rule or the open-ended US occupation in the name of freedom.

US backs both non-proliferation and proliferation
Yet the US has been and continues to be a leading proponent of the international non-proliferation regime that it unilaterally is making irrelevant fast.

At the domestic level, the US is misapplying for geopolitical aim a system of export control and licensing laws and regulations covering transfers of nuclear technology or materials, including dual-use technology that can contribute to nuclear-weapons development. There is also a vast maze of laws requiring sanctions for violations of non-proliferation commitments, and sanctions against non-nuclear-weapons states that obtain or test nuclear weapons. Yet, like free trade, export control is only selectively applied to keep proliferation from "unsafe" states.

The Comprehensive Test Ban Treaty (CTBT) was negotiated and then signed by president Clinton in September 1997 and submitted to the Senate, where it was vigorously opposed and failed to be ratified. Despite the uncertainty introduced by US rejection of the CTBT, steps toward ending the nuclear-arms race and nuclear disarmament continued, as called for in Article VI of the NPT.

Then in January 2002, three months after the September 11 terrorist attacks, the Bush administration released the results of its "Nuclear Posture Review", announcing that nuclear planning would no longer address the "Russian threat", as left over from the Cold War, but would develop capabilities to meet a range of threats from unspecified countries. China was on the top of that list before September 11 and continues to be on the list over the Taiwan situation. The redirection would be accompanied by a large, unilateral reduction in deployed nuclear weapons to a level not affecting US nuclear superiority.

While the US has reduced its arsenal of warheads from 150,000 to 10,300, the TNT-equivalent tonnage of destructive power with bigger warheads still commands the equivalent of 120,000-130,000 Hiroshima-sized bombs. The US nuclear arsenal is designed not merely for massive destruction to win a war, but total destruction of all opponents to rid the world of evil.

However, the new policy also included development of a controversial missile-defense capability, and improving the nuclear-weapons "infrastructure" to allow resumption of testing and possible development of new weapons at accelerated pace. The Fissile Material Cutoff Treaty (FMCT) has been a subject of discussion at the Geneva Conference on Disarmament for some years, but little progress has been made. On July 29, 2004, the US declared the FMCT "ripe for negotiations" and "reaffirmed" US commitment to negotiate a legally binding treaty. However, a US policy review concluded that "realistic, effective verification" of such a treaty was not "achievable".

Responding to Pakistani nuclear expert Abdul Qadeer Kahn's revelation that he had headed a network that spread nuclear-weapons technology and equipment to Iran, North Korea, and Libya, President Bush on February 11, 2004, urged more and stricter controls on nuclear exports, demanding that non-nuclear-weapons states renounce developing capacity to enrich uranium and reprocess plutonium as part of commercial nuclear-power programs, while nuclear supplier nations ensure adequate fuel for nuclear plants at reasonable prices. Bush also argued that the IAEA's Additional Protocol for inspection regimes should be required of all NPT signatories, and urged the Senate to consent to it on the part of the US. On March 31 the Senate ratified the protocol (Treaty Doc 107-7, Senate Executive Report 108-12).

As a nuclear-weapons state, the US in agreeing to IAEA inspections has the right to exclude any activities or sites that it declares are of "direct national-security significance". The same exclusion by other nations, such as Iraq, Iran and North Korea, has since been used by the US as pretext for preemptive attack, invasion or threats of such.

To engage in international trade in nuclear technology or materials (such as nuclear fuel), US companies must obtain export licenses from the Nuclear Regulatory Commission (NRC). Before an export license can be applied for, there must be in force a bilateral agreement for peaceful nuclear cooperation between the US government and the government of the importing nation. The conditions necessary for drawing up and approving an agreement for cooperation, laid out in Section 123 of the Atomic Energy Act, include a 90-day review by Congress. In many cases, congressional review of an agreement for cooperation has been controversial, being based on geopolitical rather than technical considerations. Congress narrowly allowed an agreement with China to take effect in 1997 only after extended debate and extensive lobbying from the nuclear-energy export sector.

In addition to the NRC's licensing and regulation role, the US Department of Energy (DOE) participates in export controls. The DOE authorizes the transfer of nuclear technology to countries having agreements for nuclear cooperation with the US via "subsequent arrangements", the details of which are spelled out in Section 131 of the Atomic Energy Act of 1954. In general, the NRC deals largely with licensing hardware, while the DOE licenses information and knowledge.

Finally, the Department of Commerce also is involved in regulating exports of dual-use, nuclear-related commodities under the provisions of the Export Administration Act of 1979. That law expired on August 21, 2001, and successive Congresses despite several attempts have not passed new legislation. In the absence of an Export Administration Act, the US dual-use export-control system continues to be dependent on the president's invocation of emergency powers under the International Emergency Economic Powers Act under which Commerce continues to play a role in export regulation.

The US Department of Commerce has agreed with the Ministry of Commerce of the People's Republic of China on procedures to strengthen end-use visit cooperation and help ensure that US exports of controlled dual-use items are being used by their intended recipients for their intended purposes. This understanding will enable increased US exports to China of high-technology items. The US Commerce Department said this new end-use visit understanding provides an important example of the US and China working together to solve practical problems to the benefit of both their peoples.

US nuclear export policy
US nuclear export policy has undergone major transformations since 1945. An initial emphasis on secrecy and criminality, highlighted by the 1946 Atomic Energy Act, which while putting atomic-weapons technology under civilian control supervised by the Atomic Energy Commission (AEC) imposed a criminal ban on the release of atomic technology to other countries, even to allies that had participated in US atomic research during the war. This served to push countries such as the UK, which had supplied scientific personnel and information to the Manhattan Project team, into constructing its own nuclear weapons and started the first wave of nuclear proliferation.

Julius and Ethel Rosenberg were executed for espionage under this act despite the fact that bomb experts have since held that their peripheral knowledge of nuclear technology did not allow them to give Soviet scientists any information the USSR did not already have from other sources, such as Klaus Fuchs, a German-born British citizen who had security clearance to work on the Manhattan Project under hydrogen-bomb hawk Edward Teller; and Donald Maclean, one of the Cambridge Five who spied for the Soviet Union on ideological grounds, and who served in the British Embassy in Washington during World War II.

Soviet documents declassified after the Cold War showed that Julius Rosenberg was a lower-level asset of no scientific value to Soviet intelligence and Ethel Rosenberg was not involved in espionage in any way except that her brother, a sergeant in the US Army, was a machinist at the wartime nuclear facility at Los Alamos, New Mexico, whose knowledge of the bomb was not central. Yet the Rosenbergs were the only two US civilians to be executed for espionage-related activity during the Cold War.

In imposing the death penalty at the urging of Roy Cohn, the young Jewish prosecutor and aide to senator Joseph McCarthy of McCarthyism fame, Judge Irving Kaufman, the Jewish judge hand-picked by McCarthy for the case, held the Rosenbergs responsible not only for espionage but also for all the war deaths of the Korean War. Many have since suggested that the Rosenbergs, communists and Jewish, were sacrificed by the Jewish right to prove Jewish-American loyalty to a nation in the midst of anti-communist hysteria to protect Jewish Americans from wholesale persecution for the predominance of the prewar Jewish left before the McCarthy era.

The United States' secretive approach on nuclear technology gave way in 1954 to the active promotion internationally of peaceful uses of atomic energy, which only came to an end in 1974 when the much-criticized AEC was abolished after the Indian detonation of a "peaceful nuclear explosion". The US then adopted a nuclear-export policy emphasizing technology control.

The event led to a major revision in US policy on nuclear exports, moving non-proliferation toward center stage on the US foreign-policy agenda. The Nuclear Suppliers Group (NSG) was mobilized to set strict multinational guidelines for the major nuclear-exporting states covering the transfer of nuclear fuel and sensitive technology. The NSG obligated its 45 members to pursue two sets of guidelines for nuclear and nuclear-related dual-use exports. Central to the guidelines, which like other aspects of NSG policy were adopted by consensus, was the principle that only NPT parties or other states with comprehensive (full-scope) safeguards in place should benefit from nuclear-technology transfers. The US worked hard to persuade the NSG to adopt the principle of comprehensive safeguards as a condition for export.

Under the authority of amendments to the Foreign Assistance Act, the US imposed half-hearted sanctions on Pakistan, cutting off economic and military aid as a result of its pursuit of nuclear weapons in response to the Indian bomb. The US suspended sanctions on Pakistan when Soviet activities in Afghanistan and the Soviet-Indian alliance made Pakistan a strategically important "front-line state" and in the Afghan phase of the current "war on terrorism".

At the height of the nuclear-deterrence phase of the Cold War when technological parity was necessary to maintain stability, US intelligence purposely provided nuclear and missile secrets to the Soviets to serve the dual purpose of maintaining nuclear parity and to plant credible moles in the Soviet intelligence system.

India-US Joint Statement
The July 18, 2005, India-US Joint Statement (IUSJS) set a new direction for US non-proliferation policy. The IUSJS required the United States to abandon the crucial principle of comprehensive safeguards as a condition for export, since India is not a signatory to the NPT. The nuclear deal is now working its way through the US Congress.

The IUSJS necessitated a fundamental change in US nuclear-export policy with the promise by the US president that he would seek to adjust US laws and policies, as well as international regimes, to enable full US civil nuclear energy cooperation and trade with India, a non-NPT state. These adjustments are necessary since India does not have full-scope safeguards in place and is one of only four states (along with Israel, Pakistan and North Korea) that remain outside of the NPT.

By the Joint Statement Bush in effect announced that technology control was no longer the cornerstone of US nuclear export and non-proliferation policy. Instead, it has given way to a strategy in which geopolitics has primacy and regional security strategy and international economic objectives override those of non-proliferation. Although this shift is not the first time non-proliferation objectives have been subordinated to other US foreign-policy considerations, it represents the most radical change in US nuclear-export policy. The unnamed target of the India-US nuclear agreement is, of course, China.

The IUSJS "expresses satisfaction at the New Framework for the US-India Defense Relationship ... to remove certain Indian organizations from the Department of Commerce's Entity List ... The [US] president told the [Indian] prime minister that he will work to achieve full civil nuclear energy cooperation with India as it realizes its goals of promoting nuclear power and achieving energy security. The president would also seek agreement from Congress to adjust US laws and policies, and the United States will work with friends and allies to adjust international regimes to enable full civil nuclear energy cooperation and trade with India, including but not limited to expeditious consideration of fuel supplies for safeguarded nuclear reactors at Tarapur." General Electric, the only US enterprise still in the nuclear business, built the nuclear plants at Tarapur, near Mumbai, but had been forced to leave in 1974 when India conducted its first nuclear test.

William Potter, director of the Center for Nonproliferation Studies at the Monterey (California) Institute of International Studies, thought that the IUSJS reversed more than a quarter-century of US declaratory policy. The Joint Statement suggests that the Bush national-security team regards nuclear proliferation to be both inevitable and possibly a useful balance-of-power device in geopolitics. Potter wrote last August:
In light of the magnitude of this policy shift and its potential to impact negatively on the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), associated non-proliferation institutions, and even elements of the president's own non-proliferation initiatives, one would have expected the policy announcement to follow a careful and systematic review of the costs and benefits of the proposed change. A rational decision would have required input from all of the major governmental players with non-proliferation responsibilities, including the senior officials in charge of non-proliferation policy in the departments of State and Energy. In fact, however, the new policy appears to have been formulated without a comprehensive high-level review of its potential impact on non-proliferation, the significant engagement of many of the government's most senior non-proliferation experts, or a clear plan for achieving its implementation. Indeed, the policy shift bears all the signs of a top-down administrative directive specifically designed to circumvent the inter-agency review process and to minimize input from any remnants of the traditional "nonproliferation lobby".
US selective proliferation since 1964
Yet Potter should know that selective proliferation has been a US policy option since at least 1964. National Security Archive Electronic Briefing Book No 1: Document 7, "As Explosive as a Nuclear Weapon", the Gilpatric Report on Nuclear Proliferation, January 1965 (sourced through a Freedom of Information Act request to the US State Department, reads as follows:
Largely motivated by concern over the first Chinese atomic test in October 1964, president Lyndon B Johnson asked Wall Street lawyer and former deputy secretary of defense Roswell Gilpatric to lead a special task force in investigating, and making policy recommendations on, the spread of nuclear weapons ...

Some senior officials thought that nuclear proliferation was inevitable and, among the right countries, potentially desirable. Thus, during a November 1964 meeting, [secretary of state Dean] Rusk stated that he was not convinced that "the US should oppose other countries obtaining nuclear weapons". Not only could he "conceive of situations where the Japanese or the Indians might desirably have their own nuclear weapons", Rusk asked, "Should it always be the US which would have to use nuclear weapons against Red China?" [Defense secretary] Robert McNamara thought otherwise: it was "unlikely that the Indians or the Japanese would ever have a suitable nuclear deterrent" ...

According to [AEC chairman] Glenn Seaborg's account of a briefing for Johnson, Rusk opined that the report was "as explosive as a nuclear weapon" ...

Footnote 2: Presumably Rusk thought it better that Asians use nuclear weapons against each other rather than Euro-Americans using them against Asians ... Thus the option of arming Japan and India with a nuclear weapon against China took shape immediately after China's first nuclear test.
In the August 25, 2005, article cited above, Potter wrote:
The convergence of US and Indian national-security interests vis-a-vis China is emphasized by Robert Blackwill, US ambassador to India during President Bush's first term and often cited as the most influential proponent of the shift in US policy toward India ...

This argument is made even more explicitly by Ashley Tellis in a report issued by the Carnegie Endowment for International Peace four days before the Joint Statement by President Bush and Prime Minister [Manmohan] Singh. According to Tellis, who served as senior policy adviser to Blackwill during his tenure in India and is also credited to be one of the principal intellectual architects of the new US policy, it would be a mistake to attempt to integrate India "into the non-proliferation order at the cost of capping the size of its eventual nuclear deterrent".
This deterrent would be for potential use against a rising China to protect US interests in Asia. Potter continued, "Tellis openly acknowledges the fundamental danger to the global non-proliferation regime posed by the shift in US policy [but] believes the risk of proliferation manageable and is justified by US geopolitical interests" that transcend the benefits of non-proliferation.

This approach is not surprising, for if the defense of democracy could be compromised by Cold War geopolitics with US support of dictators, why is non-proliferation different? Potter observed that "some elements of the new US policy toward India have antecedents in which non-proliferation considerations in South Asia also took a back seat to other foreign-policy and national-security objectives", as in the case of Pakistan following the Soviet invasion of Afghanistan. "It also can be discerned after [September 11, 2001] in the less than forceful manner in which the United States has pressed Pakistan to reveal the full scope of the A Q Khan network. Prior to the July 18th Joint Statement, however, the trade-offs between pursuing global nonproliferation objectives and those of regional security were never linked as directly or publicly."

What made the difference was US attitude toward China as a long-range threat beyond the "war on terrorism" and the selection of India as a counterbalance.

The India-US nuclear agreement indicates more clearly than ever before that Washington is not opposed to the possession of nuclear weapons by some states, including those outside of the NPT, only some other states. This new policy of non-proliferation exceptionalism is far more explicit and pronounced than prior routine efforts by the US and its allies to deflect criticism of Israel's nuclear policies. Unlike the Clinton administration, which "had an undifferentiated concern about proliferation", in the words of Defense Science Board chairman William Schneider, the Bush administration, wrote Potter, "is not afraid to distinguish between friends and foes".

Nuclear weapons, once given, cannot be removed easily; thus such selective policy has a tendency to lock the definition of friends and foes into long time-frames, if not perpetuity.

More may be better
Some 25 years earlier, Kenneth Waltz developed the idea that nuclear proliferation could be a positive geopolitical strategy in his "The Spread of Nuclear Weapons: More May Be Better" (Adelphi Paper 171; London: International Institute for Strategic Studies, 1981). Waltz advanced the view that the spread of nuclear weapons may promote regional stability, reduce the likelihood of war, and make wars harder to start. It was an expansion of the superpower nuclear-deterrence doctrine to regional geopolitics.

The main flaw in Waltz's argument was that it was easy to predict superpower rational behavior because each superpower had much to lose by making the wrong move, whereas some smaller powers may operate irrationally from a desperate position of having nothing or little to lose and start a nuclear chain-reaction conflict that no one wants but none can stop.

Non-nuclear-weapons states can be expected to reconsider their non-proliferation commitments in light of the new US proliferation posture toward India. A similar reassessment of the security value of the NPT may be undertaken by states that have not actively pursued a nuclear weapons option, but made explicit the conditionality of their NPT membership on assurances that the international community would not tolerate any additional nuclear-weapons states.

Japan is a critical state on the non-proliferation issue. While Japan has been vocally critical of all Asian nuclear-weapons programs, militarism has been on the rise in Japan. Revival of Japanese militarism skirts postwar Japanese pacifism by arguing that war is more likely to be forced on Japan unless Japan rearms, including the nuclear option. The assurances Japan received in joining the NPT have been rendered empty by US proliferation policy toward India. Decision-making about non-proliferation has become a dynamic process that does not end with accession to the NPT, but will change over time and according to US policy whims.

Iran and India
On February 11, 2004, President Bush gave a major address at National Defense University in which he outlined a new non-proliferation strategy with reference to Iran. He called on the Nuclear Suppliers Group to tighten its export-control guidelines by prohibiting the export of enrichment and reprocessing technology and equipment to countries that do not already operate enrichment and reprocessing plants, such as Iran.

The new strategy also aimed to fend off attempts by Russia in recent years to create a special nuclear-export exception for India. After the Bush speech, Russia reluctantly halted in late 2004 nuclear-fuel shipment for two reactors at Tarapur because of new NSG constraints. The July 2005 India-US Joint Statement commits the US to do for India what it prevented Russia from doing just a year earlier.

France and a number of other NSG states have long eyed nuclear market opportunities in India. They can be expected to support the creation of a special export regime for India under the NSG even if it means establishing the principle of exceptionalism. Iranian nuclear negotiators have pointed out the inconsistency of US efforts to deny enrichment technology to Iran, a non-nuclear-weapons state party to the NPT, while supporting nuclear trade with India, a non-NPT state that has a dedicated and demonstrated nuclear-weapons program. The inconsistency of the new US position is not lost on North Korea.

The India-US Joint Statement, cast in terms of geopolitics with regard to China, is a double-edged sword. A Congressional Research Service Report observes that US-India nuclear cooperation could prompt other suppliers, such as China, to justify nuclear exports to Pakistan, not to mention Iran and North Korea.

North Korea and Taiwan proliferation links
On January 5, 1950, three months after the founding of the People's Republic of China (PRC), US president Harry Truman announced that "the United States will not involve in the dispute of Taiwan Strait", which meant the United States would not intervene if the Chinese communists were to attack Taiwan, where the defeated Kuomintang (KMT) forces had retreated.

However, on June 25 that year, the Korean War broke out, and two days later Truman reacted by declaring the "neutralization of the Straits of Formosa". The US 7th Fleet was sent into the straits, now more usually referred to as the Taiwan Strait, under orders to prevent any attack on the island from the mainland, and also prevent the KMT forces on Taiwan to attack the mainland, as suggested by General Douglas MacArthur. From that point on, Taiwan has been placed under non-stop US military protection.

Shortly after his inauguration on February 2, 1953, president Dwight Eisenhower lifted the US Navy blockade of Taiwan that had prevented the KMT force, newly regrouped and resupplied by the US, from counterattacking mainland China. During August 1954, Chiang Kai-shek moved 58,000 troops to the island of Quemoy (now called Kinmen by the Taiwanese, transliterated Jinmen in the Pinyin system preferred by Beijing) and 15,000 to Matsu island. Chinese Premier Zhou Enlai declared on August 11 that Taiwan must be liberated. On August 17, the US warned China against attacking Taiwan, but on September 3, the People's Liberation Army (PLA) began an artillery bombardment of Kinmen and, in November, PLA planes bombed the Tachen Islands.

On September 12, the US Joint Chiefs of Staff stated the possibility of using nuclear weapons against China. On November 23, China sentenced 13 US airmen who had been shot down over China in the Korean War to long jail terms, prompting further consideration of nuclear strikes against China. At the urging of senator William Knowland, the US signed the Mutual Defense Treaty with the KMT government on Taiwan on December 2, 1954, joining one side of the Chinese civil war by treaty.

On January 18, 1955, PLA forces seized Yijiangshan (Ichiang) Island, 338 kilometers north of Taiwan, completely wiping out KMT forces stationed there. The two sides continued fighting on Kinmen, on Matsu, and along the Chinese coast. The fighting even extended to mainland coastal ports. The US-Nationalist Chinese Mutual Security Pact, which did not apply to islands along the Chinese mainland, was ratified by the Senate on February 9. The Taiwan Resolution passed both houses of Congress on January 29. The resolution pledged the United States to the defense of Taiwan, authorizing the president to employ US forces to defend Taiwan and the Pescadores against armed attack, including such other territories as appropriate to defend them.

On March 10, 1955, US secretary of state John Foster Dulles at a National Security Council meeting stated that the American people had to be prepared for possible nuclear strikes against China. Five days later, Dulles publicly stated that the US was seriously considering using atomic weapons in the Kinmen-Matsu area. And the following day president Eisenhower publicly stated that "A-bombs can be used ... as you would use a bullet".

These public statements sparked an international uproar, as NATO foreign ministers expressed opposition to nuclear attacks on China. Nonetheless, on March 25, 1955, US chief of naval operations Admiral Robert Carney stated that Eisenhower was planning "to destroy Red China's military potential", predicting war by mid-April. On April 23, China stated at the Afro-Asian Conference that it was ready to negotiate on Taiwan, and on May 1, shelling of Kinmen-Matsu ceased, ending the crisis. On August 1, China released the 11 captured US airmen previously sentenced to jail terms.

During this first Taiwan Strait crisis of 1954-55 the USSR, the other nuclear superpower, had been quite ambiguous in its support for China's campaign to liberate Taiwan, whereas the US had indicated that it was willing to use tactical nuclear weapons in defense of the island. During the crisis, it became evident that the Soviet nuclear umbrella was reserved exclusively for the defense of Soviet national interests. The PRC called off its military operations against Kinmen to avoid a US nuclear attack. The crisis solidified Chinese resolve to develop its own nuclear weapons.

An article carried by Huanqiu Shibao (Global Times) on October 15, 2004, recapped a detailed history of Taiwan's nuclear-weapons programs since 1950, when the US and Taiwan had planned a nuclear attack on Xiamen. In the 1970s the US pressured Taiwan to end a nuclear-weapons program started by Chiang Kai-shek in the late 1960s under the auspices of the Chung Shan Institute of Science and Technology. The US again pressured Taiwan to end a nuclear-weapons program "secretly" restarted by Chiang Ching-kuo in the 1980s after a nuclear scientist, Chang Hsien-i, a US spy, defected to the United States with information on the project. Huanqiu Shibao claimed that even during the Lee Teng-hui administration, the words and actions of officials suggested that his administration had resumed the nuclear-weapons program. The Huanqiu Shibao article concluded that although the current Taiwanese president, Chen Shui-bian, has publicly committed to a "nuclear-free home" and never developing nuclear weapons, Taiwan media suspect Chen is playing word games and may want to develop nuclear weapons to prevent unification with the mainland.

In 1969, Taiwan purchased from Canada a 40-megawatt research reactor and the Institute for Nuclear Energy Research (INER) began work on a fuel-reprocessing facility with equipment purchased from France, Germany and the US under NSG exceptionalism. With 100 tons of uranium quietly purchased from South Africa, INER by 1973 had a full Plutonium Fuel Chemistry Laboratory functioning. In 1974, the US Central Intelligence Agency (CIA) concluded that "Taipei conducts its small nuclear program with a weapon option clearly in mind, and it will be in a position to fabricate a device after five years". Then-president Chiang Ching-kuo responded cryptically to news reports of missing weapon-grade plutonium: "We have the ability and the facilities to man

http://www.sinodaily.com/reports/a060721191014.h886ei0u.html
China warns US not to sell fighter jets to Taiwan


by Staff Writers
Beijing (AFP) Jul 22, 2006
Beijing has warned Washington not to proceed with a reported deal to sell fighter jets to Taiwan, indicating it would impact on regional security and harm Sino-US relations, state media said on Friday.
"The Chinese side has taken note of the report and lodged serious representations to the United States," China's foreign ministry spokesman Liu Jianchao was quoted as saying by the official Xinhua news agency.

The China Times reported on Monday that a Taiwanese delegation had proposed the procurement of 66 advanced fighter planes during an annual military meeting with Washington early this month.

If the report is confirmed, it would be the biggest arms deal Washington has offered Taiwan since 2001 when US President George W. Bush agreed to provide the island with eight diesel-powered submarines, 12 P-3C submarine-hunting aircraft and an improved version of Patriot missiles, the paper said.

Taiwan's defense ministry has declined comment on the report.

The new fleet of F-16C/D fighters aim to reinforce the air force's combat capability before it can acquire so-called "third generation" fighters from the United States, the paper said.

The United States in 1992 agreed to sell Taiwan 150 less sophisticated F-16A/Bs, but refused to provide F-16C/Ds which have a longer range and powerful ground attack capability.

In addition to 146 F-16A/B fighters, the air force has 128 locally produced Indigenous Defense Fighters and 56 French-made Mirage 2000-5s, along with 60 or so aging F-5 Tigers.

Taiwanese President Chen Shui-bian has pledged gradually to increase military spending to around three percent of gross domestic product, up from 2.5 percent currently.

China has repeatedly threatened to invade Taiwan should it move towards formal independence, prompting the island to seek more advanced weaponry.

China announced in March its military budget for this year would rise 14.7 percent to 35 billion dollars, the latest in a series of double-digit annual increases dating back to the early 1990s.

A Pentagon report last year estimated that China's defense spending was two to three times the publicly announced figure and that the cross-strait military balance was tipping in Beijing's favor.

Bush met briefly in Washington on Thursday with China's top military officer and highlighted Sino-US cooperation on issues like North Korea and military matters, the White House said.

General Guo Boxiong was visiting the United States as part of a US-Chinese effort to expand cooperation between their militaries.

Related Links

Typhoon Kaemi reaches SE China BBC News
Typhoon Kaemi has reached China's south-eastern coast, bringing with it heavy rain and high winds.It made landfall at Jinjiang in Fujian province, and is set to cross a region still recovering from the effects of an earlier storm. More than 600 people died when tropical storm Bilis hit on 14 July, causing massive flooding and forcing three million people from their homes. The Chinese authorities have evacuated people ahead of the new typhoon. More than 430,000 people have been moved from their homes in Fujian, while another 80,000 have been evacuated in Zhejiang province. Around 44,000 fishing boats were ordered to seek shelter and 3,000 police were on hand to assist with rescue operations, Xinhua news agency reported. The typhoon is expected to move further inland overnight, an official from the province's Flood Control and Drought Relief Headquarters told the Associated Press news agency.

Taiwan
The typhoon passed across the Philippines on Monday, before reaching Taiwan, where it caused landslides and disruption.Schools were closed in several cities and domestic flights were cancelled, but no major damage was reported. Chinese officials fear the typhoon could bring further destruction to southern areas still recovering from landslides and flooding caused by Bilis. Homes were destroyed and land flooded in six provinces. The government of Hunan province, where the storm caused hundreds of deaths, has accused local officials of deliberately playing down the death toll, after investigations showed far more people had died than previously reported.

Southern China hit by new typhoon BBC News
Typhoon Prapiroon has hit southern China, bringing with it heavy winds and rain that have forced the evacuation of tens of thousands of people. The storm hit the coast of Guangdong province at 1920 local time (1120 GMT), Chinese media said. Severe flooding and landslides are expected as Typhoon Prapiroon, which has already killed six people in the Philippines, passes over. The region has been hard hit by typhoons this season. More than 600 people died when Typhoon Bilis hit six southern provinces last month. Prapiroon - meaning "God of Rain" in Thai - made landfall near Yangjiang city in Guangdong province, China Central Television said. The storm is expected to pound the region overnight as it moves north-west towards Guangxi and Guizhou provinces.

Stranded passengers
Provincial authorities have warned of widespread flooding, high waves, landslides and possible house collapses as up to 7.2in (18cm) of rain could fall in coming days. Some 65,000 people have been evacuated from parts of Guangdong as well as Hainan island province, directly to the south, and Guanxi. More than 53,000 fishing vessels have been recalled to harbour, and ferry and railway links between Hainan and the mainland suspended. Typhoon Prapiroon earlier skirted Hong Kong and Macau, hitting the islands with strong winds and heavy rains. More than 3,000 airline passengers were stranded in Hong Kong as hundreds of flights were cancelled or delayed. Empty cargo containers toppled over at a Hong Kong shipping terminal, reportedly injuring one person. A Chinese official said on Wednesday that Prapiroon was "as strong, if not stronger" than Typhoon Bilis, Xinhua news agency reported. Guangdong's neighbouring province, Hunan, was worst hit by Typhoon Bilis, with hundreds killed in flash floods and landslides. Typhoon Bilis was followed by Typhoon Kaemi, which caused further destruction in the area.

Dozens die in South China storm BBC News
The death toll from Tropical Storm Prapiroon in southern China has risen to at least 48, with 15 people still missing, state media report. The storm made landfall on Thursday in Guangdong and has also affected the provinces of Hunan, Guangxi and Hainan. It has forced the evacuation of some 530,000 people and caused an estimated 2.4bn yuan ($300m) worth of damage. Prapiroon was downgraded from a typhoon on Friday but continues to pound the region with winds and rain. It has caused transport chaos in recent days, with thousands of passengers stranded at Hong Kong airport. More than six million people were affected by the typhoon, officials said.

Rescue
The latest fatalities include six migrant farm workers whose shelter was swept away by a flash flood in the city of Laibin in Guangxi province, Xinhua news agency said. Earlier, Xinhua reported that one person was killed in a landslide in the same province, where hundreds of houses and hundreds of acres of farmland have been destroyed. Three people died in a landslide in Guangdong, while two more deaths were caused by lightning. Three more were killed when walls or billboards fell down, Xinhua said. A 25-year-old policeman trying to rescue survivors was killed by a mudslide in Sihui city, Guangdong, the Guangzhou Daily newspaper reported. State television showed pictures of police and soldiers carrying children through chest-deep, fast flowing water. At Hong Kong airport, the cancellation of more than 800 flights on Thursday left thousands of passengers stranded. More flights were delayed on Friday, as were flights from Nanning in Guangxi.

Typhoon Bilis
Ferries between Hainan island, south of Guangdong, and the mainland were suspended before the typhoon arrived, while rail services were also disrupted. More than 53,000 fishing vessels were recalled to harbour, but 68 people had to be rescued from a barge off the Guangdong coast, Xinhua said. Eleven million mobile phone text messages were sent warning the public ahead of the typhoon's arrival, Guangdong's provincial government said on its website. Prapiroon, which means "God of Rain" in Thai, also killed six people in the Philippines. Southern China has been hit hard by typhoons this season. More than 600 people died when Typhoon Bilis struck six southern provinces last month. Hunan was worst affected, with hundreds killed in flash floods and landslides. Bilis was followed by Typhoon Kaemi, which caused further destruction in the area.

China typhoon's death toll rises BBC News
China's most powerful storm in 50 years, Typhoon Saomai, has left at least 104 people dead, officials say. The typhoon, which has now been downgraded to a tropical storm, was continuing to batter coastal regions with heavy rain and winds. More than a million people were evacuated from their homes to temporary shelters before its arrival. Official media said that more than 50,000 houses had been destroyed in the storm.

Collapsed house
The typhoon claimed its largest number of casualties in Wenzhou, in Zhejiang province, where it made landfall early on Thursday evening. In the nearby town of Jinxiang, the bodies of 41 villagers, including eight children, were found in the ruins of a collapsed house. They had been sheltering in the concrete structure because they thought it would withstand the storm better than their own houses, state news agency Xinhua said. "The wind was so strong that whole windows were slammed into rooms," an official in Jinxiang told Reuters news agency. "Lots of people were hurt here but my family are all okay," said Wu Yelian, a local resident. "I haven't seen a typhoon this strong in years." On a local highway, trees had been blown over and debris from buildings was strewn around.

Heavy rain
Neighbouring Fujian province was also hard-hit, with at least 17 people killed and 138 missing, according to Xinhua. Fifty thousand houses had been destroyed across the two provinces and 3.5 million people were affected, the agency said. Power had been cut in parts of the region, where more than 30cm of rain fell within a twelve hour period in some areas. Soldiers and officials were being sent to the region to help emergency rescue efforts. Saomai has now been downgraded to a tropical storm as it moves inland, but the authorities warn that there is still the risk of landslides and flooding. It was moving towards Anhui and Jiangxi provinces, but continuing to lose force, Xinhua said. Saomai, which is the Vietnamese for morning star, is the eighth powerful storm to hit China this year. Just last week, Typhoon Prapiroon killed about 80 people. Tropical Storm Bilis killed more than 600 in July. Typhoons and tropical storms are common in the region between July and October, but this year they have been unusually frequent.

Chinese typhoon toll passes 250 BBC News
Typhoon Saomai, the most powerful storm to hit China in 50 years, killed at least 255 people as it tore through the country's south-east, state media said.Another 160 people are still missing in the three provinces of Fujian, Zhejiang and Jiangxi, Xinhua news agency said. In Fujian's Fuding city 138 people were killed, mostly fishermen who stayed on their boats during last week's storm. Saomai, which brought high winds and torrential rain, was the eighth typhoon to hit China this season. Many of the Fuding deaths occurred in Shacheng town, after some fishermen chose to remain on their boats during the storm, Xinhua news agency reported. "The wind was so strong that it overturned many ships and a large number of people were killed or went missing," Xinhua said.By Sunday, 97 bodies had been found in the town, the agency said. A Shacheng resident told the AFP news agency that people were renting boats to search for their relatives. "They sail up to each body and turn it around in the water and see if they recognize the face," she said.

Collapsed
Shacheng borders Zhejiang's Cangnan county, where Typhoon Saomai made landfall on Thursday evening. Forty-three people died there, including 41 who were killed when concrete structures they were sheltering in collapsed. One man said he had lost eight members of his family.After some houses collapsed, we called the police and they told us to go to a newer concrete building," said the man, who gave only his surname, Yang. "When that building fell in, whole families died," he told Reuters news agency. The storm caused damage of at least $1.4bn (£760m), according to officials and destroyed more than 50,000 houses. Some 20,000 soldiers and paramilitary police have been mobilised to help with the clear up. Saomai, which is the Vietnamese for morning star, is the eighth powerful storm to hit China this year. Typhoon Prapiroon killed about 80 people. Tropical Storm Bilis killed more than 600 in July. Typhoons and tropical storms are common in the region between July and October, but this year they have been unusually frequent.

Taiwan set for renewed protests BBC News
Demonstrators are again gathering in Taiwan's capital as part of a protest calling for President Chen Shui-bian to resign over corruption allegations.Overnight about 3,000 people braved the cold and rain to continue an effort which saw at least 90,000 protesters taking to the city streets on Saturday. It is expected that tens of thousands will be out again on Sunday, in their trademark red outfits signifying anger. Mr Chen's popularity has plummeted amid scandals involving relatives and aides. In one case, his son-in-law is facing charges - which he denies - of insider trading on the stock market.

Refusing to quit
Organisers say more that 200,000 people joined Saturday's rally outside the presidential offices in Taipei - but police put the number at 90,000. Protest leader Shih Ming-teh, a former Chen ally, hailed it as an historic moment and vowed that there would be no let up in the pressure on the president: "What the country really needs is a leader who can do something good for the people rather than one who hides in the presidential office despite so many corruption cases," Mr Shih said. "The people of Taiwan have the power to ask Chen to step down. We will not stop this protest until he does," he added. Mr Chen was elected as Taiwan's first non-Kuomintang president in 2000 and was re-elected in the disputed election of 2004. Mr Chen, whose term of office is due to run until 2008, is refusing to resign, saying that the rallies are simply part of opposition attempts to bring him down. Last month he survived an unprecedented parliamentary attempt by the opposition Kuomintang to oust him. The crisis began in May, when Mr Chen's son-in-law, Chao Chien-min, was detained on suspicion of insider trading. Mr Chen's wife was also accused of questionable dealings. The president has apologised for the actions of his son-in-law.

Beijing's Influence Grows In Middle East Forbes
Until the 1990s, there was little active Chinese involvement with Middle Eastern affairs. However, its position of neutrality has not always been to Beijing's advantage. China now wants to engage more with the region, because:

• it wants greater regional influence at a time when U.S. prestige in the Middle East has declined; and
• it needs an increasing, stable supply of oil.

China is a secular, modernizing state with more in common with secular Middle Eastern states such as Syria than an Islamic republic such as Iran. However, it has cordial, if somewhat ambivalent, relations with most Middle Eastern states. Beijing is successfully seeking greater influence in the region. Last month, in an energetic bout of diplomacy, special envoy Sun Bigan stood out as one of the few diplomats to visit Israel, Syria, Lebanon, Egypt and Saudi Arabia. The welcome he received contrasted with the temporary refusal of Lebanese Prime Minister Fouad Siniora to meet U.S. Secretary of State Condoleezza Rice. Sun became China's special envoy to the Middle East in March. Since then, he has raised the profile of the position. China has calculated that it can exploit a rise in anti-U.S. sentiment in the region to its advantage. The ability of Beijing's representative to receive a respectful hearing in Israel, Syria, Iraq and Iran places China in a powerful diplomatic position. Sun is one of China's most distinguished diplomats and a specialist on the Arab world. Although China opposed the invasion of Iraq in 2003, Sun has articulated the positions maintained by Beijing since then:

• that Iraq must be allowed to reconstruct without the fear of terrorism; and
• that a negotiated solution to the Israeli-Palestinian problem is necessary for wider peace in the region.

China suffered an important casualty in the death of Lt. Col. Du Zhaoyu, one of four U.N. observers killed in an Israeli air strike on southern Lebanon on July 25. Although the Foreign Ministry communicated its serious concern and strong displeasure, it did not attempt to stir up international or domestic outrage over the death, nor did it demand that Israel unilaterally cease fire. It appears that China does not think that the death of one peacekeeper is worth the price of losing influence with Israel. Beijing was uncritically pro-Palestinian in the 1970s, but has steadily upgraded its ties with Israel in the 1980s. Israel remains an important supplier of military technological expertise to China and shows no hostility toward it. Indeed, Israel has expressed approval of Chinese efforts to play a role in the Middle East peace process. For now, China has succeeded in a very difficult balancing act--remaining on good terms with all the key states in the region. Its rhetoric on the region is bland and inoffensive. However, ultimately it will have to take up positions to have influence, which cannot please everyone. Oil will be the policy driver for the near future. While China values the transfer of Israeli technology and enjoys its status as an honest broker in the Middle East, China's immediate energy demands are crucial, and this priority will prevail if a choice has to be made. However, China's overwhelming interest is in retaining stability in the region. In the medium term, Beijing will have to make decisions about flashpoints over Iran's nuclear policy, the Israel-Palestinian conflict, U.N. forces in Lebanon and the status of Iraq. The appointment of a high-profile and well-received figure like Sun was a necessary step for more active diplomacy. China wishes to reduce U.S. dominance in the Middle East, but it does not wish to do so through confrontation. Therefore, the growth of Chinese influence in the region is not as great a threat to the West as it might first appear. Indeed, stability is its priority, so that oil keeps flowing, and this will trump any desire for conflict with the U.S. To read an extended version of this article, log on to Oxford Analytica's Web site.
Oxford Analytica is an independent strategic-consulting firm drawing on a network of more than 1,000 scholar experts at Oxford and other leading universities and research institutions around the world. For more information, please visit www.oxan.com. To find out how to subscribe to the firm's Daily Brief Service, click here.

Helping China's companies master global M&A McKinsey Quarterly
As they go global, their hardest challenge is to integrate the management of their domestic and foreign businesses.
While multinational corporations continue to expand in China, Chinese companies are going overseas: they are making acquisitions and forming alliances to win access to raw materials, technology, and consumer brands, as well as new markets that could help them realize their growth aspirations. So far, the quest to acquire foreign mining, oil, and gas assets has dominated the buying spree. Chinese companies have picked up a wide range of assets, though often at sizable premiums, and run them successfully, particularly in emerging markets. But Western markets have been harder to crack. Some Chinese bids to take over raw-material assets and consumer goods companies have failed, partly because of opposition from Western stakeholders. By contrast, China Mobile Communication's last-minute exit, after months of negotiations, from a deal to purchase Millicom International Cellular highlights the difficulties Western companies face in making deals with their Chinese counterparts. In some of the deals that have gone through, Chinese acquirers are clearly struggling—though it is still early—to turn around the sometimes loss-making assets or second-tier brands they have bought. The Chinese home electronics company TCL, for instance, attributed its net loss of 320 million renminbi ($40 million) in 2005 to acquisitions in France during the previous year, when it bought most of Thomson's TV unit and Alcatel's mobile-phone unit. Although some skeptics question whether Chinese businesses can succeed in their forays into Western markets, they do have some advantages—including cheap finance from Chinese state-owned banks—in competing with Western bidders. They also often have a good position to cut costs at acquired companies if they can shift the manufacturing to mainland China. Against these pluses are a number of sobering challenges. Turning around troubled assets is tough even for experienced acquirers with first-class M&A skills and deep local knowledge; Chinese companies lack both. With little international experience to guide them, they must not only select the right partners or acquisition targets but also manage often skeptical regulators, unions, and other stakeholders before, during, and after a deal. They also have to globalize their branding, supply chain, and go-to-market skills and get to grips with unfamiliar environments where business issues and solutions often differ from those prevalent in China. When we talk with seasoned Chinese business leaders, they mention all these challenges. But the question at the top of their minds is often how to integrate the management of an acquired company to bridge the geographical and cultural gaps between it and the Chinese corporate center. Mastering integration is a prerequisite for success because much of the value in many acquisitions comes from combining China's advantageous cost position with the brand, technology, and other assets of a Western business. The doubts of some market watchers are understandable. We, however, believe that Chinese companies can bridge the gap between East and West. Those capable of accelerating the process will dramatically increase their chances of long-term success in global markets.

Going global—a strategic imperative
The computer maker Lenovo's $1.35 billion acquisition of IBM's personal-computer unit, in May 2005, made Lenovo the world's third-biggest maker of PCs. This move has caught the greatest degree of attention in what is still a relatively small tide of outbound Chinese direct investment (exhibit). But the official data—$5.5 billion in 2004 and an estimated $7 billion in 2005—do not include investments (such as the IBM acquisition) made by Chinese subsidiaries listed in Hong Kong or overseas exchanges. We estimate that actual outbound foreign direct investment is two to three times higher than the official figures. China is therefore a material, if not yet massive, new force in the global market for business assets. Without doubt, the 66 percent compound annual growth rate (CAGR) of official outbound Chinese foreign direct investment during the past five years underlines the determination of Chinese companies to succeed. Their progress has been followed with keen interest by foreign executives and investors. In the 2005 annual member survey of the American Chamber of Commerce in China, two-thirds of the respondents reported that Chinese companies would be "somewhat of a competitive threat" or "a serious competitive threat" to their businesses globally in five years. Yet global investors see opportunities too: they are increasingly prone to take advantage of these trends by investing either in Chinese companies that are making acquisitions in foreign markets or in the potential acquisition targets of those Chinese companies (see sidebar, "Opportunities for global investors"). Many factors drive the overseas expansion of Chinese enterprises. China's government has loosened foreign-currency controls, streamlined the approval process for overseas investments, and encouraged banks to provide capital. Private equity firms, mainly from the West, are offering access to additional capital and proposing investment opportunities to Chinese business leaders. Acquisition targets are increasingly available, particularly among the developed world's many midsize (and often low-performing) manufacturing companies that lack the scale and skills to develop operations in China themselves and thus struggle to compete against its products. Strategic considerations are the most important ones, however. Chinese business leaders increasingly believe that international expansion is an essential stepping-stone for growth. Asked about their motives, they most frequently cite the need to acquire raw materials, technology and engineering skills, access to new customers, and brands.

Securing raw materials
Large state-controlled enterprises that extract basic materials or fuels believe strongly that they must acquire foreign assets to sustain the country's phenomenal economic growth. China has, for instance, more than doubled its consumption of steel in five years and is quickly building domestic production capacity to satisfy its future needs. Because the country lacks quality iron ore at home, it has to be imported. Mining, minerals, and oil and gas have historically accounted for one-third to one-half of China's overall outbound investment. One of the biggest deals was the China National Petroleum Corporation's (CNPC) $4.18 billion acquisition of Petro Kazakhstan (PK), in Kazakhstan (in 2005). This trend will very likely continue to be a major force in raising Chinese foreign direct investment. Since China became a net importer of oil and gas, in 1993, CNPC's subsidiary PetroChina has built up a portfolio that now comprises some 50 projects in 20 countries, including Canada, Indonesia, Kazakhstan, and Venezuela. In this industry, a long-established model of joint ventures with foreign national energy companies has helped PetroChina to overcome its early lack of international management experience.

Acquiring technology and engineering skills
Another strategic rationale for expanding overseas is the need to acquire intellectual property and sophisticated manufacturing expertise. China's enterprises acutely recognize the technology gap they must close to compete head-to-head with the multinationals. In the automotive sector, technology and skills have been brought into the country by several Chinese manufacturers, among them Nanjing Automotive, with the 2005 acquisition of MG Rover, and Shanghai Automotive Industry (SAIC), which in 2004 spent €400 million to acquire a 49 percent stake in the passenger car business of the South Korean company SsangYong Motor. In China's high-tech sector, at least part of the rationale behind TCL's acquisition of Thomson's TV unit and Alcatel's handset business was the need to accelerate its own development of flat-screen TV technology and to gain mobile-phone patents.

Obtaining access to new customers
Perhaps the most challenging strategic aim, and one particularly common in China's consumer electronics and high-tech sectors, is reaching new customers abroad to bolster growth through international expansion. Local winners in China often achieve shares of 30 to 40 percent in their core product markets but find it hard to progress further. In some cases, annual growth rates have dropped from more than 20 percent to 10 or 15 percent. Many Chinese enterprises that attempted to diversify into new product categories at home have achieved only moderate success—or outright failure. Some of these companies couldn't differentiate their offerings; others misjudged how far their brands would stretch. Chinese business leaders also understand all too well the increased effectiveness of their multinational rivals in the intensely competitive Chinese market. In the past, Chinese companies often fended off foreign competition because their products were better adapted to local needs and they had superior distribution and service delivery models, as well as privileged relationships with the government and local suppliers. This state of affairs is changing in many industries. Multinationals are adapting themselves to local conditions and rapidly expanding their businesses in China, challenging indigenous companies at home.

Acquiring brands
Chinese businesses that want to sell in the international market recognize the challenge they face in building competitive brands. Chinese heritage brands are largely regarded as providers of basic value or as unknown names on a box. To capture the price points that Chinese companies believe to be merited by the quality of their products, many of them look to buy existing brand names. One example was TCL and its acquisition of Thomson.

The integration challenge
Chinese business leaders who have taken on the challenge of cross-border M&A now realize that managing the people in acquired businesses effectively can have a significant influence on the eventual fate of global expansion strategies. They talk of three stages that have successively transformed their assumptions about running a global company. Euphoria about getting the deal done characterizes the first stage. The members of the new global team get to know each other; everybody is friendly and anxious to avoid stepping on cultural land mines. The Chinese leadership, fortified by success in the intensely competitive home market, assumes it will prevail in Western markets too. Growing discomfort marks the second stage. Unfamiliarity with Western markets inclines the Chinese leaders to let their Western colleagues keep running the overseas operations. But results usually don't improve as fast as predicted, and communication can be frustrating. There is an increasing sense that control has been lost because the international business is culturally and geographically outside the frame of reference that the Chinese leaders built in the local one. Often, the true extent of what must be done to turn around the acquired business becomes visible only during this stage. In the third stage, many Chinese companies realize that strong and detailed direction from the corporate center is necessary. The leadership starts replacing managers more often and launching systematic improvement programs to reap the benefits of expansion. In some cases, companies take even more drastic action, such as inviting in private equity or other new investors with access to global talent, resources, and capabilities. The details vary from one company to another—particularly the length of each stage, which can run from a few months to several years. But there does appear to be a broad consensus about the importance and difficulty of developing a high-performing international management system. Strong, integrated management is critical because combining a Chinese cost structure with Western assets and intangibles often requires a substantial change in a company's business model and go-to-market approach. D'Long's acquisition of Murray Lawnmower, for example, foundered partly on the difficulty Murray's new management had in sustaining relationships with major US retailers. Other problems included the company's failure to grasp the challenge of extending its supply chain across the Pacific and to forecast US market demand well enough to avoid a large buildup of inventory. Manufacturing in China may be inexpensive, but Chinese companies must understand and manage their full system costs. Many things make it hard to build an effective management system that can implement the strategy behind an international acquisition. One is the fact that acquired managers can be too stuck in their old ways to catalyze the needed business transformation, while the new Chinese managers often lack the necessary international experience. What's more, barriers of geography and culture (especially management styles and language problems) can stand in the way of smooth coordination and optimal cooperation between a headquarters in China and an acquired company elsewhere.

Managing management
In our experience, three steps are essential for ensuring that Chinese companies succeed at M&A. They all force the acquirer to prepare for the task long before the deal is done and to move quickly and decisively thereafter to take advantage of the brief window of time when employees of acquired companies expect change. Lenovo started planning systematically to integrate IBM's PC business almost a year before completing the deal. But some other Chinese businesses have made acquisitions without preparing any solid plans for "the day after."

Bring in new blood
People working in the acquired company usually have little idea what to expect from its new Chinese owners. Keeping the entire acquired management team in place sends a strong signal that the order of the day is business as usual and that major changes should not be expected—often a fatal message for a business that needs a turnaround. Intra-European acquirers address this problem by putting one of their own top executives at the helm of the acquired business. Chinese companies, however, often find that their senior managers don't know how to run a US or European organization. They also face severe difficulties in forming strong relations with the employees and other stakeholders of the acquired company. The answer, in many cases, is to bring in experienced local managers, and sometimes even a new chief executive, from outside the acquisition. This new leader should be an experienced and successful executive, respected in the local business community, who has a record of forging strong ties with employees, suppliers, and customers.

Bond the existing and acquired businesses
Bridging the gap between a Chinese company and an overseas business it acquires is crucial, but it doesn't happen naturally—ties must be encouraged. The process tends to be less challenging if the acquired company already has a significant part of its business system in China, since its management will then be more familiar with Chinese companies and perhaps even its new owner. The Chinese acquirer of one company appointed a local senior manager with Chinese experience as its president, and he played the bridging role effectively in forming a management team. The centralized decision-making style of many Chinese companies can be a major obstacle to strong and well-informed coordination. It works well at home, where business systems are relatively straightforward. But as Chinese companies send executives into global markets, decisions made at the center may be tardy and less well informed. Executives in the field believe that they must check with their bosses at home for final decisions—only to find that their bosses lack knowledge, context, and skills. Chinese styles of decision making can't be adapted to a global business overnight. However, one effective approach is to dispatch "connectors": experienced Chinese managers, with good language skills, who join overseas operations to help them communicate with headquarters. The best connectors command respect in the Chinese organization and have the clout to make things happen in China; they might, for instance, forcefully promote the idea of using Chinese facilities to manufacture a new product for overseas markets. Connectors must have an important and visible management role in the acquired organization to make the career move attractive and to ensure that they don't sit outside line operations, with no real power. Companies must also establish end-to-end responsibility. Sometimes, management tasks are fragmented: certain people at the Chinese headquarters are responsible for product development and others for manufacturing, say, while the overseas operation runs product planning, marketing, and sales. In such cases, failure is preordained: even if everyone executed well, it would be a sheer coincidence if all the priorities were aligned across functional, geographic, and cultural boundaries. The answer is to make one manager, in China or abroad, directly accountable, with end-to-end responsibility for introducing new products and fulfilling orders.

Bridge the cultural divide
Differences in business culture and practices can complicate mergers even between US and European companies, which usually have relatively similar business environments and management traditions. Chinese acquirers often face a still greater challenge because the culture gap may be wider and more difficult to bridge given their language difficulties and limited international experience; Chinese managers, for instance, may have a penchant for calling all-weekend meetings late Friday night or may expect their subordinates to attend Sunday evening dinner meetings. Some Chinese companies, realizing that seemingly trivial cultural complications can throw a wrench in the works of overseas expansion, have begun teaching managers to adapt their style to the local business culture, much as multinationals do in China. A more serious problem is the fact that although Chinese organizations often have power structures that are well understood internally, those structures bear only a limited resemblance to the organizational chart. Western management teams, by contrast, tend to be paralyzed if the chart and the reality of power don't match. A European subsidiary faced a challenge when its Chinese owners kept the local general manager in his formal role but informally bestowed all his decision-making power on one of his direct reports. The Chinese viewed this arrangement as absolutely normal and didn't understand why it confused the Europeans, who, for their part, could navigate neither the Chinese nor the European power structure. Many people left the subsidiary. While cultural gaps in management style and practice might never be fully overcome, they must be actively managed to blend (and make the most of) the skills on both sides. The more explicitly these differences are acknowledged and the more actively they are addressed in day-to-day operations, the less likely it is that they will seriously impede the building of trust and collaboration. One interesting way (now being tested by some companies) of promoting integration is to pair Chinese managers with local ones in, for example, sales and marketing roles immediately after an acquisition is completed. This approach can promote both connectivity and joint accountability and greatly enhances the transfer of skills in both directions. Finally, the use of top-quality simultaneous translation services might seem a trivial matter, but it isn't. Today the executive assistants of Chinese business leaders often take on the role of translator in business meetings. This kind of sequential translation often makes participants feel disconnected from the discussion—a feeling that can prevent effective problem solving. At one company that introduced expert simultaneous translations (conveyed wirelessly into earphones) managers told us that this move's importance could hardly be overestimated. Especially during the early discussions of the joint senior-management team after an acquisition, getting small matters like this right can have a huge positive impact.

Chinese business leaders have taken their first steps on the long and arduous path to creating global businesses. They, like their Western and Japanese counterparts before them, must learn from their early mistakes and build the managerial and operational skills required for lasting success in international markets.

Opportunities for global investors
Investors such as mutual funds and private equity firms can take advantage of growing outbound Chinese investment in several ways. One option is to invest ahead of the trend in sectors such as aerospace, automotive, and pharmaceuticals, where Chinese companies have only just begun their international expansion. Investors could take stakes in Western businesses that Chinese companies are likely to buy at a premium or invest in legal, accounting, and other businesses whose services will probably be in demand to help Chinese enterprises make their international moves. A second opportunity would be to invest alongside leading Chinese companies in sectors that are just about to go global. This approach might be implemented through a joint venture to create the international arm of a Chinese business, with the foreign investor bringing global experience to help the Chinese partner's products succeed abroad. An alternative could be to bet on the parent company: the venture capital firm Warburg Pincus's investment in Harbin Pharmaceutical exemplifies the idea of making early bets on Chinese drug companies hoping to emulate the forays that their Indian counterparts are making in the global marketplace. Investing in the listed part of a mainland Chinese enterprise that has already made inroads into foreign markets is a third path—a bet on both successful international expansion and the company's continued domestic success. One example: the investments in Lenovo (which is listed in Hong Kong) made by Texas Pacific Group and General Atlantic, two of the leading private equity firms operating in China. These moves encouraged mutual funds to buy Lenovo stock too. A fourth way is to invest preemptively by seizing attractive turnaround opportunities before Chinese companies home in on them. Investors can target segments and companies likely to attract Chinese investments and then replicate what a Chinese enterprise would do: take advantage of the cost benefits of moving sourcing and manufacturing to China and combine them with the Westerners' international experience. One example is international private equity firm Crimson's investment in 2005 in Tyden Group, a US security equipment manufacturer. Crimson is now helping Tyden set up manufacturing of product identification and tracking equipment in China.
By Martin Hirt and Gordon Orr

Thousands rally for Taiwan leader BBC News
Tens of thousands of Taiwanese have taken to the streets of the capital, Taipei, in support of their embattled President, Chen Shui-bian.The protest was organised to counter a demonstration on Friday demanding Mr Chen's resignation. The president is under pressure to quit over a string of corruption scandals surrounding his family and aides. Organisers of Saturday's march said the opposition campaign was endangering Taiwan's democracy.

Emergency order
Many protestors waved green flags with the Chinese characters for "Taiwan", a symbol of support for independence, a cause linked to Mr Chen's Democratic Progressive Party (DPP). "If there is no concrete evidence, you can't make such claims against him," a protester who gave her name as Ms Tsang told the Associated Press new agency. "If we are pursuing democracy, everything has got to be clarified." Estimates of the number of people present varied widely with organisers claiming that 200,000 turned up but police putting the figure closer to 60,000. The rally was organised by the pro-government Taiwan Group, but reports say Mr Chen's DPP issued an emergency order to mobilise party members nationwide. The party organised buses to bring supporters to the capital. On Friday, a much larger march took place in the capital with organisers claiming as many as three quarters of a million took part. Police said the number of red-clad protestors was around 320,000.

Scandals
The president's popularity has plummeted amid scandals involving relatives and aides. His son-in-law is facing charges - which he denies - of insider trading on the stock market, while his wife has also been accused of accepting department store vouchers. Prosecutors have also questioned Mr Chen over allegations of misuse of public funds. His term of office is due to run until 2008 and, though he has apologised for the scandals, he is refusing to resign, saying that the rallies are simply part of opposition attempts to bring him down. In June Mr Chen survived an unprecedented parliamentary attempt by the opposition Kuomintang to remove him from office.

China ups Lebanon force to 1,000 BBC News
China will increase its peacekeeping presence in Lebanon to 1,000 troops, Premier Wen Jiabao has confirmed.The move would make China one of the largest contributors to a strengthened UN force designed to keep the peace. It would also signal that China, now the world's fourth largest economy, was starting to lift its diplomacy in areas it had previously not seen as vital. The UN wants to raise troop numbers in southern Lebanon to 15,000 as part of UN Security Council Resolution 1701. It follows August's UN-brokered truce which ended 34 days of fighting between Israel and the militant Hezbollah movement.More than 1,100 Lebanese - mostly civilians - were killed during the war. More than 150 Israelis - mainly soldiers - were also killed.

Leading role
Mr Wen made the announcement - which had been hinted at last week - following talks in Beijing with Italian Prime Minister Romano Prodi. "China is very concerned about the situation in Lebanon and hopes it can be fundamentally resolved," Mr Wen said. Mr Prodi said it showed China was taking on a greater diplomatic role."This shows that China is assuming more and more international responsibility," he said. In the past, China has been reluctant to play leading roles in UN peacekeeping missions. Until 1989, it shunned UN missions for interfering in other country's internal affairs. But as China's economy has grown more powerful, it has faced calls from the US and EU to play a greater role. It own foreign policy has shifted so that ensuring access to natural resources like oil is now a priority. Earlier this year - before the fighting between Israel an Hezbollah - China sent 180 peacekeepers to the Unifil force in Lebanon, its first peacekeeping contingent to the Middle East. Increasing the force to 1,000 troops would make it the largest Chinese contribution to a UN peacekeeping mission so far. A rotating force of about 2,000 Unifil peacekeepers have been stationed in southern Lebanon since 1978. Under Resolution 1701, the expanded force will support the Lebanese army taking over areas that have been controlled by Hezbollah since Israel ended its occupation of the south in 2000.

News Corp plans MySpace in China The Financial Times
Rupert Murdoch said on Tuesday that his wife, Wendy Deng, was working with senior News Corp executives to help bring the company’s popular MySpace social networking site to China. “We have to make MySpace a very Chinese site,” Mr Murdoch said at a media conference organised by Goldman Sachs. “I have sent my wife across there because she understands the language.” Mr Murdoch, chairman and chief executive of News Corp, bought MySpace last year as part of his strategy for the digital age. MySpace has become one of the most popular sites on the internet because of the ease with which people can communicate and share text, pictures and video. He said his wife, Ms Deng, who is not an officer of the company, was currently in China with senior News Corp executives trying to find a way for MySpace to enter the Chinese market without running up against political obstacles and the “heavy weather” that internet groups Google and Yahoo have encountered. Mr Murdoch said MySpace in China was likely to have local partners, who would own around 50 per cent. This would ensure the content was more suitable for a Chinese audience, and Mr Murdoch also said it would mean his local partners could deal with complaints. Mr Murdoch has been trying to expand his media group in the Chinese mainland, but admitted last year he was hitting a brick wall with the authorities over foreign media groups’ control. The Chinese authorities continue to restrict the free exchange of information and access to news, despite rapid liberalisation of the economy. There is widespread internet use, and the spread of broadband connections is increasingly rapidly. MySpace is adding around 1.5m new users globally every week and recently surpassed 100m registered users. It recently launched in the UK and is planning other European expansion. Mr Murdoch, who beat rival Viacom in buying the site last year, said one of the biggest challenges MySpace faced was technical, with the company having to cope with buying enough servers to keep up with its sharp increases in traffic.
By Aline van Duyn and Joshua Chaffin in New York

Top China leader fired for graft BBC News
The most senior Chinese Communist Party official in Shanghai has been sacked for corruption, state media reported.Party secretary Chen Liangyu was dismissed after a high-level probe into alleged misuse of the city's pension fund, Xinhua news agency said. He has also been suspended from the Politburo, the party's top leadership council, Xinhua added. Mr Chen is the most senior official to be sacked since President Hu Jintao became party secretary in 2002. The government investigation has centred on the alleged misuse of at least one third of the 10bn yuan ($1.2bn) pension fund to make illegal loans and investments in real estate and other infrastructure deals. Chen Liangyu, 60, is accused of seeking benefits for companies and relatives and protecting people around him "who had seriously violated discipline and law", Xinhua reported. His case has "created an odious political influence," the report added. Chen Liangyu has been temporarily replaced by Shanghai Mayor Han Zheng, Xinhua reports.

Power struggle
The allegations of misuse of pension funds came to light in July, and have already led to the removal and detention for questioning of several officials and prominent businessmen, including the city's social security and labour chief. Speculation over Chen Liangyu's political future has swirled since August, when his former secretary Qin Yu was removed from his post as a district governor for his alleged part in the scandal.The sacking of Chen Liangyu comes ahead of the key Communist Party Congress later this year when Hu Jintao will be hoping to consolidate his leadership. Until now, Shanghai - China's second city and financial centre - has been considered a stronghold for officials loyal to Mr Hu's predecessor, Jiang Zemin. Mr Chen was a protege of Jiang Zemin. There has been a continuing power struggle between Jiang Zemin and Hu Jintao, the BBC's Quentin Sommerville in Shanghai says. Mr Chen's dismissal is being widely interpreted as Hu Jintao strengthening his position both within the party and the country as a whole, our correspondent adds. The sacking of such senior Communist Party members are rare. The last member of the Politburo to be dismissed for corruption was former Beijing party secretary, Chen Xitong, in the mid 90s. He was sentenced to 16 years in prison, but released earlier this year because of health reasons.

China calls for calm over N Korea BBC News
China has appealed for calm following North Korea's announcement that it planned to test a nuclear bomb. "We hope that North Korea will exercise necessary calm and restraint," a Foreign Ministry spokesman said, urging other states not to escalate tensions. North Korea announced the test on state TV, saying it would boost security in the face of US hostility. The US said such an action would be "provocative", while Japan said it would be "unacceptable". The US has already indicated it would raise the issue with the UN Security Council, but Beijing says the issue should be handled by ongoing six-nation talks on North Korea's nuclear ambitions. These talks have been stalled for almost a year, with Pyongyang refusing to return to the table unless the US first lifts financial sanctions. Despite a flurry of diplomatic activity in recent months, after the North conducted internationally condemned ballistic missile tests, little progress has been made. China, the nearest the North has to an ally, has often advocated quiet diplomacy in efforts to get Pyongyang to abandon its nuclear programme. But other countries involved in the six-nation talks - notably the US and Japan - have frequently taken a more hardline stance.

International outcry
North Korea said that it would conduct the nuclear test to prove its claim that it is an atomic nuclear power. Pyongyang did not give a date for its planned nuclear test, but North Korean diplomat Pak Myong-guk told the BBC that the country had been forced to act because of Washington's stance. "These kinds of threats of nuclear war and sanctions and pressure by the United States compel us to conduct a nuclear test," he said. But there was little sympathy among the international community for Pyongyang's reasons. Japan's new Prime Minister Shinzo Abe told parliament on Wednesday that Tokyo "simply could not accept if North Korea were to conduct a nuclear test". "It would be a very provocative act by the North Koreans," added US Secretary of State Condoleezza Rice . South Korea warned that it might abandon its long policy of pursuing engagement with the North if the tests went ahead. Russia and various other European nations have also expressed concern, and a spokesman for UN Secretary General Kofi Annan said a test would only provoke universal condemnation and do nothing towards strengthening North Korea's security. The US ambassador to the UN, John Bolton, said he would be raising the nuclear issue with the Security Council and hoped for a strong response similar to the one following the missile tests earlier this year. "Given the very strong action by the council in July in condemning the North Korean ballistic missile tests, I think it's important that we're prepared to follow up here," he said. But China said it would be better to revive the six-nation talks, which stalled almost a year ago. "If the six-party talks cannot do anything about it, I don't think the Council is in a position to do it," China's envoy to the UN, Wang Guangya, told reporters.

Nuclear capabilities
North Korea is thought to have developed a handful of warheads but never before announced it would test one. US and South Korean reports suggest the North has at least one underground test site. The North appears increasingly angry at sanctions imposed by the US and other countries on North Korean businesses accused of arms sales and illegal activities. In 2002, it restarted its nuclear reactor at Yongbyon and forced two UN nuclear monitors to leave the country. It is unclear how far work has progressed at the plant since then.

China threatens shoe retaliation BBC News
China has threatened to retaliate after the European Union agreed to impose financial penalties on Chinese shoe exports to Europe. The EU is placing a tariff of 16.5% on leather shoes imported from China over the next two years. Under pressure from manufacturers, the EU has accused China of "dumping" shoes in Europe at less than market prices. Beijing said the tarrif, approved by one vote, was legally "defective" and not in accord with global trade rules.

'Flawed process'
China aruges that its trade practices are above board and that the EU's investigation into the issue - which saw provisional tariffs come into force in April - was flawed. Vietnamese shoe producers have also criticised the EU's move, arguing that up to 70,000 jobs in the sector could be affected. "The European anti-dumping measures on Chinese leather shoes lack any legal or factual basis and damage the Chinese companies' legitimate rights," Chong Quan, spokesman for China's Commerce Ministry, said. "China thinks that the EU's investigation and decision-making process in this case had many legal defects that do not accord with World Trade Organization (WTO) or EU law." Mr Chong said Beijing would review the situation but warned that it reserved the right to take "corresponding measures".

Close call
EU members voted by 13 to 12 to sanction tariffs on a permanent basis after a long-running and fractious debate over the issue. Italy led the calls for action, claiming that unreasonably cheap imports were hurting its own footwear industry and threatening jobs. Beijing has hinted in the past that it could ask the WTO to intervene in the dispute, one of several trade disagreements between China and the European Union in recent years. China exports more than one billion shoes to EU countries. Provisional tariffs of 19.4% on Chinese leather shoes agreed in April have already affected 145 million worth of goods. Ironically, the EU revealed recently that it may review the use of trade sanctions such as anti-dumping penalties and would announce a new strategy for trade co-operation with China next month.

Japan's new leader visits China BBC News
Japan's Prime Minister Shinzo Abe is in China for the first visit there by a Japanese leader in five years.As he left on the trip, which includes a visit to South Korea, Mr Abe said North Korea must not carry out its threat to test a nuclear weapon. Japan has warned that it will seek tough action from the United Nations if North Korea carries out a nuclear test. Both China and South Korea's leaders refused to meet Japan's last PM over his visits to a controversial shrine.

Isolation threat
"North Korea must not conduct nuclear tests," Mr Abe told reporters gathered at Tokyo's Haneda Airport as he departed on his first overseas trip since taking office in September. "I will discuss the situation with leaders of both countries to achieve that goal." "We need to transmit a message to North Korea that unless it revokes its test plans, it will face further isolation from international society and its situation will deteriorate." Mr Abe is to meet Chinese President Hu Jintao and other senior Chinese politicians in Beijing later on Sunday. He will then fly to Seoul on Monday for talks with South Korean President Roh Moo-hyun. Both China and South Korea's leaders refused to meet former Japanese Prime Minister Junichiro Koizumi over his decision to visit the Yasukuni shrine, which honours Japan's war dead, including 14 World War II war criminals. Both China and South Korea say the shrine glorifies Japan's past militarism, particularly during World War II. Mr Koizumi made six visits to the shrine while he was prime minister, despite protests from Japan's regional neighbours. The last bilateral summit between Japan and China took place in October 2001, when Mr Koizumi visited Beijing. The last meeting between the two countries' leaders came in April 2005, on the fringes of an Asia-African summit in Indonesia.

Regional rivals
Since his recent election victory Mr Abe has so far refused to comment on whether he plans to visit the shrine. But his election has brought the hope of a regional rapprochement. But the BBC's East Asia regional analyst Clare Harkey says that neither the appointment of Mr Abe nor the summit talks mean that the issues dividing China and Japan will simply disappear. At the heart of the disagreements between the two countries, our correspondent says, is a real struggle for regional dominance. Despite being each other's largest trading partners, they disagree and compete on a range of issues, including United Nations reform and access to resources like oil and gas. Japan is worried about China's military modernisation, China is concerned by Japan's increasingly close military links with the United States, our correspondent adds.

China's leaders hold policy meet BBC News
China's leaders have started one of the most important policy-setting meetings of the year.The Communist Party Central Committee is meeting behind closed doors for its main annual session. President Hu Jintao is expected to use the meeting to bolster his own position and endorse the need for more balanced and controlled economic growth. Several top officials in Shanghai linked to the former president have been sacked on corruption charges. Policy making is still a highly secretive process in China. Little will be known about the debates of the next few days until a final communiqué is issued. Even then, most of the real information will be between the lines.

'Powerful signal'
But this year, the weeks before the meeting were dominated by dramatic political events - the anti-corruption drive that led to the disgracing of high-profile leaders in Shanghai, including politburo member Chen Liang-yu. It is likely formal action against Chen will be decided by the committee in the coming days. But the move was a powerful signal too of the Beijing leadership's thinking. Many analysts saw the anti-corruption drive as part of a bigger political battle for control, an attempt by Beijing to re-impose its authority on the regions. Shanghai has been seen as challenging demands from Beijing to rein in growth and lending. Some in Shanghai even seemed to question whether policy can be applied universally across China when the provinces are so different economically. Factions and loyalties within the party may also have played a part. Some emphasise the fact that many of those denounced were close to former President Jiang Zemin. So the meeting's formal censure of the Shanghai leaders could be an opportunity for Mr Hu to re-assert his authority. He is likely too to stress more firmly than ever the need for "harmonious development" - including the need for the state to ease the hardships faced by the millions in China who feel marginalised and excluded. So although the debate itself will be secret, the main topics of conversation seem clear: a battle to re-assert central control and do more to address social discontent.
By Jill McGivering

"Why Not Let Them Hate Us as long as They Fear Us?" http://www.mepc.org/whats/whynot.asp

"From Mao to Now" http://www.sais-jhu.edu/pubaffairs/media_e...eman_101106.pdf

China in rural birth control bid BBC News
China is to bring in new financial incentives to encourage people in rural areas to have fewer children in another bid to control its rising population. From next year, parents in the countryside will get an annual payment when they reach the age of 60, provided they have only one child, or two girls. A lack of social security in rural areas has encouraged some families to break China's one-child policy. China's population is now 1.3bn, making it the most populous nation on earth.

Gender imbalance
From next year, parents aged over 60 who have only one child, or two girls, will receive 600 yuan ($76) - around a fifth of an average farmer's income - the China Daily reports. The aim is to ease the burden on single children looking after elderly parents, the newspaper added. It highlighted a survey in three rural provinces that found smaller families had reported financial problems. Since 1979, families in China have been allowed to have just one child, or two in the countryside if the first is a girl. Many people in the countryside traditionally only want a son, who they believe will carry on the family name and care for them in old age. Critics of the one-child policy say it has encouraged the abandonment and infanticide of baby girls, and has led to a gender imbalance in Chinese society. The number of men is thought to outnumber women in China by more than 60 million.

http://www.atimes.com/atimes/South_Asia/HJ18Df01.html
It's official: China is India's security threat
By Indrajit Basu

KOLKATA - The Indian government is drafting a new foreign direct investment (FDI) policy that will, for the first time, include China on a list of countries not limited to Pakistan and Bangladesh that are considered a sensitive for India's national security.

New Delhi has long been wary of allowing Chinese to invest in sensitive sectors, such as ports and telecommunications, but the new edict will extend security reviews to all sectors, including such innocuous sectors as household appliances. For the first time China will be officially labeled a "security risk".

Once the new FDI norms come into effect, it would mean an end to all automatic clearances for Chinese investments under India's supposedly liberalized FDI laws as each an every investment coming from China will have to undergo scrutiny by the Indian security agencies.

Until now, India was selective about imposing restrictions. For instance, only investments in sectors like ports, aviation and telecom and Internet services were selectively screened. But the new framework has reportedly increased the security filter to cover a cross-section of important sectors, such as drugs and pharmaceuticals, data processing, metallurgy, IT hardware, data processing, hydrocarbon exploration, pipelines and refineries and consumer goods.

The new framework may still be under formulation, but Chinese companies have already started facing serious discrimination in India compared with investors from other countries. Take the recent disqualification of two telecom companies, one Chinese and the other US-based, from the world's largest Global System for Mobile communication (GSM) network tender floated by India's largest government-controlled telecom company, Bharat Sanchar Nigam Ltd (BSNL).

Worth about $4 billion, this tender for about 60 million new GSM lines was tendered last week and was supposed to be open to all global telecom companies. But when announcing the opening of the tender, BSNL said that Chinese major ZTE and Motorola were disqualified since these two companies "failed to meet the stringent technical criteria stipulated by the tender".

BSNL did not specify what it meant by "stringent technical" norms, but it is easy to guess what these are. According to sources, both companies were eliminated on security grounds. ZTE is a Chinese company; Motorola declared in its tender offer earlier that it was sourcing a significant part of its equipment from Huawei, another Chinese vendor. According to India's intelligence agencies, like the Research and Analysis Wing (RAW) and the Intelligence Bureau, Huawei has been "responsible for sweeping operations in the country". Consequently, the final bids have now narrowed down to just three European vendors, Ericsson, Nokia and Siemens.

Indeed, the two countries have never been comfortable with each other, and that has been going on for decades. Ever since the eruption of border skirmishes between India and China in 1962 that gradually developed into an emotional posturing called "The Chinese Aggression", Indians and Chinese have viewed each other with mutual suspicion.

Although the two countries have settled many of their differences in the ensuing four decades, the paranoia about China as a security threat seems to be increasing daily in India. For instance, India now feels, said one recent report, that investments from not only China but those from Hong Kong and Macau should also be screened. Besides, investments from North Korea, Taiwan and Afghanistan, too, are being included in the sensitive list. The current FDI norms just categorize Bangladesh and Pakistan as "security risk" countries.

According to the National Security Council, foreign investments from these countries should not only be subjected to special security screening at the time of approval but also during the entire period of operation. The NSC also wants to be kept in the loop for all investment approvals. It has suggested that before each approval, India's businesses should seek its opinion, even if such investments involved an Indian partner.

Clearly, these moves, which a local newspaper editorial terms "anti-Chinese", have started bothering the Chinese authorities. In fact, at an India-centric event organized in Beijing last month by an influential Indian industry chamber, Wang Jinzhen, the secretary general of the China Council for Promotion of International Trade reportedly expressed his concern about India's attitude toward Chinese investments.

He said that several Chinese companies were eager to invest in India in a wide range of industries, but were getting stymied and discouraged by the "over-cautious attitude toward Chinese investment and a stream of anti-dumping cases filed in India against Chinese companies".

Criticism about the present government's security stance are emerging from within India as well. The business sector, eager for Chinese investment and technological cooperation, is worried about the rising anti-China tide. It took pressure from the country's largest business, Reliance Industries Inc, to get the government to loosen up on visas for Chinese technicians needed for its projects.
On the political left, the Communist Party of India-Marxist (CPI-M), that lends crucial support to the current Congress Party-led government, wants the government to explain why it considered Chinese investment in infrastructure projects posed a threat to India's security. In August, India refused approval of a port terminal contract to a consortium consisting of Chinese companies - Kaidi Electric Power Company and China Harbor Engineering Company. The CPI-M feels such refusals go against India's foreign policy of seeking closer ties with China.

Yet NSC sources say that India is just following the footsteps of other countries such as the US and Britain. For instance, in justifying the NSC's moves, India's security advisor M K Narayanan cited in a recent TV interview that even the US had security checks on foreign investments that authorized the president of the US to block or suspend mergers, acquisitions or takeovers by foreigners on grounds that they may threaten its national security.

The NSC also says that British norms mandate that all foreign telecom equipment should be certified by the government before its is mass produced and distributed in that country.

Meanwhile, the Indian government may look down on the Chinese with suspicion, but it seems that most Indians feel positively about their next-door neighbor. According to a recent public opinion survey on Americans and Asians by the Chicago Council on Global Affairs, about 56% of Indians and 46% Chinese felt they were partners rather than rivals, even as 66% of Americans saw the two Asian biggies as rivals. The survey added that 72% Indians viewed China's economic growth positively, and interestingly, both South Koreans and the Chinese viewed that India practiced fair trade.

Indrajit Basu is a Kolkata-based journalist.

(Copyright 2006 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing .)

http://www.atimes.com/atimes/China/HJ18Ad01.html
China pulls its punches on North Korea

BEIJING - China has begun inspecting cargo trucks traveling across its border with North Korea as part of moves to enforce United Nations sanctions on the North.

The news comes as South Korea announced on Tuesday that there were signs that North Korea was preparing for another nuclear explosion at the site of the first test last week. Following earlier doubts, the US on Monday confirmed that the detonation last week was in fact nuclear, and not dynamite or some other
material, as some had speculated.

China is taking action against North Korea following the
unanimous approval of UN Security Council Resolution 1718 at the weekend. In part, this bans North Korean trade in materials linked to its weapons of mass destruction program, ballistic missiles, high-end conventional weapons and luxury goods.

A sticking point was over the issue of inspections to control such trade. "Inspections yes, but inspections are different from interception and interdiction," Wang Guangya, the Chinese ambassador at the UN, told the media in an apparent reference to stopping ships at sea, which is one of the UN sanctions agreed on Saturday.

The news of Chinese inspections comes amid increasing questions over whether China would fully honor the UN resolution. Chinese customs officials were seen opening trucks bound for North Korea in the border city of Dandong on Monday and examining their cargo and passengers, local residents said. Some customs officials climbed into trucks, but it wasn't verified whether they opened each container.

The Oriental Morning Post, a Chinese newspaper, also said China had strengthened its inspection of cargo on ships bound for the North at its eastern border port city of Hunchun. The report said China had banned tourists from entering North Korea across bridges.

The wording in the resolution that authorizes inspections of cargo leaving and arriving in North Korea was watered down at the request of China. Instead of using the term "require", the resolution "requests" member states to comply.

Also on Monday, Chinese soldiers were seen continuing their work to build a barbed wire and concrete fence along parts of its border with North Korea. China has been constructing wire fences 2.5-4 meters tall amid speculation that China is taking measures to prepare for a possible influx of refugees should the North Korean regime collapse.

North Korea defiantly conducted its first-ever nuclear test on October 9, despite repeated international warnings. The UN Security Council approved sanctions six days later, but regional powers remained at odds over how to enforce the punitive actions.
South Korea said it would continue key reconciliation projects with the North, which critics say might have funneled much-needed funds to Pyongyang's nuclear programs. China is also opposed to excessively harsh measures, believing they might further destabilize the region.

But on Monday, Wu Bangguo, the second-highest-ranking official in the Chinese Communist Party, indicated that China was willing to impose sanctions on North Korea in line with other countries. "We need to make North Korea realize that it will pay a high price" for conducting a nuclear weapons test, Wu told Chikage Ogi, president of the Japanese diet's upper house, in a meeting in Beijing.

This is the first time that a high-ranking member of China's leadership has used such tough language as "high price" in describing its stance on the North. Wu is chairman of the standing committee of the National People's Congress.

His remark is believed to be intended to inform North Korea that China is deeply disturbed by the nuclear test, while showing the international community that Beijing is taking a firm stance, as its Foreign Affairs Ministry officials have repeatedly said.

But Wu also stressed the need for caution in imposing specific sanctions, saying, "We cannot force North Korea into a tight corner." It is this dilemma in Beijing that could place the United States and China, two veto-wielding permanent members of the UN Security Council, on course for a political showdown.

One of North Korea's longstanding political, economic and military allies in the region, China accounts for nearly 40% of all Pyongyang's imports and exports.

Ambassador Wang said that the proposed inspections - aimed primarily at preventing illicit trafficking in nuclear, biological and chemical weapons - could create "conflict that could have serious implications for the region".

He said that China did not approve of the practice of inspecting cargo to and from North Korea, and he had reservations about related provisions of the resolution.

But US Secretary of State Condoleezza Rice, who is due in the region this week, insisted that China had an obligation to implement the resolution which it had supported. She pointed out that China was part of "a Security Council resolution that demands very clear cooperation of member states to make certain that dangerous goods are not getting in and out of North Korea".

Phyllis Bennis, senior fellow at the Institute for Policy Studies and the author of several books on the United Nations, said the compromises in the resolution have already weakened implementation.

"The resolution calls on member states to prevent 'illicit trafficking in nuclear, chemical or biological weapons', but only mentions inspecting cargo, implying the forcible inspection of North Korean ships, as one example of what should be done," Bennis told Inter Press Service.

But there is nothing that specifically requires any country to participate in such actions - particularly because the resolution specifies that countries' actions should be consistent with international law and "in accordance with their national authorities and legislation".

So China was not obligated to take any specific action in that regard, said Bennis, author of Challenging Empire: How People, Governments and the UN Defy US Power.

Asked if this was the first time a permanent member had openly expressed reservations on a resolution it had supported, Bennis said: "It is certainly not the first time that a divided Security Council has passed a resolution under US or other pressure with some or even most council members having no intention of insuring implementation."

Still, Washington failed in its attempt to keep its options open to invoke Chapter VII of the UN charter to justify a possible future military attack on Pyongyang - as it did in Iraq more than three years ago. Chapter VII deals with "action with respect to threats to the peace, breaches of the peace, and acts of aggression". Under the resolution, the Security Council at the weekend specifically singled out article 41 in Chapter VII which says that "the Security Council may decide what measures not involving the use of armed force" should be employed to give effect to its decision.

The US was forced to compromise on Chapter VII because of strong opposition - both from Russia and China - over the possible invocation of that chapter for a future military attack on Pyongyang.

When the US-led coalition invaded Iraq more than three years ago, the administration of President George W Bush legally justified it on the ground that the resolution adopted by the Security Council called for military action under Chapter VII of the UN charter.

Despite the fact that the resolution did not specifically call for military action against Iraq, Washington interpreted the existing resolution to justify its action. The crucial element in the resolution was the invocation of Chapter VII.

But that interpretation brought a strong negative response from Secretary General Kofi Annan himself, who unequivocally ruled that the Iraq war was "illegal" because it did not have clear and unambiguous Security Council authorization.

The argument was that there should have been a second resolution calling for military action: a resolution which the Bush administration knew would have been vetoed by either China or Russia, or both.

Meanwhile, Saturday's resolution demanded that North Korea not conduct any further nuclear test or launch a ballistic missile. If Tuesday's reports are correct, Pyongyang is about to ignore this demand.

(Asia Pulse/Yonhap/Nikkei, Inter Press Service)

China pressures N Korean leader BBC News
A Chinese envoy has met North Korea's reclusive leader Kim Jong-il, according to Chinese officials, as tensions mount over the North's nuclear test.The envoy, former Foreign Minister Tang Jiaxuan, was believed to be carrying a message from China's President Hu Jintao calling for restraint. The meeting came as a North Korean official hinted at another test. US Secretary of State Condoleezza Rice has warned of "more grave consequences" if a second test is carried out. China's Foreign Ministry warned on Thursday against "wilfully" expanding UN sanctions against North Korea."Sanctions are a signal, not a goal," spokesman Liu Jianchao told a news conference. Ms Rice, who is in South Korea on the second leg of an Asian tour to rally opposition to North Korea's nuclear testing, said she hoped China's envoy had sent a "strong message" to Pyongyang. Her visit follows a UN Security Council vote backing sanctions in response to North Korea's 9 October test. A North Korean official gave the country's first indication it may be preparing a second nuclear test. The deputy head of North Korea's foreign ministry, Li Gun, speaking on ABC TV in the US, said a second test would be "natural" and that the US should not be surprised if one were carried out. President George W Bush said North Korea would face "grave consequences" if it tried to transfer nuclear weapons to third parties such as Iran or al-Qaeda.

Conflict fears
Following what she called "fruitful" talks with South Korea's president and foreign minister, Ms Rice said they had discussed ways of preventing the trafficking of nuclear material by North Korea. South Korea is still considering whether to join the US-led Proliferation Security Initiative (PSI), which was set up in 2003 to inspect ships suspected of carrying materials that could be used for weapons of mass destruction. Ms Rice said reports of US plans for the inspection of cargo involving blockades and quarantines had been exaggerated. "It is the intention of the resolution to have all states act on their obligation to prevent this trafficking and I think there is much that we can do co-operatively in order to do so," she said. The South has been reluctant to join PSI for fear of sparking conflict with the North. Ms Rice began her Asian tour in Japan on Wednesday, meeting Prime Minister Shinzo Abe in Tokyo. She is due to travel on to China.

Chinese envoy hopeful on N Korea BBC News
A high-level Chinese envoy has returned from North Korea expressing optimism about the mounting nuclear crisis.Tang Jiaxuan, who met North Korea's reclusive leader Kim Jong-il, said his visit had "not been in vain". China is North Korea's closest ally and has publicly warned the North not to test another weapon. Mr Tang was speaking to US Secretary of State Condoleezza Rice, who has stepped up calls for UN sanctions against the North to be fully implemented. Ms Rice, who is in China as part of an Asian tour to rally support against North Korea, held talks with Chinese Foreign Minster Li Zhaoxing on Friday. Ms Rice said the two discussed implementing UN sanctions imposed after Pyongyang's 9 October nuclear test and described the talks as "very fruitful". The meeting comes amid concern North Korea is planning a second test, and reports that China has threatened to cut off vital oil supplies if it goes ahead. The BBC's Rupert Wingfield-Hayes in Beijing says that behind the scenes there are signs China is starting to get tough with Pyongyang. The threat to the oil supply demonstrates just how angry and frustrated China now is with its erstwhile friend and ally, our correspondent says. On Thursday a North Korean official hinted that another test could take place. The deputy head of North Korea's foreign ministry, Li Gun, speaking on ABC TV in the US, said a second test would be "natural" and that the US should not be surprised if one were carried out. US intelligence officials say satellite images have shown increased activity at a suspected North Korean test site, according to US media reports. Both US and South Korean officials have warned of "grave consequences" should a second test go ahead.

Cargo searches
Mr Tang, who went to North Korea on Thursday with a special message from China's President Hu Jintao, told Ms Rice: "Fortunately my visit this time has not been in vain". He did not elaborate, publicly, on the goals of his visit. But China's foreign minister, Li Zhaoxing, later said Mr Tang had spoken to the North Korean leader about how to kick-start six-nation talks on resolving North Korea's nuclear ambitions which have been stalled since late 2005."At least it increased mutual understanding. Everyone discussed how to restart progress in the six-party talks as quickly as possible," Mr Li said. North Korea has stated that it wants US financial and other sanctions lifted before it will consider resuming the talks, which have stalled for over a year. Some analysts say North Korea's nuclear test made the talks meaningless. China, North Korea's closest ally and main trade partner, is thought to have most influence over the communist state. It backed a resolution in the UN Security Council that imposed sanctions targeting Pyongyang's missile and weapons programmes. But Beijing has baulked at one clause allowing inspections of cargo going to and from North Korea for banned items, fearing it will raise tensions further.

China bank raises $19bn in float BBC News
China's biggest lender, Industrial and Commercial Bank of China, has raised $19bn in the world's largest stock market floatation.The shares, which are due to begin trading on 27 October, will be listed in Hong Kong and China. The sale was heavily oversubscribed as investors tried to tap into one of the world's fastest growing economies. China has been overhauling its banking system, toughening up regulation in an effort to cut corruption and bad loans.

Growth potential
The government has bought back billions of dollars of bad loans to help banks clean up their balance sheets and make them more attractive to investors. Analysts said the potential for growth of consumer and corporate lending in China was massive as wage levels increase and company profits rise. Industrial and Commercial Bank of China was set up by the Chinese government in 1984 and has 21,000 branches, 360,000 staff and 150 million customers. In a recent statement, it said it expected to earn a net profit of $6bn this year, compared with $4.3bn in 2005. The previous record for the world's largest initial share flotation was $18.4bn, which was raised by Japan's NTT Mobile Communications Network in 1998.

Rice: 'N Korea escalating crisis' BBC News
US Secretary of State Condoleezza Rice, has accused North Korea of wanting to escalate international tensions over its nuclear weapons programme.Mr Rice said she doubts claims that North Korean leader Kim Jong-il agreed not to carry out a second nuclear test or that he regretted the first. Her comments follow media reports that Mr Kim made the pledge to Chinese envoy Tang Jiaxuan when he visited Pyongyang. She is in Moscow for talks expected to focus on the North Korea crisis. Ms Rice is on a regional tour, meeting leaders in Japan, South Korea, China and Russia.

International threat?
The secretary of state was in Beijing on Friday, but she said the Chinese made no mention of Mr Kim agreeing to halt nuclear tests, despite giving her a "thorough" briefing on Mr Tang's visit to Pyongyang. "I don't know whether or not Kim Jong-il said any such thing," Ms Rice told journalists accompanying her on a flight from Beijing to Moscow. "Tang did not tell me that Kim Jong-il either apologised for the test or said that he would not ever test again," Ms Rice added."The North Koreans, I think, would like to see an escalation of the tension." Mr Tang, a former Chinese foreign minister, was sent to North Korea on Thursday to deliver a personal message from President Hu Jintao. Mr Tang did not set out what took place during his meeting with Mr Kim, but said afterwards that the visit had "not been in vain". Ms Rice is seeking to bolster international support for enforcing UN sanctions imposed after the communist state's 9 October nuclear test. The Russians condemned the test when it happened and the Kremlin has made it clear that it does not welcome a nuclear armed North Korea, but the BBC's James Rodgers in Moscow says there is little sense in the Russian capital that the world faces a clear and immediate threat. The Russian defence minister, Sergei Ivanov, has said that the sanctions against Pyongyang should be lifted if it returns to the negotiating table.

Sanctions backing
Ms Rice may also raise the issue of Iran and seek Russian support for sanctions over its suspected nuclear weapons programme at her meetings with Mr Ivanov, President Vladimir Putin and Foreign Minister Sergei Lavrov, analysts say. Russia's troubled ties with Georgia and the killing of Russian investigative journalist Anna Politkovskaya could also be on the agenda.Ms Rice arrives from three days of intensive diplomacy in East Asia over enforcing a Security Council resolution agreed last Saturday in response to North Korea's underground nuclear test. The resolution includes sanctions targeting North Korea's missile and nuclear programmes, and allows the inspection of cargo going in and out of the country - something some countries fear will raise tensions further. Ms Rice has come to Russia to see how much understanding it has for the US position, says our correspondent in Moscow. Like China, Moscow is wary of putting too much pressure on Pyongyang, our correspondent says. On Friday, Ms Rice said she was convinced China was committed to enforcing sanctions. "I think that you will see (Chinese) co-operation on cargo, particularly if there is suspicious cargo," she said.

Shanghai scandal 'implicates 50' BBC News
More than 50 people have been detained in Shanghai's widening pension fund corruption scandal, a Beijing-funded Hong Kong newspaper has reported.Several senior Shanghai officials and businessmen have already been implicated in the alleged misuse of the multi-million dollar fund. One of the country's richest men, Zhang Rongkun, was arrested at the weekend. On Sunday, President Hu Jintao said the Communist Party was determined to root out corruption. "We are stepping up efforts to improve the rule of law and a culture for clean and honest government, and strengthen the checks and supervision on power," he said. He also appealed for party unity at a rare joint public appearance with his predecessor Jiang Zemin. The first high-profile head to roll in the pensions scandal was Chen Liangyu, an ally of Mr Jiang who was dismissed from his post as chief of the Communist Party in Shanghai last month. Other leading figures tainted by the case include the head of Formula One in China, Yu Zhifei, who has been questioned by the authorities, and the country's chief statistician Qiu Xiaohua who was dismissed from his post.

Anti-corruption investigation
Zhang Rongkun, believed to be the 16th richest man in China with a $600m fortune, was arrested by "relevant law enforcement authorities", his own firm Fuxi Investment said in a brief statement on Saturday.Hong Kong's Ta Kung Pao newspaper reported on Monday that more than 50 other businessmen and government officials were being held over the scandal. It did not give any further details. As the anti-corruption investigation continues, it seems likely the number of people involved will grow still further, the BBC's Quentin Sommerville in Shanghai says. More than 100 central government investigators have been sent to Shanghai to investigate money that has disappeared from the city's 10 billion yuan ($1.25 billion) social security fund. The funds were allegedly used to make illegal loans and investments in real estate and other infrastructure deals. The corruption scandal demonstrates the problems facing those who wish to end graft in China, our correspondent says. The courts do not operate independently and almost all of those detained in Shanghai have not been seen or heard of since, he adds. There is little independent oversight. Auditors and corruption investigators are limited and the usual checks and balances that expose corruption - such as a free press and regular open elections - do not exist.

Airbus sells 150 A320s to China BBC News
Commercial planemaker Airbus has won a multi-billion dollar Chinese order for 150 of its A320 planes, some of which will be assembled in China.The factory in the north-eastern city of Tianjin will build its first A320 in 2009 and then manufacture four a month. The deal also includes an option for China to buy 20 of the planemaker's new wide-body A350. Economic expansion is driving demand for air travel in China, a key growth market for Airbus and rival Boeing. Chinese airlines have ordered 150 Boeing 737s in recent years. The 737 is the US aerospace giant's nearest competitor to the A320. "It is a means for us to develop a long-term vision with the Chinese," said Airbus chief executive Louis Gallois. "It is clear that building the planes in China will give the Chinese an incentive to buy more of our aircraft." The deal was signed during French President Jacques Chirac's visit to Beijing, and adds to last year's order for 150 Airbus planes signed during Chinese Premier Wen Jiabao's visit to France.

http://business-times.asiaone.com/sub/view...,213190,00.html?
Business Times - 27 Oct 2006

Washington's wrong bogeyman and wrong issues

By LEON HADAR
WASHINGTON CORRESPONDENT

CHINA bashing has become a common pursuit in Washington these days with members of the political right warning that Beijing is becoming America's most threatening geo-strategic rival while those on the political left are arguing the Chinese have been transformed into a major geo-economic peril.

Hence while conservatives - neo or otherwise - are proposing that the United States prepare itself for a cold - or even a hot war with China, liberals are calling for 'protecting' the US economy from Chinese products and investment.

But even those Americans who are urging US diplomatic and business engagement with China have yet to come up with a coherent strategy to advance their agenda, which explains why the China Bashers have succeeded in dominating the debate on the Sino-American relationship while the China Engagers find themselves frequently on the defensive. Indeed, at a time when the consensus among members of the US foreign policy establishment is that American long-term interests lie in enforcing global military and ideological dominance, it is not surprising perhaps that many Americans should view China with apprehension.

'With China returning to wealth and power, it does seem to be the only country that might have the ability, should it choose to do so, to dislodge us from our position as the greatest military and economic power,' explains former US diplomat Chas Freeman, who was the principal American interpreter during President Richard Nixon's historic 1972 visit to China and is currently the co-chair of the United States China Policy Foundation.

'The Chinese are thus our preferred cure for 'enemy deprivation syndrome', the sickening feeling of disorientation we experienced when our longstanding enemy irresponsibly dropped dead,' argues Freeman, who had served, among other things, as charge/deputy chief of mission at US embassies in Beijing and Bangkok; director, Chinese affairs, at the Department of State; and assistant secretary of defence for international security affairs.

Freeman, who spoke recently in Washington in a seminar organised by the Committee for the Republic, a foreign policy analysis group, is very concerned that more and more of his colleagues in Washington are seeing the Sino-American relationship as a zero-sum game, and believe that, like in the case of other troublesome foreigners, the only approach that would work with China is coercion: sanctions, followed up, when these fail - as they invariably do - by military assault.

He points to the recent proposal in the Senate to impose a contemporary version of the Smoot-Hawley tariff on China. Or as Freeman puts it: 'The signal, filtered through the roughly 2 per cent of our GDP accounted for by turnover at Wal-Mart, is: 'Surrender - or we'll blow your brains out!' ' And since US warplanes and nuclear submarines, though conceived for use against a different enemy in a completely different geopolitical and military context, obviously need new targets, where are such targets to be found, if not in China?

Facile judgments

'Threat analysis is the highest form of budget justification and China, faute de mieux (for want of something better), is the justification du jour,' according to Freeman. 'We have clearly arrived at a national consensus that the main challenges we face from China are bilateral and either employment-related or military in nature - or both.'

Freeman has been spending much of his time questioning these judgments which he considers to be 'too facile'. First, contrary to the narrative promoted by the protectionists on the political left, declining employment in manufacturing in the US - however potent a tool of demagoguery it may furnish - is not, as is widely believed, a case of China gaining jobs at US expense.

The fact is that China is also losing manufacturing jobs, and it's losing them both faster and on a much larger scale than the US economy, Freeman points out; between 1995 and 2002, for example, 2 million factory jobs disappeared in the US, while China lost 15 million.

Moreover, the losses in both countries have been in the very same industrial sectors. Over that period, for example, America lost 202,000 textile jobs; China lost 1.8 million. What is happening is that technology and capital are everywhere rapidly replacing labour in manufacturing, just as technology and capital earlier replaced labour in agriculture.

In 1980, about 20 per cent of the American workforce was in manufacturing; today, the figure is less than 10 per cent but US industrial production has more than doubled. 'Productivity gains, not foreign workers, are what is causing increasing numbers of Americans to leave the factory floor, much as their grandparents left the farm,' Freeman explains. 'Cluelessly blaming this on the Chinese may be a good political tactic, but it is not a strategy to cope with our problems.'

At the same time, while one can understand the utility of inventing bogeymen to justify continuing investments in advanced weaponry and tactics, China is simply not up to the role of peer competitor that officials and analysts in Washington have assigned to it, 'even if it were interested in such a role - which it shows no sign of being', Freeman insists, adding: 'We need to keep China's large but relatively backward and defensively deployed military in perspective.'

Even if one agrees with the US government estimate that China is spending twice as much as its stated defence budget on its military - US$70 billion, or around 2.8 per cent of its GDP - one should also note that in the past fiscal year, the US defence budget was about US$441.5 billion and 3.7 per cent of GDP, which doesn't include about US$120 billion in combat operations in Afghanistan and Iran, which are provided outside the budget through 'supplementals'; the benefits for veterans, another US$70 billion or so; nuclear weapons, which are in the Department of Energy budget; the Coast Guard and other homeland security programmes; and the various military-related programmes in space.

'US military spending now is not - as our media commonly states - US$441.5 billion but more like US$750 billion, which is about 6.2 per cent of GDP, not the published 3.7 per cent,' Freeman explains, concluding that US military spending has been rising as a percentage of its national budget, and this has been happening 'despite the fact that, by startling contrast with China, we have no great powers or traditional enemies on our borders, no territories in dispute with foreign powers, and no enemy fleets or air forces probing our defences'.

As Freeman sees it: 'China hasn't designated us as its enemy and, in most respects, doesn't behave as if we were.' But branding China an enemy could prove to be a case of self-fulfilling paranoia, Freeman warns. And if that happens, 'much as some in our military-industrial complex would like to fight the Cold War all over again, we aren't going to get to do this if we make an enemy of China', since the 'Chinese would be a vastly more formidable peer competitor than the late, unlamented USSR'. War with China would likely be hot, rather than cold, and it could involve many battles and last a very long time.

Freeman, who travels to China and Taiwan quite frequently, believes that the one real casus belli between the US and China - the Taiwan issue - has been managed peacefully by the two governments and publics, including through establishment of party-to-party ties between Taiwan's major opposition parties and the Chinese Communist Party, and their joint inauguration of a partial cross-Strait political entente that has reversed the trend towards war in the Taiwan Strait.

'Cross-Strait interaction is replacing Taiwan separatism with a process of political integration that parallels the economic integration and cultural rapprochement that have been under way for more than a decade,' according to Freeman.

Meanwhile, Taiwan's political establishment has rejected massive purchases of US weapons on three occasions, after concluding that they could not win an arms race with 1.3 billion Chinese across the Strait. The leadership in Beijing, for its part, now sees peaceful reunification as the likely result of trends that are increasingly well established.

'Renewed confidence that time is on the side of reunification has enabled China to resume its default position, which - as demonstrated in its approach to the peaceful recovery of Hong Kong and Macau - is to be patient and forbearing,' Freeman says.

From that perspective, American concerns about Chinese aggressiveness in the Taiwan Strait seem 'increasingly delusional', he argues. Freeman maintains that instead of worrying about bilateral challenges from China, Americans should pay more attention to the challenge that the Chinese are presenting to US global economic, scientific and technological leadership.

More specifically, a very different world monetary system is emerging in which Europe and China are bound to play roles commensurate with their economic clout and in which Americans no longer enjoy the privileges of economic dominance but must share financial power with others.

Challenge to US dominance

Moreover, China's drive to excel in science and technology (S&T), and become an innovation leader poses a serious challenge to US dominance in S&T.

And the third challenge to US supremacy is in the realm of global political leadership. 'Alarming numbers of foreigners now hate our country, not because they have ceased to admire our traditional values but because they believe we are repudiating them or at least failing to honour them,' Freeman notes.

'With a few important exceptions - like our own country and Germany - China has everywhere displaced the United States as the country that people most admire.'

Ironically, in the face of Washington's international conduct, China has now emerged as a stalwart defender of the international order.

'As China's global influence continues to grow, I wouldn't bet on Washington's current radicalism prevailing over Beijing's conservatism,' Freeman concludes.

'The east wind may indeed prevail over the west, not in a sudden squall of revolution but as a steady breeze forcing a return to norms of international law and comity we once championed but now repudiate.'

Copyright © 2005 Singapore Press Holdings Ltd. All rights reserved.

CHINA'S NEW NORTH KOREA DIPLOMACY - JING-DONG YUAN (ASIA TIMES, NOVEMBER 14): While Washington and Beijing have cooperated closely on the North Korean nuclear issue, it would be unrealistic to expect that China would be as cooperative on the Iranian nuclear issue.
http://atimes.com/atimes/China/HK14Ad02.html

Japanese doctor admits POW abuse BBC News
A former doctor in Japan's World War II navy says he was ordered to perform medical experiments on Filipino prisoners before they were executed.Akira Makino, 84, told Kyodo news agency he performed surgery and amputations on condemned prisoners, including women and children. Japan's imperial forces are believed to have carried out medical experiments on prisoners captured in China. Few Japanese veterans have spoken of atrocities committed during the war. The BBC's Chris Hogg says most want to put the past behind them and they have had little encouragement from the authorities to offer an account of what happened. Mr Makino's testimony is believed to be the first account from a Japanese veteran of the war in south-east Asia describing medical experiments on prisoners.

Revulsion
Mr Makino was stationed on the island of Mindanao in the Philippines during World War II. He told the Kyodo news agency he had operated on some 30 prisoners between December 1944 and February 1945. The operations - which included amputations and abdominal surgery - were regarded as part of his medical training, he said. "I would have been killed if I had disobeyed the order," Mr Makino said. "That was the case in those days." He also said he was disgusted by orders to practise surgery on two Filipino men, rendered unconscious after being captured on suspicion of being US spies. "I thought, 'What a horrible thing I'm doing to innocent people even though I'm ordered to do it'," he said.

Biological warfare
Mr Makino said he was still haunted by the memories of his work in the Philippines. "We should not repeat such miseries again," he said. "I want to tell the truth about the war, even if it is to only one person or two." A Japanese army unit specialising in biological warfare is believed to have carried out medical tests on prisoners during the wartime occupation of north-eastern China. At least 3,000 prisoners are believed to have died at the hands of the unit. Japan has acknowledged the unit's existence but has not charged anyone in connection with allegations of atrocities.

Hong Kong votes for leader panel BBC News
Voters in Hong Kong have gone to the polls to elect the members of a committee that will choose the territory's next leader. Those eligible to vote include members of political or professional bodies - less than 5% of the population. Pro-democracy groups are hoping to win enough representation on the 800-seat committee to enter a candidate in next March's chief executive contest. There are 427 seats being contested, with the rest already allocated. Candidates will need the backing of at least 100 members if they want to challenge the China-backed incumbent. Donald Tsang is expected to win re-election when the final vote is held.

Beijing 'worried'
The BBC's Vaudine England, in Hong Kong, says the democrats already admit that their chosen potential candidate, lawyer Alan Leong, has no chance of beating Mr Tsang. But according to Mr Leong, a recent campaign against him had actually boosted voter turnout. "The recent smearing has in fact helped to make people realise how important this election committee election is," he said. For the first time since Hong Kong was handed back to China by the UK in 1997, the democrat groups now say they feel that it is worth taking part in the contest. "I think Beijing is worrying about some people thinking of this time nominating Alan Leong so we have some kind of competition," Priscilla Lau, a Hong Kong deputy to China's parliament, the National People's Congress, told the Reuters news agency. "They don't like this kind of game," she said.

Atmosphere
Sunday's election is not expected to make a wide impact in Hong Kong, where just over 200,000 people from a population of 7.2 million are eligible to vote. The electorate is drawn from a selection of political organisations and business and professional communities. "The atmosphere so far is no good, ordinary citizens have no idea there is an important election," said James Sung, a political scientist at Hong Kong's City University. Of the 373 seats already allocated, 96 are assigned to members of Hong Kong's assembly, or to Hong Kong members of the National People's Congress in Beijing. Other members are appointed through their professions or through political appointment. Results are not expected until early on Monday.

US embarks on key Chinese talks BBC News
US Treasury Secretary Henry Paulson has arrived in Beijing for what is thought to be one of the most important US trade delegations to China in months.Key topics include currencies, access to markets and information piracy. The delegation includes the Federal Reserve's head Ben Bernanke and US Trade Representative Susan Schwab. This week marks five years since China joined the World Trade Organization, but the US feels China still has much to do to open its markets as required.

'Barriers'
The visit comes days after the US issued a report assessing China's record in implementing requirements demanded by the WTO. "China has taken many important steps to implement its WTO obligations, but on the fifth anniversary of its WTO membership, China's overall record is decidedly mixed," said Susan Schwab following the report. Ms Schwab also said come industries face "frustrating barriers" when doing business in China, and highlighted concerns that China's market liberalization had been slowing down in the past year. But analysts also say China has transformed into a far more sophisticated nation in the past five years - and that Mr Paulson and his mission will face a country that is more assertive in trade matters. The trip comes amid mounting pressure for China to reform its currency, and a day after data showed that China has replaced Mexico as the second largest trading partner with the US. The US - the world's largest economy - posted figures showing its deficit with China had risen by 6.1% in October compared with the previous month. Critics blame the growing deficit with China largely on China's currency, the yuan, being artificially weak. This makes Chinese exports to the US cheap in comparison with US goods.

'Effective rules'
The summit, which is being billed as a "strategic economic dialogue", follows a range of commercial deals signed between the two nations.US retailer Home Depot bought a chain of Chinese DIY stores, while GE Aviation is selling engines to a Chinese airline. "Commercial engagement built on fair, effective rules is the foundation of the healthy, strong and continually growing trade relationship that we envision between China and the US," said Commerce Secretary Carlos Gutierrez, following the deals. As well as trade, a key topic of discussion will be piracy. On Wednesday, China's official news agency announced a campaign to tackle manufacturers of fake goods. US officials say Chinese pirated goods cost genuine producers as much as $50bn (£24.4bn; 37.8bn euros) annually in lost earnings.

China ends school fees for 150m BBC News
China is to abolish tuition and other fees for 150 million rural students, in a bid to narrow the gap between wealthy coastal provinces and poorer regions.The students will be exempt from tuition fees over the course of their compulsory nine-year education. The move would cost 15bn yuan ($1.9bn) a year, the China Daily said, or about 140 yuan ($18) a child. But children of rural families who have migrated to China's booming cities will not be included. The new policy is "part of a major move to relieve the financial burden of farmers and to develop a new countryside," the state-owned newspaper said. In the first phase of the programme, which took effect this spring, more than 50m students living in western provinces - some of China's poorest - were exempted.

Money shortage
In theory, Chinese children are offered education that is free or almost free from age six to 15. But in practise, cash strapped local authorities and schools charge extra fees and education taxes. Poorer families - and the average income of China's rural residents was 2,936 yuan (US$367) in 2004, according to the National Bureau of Statistics - can find these prohibitive. The move to end fees follows increasing concern at a growing gap between the rich coastal provinces and poor interior, and at unrest in the countryside. The authorities have promised more money and fresh policies to ease the problems, as part of what is officially billed as building a "harmonious society". But many people in rural areas are still living on less than a dollar a day, and rural schooling is seen to lag well behind. Rural unrest, often blamed on illegal land grabs, is also a growing problem. There are thought to be thousands of protests a year across China, with farmers in villages whose land has been taken often directing their anger at corrupt local officials who skim off the profits when it is sold to developers.

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Dramatic economic changes for China
WTO membership boosts trade, eases some restrictions, but some say more is needed
Kathleen E. McLaughlin, Chronicle Foreign Service

Sunday, December 17, 2006

Beijing -- The land of the bicycling commuter is now the world's second-largest auto market. Chinese citizens, long forced to choose between storing savings at home or in a troubled state-owned bank, can open accounts at Citibank or one of a growing number of competitors.

No longer does owning a television or washing machine signal personal financial success. Instead, think diamonds, designer clothes or a Porsche SUV. Those items, not so long ago reserved for the ultrarich, are today within reach of an ever-growing middle class.

From banking to fashion, insurance to the Internet, and everything in between, hardly a single aspect of Chinese daily life has been untouched by the country's entry into the World Trade Organization, a process that began five years ago this month. Where once consumer options were limited, imports from the United States and around the world have brought seemingly endless choices. And China's new wealth from its export boom has created a customer base willing and able to partake in the spoils.

"The changes are very, very dramatic," said former U.S. Trade Representative Charlene Barshefsky, who led the negotiations with China that allowed it to enter the WTO.

"Bicycles have been replaced by automobiles. Average people on the street are attractively groomed and well dressed. The building boom is almost breathtaking," said Barshefsky, now a private-practice attorney, listing things she noticed in the Chinese capital recently.

"What China has accomplished in the past five years, or indeed the past 15 years, has no historic parallel," she said.

The agreement Barshefsky helped broker laid out a detailed five-year implementation plan that called on China to tear down trade barriers by cutting and eliminating import taxes, allowing more foreign businesses to set up shop and enacting reforms in all sectors.

The last major barrier fell on Monday when, on schedule, China allowed three international banks, the first of eight to apply, to start offering some services in local currency.

Since China entered the WTO, it has substantially reduced or eliminated import tariffs on consumer goods and raw materials, opened major sectors like insurance and the financing of motion pictures to foreign investment and ownership, and overhauled its banking system to prepare for international competition.

"China's WTO entry built upon probably 15 years of prior but smaller economic reforms instituted in the country," Barshefsky said. "What the WTO agreement did was to not only cement the reforms, but to broaden them, deepen them and cover virtually every sector of China's economy."

The numbers are telling: China's gross domestic product has tripled since it entered the global trade body and was estimated at $2.2 trillion in 2005. This year, it became the world's fourth-largest economy, according to the World Bank.

In the past five years, 80,000 to 100,000 factories have been opened, producing billions of dollars worth of consumer goods. U.S. exports to China have doubled since 2001 to $41.8 billion in 2005, while imports of China-made goods to the United States have nearly tripled to $243.5 billion. But the process has not been without disappointments, and problems continue.

China still has a dismal record of protecting international intellectual property rights, an issue long simmering with its trade partners and one likely to prompt formal action at the global trade body. Critics argue that in some cases it has erected trade barriers rather than eliminated them, and the government has paid lip service to its commitments to fully open the country's service sectors for international businesses.

"China has generally fulfilled all of its WTO commitments. However, China has adopted various regulatory hurdles that make full market access as negotiated under WTO a challenge for foreign investors," said James Zimmerman, chairman-elect of the American Chamber of Commerce in China. "This is especially true in the banking, distribution, insurance, construction (and) engineering, direct marketing and other sectors."

Meanwhile, an entire segment of the Chinese population has been left behind, officials and statistics report. The country's rural poor have not shared in the wealth brought by WTO entry, and an increasingly visible gap exists in the nation's social services as the population ages. And there is little evidence thus far that the totalitarian Chinese government is loosening its grasp on its citizenry, something WTO proponents had argued would come with economic prosperity.

Those changes may start to appear in the next phase, but questions loom.

Now that the implementation phase is completed and WTO mandates have passed, what will prod China to continue its economic reforms?

Leading a delegation to Beijing for high-level trade talks last week, Treasury Secretary Henry Paulson said the United States is concerned that China might slow down its reforms even as international pressure mounts to further overhaul its currency and open more markets.

With a record-busting trade surplus mounting daily -- likely to hit $229 billion this year -- China is coming under increasing pressure to act on issues like intellectual property and currency valuation even more quickly.

"I see some resistance to moving ahead as fast as I'd like to see with some reforms that go even beyond WTO," said Paulson.

In a speech at the opening of the trade summit, Chinese Vice Premier Wu Yi said the leadership is committed to continuing economic changes.

"Only by focusing on development over the long run can China lay the necessary foundation for the constant improvement of people's living standards," Wu said.

Senior U.S. trade officials said social stability is likely to keep China on an economic reform path. The communist leadership has staked its reputation on economic growth and it's not likely to allow backsliding. In addition, one top official noted, disputes with trading partners will keep China's feet to the fire.

Barshefsky noted that China needs to create 10 million to 13 million jobs every year just to keep up with the growth. Thus, backing away from economic reform is not really an option.

"China continues to need to grow. It needs continued investment and trade. Without that growth, the level of instability in China will increase as the public (becomes) increasingly disaffected," she said. "It is growth that maintains the party's own legitimacy."

China awards massive nuclear deal BBC News
Westinghouse, the nuclear-plant builder sold by British Nuclear Fuels earlier this year, has won a billion-dollar contract to build reactors in China.The deal, worth about $8bn (£4.1bn), is for four nuclear plants - two at Sanmen in Zhejiang province, with another two at Yangjiang in Guangdong. An expected decline in fossil fuels and increasing energy demands have prompted many nations to focus on nuclear power. Analysts said that the deal may also help soothe trade tensions with the US.

'Relationship driven'
US-based Westinghouse defeated a number of other international companies to win the tender, including France's Areva and Russia's Atomstroiexport. The fact that Westinghouse is now owned by Japan's Toshiba may also have helped secure the deal, especially after Japan's new Prime Minister Shinzo Abe signalled an intention to restore friendlier ties with China. "This is all relationship driven," said David Hurd, an analyst at Deutsche Bank. "The US is putting pressure on China at the moment, so China's response is 'let's thrown them a bone,'" he explained. The US, which is running a record trade deficit with China, estimated that the deal would create more than 5,000 American jobs. At the heart of the deal was the promise of a transfer of technology from the US firm to China, analysts said. Westinghouse will build AP1000 reactors that should be up and running by 2013, while the transfer of technology means that China would be able to build itself similar reactors.

Nuclear future?
China is having to look at ways of safeguarding its energy independence as world oil supplies are squeezed, and its growing population and booming economy increase its thirst for energy. At the same time, many experts have claimed that nuclear power is one of the most efficient and environmentally friendly ways of meeting a population's energy needs. This view is proving controversial and has been contested by environmental groups, which claim that the risks of an accident and cost of dealing with radioactive waste far outweigh any benefits. Even so, demand for nuclear power plants is on the increase, and the International Energy Agency estimates that more than $200bn will be spent by 2030 on harnessing the atom for energy output.