Credit Crisis: China is ready but not the US

By China Watcher

The credit crisis over the past few months has one major telling factor – the gradual decline of the US influence economically and the importance of China in the global financial system.

In short, are we saying that the US had lost its economic leadership status to the Chinese? No, not yet. Let us get real. The US is still the dominant economic power with a US$13 trillion Gross Domestic Product (GDP) clearly well ahead of the second largest Japanese Economy at US$4.5 trillion. China’s GDP is expected to surpass the German’s economy to become the third largest with a US$3.4 trillion size by the end of 2008.

The US is currently the biggest debtor, owing creditors – both domestic and foreign - at almost the same level of its present GDP size of US$13 trillion. In fact, most of the world’s exports are being shipped to the US, a strong engine of growth for the world’s economy for the past 40 years.

With the credit crunch affecting liquidity in the US that has now spread across the Atlantic to the closely knitted European Community, the attention is now focus on China, which currently hold almost $2 trillion in foreign currency reserves. Certain national leaders had urged China to become a more responsible stakeholder while undertaking a leadership role in shaping the new world’s economic order. This will be one of the many important agendas in the coming special G20 meeting in Washington, initiated by the US to discuss affordable and feasible solutions to prevent the world’s economy from sinking into a deep depression.

But China also has its own share of problems and it is not completely insulated from the economic woes. The slowdown in orders from abroad has already resulted in the closure of many small to middle sized factories which inevitably will affect the growth of the Chinese economy and the loss of thousands of jobs that are critical for maintaining social order in the developing country. The good news is that the inflationary fears have more or less abated.

By announcing a fiscal stimulus package of US$586 billion to face the effects of the financial troubles coming from the US and also, perhaps on a bigger scale from Europe, China has prepared itself socially and economically, to bear the full impact of the recession. The fiscal amount announced represented 18% of China’s GDP, which may be sufficient to tie the Chinese through the tough period ahead.

On the basis of comparison, I am of the opinion that the U.S. is still not fully geared up to handle the problem, as the financial packages announced so far totaling US$700 billion constituted only 6% of its GDP, which is perceived by analysts to be inadequate to cope with the magnitude of the credit crisis. An adequate stimulus program would need to be in the range of 10% of the GDP, let say, at US$1.3 trillion.

China's stimulus program is meant for injecting money into the real economy like in infrastructural constructions and not into the balance sheets of troubled financial institutions while the US funds raised are more for bailout of illiquid financial institutions. The US is moving into a stage of the crisis in which the real economy needs direct intervention and not merely buying into the equities of US financial institutions. Unless there is another new pledge of funds going into the direct components of the economy, the recession could get worse.

There is also a fear in China that the present US government budget which is already in double digit deficit every month would go much higher with some analysts predicting that it will balloon to well over US$1 trillion for this fiscal year. It was reported that the US holds 8,133.5 tonnes of gold reserves valued at US$188.23 billion. Printing more money and issuing more debt instruments logically will continue to weaken the US currency, and that is why, there is an urgent need to expand its real economy to generate exports and bringing it the hard earned currency to lubricate its economy.

Just a few months ago in the run-up to the Olympics, right activists and Western governments were actively demanding more human and religious rights reforms in China but the tone now has changed to one, in which they are praising China for its existing efforts to stabilize the global financial system and hope that it could do more.

Let us face the fact that it is difficult for one nation alone to resolve the problem considering the size and it may require a concerted effort from the largest economies and trading nations at the G20 meeting to ensure the imminent recession from getting any worse than it is and, if possible speed up the recovery from its current state.

Arrogant Chelsea dumped by lowly Burnley

By China Watcher

I am not an avid fan of the English Premier League but there was certainly a piece of pleasing news as arrogant Chelsea was brought down to earth when the team lost to lower-league Burnley 5-4 on penalty kicks after the score is tied at 1-1 even after extra time.

What has this sports news got to do with China? Well, if we could recall not too long ago when Chelsea went on a tour of Asia to promote its “brand” and to reward its so-called legion of crazy supporters across Asia, the Executive Chairman said that Asian players (including Chinese players) do not have the caliber, competence level and the required skill set to make it big in the most competitive soccer league in the world. That was his basis when he was asked why there is not even a single Asian player on the team (including players in the reserves and the junior ranks).

I am impressed by his frankness but to me, it is just plain humiliating because I do sincerely believed that there are certainly a few good Asian players around and also, there must be a few junior openings at the club’s academy for Asian players.

I feel very sad to notice so many of our youths saluting and worshiping the so-called “stars’ of these teams who are not even from Asia. If Chelsea wins, what did you get in return? Probably just a heart warming psychological satisfaction that “YOUR” team had won and, that is about all you will get with no real monetary rewards or no presence of patriotic feeling or nationalistic pride.

To me, Chelsea and the many European clubs are only interested in signing lucrative advertisement contracts and making business deals to enhance its coffers so that they could buy more foreign players but not Asian players. With an impressive economic growth and the flow of funds in the Asia-Pacific region, it is not surprising that the European clubs are aiming for the riches of the region rather than genuinely contributing to the development of soccer in Asia. The many youth programs and joint soccer academies set up 10 years ago across Asia have yet produced any noteworthy talents.

It is a good time for the Asia Football Confederation to reflect upon the many unproductive tours made by these European clubs to Asia and ponders over an integrated self-development plan to raise the soccer standard in this part of the world.

We have to be extra firm and united, to tell these European Clubs to stay at home or go somewhere else when their season ends.

As for arrogant Chelsea, even with the best from Europe, Latin America and Africa, your management stinks and it is very unlikely that you will reach your target in 2008/2009.

Taiwan's ex-leader on corruption charges trying to hide behind the veil of democracy

By China Watcher

Taiwan’s former President Chen Shui-bian who escaped prosecution in 2006 while he was holding office over the embezzlement of US$480,000 from the government coffers has conveniently tried to hide behind the democracy shield by saying that going to jail is worth it as he is doing it for Taiwan’s independence and democracy.

What a load of rubbish!

Practicing democracy ideals do not allow an elected office bearer to misuse public funds which was originally made available for the benefit of the country and its people. Prosecutors have found that at least a portion of the money was spent on diamond rings and other luxury items for Mr.Chen’s wife. The former first lady is also facing an ongoing trial for corruption and document forgery in connection with the same case.

The line of questioning by the special investigators on the corruption case and the subsequent arrest was definitely not “political prosecution” as alleged by the former President and was also refuted by the present administration.

Throughout Mr.Chen’s 8 years of Presidency, he had nearly caused a full scale war with mainland China over his confrontational policies and his stance on independence which had encouraged or provided the necessary boost to his hordes of pro-independence supporters or trouble-makers.

The largely Western media who is quietly supportive of Taiwan independence in its many comments during the period from 2000 to 2008 has only within the last few days made factual account of the case. Maybe these editors who suddenly felt that the leader who had been using the cause of democracy and human rights in all his campaign against China is not so “clean” after all.

Chen also took the opportunity to level accusations at the present Kuomintang’s government for being too close economically to the mainland. His mainly pro-independence Democratic Progressive Party supporters were actively involved in demonstrations during the Chinese envoy visit to the island from November 3 to 7.

During the envoy visit, the protests, at times, turned violent and ugly with demonstrators seen throwing stones and objects at the police. The protesters surrounded the hotel where the Chinese visitor was having dinner and prevented him from leaving until after midnight.

Adopting democratic principles of voting on the basis of one vote one person is certainly the ultimate form of people represented government but copying blindly Western liberal standards of protests with violent tendencies are certainly not for Asian societies in which I believed there are other avenues to express dissatisfaction and grievances in an orderly and peaceful manner. If there are ineffective platforms to express one’s opinion, then peaceful protest can be conducted provided it does not cause inconvenience to the people at large and the local laws must be respected.

The Taipei District Court must have discussed the issue at length before ordering the arrest of the once powerful man in Taiwan for suspicion of graft, bribery, forgery, money laundering and illegal possession of state assets.

I have mentioned in my earlier write-ups on the election of the new President from Kuomintang in March this year that the next step is to investigate Mr. Chen many suspicious financial dealings and if there are any incriminating hard evidences, there should not be any let up in bringing him to books. Mr. Chen is an intelligent man and he will willfully twist the facts using his cause for democracy, human rights and independence to shield him from the arms of the law.

I do hope the Taiwanese people especially the pro-Independence camp are smart enough to see through his many masquerading acts. At least, I do not need any gadgets to do so.

Interesting Indian mentality

By China Watcher

I have not been able to write anything of late either due to the dearth of anti-China news other than the daily over-saturated China’s food quality issues on melamine which I think has been blown out of proportion by the Western media. On a personal level, I did not deny the fact that from all these negative publicities, which to a greater degree, will push China to introduce a result-oriented, cost-effective food monitoring mechanism with less avenues for corruptions especially to improve the Chinese people’s confidence towards the food production process in the world’s fastest growing economy. I am not unduly concern about China food exports as the West and other importers’ nations constituted a small percentage of the total production volume.

But there was this piece of news report that caught my eye about the Indians communities (in India) constant use of the Chinese as the sole barometer (or an easy punching bag) whenever there is a rare progress made in the economic and scientific fields, much to the envy of much of its readers like myself.

If we revisit 50 years ago to the days of the two great Asian statesmen, Chou En-Lai and Jawaharlal Nehru, we would have noticed that both China and India were developing nations with a high percentage of its people living under the United Nation’s defined poverty status. The size of the Gross Domestic Product (GDP) of both the countries was about the same. Unfortunately, there was an outbreak of hostilities in the short Sino-Indian war in 1962 over certain territorial disputes along its borders which remain unresolved till to this day. Since then, both of them have embarked on their very own economic development strategies and growth programs.

India is believed to be the largest democracy bogged down by its heavy bureaucratic elected government, with countless differing opinions which would take ages to arrive at a much needed compromise like for instance the inherent difficulty to secure a position even for a simple matter to build a steel plant over a highly sensitive and populated river. China, on the other hand, was embroiled in the Cultural Revolution which set them back, possibly 10-15 years. Fortunately, the course of the “revolution” was short and it requires the foresight of an inspiring leader to chart an “open-door” economic policy in 1979.

Today, we could see the glaring differences between the state of economic development between China and India. China’s coastal cities are booming with high rise buildings and mega-structures which would have been impossible 30 years ago. Shanghai is gradually but slowly taking its place as one of the dynamic financial centers across Asia, possibly eclipsing Hong Kong in the near future. India’s development path is sporadic and its cities are clogged up due to poor planning. If you drive in Mumbai, you need to be “street-wise” to avoid crashing into its hordes of pedestrians. The only bright spark in its economic development is the successful creation of Hyderabad as the Information Technology and Outsourcing Center for Western corporations.

About two weeks ago, when India successfully launches its lunar probe, there was a full round of applause from the Indian scientists on its space achievements who apparently were not provoked but openly proclaimed out of an inert psychological “beat China” desire as reflected in the many nationalistic comments, "We're catching up! We're better than China in some areas and we can beat China”.

The prideful Indians, though not glaring, and tainted with sheer jealously, were dented on many occasions when China commenced its first nuclear program in the 60s, China’s own “astronaut” from its indigenous space program in 2003, the many successfully mega business-ventures, the success of China’s diversified industrial growth, the 30-years of sustainable economic growth, the significant achievement in its sports and the current GDP size which is more than three times the size of its own.

In China, the people are not bothered with what India is doing. The Chinese are looking at the US as a country to benchmark against in its economic and scientific developments. The Chinese being pragmatic recognized that they still have a long way to go before they could match the US in the areas of scientific development and space exploration. But the Chinese are slowly working on its weaknesses in its quest to be a developed nation, possibly in 40 years’ time.

The support and the all-weathered partnership with India’s rival, Pakistan, also does not help to build trust and even though efforts have been made especially in the past 10 years to strengthen bilateral relations but China is still view within the Indian circles as a hidden “enemy” which India must always be on top in terms of defense.

The Western media hyped up reports that India will surpass China in terms of economic and technological excellence with a projected GDP’s standing next to China, overtaking the US, in 2042 did not help to reduce India’s highly charged emotions and nationalistic sentiments which were largely vented against China.

I believe China has always viewed India as an important neighbor and also an equal partner in which closer economic cooperation will indisputably advance their present economic status and prosperity of the two countries for its people, creating the next economic engine of growth for the world.

The Indians should monitor and measure its own economic and scientific progress from within its targeted objectives and goals based on its internal resources rather than comparing with China, in almost all its major achievement to date.

On a final note, the Chinese holds very strongly to its Confucian values which is present in other East Asian countries as well (including South Korea and Japan) and I have no doubt these highly disciplined traits will continue to bring measured success to China in the areas of economic, cultural and scientific (space included) developments. Perhaps, we may see a Chinese winning a science related Nobel Prize in the not too distant future.

China should retaliate strongly on EU's award of human rights to the West's promoted Chinese activist

By China Watcher

EU's award of its European human rights award to one of its activists, Hu Jia, is a clear sign that the EU is out to provoke China's patience on the issue. The parliament head commented that it is sending a clear message to China that the authorities in China need to give more prominence on human rights to its people. What type of rights? The European standards?

This is a gross interference in the affairs of the Chinese.

I hope the Chinese government will be able to take a more stronger stance by boycotting all rights dialogue with the EU and also, to put EU relationship at a lower level. It looks as though China's protest has fallen on deaf ears and this involves the plea from the majority of the Chinese people here and that is why China should take a more firmer retaliation on this matter.

Further, I believe the actions of the European Commission on human rights is going to be counter-productive and provoking act like this will hardly move a potential superpower like China.

To China, there is a clear need to diversify the country's economic activities from depending too much on Europe and US.

Taiwan’s opposition group is out to stir more troubles

By China Watcher

Chen Yunlin, the appointed Chinese negotiator and the head of the Association governing Straits relations, will make a landmark visit to Taiwan either in late October or early November under the invitation of the administration of President Ma Ying-jeou, who is perceived by Western media to be a more China-friendly government.

These opposition members and its pro-independence activists plan to stage the biggest rally this weekend as a protest against China's continued claim of sovereignty over the breakaway island.

According to the Democratic Progressive Party’s (DPP) representative, the party will use the protest to display its power to show that they are not supportive of the progressive reconciliation effort made by the government and the mainland. Saturday's demonstrators will also be demanding that Beijing apologize to Taiwan for selling milk and other products tainted with the chemical melamine. If I am not wrong, China through its State media had already apologized to the Taiwanese public for exporting tainted milk products to the island. So, what is the fuss?

Chen’s visit is expected to discuss matters on establishing closer shipping and air cargo links. The opposition (DPP), of which its former Chairman and President, Chen Shui-bian is under investigation for corruption, is attempting to thwart the warming of relationship between the present government and the mainland.

Trade and travel links between China and Taiwan have been severely limited since 1949, but talks in June 2008 led to the first regular direct flights between the island and the mainland in nearly six decades.

Chen's number two Zhang Mingqing was jostled and shoved to the ground by pro-independence activists initiated by the DPP during his visit to the island earlier this week. Do we really need this kind of outward violent and unruly behavior promoted by the DPP? In Chinese traditional customs, a perceived “enemy” guest must still be accorded the best possible hospitality when he calls at the host home, although his untrustworthy antics and devious back-stabbing are being constantly monitored in the courts.

As usual, in the Western press line of reporting, the same sentence keeps repeated very often - “China and Taiwan split in 1949 at the end of a civil war, but China claims the island as part of its territory awaiting reunification and has threatened an invasion if it declares independence”. I reiterate, once again, that majority of the countries, except for about 14 or 16 small nations recognized the sovereignty of China over Taiwan but the Western media keep harping that only China claims the island as part of its territory. Isn’t this continuous parroting of the same message tantamount to “brain washing” of its readers whether consciously or unconsciously. Fortunately, there are still a lot of smart readers in the world.

Personally, I think reconciliation talks are the best solution on offer to reduce the political and military tensions created by the previous administration that last for 8 long unproductive years. A government survey which was loosely conducted revealed that 50 percent were positive about Chen’s visit and believed that it would help Taiwan to further ease tensions with Beijing and possibly, to allow mainland authorities to understand that democracy principles, other than the unruly behavior of its elected representatives, can co-exists and be part of Chinese societies when the electorate are more mature. Linkages with China will also allow trade to flourish improving the economic conditions and livelihood of the average Taiwanese.

The people of Taiwan should reject the uncompromising stance and the dangerous independence overtures of the main Opposition party who is only out to stir troubles without any end in mind. Moving Taiwan towards independence will only bring catastrophic consequences.

Arms sales to Taiwan, China responds rightfully by canceling and postponing military exchanges with US

By China Watcher

There is a common saying that you cannot have both the cakes and enjoy eating it as well. The double-faced US, self-appointed supreme power of the world, in its normal unilateral way arrogantly informed other nation that this is the only deal on the table, “Take it or leave it”. And of course, the US would use its own standards to justify its decision in order to show that it is listening and that it is the best course of solution for everyone. Most of the reasoning has more to do with protecting US interest. So it is just a lot of cocky stories.

In response to the Pentagon proposed arm sales to Taiwan worth US$6.5 billion for US Congress notification, the Chinese has responded within its authority to cancel or postpone several military exchanges with the United States. This would comprise senior officials level visits and exchanges involving humanitarian assistance, and disaster relief issues that had been scheduled to take place before the end of November.

A high ranked US official commented that the Chinese reaction is unfortunate and these may results in missed opportunities. I would not give a damn of missed opportunities. This is more to do with the respect of Chinese sovereign rights over Taiwan and the US had so many times mentioned insincerely that there is only one China but promoting actions that is the opposite. So how could you trust the US?

The US is the only country in the world who still feels remorseful for “betraying the Taiwanese” when it officially recognized the People Republic of China in 1979. To placate itself of being a “traitor” it passed a controversial Taiwan Relations Act to tell the US residents that while it recognized a “communist” government it is under an obligation to protect Taiwan (or US interest in Asia). But the Act runs counter to the Joint Communiqués signed between the US and China to establish diplomatic linkages and relationship between the people of both countries.

Do you think the Chinese government can accept this? Obviously not and so far, the Chinese can only protest and make its voices heard across the Pacific but as it gets stronger and more influential, and the US is getting weaker, we’ll see whether the double-faced US can really hold its ground based on the US-Taiwan Relations Act. By the way, the US is the ONLY country which still sells weapons to Taiwan and also, the ONLY country which has a unilateral act as the Taiwan Relations Act. I believe no other trustworthy country in the world who has established genuine diplomatic relationship with China would act this way.

The selling of weapons to a state of which a country has sovereign right is like giving a gun to a disobedient kid who has a highly disciplined father so that the parent will not be able to reconcile with the liberal son even though the father has many times said he will only use the cane if the son follows the step-father.

According to the Defense Security Cooperation Agency, the package includes 330 Patriot Advanced Capability (PAC-3) missiles and associated equipment worth up to 3.1 billion dollars. The advanced missile defense system has never been sold to Taiwan before. The Pentagon is also proposing selling Taiwan 30 AH-64 Apache Longbow attack helicopters and 1,000 Hellfire missiles to beef up its anti-armor capabilities, and for close air support of its ground forces. Are the helicopters defensive in nature?

In the proposal it mentioned that Taiwan has requested to buy 31 UGM-84L submarine-launched Harpoon anti-ship missiles and 182 Javelin guided missiles with 20 Javelin command launch units. The missiles are portable anti-tank weapons.

The Chinese side had already sternly warned the US of the impending arms sales which would affect bilateral relationship and it is of no surprise that the Chinese military has temporary called off all military exchanges with the US.

To address common security challenges, it is important to build trust between the two powerful militaries but the selling of arms to a province which is recognized as a part of China, it actually creates more mistrusts.

Besides, the usage of the Act, the US has also tried to justify its sales by saying that China’s military expansion leads other to hedge and one way is to arm its allies. But it will come a time even if a country’s hedges, would this be sufficient to prevent an outright invasion if there is no intervention from a bigger power. Historically, small nations are swallowed by bigger and stronger nations and the course and outcome of war is still the same. China is a big country and in 20 years’ time, hedging against an invasion would be useless. Even the Pentagon think-tank knows about it but they are still pushing sales trying to build comfort and misleading the American public. Personally, to deal with a potential superpower, it is important to build trust with the Chinese military and getting them more involved responsibly in international security programs.

The Western media always end its article with the words that Taiwan and the mainland have been governed separately since they split in 1949 at the end of a civil war, but Beijing sees the island as part of its territory that is awaiting reunification, by force if necessary.

The majority of the countries who have established diplomatic status with China recognized that there is only one China and that China has sovereign rights over Taiwan but why must the media continually emphasize that only Beijing sees it as part of its territory and not them. Are the media implying that these countries do not recognize Beijing’s right over Taiwan? This is why I have over the years become less trustful of western news agencies because of its hidden anti-China crusade.

China is slowly closing the gap with the US in space technology

By China Watcher

On Thursday, 25 September 2008, at 9.10 pm local time, Shenzhou VII blasted off from a remote desert site in Jiuquan without any hiccups and, the craft eventually shifted from an oval orbit to a more stable round orbit about 350 kilometers above Earth. Jiuquan! we had a lift off was proclaimed by the scientist and engineers which congregate at the Space Control Centre. The most prominent reverberation was that the trip had demonstrated to the world that China has progressively closed the space technological gap with the US and the West, and hopefully to match the West space prowess and in particular, the US in the future.

It cannot be denied that in terms of the quality and appearance of the craft, China was at least 30 years behind the US. But the ability of the Chinese to build a reliable 3-man spacecraft on its own, perfecting the Long March 2F rockets and to perform the spacewalk (though only 15 minutes long), which in the past only 2 nations had been able to master this particular risky feat, is in itself a tremendous achievement for a country which only seriously committed to a manned space program about 16 years ago.

Another very significant development for China is the government’s confidence in broadcasting the launch event live on state television. Before the launch, the selected “taikonauts” were introduced to the media and the people in a specially arranged ceremony. The live telecast of the launching of the Shenzhou VII and the lunar probe in 2007, demonstrated that the Chinese government is willing to be more open and transparent in its space program as compared to the brief video clips on news channels for its earlier space missions. The possibility that the event may go very wrong and the losing “face” syndrome in Chinese culture is always present but the government preferred the live mode, and I wish to commend admirably of the sound decision which may be a prelude to an open government for the Chinese people.

For more than a decade, the U.S. government backed by the neo-conservative Congress representatives was the main culprit in rejecting Beijing's overtures to join the 15-nation International Space Station (ISS) Club. Besides being the main technology contributor and the main financial backer for the ISS, the US do possesses lots of influence and hence, the voting always tilted towards the US stance to block a China invitation to the space club.

The US did not outwardly provide any reasons for its decision but space experts know that it has more to do with its self-centered objectives of being the supreme space power and also, the hidden fear that China may apply to its military development whatever advanced space technologies the country’s may acquire through its participation in the elite space club.

The latter line of argument is seriously flaw as we already noted that space technologies are the core element in advancing one’s military warfare if satellites and laser-type weapons are to be widely used in the future. No independent nation with a proper thinking mind would use its space advancement strictly for commercial purposes and benefits. Even the hypocritical US’s NASA programs are fully funded by the government and if I am not wrong the US do apply, to a large extent, these space technologies in its military for example, in mapping war zone using satellites and enhancement of missile precision and most important, the development of a reliable missile defense shield.

Who appointed the US to set the standard and why must she or any other permitted Western nations be the only people who can apply the core space technologies to its military? Perhaps, it is because China does not share its so-called “liberal and western set values”. I am fully aware that any countries which do not hold the set of human "values" (approved by the US, of course) are deemed to be “unfriendly” to the powers in the West especially the US.

The successful execution of the spacewalk will undoubtedly provide ample and vital information for the Chinese to proceed to conduct another expedition to dock two orbiters which are keys to constructing a space lab and ultimately, to build a space station.

China has announced that the time gap to launch the next two Shenzhou missions will be shorter and I would not be at all surprise if China will have a workable space station by 2018.

Congratulations to China and it goes to show that you do not need to be in an exclusive club controlled by the US, to further your space programs objectives.