http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2008/06/12/the-geopolitics-of-china.aspx
The Geopolitics Of China
John Mauldin's Outside the Box
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No matter where in the world I am, in South Africa, in Europe, in La Jolla, there's one question I get asked over and over, "What about China?" And small wonder. The increasing impact of China in the last generation is just staggering and seemingly accelerating every day. If you're in the market for oil, minerals, arable land, equities or debt, you're bidding against Chinese government-sponsored entities with a $1 trillion warchest. And the list of markets where China is a key player grows every day. Bottom line: whether you're filling up your gas tank or trading credit default swaps, China's decisions impact your pocket book.
The only thing that's crystal clear about China is the need to look long term, at the underlying forces that don't change day by day. Nobody does this better than my friend George Friedman and his team at Stratfor. Their geopolitical focus filters out the noise in the popular press and concentrates on the real drivers behind national policy. This is especially critical for a market like China, where traditional financial statement analysis is impossible and profit motives just don't apply.
On Monday, George and his team are releasing the second in their series of Geopolitical Monographs, called The Geopolitics of China. I've received an advance copy of the report below, and it is today's Special Edition of Outside the Box. Click this link to take advantage of a special pre-release offer on a Stratfor Membership that George is offering just to my readers. Did you know that China is functionally an island? Want to understand China's strategy behind their sovereign wealth funds? Policy in Tibet and Darfur? Join Stratfor now. You'll get a whole year of Stratfor's insights, plus you'll get The Geopolitics of China and their other Geopolitical Monographs included free. You really don't want to miss out on this opportunity.
Look at the map below that shows how China is functionally an island. Fascinating. It's just one of the maps George uses to illustrate what makes China, China. I hope you find this report intriguing, and do take George up on his offer for a free copy of the entire series included with your Stratfor Membership.
John Mauldin, Editor
Outside the Box
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THE GEOPOLITICS OF CHINA: A Great Power Enclosed
Contemporary China is an island. Although it is not surrounded by water (which borders only its eastern flank), China is bordered by terrain that is difficult to traverse in virtually any direction. There are some areas that can be traversed, but to understand China we must begin by visualizing the mountains, jungles and wastelands that enclose it. This outer shell both contains and protects China.
Internally, China must be divided into two parts: The Chinese heartland and the non-Chinese buffer regions surrounding it. There is a line in China called the 15-inch isohyet. On the east side of this line more than 15 inches of rain fall each year. On the west side annual rainfall is less than that. The bulk of the Chinese population lives east and south of this line. This is Han China, the Chinese heartland. It is where the vast majority of Chinese live and the home of the ethnic Han, what the world regards as the Chinese. It is important to understand that over a billion people live in an area about half the size of the United States.
The Chinese heartland is divided into two parts, northern and southern, which in turn is represented by two main dialects, Mandarin in the north and Cantonese in the south. These dialects share a writing system but are almost mutually incomprehensible when spoken. The Chinese heartland is defined by two major rivers -- the Yellow River in the north and the Yangtze in the South, along with a third lesser river in the south, the Pearl. The heartland is China's agricultural region. However -- and this is the single most important fact about China -- it has about one-third the arable land per person as the rest of the world. This pressure has defined modern Chinese history -- both in terms of living with it and trying to move beyond it.
A ring of non-Han regions surround this heartland -- Tibet, Xinjiang province (home of the Muslim Uighurs), Inner Mongolia and Manchuria. These are the buffer regions that historically have been under Chinese rule when China was strong and have broken away when China was weak. Today, there is a great deal of Han settlement in these regions, a cause of friction, but today Han China is strong.
These are also the regions where the historical threat to China originated. Han China is a region full of rivers and rain. It is therefore a land of farmers and merchants. The surrounding areas are the land of nomads and horsemen. In the 13th century, the Mongols under Ghenghis Khan invaded and occupied parts of Han China until the 15th century, when the Han reasserted their authority. Following this period, Chinese strategy remained constant: the slow and systematic assertion of control over these outer regions in order to protect the Han from incursions by nomadic cavalry. This imperative drove Chinese foreign policy. In spite of the imbalance of population, or perhaps because of it, China saw itself as extremely vulnerable to military forces moving from the north and west. Defending a massed population of farmers against these forces was difficult. The easiest solution, the one the Chinese chose, was to reverse the order and impose themselves on their potential conquerors.
There was another reason. Aside from providing buffers, these possessions provided defensible borders. With borderlands under their control, China was strongly anchored. Let's consider the nature of China's border sequentially, starting in the east along the southern border with Vietnam and Myanmar. The border with Vietnam is the only border readily traversable by large armies or mass commerce. In fact, as recently as 1975, China and Vietnam fought a short border war, and there have been points in history when China has dominated Vietnam. However, the rest of the southern border where Yunnan province meets Laos and Myanmar is hilly jungle, difficult to traverse, with almost no major roads. Significant movement across this border is almost impossible. During World War II, the United States struggled to build the Burma Road to reach Yunnan and supply Chiang Kai-shek's forces. The effort was so difficult it became legendary. China is secure in this region.
Hkakabo Razi, almost 19,000 feet high, marks the border between China, Myanmar and India. At this point, China's southwestern frontier begins, anchored in the Himalayas. More precisely, it is where Tibet, controlled by China, borders India and the two Himalayan states, Nepal and Bhutan. This border runs in a long ark past Pakistan, Tajikistan and Kirgizstan, ending at Pik Pobedy, a 25,000-foot mountain marking the border with China, Kirgyzstan and Kazakhstan. It is possible to pass through this border region with difficulty; historically, parts of it have been accessible as a merchant route. On the whole, however, the Himalayas are a barrier to substantial trade and certainly to military forces. India and China -- and China and much of Central Asia -- are sealed off from each other.
The one exception is the next section of the border, with Kazakhstan. This area is passable but has relatively little transport. As the transport expands, this will be the main route between China and the rest of Eurasia. It is the one land bridge from the Chinese island that can be used. The problem is distance. The border with Kazakhstan is almost a thousand miles from the first tier of Han Chinese provinces, and the route passes through sparsely populated Muslim territory, a region that has posed significant challenges to China. Importantly, the Silk Road from China ran through Xinjiang and Kazakhstan on its way west. It was the only way to go.
There is, finally, the long northern border first with Mongolia and then with Russia, running to the Pacific. This border is certainly passable. Indeed, the only successful invasion of China took place when Mongol horseman attacked from Mongolia, occupying a good deal of Han China. China's buffers -- Inner Mongolia and Manchuria -- have protected Han China from other attacks. The Chinese have not attacked northward for two reasons. First, there has historically not been much there worth taking. Second, north-south access is difficult. Russia has two rail lines running from the west to the Pacific -- the famous Trans-Siberian Railroad (TSR) and the Baikal-Amur Mainline (BAM), which connects those two cities and ties into the TSR. Aside from that, there is no east-west ground transportation linking Russia. There is also no north-south transportation. What appears accessible really is not.
The area in Russia that is most accessible from China is the region bordering the Pacific, the area from Russia's Vladivostok to Blagoveschensk. This region has reasonable transport, population and advantages for both sides. If there were ever a conflict between China and Russia, this is the area that would be at the center of it. It is also the area, as you move southward and away from the Pacific, that borders on the Korean Peninsula, the area of China's last major military conflict.
Then there is the Pacific coast, which has numerous harbors and has historically had substantial coastal trade. It is interesting to note that, apart from the attempt by the Mongols to invade Japan, and a single major maritime thrust by China into the Indian Ocean -- primarily for trade and abandoned fairly quickly -- China has never been a maritime power. Prior to the 19th century, it had not faced enemies capable of posing a naval threat and, as a result, it had little interest in spending large sums of money on building a navy.
China, when it controls Tibet, Xinjiang, Inner Mongolia and Manchuria, is an insulated state. Han China has only one point of potential friction, in the southeast with Vietnam. Other than that it is surrounded by non-Han buffer regions that it has politically integrated into China. There is a second friction point in eastern Manchuria, touching on Siberia and Korea. There is, finally, a single opening into the rest of Eurasia on the Xinjiang-Kazakh border.
China's most vulnerable point, since the arrival of Europeans in the western Pacific in the mid-19th century, has been its coast. Apart from European encroachments in which commercial interests were backed up by limited force, China suffered its most significant military encounter -- and long and miserable war -- after the Japanese invaded and occupied large parts of eastern China along with Manchuria in the 1930s. Despite the mismatch in military power and more than a dozen years of war, Japan still could not force the Chinese government to capitulate. The simple fact was that Han China, given its size and population density, could not be subdued. No matter how many victories the Japanese won, they could not decisively defeat the Chinese.
China is hard to invade; given its size and population, it is even harder to occupy. This also makes it hard for the Chinese to invade others -- not utterly impossible, but quite difficult. Containing a fifth of the world's population, China can wall itself off from the world, as it did prior to the United Kingdom's forced entry in the 19th century and as it did under Mao Zedong. All of this means China is a great power, but one that has to behave very differently than other great powers.
China's Geopolitical Imperatives
China has three overriding geopolitical imperatives:
Maintain internal unity in the Han Chinese regions.
Maintain control of the buffer regions.
Protect the coast from foreign encroachment.
Maintaining Internal Unity
China is more enclosed than any other great power. The size of its population coupled with its secure frontiers and relative abundance of resources, allows it to develop with minimal intercourse with the rest of the world, if it chooses. During the Maoist period, for example, China became an insular nation, driven primarily by internal interests and considerations, indifferent or hostile to the rest of the world. It was secure and, except for its involvement in the Korean War and its efforts to pacify restless buffer regions, was relatively peaceful. Internally, however, China underwent periodic, self-generated chaos.
The weakness of insularity for China is poverty. Given the ratio of arable land to population, a self-enclosed China is a poor China. Its population is so poor that economic development driven by domestic demand, no matter how limited it might be, is impossible. However, an isolated China is easier to manage by a central government. The great danger in China is a rupture within the Han Chinese nation. If that happens, if the central government weakens, the peripheral regions will spin off, and China will then be vulnerable to foreigners taking advantage of Chinese weakness.
For China to prosper, it has to engage in trade, exporting silk, silver and industrial products. Historically, land trade has not posed a problem for China. The Silk Road allowed foreign influences to come into China and the resulting wealth created a degree of instability. On the whole, however, it could be managed.
The dynamic of industrialism changed both the geography of Chinese trade and its consequences. In the mid-19th century, when Europe -- led by the British --compelled the Chinese government to give trading concessions to the British, it opened a new chapter in Chinese history. For the first time, the Pacific coast was the interface with the world, not Central Asia. This in turn, massively destabilized China.
As trade between China and the world intensified, the Chinese who were engaged in trading increased their wealth dramatically. Those in the coastal provinces of China, the region most deeply involved in trading, became relatively wealthy while the Chinese in the interior (not the buffer regions, which were always poor, but the non-coastal provinces of Han China) remained poor, subsistence farmers.
The central government was balanced between the divergent interests of coastal China and the interior. The coastal region, particularly its newly enriched leadership, had an interest in maintaining and intensifying relations with European powers and with the United States and Japan. The more intense the trade, the wealthier the coastal leadership and the greater the disparity between the regions. In due course, foreigners allied with Chinese coastal merchants and politicians became more powerful in the coastal regions than the central government. The worst geopolitical nightmare of China came true. China fragmented, breaking into regions, some increasingly under the control of foreigners, particularly foreign commercial interests. Beijing lost control over the country. It should be noted that this was the context in which Japan invaded China, which made Japan's failure to defeat China all the more extraordinary.
Mao's goal was three-fold, Marxism aside. First, he wanted to recentralize China -- re-establishing Beijing as China's capital and political center. Second, he wanted to end the massive inequality between the coastal region and the rest of China. Third, he wanted to expel the foreigners from China. In short, he wanted to recreate a united Han China.
Mao first attempted to trigger an uprising in the cities in 1927 but failed because the coalition of Chinese interests and foreign powers was impossible to break. Instead he took the long march to the interior of China, where he raised a massive peasant army that was both nationalist and egalitarian and, in 1948, returned to the coastal region and expelled the foreigners. Mao re-enclosed China, recentralized it, and accepted the inevitable result. China became equal but extraordinarily poor.
China's primary geopolitical issue is this: For it to develop it must engage in international trade. If it does that, it must use its coastal cities as an interface with the world. When that happens, the coastal cities and the surrounding region become increasingly wealthy. The influence of foreigners over this region increases and the interests of foreigners and the coastal Chinese converge and begin competing with the interests of the central government. China is constantly challenged by the problem of how to avoid this outcome while engaging in international trade.
Controlling the Buffer Regions
Prior to Mao's rise, with the central government weakened and Han China engaged simultaneously in war with Japan, civil war and regionalism, the center was not holding. While Manchuria was under Chinese control, Outer Mongolia was under Soviet control and extending its influence (Soviet power more than Marxist ideology) into Inner Mongolia, and Tibet and Xinjiang were drifting away.
At the same time that Mao was fighting the civil war, he was also laying the groundwork for taking control of the buffer regions. Interestingly, his first moves were designed to block Soviet interests in these regions. Mao moved to consolidate Chinese communist control over Manchuria and Inner Mongolia, effectively leveraging the Soviets out. Xinjiang had been under the control of a regional war lord, Yang Zengxin. Shortly after the end of the civil war, Mao moved to force him out and take over Xinjiang. Finally, in 1950 Mao moved against Tibet, which he secured in 1951.
The rapid-fire consolidation of the buffer regions gave Mao what all Chinese emperors sought, a China secure from invasion. Controlling Tibet meant that India could not move across the Himalayas and establish a secure base of operations on the Tibetan Plateau. There could be skirmishes in the Himalayas, but no one could push a multi-divisional force across those mountains and keep it supplied. So long as Tibet was in Chinese hands, the Indians could live on the other side of the moon. Xinjiang, Inner Mongolia and Manchuria buffered China from the Soviet Union. Mao was more of a geopolitician than an ideologue. He did not trust the Soviets. With the buffer states in hand, they would not invade China. The distances, the poor transportation and the lack of resources meant that any Soviet invasion would run into massive logistical problems well before it reached Han China's populated regions, and become bogged down -- just as the Japanese had.
China had geopolitical issues with Vietnam, Pakistan and Afghanistan, neighboring states with which it shared a border, but the real problem for China would come in Manchuria or, more precisely, Korea. The Soviets, more than the Chinese, had encouraged a North Korean invasion of South Korea. It is difficult to speculate on Joseph Stalin's thinking, but it worked out superbly for him. The United States intervened, defeated the North Korean Army and drove to the Yalu, the river border with China. The Chinese, seeing the well-armed and well-trained American force surge to its borders, decided that it had to block its advance and attacked south. What resulted was three years of brutal warfare in which the Chinese lost about a million men. From the Soviet point of view, fighting between China and the United States was the best thing imaginable. But from Stratfor's point of view, what it demonstrated was the sensitivity of the Chinese to any encroachment on their borderlands, their buffers, which represent the foundation of their national security.
Protecting the Coast
With the buffer regions under control, the coast is China's most vulnerable point, but its vulnerability is not to invasion. Given the Japanese example, no one has the interest or forces to try to invade mainland China, supply an army there and hope to win. Invasion is not a meaningful threat.
The coastal threat to China is economic, and most would not call it a threat. As we saw, the British intrusion into China culminated in the destabilization of the country, the virtual collapse of the central government and civil war. It was all caused by prosperity. Mao had solved the problem by sealing the coast of China off to any real development and liquidating the class that had collaborated with foreign business. For Mao, xenophobia was integral to natural policy. He saw foreign presence as undermining the stability of China. He preferred impoverished unity to chaos. He also understood that, given China's population and geography, it could defend itself against potential attackers without an advanced military-industrial complex.
His successor, Deng Xiaoping, was heir to a powerful state in control of China and the buffer regions. He also felt under tremendous pressure politically to improve living standards, and he undoubtedly understood that technological gaps would eventually threaten Chinese national security. He took a historic gamble. He knew that China's economy could not develop on its own. China's internal demand for goods was too weak because the Chinese were too poor.
Deng gambled that he could open China to foreign investment and reorient the Chinese economy away from agriculture and heavy industry and toward export-oriented industries. By doing so he would increase living standards, import technology and train China's workforce. He was betting that the effort this time would not destabilize China, create massive tensions between the prosperous coastal provinces and the interior, foster regionalism or put the coastal regions under foreign control. Deng believed he could avoid all that by maintaining a strong central government, based on a loyal army and communist party apparatus. His successors have struggled to maintain that loyalty to the state and not to foreign investors, who can make individuals wealthy. That is the bet that is currently being played out.
China's Geopolitics and its Current Position
From a political and military standpoint, China has achieved its strategic goals. The buffer regions are intact and China faces no threat in Eurasia. It sees a Western attempt to force China out of Tibet as an attempt to undermine Chinese national security. For China, however, Tibet is a minor irritant; China has no possible intention of leaving Tibet, the Tibetans cannot rise up and win, and no one is about to invade the region. Similarly, the Uighur Muslims represent an irritant in Xinjiang and not a direct threat. The Russians have no interest in or capability of invading China, and the Korean peninsula does not represent a direct threat to the Chinese, certainly not one they could not handle.
The greatest military threat to China comes from the United States Navy. The Chinese have become highly dependent on seaborne trade and the United States Navy is in a position to blockade China's ports if it wished. Should the United States do that, it would cripple China. Therefore, China's primary military interest is to make such a blockade impossible.
It would take several generations for China to build a surface navy able to compete with the United States Navy. Simply training naval aviators to conduct carrier-based operations effectively would take decades -- at least until these trainees became admirals and captains. And this does not take into account the time it would take to build an aircraft carrier and carrier-capable aircraft and master the intricacies of carrier operations.
For China, the primary mission is to raise the price of a blockade so high that the Americans would not attempt it. The means for that would be land- and submarine-based-anti-ship missiles. The strategic solution is for China to construct a missile force sufficiently dispersed that it cannot be suppressed by the United States and with sufficient range to engage the United States at substantial distance, as far as the central Pacific.
In order for this missile force to be effective, it would have to be able to identify and track potential targets. Therefore, if the Chinese are to pursue this strategy, they must also develop a space-based maritime reconnaissance system. These are the technologies that the Chinese are focusing on. Anti-ship missiles and space-based systems, including anti-satellite systems designed to blind the Americans, represent China's military counter to its only significant military threat.
China could also use those missiles to blockade Taiwan by interdicting ships going to and from the island. But the Chinese do not have the naval ability to land a sufficient amphibious force and sustain it in ground combat. Nor do they have the ability to establish air superiority over the Taiwan Strait. China might be able to harass Taiwan but it will not invade it. Missiles, satellites and submarines constitute China's naval strategy.
For China, the primary problem posed by Taiwan is naval. Taiwan is positioned in such a way that it can readily serve as an air and naval base that could isolate maritime movement between the South China Sea and the East China Sea, effectively leaving the northern Chinese coast and Shanghai isolated. When you consider the Ryukyu Islands that stretch from Taiwan to Japan and add them to this mix, a non-naval power could blockade the northern Chinese coast if it held Taiwan.
Taiwan would not be important to China unless it became actively hostile or allied with or occupied by a hostile power such as the United States. If that happened, its geographical position would pose an extremely serious problem for China. Taiwan is also an important symbolic issue to China and a way to rally nationalism. Although Taiwan presents no immediate threat, it does pose potential dangers that China cannot ignore.
There is one area in which China is being modestly expansionist -- Central Asia and particularly Kazakhstan. Traditionally a route for trading silk, Kazakhstan is now an area that can produce energy, badly needed by China's industry. The Chinese have been active in developing commercial relations with Kazakhstan and in developing roads into Kazakhstan. These roads are opening a trading route that allows oil to flow in one direction and industrial goods in another.
In doing this, the Chinese are challenging Russia's sphere of influence in the former Soviet Union. The Russians have been prepared to tolerate increased Chinese economic activity in the region while being wary of China's turning into a political power. Kazakhstan has been European Russia's historical buffer state against Chinese expansion and it has been under Russian domination. This region must be watched carefully. If Russia begins to feel that China is becoming too assertive in this region, it could respond militarily to Chinese economic power.
Chinese-Russian relations have historically been complex. Before World War II, the Soviets attempt to manipulate Chinese politics. After World War II, relations between the Soviet Union and China were never as good as some thought, and sometimes these relations became directly hostile, as in 1968, when Russian and Chinese troops fought a battle along the Ussuri River. The Russians have historically feared a Chinese move into their Pacific maritime provinces. The Chinese have feared a Russian move into Manchuria and beyond.
Neither of these things happened because the logistical challenges involved were enormous and neither had an appetite for the risk of fighting the other. We would think that this caution will prevail under current circumstances. However, growing Chinese influence in Kazakhstan is not a minor matter for the Russians, who may choose to contest China there. If they do, and it becomes a serious matter, the secondary pressure point for both sides would be in the Pacific region, complicated by proximity to Korea.
But these are only theoretical possibilities. The threat of an American blockade on China's coast, of using Taiwan to isolate northern China, of conflict over Kazakhstan -- all are possibilities that the Chinese must take into account as they plan for the worst. In fact, the United States does not have an interest in blockading China and the Chinese and Soviets are not going to escalate competition over Kazakhstan.
China does not have a military-based geopolitical problem. It is in its traditional strong position, physically secure as it holds its buffer regions. It has achieved it three strategic imperatives. What is most vulnerable at this point is its first imperative: the unity of Han China. That is not threatened militarily. Rather, the threat to that is economic.
Economic Dimensions of Chinese Geopolitics
The problem of China, rooted in geopolitics, is economic and it presents itself in two ways. The first is simple. China has an export-oriented economy. It is in a position of dependency. No matter how large its currency reserves or how advanced its technology or how cheap its labor force, China depends on the willingness and ability of other countries to import its goods -- as well as the ability to physically ship them. Any disruption of this flow has a direct effect on the Chinese economy.
The primary reason other countries buy Chinese goods is price. They are cheaper because of wage differentials. Should China lose that advantage to other nations or for other reasons, its ability to export would decline. Today, for example, as energy prices rise, the cost of production rises and the relative importance of the wage differential decreases. At a certain point, as China's trading partners see it, the value of Chinese imports relative to the political cost of closing down their factories will shift.
And all of this is outside of China's control. China cannot control the world price of oil. It can cut into its cash reserves to subsidize those prices for manufacturers but that would essentially be transferring money back to consuming nations. It can control rising wages by imposing price controls, but that would cause internal instability. The center of gravity of China is that it has become the industrial workshop of the world and, as such, it is totally dependent on the world to keep buying its goods rather than someone else's goods.
There are other issues for China, ranging from a dysfunctional financial system to farm land being taken out of production for factories. These are all significant and add to the story. But in geopolitics we look for the center of gravity, and for China the center of gravity is that the more effective it becomes at exporting, the more of a hostage it becomes to its customers. Some observers have warned that China might take its money out of American banks. Unlikely, but assume it did. What would China do without the United States as a customer?
China has placed itself in a position where it has to keep its customers happy. It struggles against this reality daily, but the fact is that the rest of the world is far less dependent on China's exports than China is dependent on the rest of the world.
Which brings us to the second, even more serious part of China's economic problem. The first geopolitical imperative of China is to ensure the unity of Han China. The third is to protect the coast. Deng's bet was that he could open the coast without disrupting the unity of Han China. As in the 19th century, the coastal region has become wealthy. The interior has remained extraordinarily poor. The coastal region is deeply enmeshed in the global economy. The interior is not. Beijing is once again balancing between the coast and the interior.
The interests of the coastal region and the interests of importers and investors are closely tied to each other. Beijing's interest is in maintaining internal stability. As pressures grow, it will seek to increase its control of the political and economic life of the coast. The interest of the interior is to have money transferred to it from the coast. The interest of the coast is to hold on to its money. Beijing will try to satisfy both, without letting China break apart and without resorting to Mao's draconian measures. But the worse the international economic situation becomes the less demand there will be for Chinese products and the less room there will be for China to maneuver.
The second part of the problem derives from the first. Assuming that the global economy does not decline now, it will at some point. When it does, and Chinese exports fall dramatically, Beijing will have to balance between an interior hungry for money and a coastal region that is hurting badly. It is important to remember that something like 900 million Chinese live in the interior while only about 400 million live in the coastal region. When it comes to balancing power, the interior is the physical threat to the regime while the coast destabilizes the distribution of wealth. The interior has mass on its side. The coast has the international trading system on its. Emperors have stumbled over less.
Conclusion
Geopolitics is based on geography and politics. Politics is built on two foundations: military and economic. The two interact and support each other but are ultimately distinct. For China, securing its buffer regions generally eliminates military problems. What problems are left for China are long-term issues concerning northeastern Manchuria and the balance of power in the Pacific.
China's geopolitical problem is economic. Its first geopolitical imperative, maintain the unity of Han China, and its third, protect the coast, are both more deeply affected by economic considerations than military ones. Its internal and external political problems flow from economics. The dramatic economic development of the last generation has been ruthlessly geographic. This development has benefited the coast and left the interior -- the vast majority of Chinese -- behind. It has also left China vulnerable to global economic forces that it cannot control and cannot accommodate. This is not new in Chinese history, but its usual resolution is in regionalism and the weakening of the central government. Deng's gamble is being played out by his successors. He dealt the hand. They have to play it.
The question on the table is whether the economic basis of China is a foundation or a balancing act. If the former, it can last a long time. If the latter, everyone falls down eventually. There appears to be little evidence that it is a foundation. It excludes most of the Chinese from the game, people who are making less than $100 a month. That is a balancing act and it threatens the first geopolitical imperative of China: protecting the unity of the Han Chinese.
Your working hard to understand China Analyst,
John Mauldin
Disclaimer
John Mauldin is president of Millennium Wave Advisors, LLC, a registered investment advisor. All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors before making any investment decisions.
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Filed under: George Friedman, China, Stratfor, Geopolitics, Global Economy
Thursday, October 30, 2008
The Geopolitics Of China
တရားမွ်တမွဳဆိတ္သုဥ္းေနေသာ နအဖအာဏာရွင္စနစ္ကို နိဂံုးခ်ဳပ္ၾကစို႕ -ခင္မမမ်ိဳး
FROM TOM BROWN
တရားမွ်တမွဳဆိတ္သုဥ္းေနေသာ နအဖအာဏာရွင္စနစ္ကို နိဂံုးခ်ဳပ္ၾကစို႕
အႏွစ္ႏွစ္ဆယ္ေက်ာ္ကာလ။
နဝတ၊နအဖလက္ထက္မွာ လူျဖစ္ေနၾကရေသာ ျမန္မာျပည္သူတို႔ဘဝတြင္ ပ်က္စီးဆံုးရွဳံးမွဳမ်ားကား ေရတြက္၍ပင္မရ။ ျပည္သူတို႔၏ အသက္အိုးအိမ္စည္းစိမ္ကို ကာကြယ္ရမည့္သူမ်ားက ျပည္သူ႔အသက္ကို သတ္၍ စည္းစိမ္ဥစၥာတို႔ကို လုယူခဲ့ၾကေလျပီ။
ျပည္သူတို႔ဆန္ၾကမ္းစားျပီး၊ အခ်ိဳ႔မွာထမင္းေရေသာက္ေနရခ်ိန္တြင္ နအဖႏွင့္အေပါင္းအပါမ်ားကား ဟိုတယ္၊ စားေသာက္ဆိုင္မ်ားတြင္ ႏိုင္ငံေပါင္းစံုမွ အစားအေသာက္မ်ားမွီဝဲေနၾကသည္။ ယမကာမ်ိဳးစံုကို မွီ၀ဲေနၾကသည္။ စားဝတ္ေနေရး မေျပလည္၍ မိသားစုအတြက္ ဘဝနစ္မြန္းခံကာ စရိတ္စက ရွာေဖြေနၾကရေသာ ျမန္မာမိန္းကေလးငယ္မ်ားႏွင့္ ေပ်ာ္ပါးေနၾကသည္။
ျပည္သူတို႔ အဝတ္အစား (၃)၊(၄)စံုႏွင့္ ဘဝခရီးၾကမ္းထဲ ရုန္းကန္ေနၾကခ်ိန္တြင္ နအဖႏွင့္အေပါင္းအပါတို႔၏ ဇနီးသားမယားမ်ား၏ လည္တိုင္မ်ား၌သိန္းေပါင္း ေထာင္ခ်ီတန္သည့္ စိန္တန္ဆာမ်ား ဆင္ျမန္းထားၾကသည္။ ဖခင္ႏွင့္ ခင္ပြန္းျဖစ္သူ၏ လစာႏွင့္ ဝယ္ထားပါသည္ဟု အဘယ္နအဖ ဇနီးႏွင့္ သမီးတို႔ဆိုဝ့့ံသနည္း။
ျပည္သူတို႔ အမိုးအကာေလး ေအာက္မွာေနရဖို႔ အသည္းအသန္ ၾကိဳးစားေနရခ်ိန္တြင္ နအဖတို႔မွာကား၊ တိုက္တစ္လံုးျပီး တစ္လံုး တိုးတက္ပိုင္ဆိုင္လာၾကသည္။ ယင္းသို႔ေသာသူမ်ားက အမိုးအကာေအာက္မွေနျပီး၊ စားရမဲ့ေသာက္ရမ ဲ့ျပည္သူမ်ားကို ေနစရာပါမဲ့ေအာင္ အိမ္မ်ားဖ်က္၊ ရြာမ်ားမီးရွိဳ႔လုပ္ရက္ေနၾကသည္။
ျပည္သူတို႔မွာကား အဆမတန္ၾကီးထြားလာေသာ ကုန္ေစ်းႏွဳန္းႏွင့္ အမွီလိုက္ႏိုင္ေအာင္ ကိုယ္ဆင္းရဲ၊ စိတ္ဆင္းရဲ ရုန္းကန္ေနၾကရသည္။ ေလာကပါလတရားျဖစ္သည္႔ တရားမွ်တမွဳဆိုသည္ကား အဘယ္နည္း။
ဤၾကားထ ဲတစ္ပူေပၚႏွစ္ပူဆင့္ေစသည္က နအဖတို႔က်င့္သံုးေနေသာ တရားစီရင္ေရးစနစ္၏ တရားမမွ်တမွဳ။ 'အသက္တစ္ရာမေနရ၊ အမွဳတစ္ရာၾကံဳရ" ဆိုသကဲ့သို႔ လူထုၾကားတြင္လဲ အမွဳအခင္းမ်ားရွိေနတတ္စျမဲ။ အေမြလုမွဳ၊ ခိုးမွဳ၊ လူသတ္မွဳ၊ လိမ္လည္ဖ်ားေယာင္းမွဳ စသည္စသည္။ တရားဥပေဒဟူသည္ ၾကီးသည့္အမွဳငယ္ေအာင္၊ ငယ္သည့္အမွဳပေပ်ာက္ေအာင္ ျပဳလုပ္ေပးရစျမဲ။
သို႔ရာတြင္ နအဖလက္ထက္ အမွဳမ်ားသည္ကား မရွိရွိေအာင္၊ မၾကီးၾကီးေအာင္ ခ်ဲ႔ထြင္ခံရတတ္သည္။ ေရွ့ေနမ်ား၊ တရားသူၾကီးမ်ား၊ ရံုးစာေရးမ်ားကို အဆင့္ဆင့္ လာဘ္ေပးၾကရသည္။ ျပီးသင့္သည့္ အခ်ိန္တြင္လဲမျပီးႏိုင္။ ရွိသမွ်ကုန္ကာ တခါတရံအမွဳျပီး၍ ေနာင္ႏွစ္ေပါင္းမ်ားစြာ ၾကာသည္အထိ အေၾကြးဆပ္ေနၾကရသည္။ လူမသတ္ပဲ လူသတ္တရားခ ံျဖစ္ရသူမ်ားလဲ ဒုနဲ႔ေဒး။ မခိုးပဲသူခိုးျဖစ္ရသူလဲ အမ်ားအျပား။
ယင္းဘဝမ်ားၾကားထဲတြင္ အမွန္တရားအတြက္ ရပ္တည္ေနသူမ်ားကားပိုမို ဒုကၡမ်ားၾကရသည္။ ဆန္ေစ်းတက္လို႔ တက္တယ္ေျပာတာလဲ ေထာင္အႏွစ္ႏွစ္ဆယ္၊ လူထုဘဝ အေၾကာင္း ကဗ်ာေလးတစ္ပုဒ္စပ္ျပန္ေတာ့လဲ ေထာင္ခုနစ္ႏွစ္၊ ဘီဘီစီေရဒီယိုေလး နားေထာင္မိတာလဲေထာင္သံုးႏွစ္၊ မတရားတာကို မေက်နပ္လို႔ ဆႏၵျပေတာ့ ေထာင္ငါးဆယ့္ကိုးႏွစ္ဆိုပဲ။ ကဲ- ဘယ္လိုရွိစ။
တရားမွ်တမွဳဆိုသည္ကား ဆိတ္သုဥ္းကြယ္ေပ်ာက္ေနပါပေကာ။
နအဖအေပါင္းအပါ စီးပြားေရးသမားမ်ားက 'စားမယ္၊ ဝါးမယ္' ၾကိမ္းဝါးေနသည္။
နအဖေနာက္လိုက္ မတရားဥပေဒ ဘက္ေတာ္သားမ်ားက 'ဖမ္းမယ္၊ ဆီးမယ္' ျခိမ္းေခ်ာက္ေနသည္။
နအဖလက္ကိုင္စစ္သားမ်ားက 'သတ္မယ္၊ ျဖတ္မယ္'ေၾကြးေၾကာ္ေနသည္။
နအဖအျမီးဆြဲစြမ္းအားရွင္မ်ားက 'ရိုက္မယ္၊ ႏွက္မယ္' တုတ္ျပင္ေနသည္။
သူတို႔မည္သို႔သြားျဖဲျဖဲ အဖိႏွိပ္ခံျပည္သူမ်ား ညီညြတ္ၾကဖို႔ အခ်ိန္တန္ျပီ။ "ျပည္သူ႔အားသည္ ထိုအရာမ်ားထက္ပို၍ အင္အားၾကီးမားပါသည္။" ကမၻာ့သမိုင္းတေလွ်ာက္ ျပည္သူ႕အင္အားကို လြန္ဆန္ႏိုင္ေသာ အာဏာရွင္ဟူ၍ မရွိေသးပါ။
ဆိတ္သုဥ္းကြယ္ေပ်ာက္ေနေသာ တရားမွ်တမွဳတို႔ ျပန္လည္ထြန္းကားလာေရးသည္ တစ္ဦးတစ္ဖြဲ႔ တစ္ပါတီတည္း၏ တာဝန္မဟုတ္။ ျပည္သူအားလံုး၏ တာဝန္ျဖစ္သည္။
ေဒၚေအာင္ဆန္းစုၾကည္ေျပာခဲ့သည့္စကားတခြန္းျဖင့္နိဂုံးခ်ဳပ္ပါမည္။
'ေလွတစ္စင္းကို ေလွာ္တဲ့ေနရာမွာ၊ ေလွာ္တဲ့လူကႏွစ္ေယာက္၊ စီးတဲ့လူက တစ္ရာကိုးဆယ့္ရွစ္ေယာက္ ဆိုရင္ေတာ့ ျမန္ျမန္ေရာက္ဖို႕မလြယ္ဘူး'
ျပည္သူလူထုအားလံုး တက္ညီလက္ညီ ပူးေပါင္း၍ ေတာ္လွန္ေရးအသြင္သ႑ာန္မ်ိဳးစံုျဖင့္ နအဖအာဏာရွင္စနစ္အား နိဂံုးခ်ဳပ္ၾကပါစို႔။
ခင္မမမ်ိဳး
Burma's Relations with China: Neither Puppet nor Pawn
http://www.jamestown.org/terrorism/news/article.php?articleid=2373268
By Ian Storey
On January 12, China and Russia wielded their vetoes at the United Nations Security Council (UNSC) to defeat a draft resolution tabled by the United States and the United Kingdom, which called on the government of Burma to cease military attacks against ethnic minorities, release all political prisoners, including democracy icon Aung San Suu Kyi and engage in political dialogue leading to genuine democratic transition. The United States had argued that narcotics production in Burma, refugee outflows, widespread human rights abuses and the spread of communicable diseases make Burma a threat to international peace and security. Yet, China vetoed the proposal on the grounds that the issues faced by Burma were internal, sovereign matters, and that Burma did not pose a threat to international peace and security.
China’s action at the UNSC underscores its continued position as Burma’s most valuable ally. Since the early 1990s, Burma has viewed China’s veto-power at the UN as its ultimate insurance policy against an East Timor-style international intervention. Contrary to what many observers believe, however, Burma is neither Beijing’s puppet nor a pawn in China’s grand strategy in Asia. The Burmese are fiercely nationalistic and often xenophobic, and Rangoon’s foreign policy actions since the mid-1990s strongly suggest that the ruling military junta has sought to reduce its dependence on China by reaching out to other countries. Since 2000, this policy—implemented with varying degrees of success—has only accelerated, with India becoming the primary beneficiary. China is likely to retain its privileged position in the hierarchy of Burma’s foreign relations in the immediate future. Yet, the long-term future of Sino-Burmese relations depends on the domestic developments within Burma, developments which could ultimately undermine China’s premier position.
The Development of a Symbiotic Relationship
Burma and China forged a close relationship in response to the international disapprobation that followed their military crackdowns on anti-government demonstrators in August 1988 and June 1989, respectively. For Burma, friendship with Beijing provided diplomatic support and protection at the UN, economic aid to support its moribund economy and military equipment to consolidate power and bring ethnic separatists under control. For China, alignment with Burma offered a golden opportunity to further its interests in mainland Southeast Asia. Access to the Indian Ocean through Burma was an important component in the development of China’s landlocked southwest provinces such as Yunnan and Sichuan. China was also eager to gain access to Burma’s rich natural resources, such as oil and gas, lumber and gemstones. Additionally, China gained a friend on its southern border, a friend who could, in the future, allow the Chinese Navy to project power into the Indian Ocean and the northern approaches to the Strait of Malacca.
During the 1990s, the two countries cemented a valuable relationship. China delivered $2 billion worth of military equipment to the Burmese armed forces (Tatmadaw), including fighter aircraft, tanks, naval patrol boats, armored personnel carriers, field and anti-aircraft artillery, small arms and ammunition. China also provided training to the Tatmadaw, helped upgrade naval bases and established their signal intelligence (SIGINT) capability. This enabled the Tatmadaw not only to become a more effective counter-insurgency force, but also to keep a tighter grip on internal security and resist external aggression. Beijing’s interest-free loans prevented economic collapse, stabilized the economy during the 1997-1998 Asian financial crisis and enabled Rangoon to circumvent Western sanctions. After 1998, China quickly became Burma’s dominant external economic force, flooding the Burmese market with cheap manufactured goods. The opening of cross-border trade was also accompanied by an influx of Chinese nationals who used the identity cards of deceased Burmese citizens to purchase real estate, retail outlets and restaurants, mainly in Mandalay. This economic penetration of Burma in the 1990s was facilitated by improvements to the country’s crumbling infrastructure, including roads, railways, airports and ports, almost all of which were financed by Beijing.
The scale of Beijing’s support to the military junta during the 1990s led many observers to conclude that Burma had completely abandoned its policy of non-alignment and allowed itself to become a client-state of China. Burma’s relationship with China post-1988, however, is far more complex than simply a manifestation of the client-state theory. Facing international isolation and economic collapse in 1988, the military junta, the State Law and Order Restoration Council (SLORC), turned to China out of dire necessity. There can be no doubt that China’s support enabled the SLORC to survive and consolidate power. Yet, a long tradition of nationalism, self-reliance and even xenophobia suggests Rangoon had no intention of becoming a Chinese pawn, and that as soon as conditions permitted, it would move to reduce its dependence on Beijing. Indeed, beginning in 1993 this is exactly what has happened, as Rangoon attempted to broaden its foreign relations by courting two regional actors: India and ASEAN.
India-Burma relations had nose-dived in 1988 after New Delhi threw its support behind the Burmese student demonstrators. In 1993, however, India abandoned its policy of supporting the pro-democracy forces in Burma after realizing that its anti-SLORC policy had helped push Burma into China’s embrace. The Indian government was particularly concerned with Sino-Burmese strategic links and the prospect of the Chinese Navy gaining a foothold in the Bay of Bengal. By engaging Burma, India hoped to lessen China’s influence. Additionally, as part of its “Look East” policy of economic reform, India saw Burma as its gateway to ASEAN. India also sought Burma’s assistance in countering the insurgents in its northeast states, some of whom had taken sanctuary on Burmese territory. Between 1993 and 1994, India and Burma agreed to establish military dialogue and commence counter-narcotics and counter-insurgency cooperation. When India awarded Aung San Suu Kyi the Jawaharlal Nehru Award for International Understanding, however, the forward momentum of India-Burma relations was thrown into reverse and would not regain traction until the new century.
In July 1997, Burma became a member of ASEAN. Rangoon hoped that by developing economic linkages to the advanced economies of ASEAN, it could lessen its dependence on Chinese aid and trade. Rangoon also calculated that ASEAN membership would afford it a measure of international legitimacy, while avoiding censure over its human rights record thanks to the organization’s cardinal principle of non-interference. ASEAN’s existing members hoped that membership would allow them to wean Burma away from China; a shared concern was that China’s bolstering of the junta might precipitate internal instability, resulting in an outflow of refugees into ASEAN countries. Yet, the results for both parties were disappointing. The Asian Financial Crisis actually attenuated economic linkages between Burma and the other ASEAN members, forcing Rangoon to turn to Beijing for economic aid to weather the financial storm.
Sino-Burmese Relations into the 21st Century
At the outset of the twenty-first century, the overriding goal of the Burmese junta, now renamed the State Peace and Development Council (SPDC), is regime survival. Close and cordial relations with China are a key element of the strategy. As such, the two countries regularly exchange high-level visits, while Beijing continues to dole out soft loans to the junta. For instance, in 2003 China helped stabilize the economy after a banking crisis with $200 million in preferential loans and partial debt relief on earlier loans (Financial Times, January 17, 2003). China has maintained its position as Burma’s top trade and investment partner. In 2005, bilateral trade hit $1.21 billion, much of it in China’s favor; China exported $935 million worth of goods to Burma, but only imported $274 million (People’s Daily, July 31, 2006). Nevertheless, given the unreliability of Burmese statistics and the fact that a massive volume of cross-border smuggling goes unreported, these figures undoubtedly underestimate the true extent of bilateral economic interaction.
Since 1988, China has shown a keen interest in exploiting Burma’s energy resources, estimated to be 3.2 billion barrels of recoverable crude oil and 2.46 trillion cubic meters of natural gas (Xinhua, January 25, 2005). Since 2000, this interest has intensified, and China’s state-owned energy companies have all signed major contracts with the Burmese government. The importation of Burmese energy resources enables China to enhance its energy security by lessening the country’s dependence on oil and gas from the Middle East. A proposed $2 billion pipeline that would run from the Burmese port of Sittwe to Kunming, Yunnan Province, would also help mitigate Beijing’s so-called “Malacca dilemma” (China Brief, April 12, 2006). Lucrative energy deals with China and other countries help fill the junta’s coffers and mitigate the effects of Western sanctions. China remains Burma’s number one supplier of arms, though the junta is diversifying its sources of arms procurement.
Domestic developments in Burma in 2003 and 2004 helped strengthen Sino-Burmese relations. Following the attacks on Aung San Suu Kyi’s entourage by pro-SPDC militias on May 30, 2003 in the town of Depanyin, the United States, EU and Japan tightened sanctions against Burma, increasing the country’s reliance on China for economic sustenance. The downfall of Prime Minister Khin Nyunt in October 2004, widely regarded as the architect of Sino-Burmese relations, was initially seen as a blow for China, especially when SPDC Chairman General Than Shwe paid a state visit to India just a week later. Nevertheless, within days of Khin Nyunt’s ouster, his successor, Lieutenant General Soe Win, was in Beijing, followed by Lieutenant General Thura Shwe Mann, Than Shwe’s heir apparent. These visits were no doubt intended to reassure Beijing that the SPDC still valued China as its most important ally.
The continued closeness of relations was underscored in July 2005 when, in a gesture of solidarity with the SPDC after pressure from other members of ASEAN forced it to relinquish the rotating chair of the organization, Chinese Foreign Minister Li Zhaoxing boycotted the ASEAN Regional Forum meeting and headed for Rangoon for talks with the junta. Moreover, when the SPDC suddenly relocated the capital from Rangoon to Naypyidaw, 400 miles to the north in November 2005, the Chinese government provided much of the new capital’s telecommunications infrastructure and air defense systems.
This is not to say, however, that bilateral relations are without any challenges. Beijing has expressed concern over the complete lack of progress toward political reform in Burma, principally because of the potential for social and political unrest. In 2004, Premier Wen Jiabao stated that, while the political process was Burma’s internal affair, the Chinese government hoped the SPDC would speed-up “political settlements of existing disputes so as to enhance stability and peaceful development” (People’s Daily, July 13, 2004). He reiterated this message to Prime Minister Soe Win at the China-ASEAN Summit in Nanning in November 2006 (Jiefangjun Bao, November 1, 2006). Speaking earlier in the year, a senior U.S. State Department official revealed that China had privately expressed its concern to Washington regarding the glacial pace of national reconciliation [1]. Another cause of disagreement that Beijing has with the SPDC is the flow of illegal narcotics from Burma into Yunnan Province, specifically heroin and methamphetamines, which is fueling drug addiction, crime and the spread of HIV/AIDS in China. China has called on Burma to increase counter-narcotics cooperation. China, however, contributes to the problem itself as it funds and arms the main producer of methamphetamines in Burma, the United Wa State Army (Asia Times Online, October 24, 2006).
Despite close links with Beijing, the SPDC continues to diversify its foreign relations in an attempt to lessen its dependence on China. India has been the main beneficiary. Once New Delhi committed itself to a policy of remaining silent on the political situation in Burma, relations with the SPDC improved rapidly. In November 2000, General Maung Aye, the second highest ranking member of the SPDC hierarchy and reputed to favor closer links with India to balance China, visited New Delhi to discuss trade, transport links, counter-insurgency cooperation and arms procurement. Since then the two countries have exchanged high-level visits, including a visit by Indian President A.P.J Abdul Kalam in March 2006. India has supplied the Tatmadaw with tanks, artillery and helicopters, while the two countries’ armed forces have conducted coordinated military operations against Indian insurgents. In addition to the interests listed earlier, New Delhi is in competition with China to exploit Burma’s energy resources.
Since 2000, Burma has also allowed itself to be courted by Russia as well. Enhanced relations with Moscow have provided the SPDC with several benefits, including an alternative source of arms (Moscow has agreed to provide Burma with MiG-29 fighters and air defense systems), investment in the country’s energy sector and, as was demonstrated in January 2007, Russia’s veto at the UNSC, providing an added insurance policy. China is reportedly unhappy with the SPDC’s courtship of India and Russia.
Alternative Futures
There are several possibilities regarding the future of Sino-Burmese relations. In the first, the junta maintains its grip on power through sheer brute force, and the new generation of military leaders continues to adhere to the country’s current foreign and domestic policies. As such, Naypyidaw will continue to look to China for diplomatic protection, economic sustenance and military hardware. Nevertheless, in line with its desire to exercise some diplomatic latitude, Burma will seek to bolster relations with other regional countries as well. India will figure prominently in Burma’s foreign policy, though Beijing will retain its position as Burma’s primary patron; China’s veto power at the UN makes it a far more valuable ally than India, and future Indian governments might yet put pressure on Burma to democratize. Should relations with India sour over human rights issues, Burma’s dependence on China would only increase. Moreover, this dependence would deepen if Naypyidaw’s relations with ASEAN became more strained and Burma’s membership were suspended or voluntarily forfeited. At their annual summit in Cebu in January 2007, the ASEAN leaders agreed to frame a charter, which for the first time, would enable the organization to discipline or sanction members who violate ASEAN principles.
In the second alternative future, the junta relinquishes power, either voluntarily or as the result of a popular uprising, leading to the restoration of democracy. A democratic Burma, possibly led by Aung San Suu Kyi, would likely orient the country’s foreign policy toward the West and Japan. This would be a major setback for China’s interests in Southeast Asia, as Beijing would lose a pliant friend and all the economic and geostrategic advantages it has accrued since 1988. In order to forestall such an outcome, Beijing may be tempted to intervene militarily in support of the SPDC.
A third scenario posits a major nationalist backlash against China as a result of the Sinicization of upper Burma and the growing resentment caused by income disparities between impoverished Burmese and Chinese immigrants. A xenophobic outburst of this nature is not without precedent: in 1964 the Burmese government expelled hundreds of thousands of Indians (who made up the bulk of the commercial class) from the country, and in 1967, violent anti-Chinese riots took place in Rangoon. Such a backlash, possibly orchestrated by the junta itself, would signal an end to the Sino-Burmese alliance and a return to the pre-1988 policy of equidistance between China and India.
As things stand today, with the tightening of U.S. and EU sanctions, and as ASEAN’s patience with the generals wears thin, the first scenario remains the most probable. Yet, mid to long-term, a democratic Burma aligned with the West, or the return to a policy of equidistance, cannot be ruled out.
Notes
1. Remarks by U.S. Deputy Assistant Secretary of State for East Asia and Pacific Affairs, Eric John, Harvard Asia Center, Cambridge, MA, February 17, 2006.
Trials in Burma (Under the Military Regime)- BY Aung Din
http://www.fbppn.net/?p=975
Trials in Burma (Under the Military Regime)
October 27, 2009
(1) Current Trials of Burmese Democracy Activists
The Burmese military regime have sent democracy activists, arrested during the peaceful protests in August, September 2007 and the following months, before various Township and District Courts for trials since July 2008. Most of the trials are being held inside the Insein Prison Compound in Rangoon and Oo-Bo Prison Compound in Mandalay. Defendants were brought to the Court with hand-cuff and not allowed to meet with their lawyers in the first hearings. Later, they were allowed to meet with their lawyers and their family members were also allowed to attend the Court hearings.
However, since Oct 3, 2008, the authorities stopped allowing family members to attend the trials and moved their prison visits to meet their family members to the weekend, instead of week days. The family members sent a letter to Chief Justice, requesting to re-allow them to attend the hearing, but there is no response from the Chief Justice as of this writing.
Meanwhile, the Court hearings are more and more restricted and unjust. The judges do not allocate sufficient times for the defense lawyers to ask counter questions. The judges refuse the request of the defendants to allow their family members to attend the hearings. The prosecutors demanded the judges to take action against the defendants who asked for their rights. In case of Daw Win Mya Mya and five NLD leaders in Mandalay, the authorities refused to allow the prison officials to testify for the defendants to confirm the date of arrest.
(2) One More Charge for Min Ko Naing and 88 Generation Students Group
Min Ko Naing and 34 members of the 88 Generation Students are facing 21 trials with dozens of charges, which will lead up to over 150 years imprisonment, since August 2008. Their cases were heard by two District Courts and seven Township Courts, held inside the Insein Prison Compound. Since October 15, 2008, all Township Courts handed over the cases to three District Courts, which are Rangoon Eastern District Court, Rangoon Western District Court and Rangoon Northern District Court. These three District Courts are hearing the cases inside Insein Prison Compound. As they are instructed to wrap up the cases by the authorities, the court hearings are held at least two or three days a week.
Last Friday, on Oct 24, 2008, Rangoon Northern District Court held a hearing against Min Ko Naing and group. All student leaders stood up and asked the judge to allow their family members to attend the hearing. Security was very tight. Armed security forces were present outside and inside the Insein Prison Compound and around the Special Court. Further, dozens of armed police stood behind all defendants in the Court room. When the student leaders stood up and demanded for their rights, the police prosecutor asked the judge to take action against the defendants for contempt of the court and the judge instructed the armed police to force them down to sit. Later, the judge decided to adjourn the hearing and instructed the police to remove defendants from the court room. Before they left the room, the judge told them that they would be charged with Section 188 of the Penal Code, for contempt of the court.
Their trial continued on Monday, Oct 27. Many defendants began to withdraw their attorney power from their lawyers, as they believe it is not a fair trial. Some refused to answer the questions of the prosecutors. Security was still tight and the defendants are concerned for their safety. Trial will continue on Wednesday, Oct 29, 2008.
(3) Imprisonment of Seven Monks and Seven Nuns
On Oct 23, 2008, a judge from North Okkalapa Township Court sentenced seven monks and seven nuns four-year imprisonment each with hard labor. They all are from Hantharwaddy School and Thitsa Tharaphu School of the Artharwaddy Monastic University in North Okkalapa Township and were arrested since September 2007 when the security forces raided these Monasteries. They all participated in the Saffron Revolution. Among them were Abbot U Yevada (over 65-year old, from Hantharwaddy), Abbot U Arrnanda (over 60-year old from Thitsa Tharaphu), Senior Nuns from Thitsa Tharaphu School, namely Daw Ponnami (80-year old, partially paralyzed by a stroke), Daw Htay Yi (over 70-year old), and Daw Pyinyar Theingi (64-year old) . They all were charged with Section 295 and 295 (A) of the Penal Code.
Their family members were not allowed to attend the court hearings. Their lawyers were not informed the dates of court hearing and trial continued even with the absence of the defense lawyers many times.
(4) Imprisonment of Six Leaders of NLD from Mandalay Division
On October 24, 2008, a judge from a special court, held inside the Oo-Bo Prison Compound in Mandalay, delivered imprisonments, ranging from 2-year to 13-year to six leaders of the National League for Democracy party’s Mandalay Division Branch. They all were arrested since September 2007, during the Saffron Revolution and detained without trials for almost a year. They were sent before the special court in August 2008. They were charged with Section 153 and 505 (B) of the Penal Code. Their respective sentences are below.
Daw Win Mya Mya (12-year imprisonment) (Female) (Mandalay Division NLD Organizing Committee Member)
U Kan Tun (12-year imprisonment) (Mandalay Division NLD Organizing Committee Secretary)
Min Thu (13-year imprisonment) (Mogok Township NLD)
U Than Lwin (8-year imprisonment) (Mandalay Division NLD Organizing Committee Deputy Chairman)
Win Shwe (11-year imprisonment) (Kyaukpandaung Township NLD)
Tin Ko Ko (2-year imprisonment) (Meikhtila Township NLD)
The police prosecutors presented some audio tapes, private conversation between Daw Win Mya Mya and members of Mandalay Division NLD and US Embassy officials during the lunch at Shwe Be (Golden Duck) Restaurant in Mandalay, as evidences.
(5) Prison Transfer
While the judges are trying to close the trials with heavy sentences, the prison authorities are beginning to transfer the newly imprisoned prisoners of conscience to the remote location, far away from their home Towns.
On October 24, 2008, Khin Moe Aye (a female member of the 88 Generation Students and sentenced a week ago) was transferred from Insein Prison in Rangoon to Myingyan Prison in Mandalay Division. Two other activists, Ye Win and Myint Lwin Oo (aka) Thar Gyi were also transferred from Insein Prison to Pyi Prison in Bago Division.
Aung Din
Executive Director
U.S. Campaign for Burma
1444 N Street, NW Suite #A2
Washington, DC 20005
Tel: (202) 234 8022
Fax: (202) 234 8044
aungdin@uscampaignforburma.org
www.uscampaignforburma.org
"ခရီးသည္"
[Ye Yint Thet Zwe]
ည
တစတစနဲ ့ ၿပိဳကြဲက်လာ
လ
ေအးျမျမ၀တ္ရံုကို
ဆြဲယူသိမ္းရုပ္
တိမ္အုပ္ေနာက္ကို၀င္သြားတယ္ ၊
အရုဏ္
တေရြ ့ေရြ ့နဲ ့
ေန ့တေန ့ရဲ ့အစကို ဆြဲယူလာခဲ့
ေန
ပူပူေလာင္ေလာင္ သူ ့ရဲ ့အေရာင္ကို
ကမၻာေျမျပင္အေရာက္ပို ့လိုက္တယ္ ၊
အဲဒီလို ညေတြ ေန ့ေတြ
သံသရာအဆက္ဆက္
ေမွ်ာ္လင့္ခ်က္ေတြနဲ ့ ခရီးဆက္
အသက္ရွင္လိုသူမ်ား
အဆင္ကြဲ မဲျပာပုဆိုးမ်ား လႊင့္ပစ္ခဲ့ပါ
ယံုၾကည္မႈေတြတည္ေဆာက္
အဲဒီေအာက္က သံသယမ်ား လႊင့္ပစ္ခဲ့ပါ
ပုဆိုးၿခံဳထဲက
လက္သီးပုန္းမ်ား လႊင့္ပစ္ခဲ့ပါ
သႀကၤန္အေျမွာက္ဆံမ်ား လႊင့္ပစ္ခဲ့ပါ
ရာဇ၀င္ထဲမွာယစ္မူး
ရူးသြပ္ေသာ အေတြးအေခၚမ်ား လႊင့္ပစ္ခဲ့ပါ
ေျမႀကီးရဲ ့ သားသမီးမ်ား
ေျမႀကီးထံျပန္မသြားခင္ၾကားမွာ
သမိုင္းေပးတာ၀န္ ေၾကပြန္ေစဘို ့
တို ့လက္မ်ားနဲ ့ ေခတ္တေခတ္ကို သစ္ေစမယ္ ။
--
Posted By Ye Yint Thet Zwe to Ye Yint Thet Zwe at 10/30/2008 10:24:00 AM
ESCAP, ASEAN bring together experts to discuss future steps for recovery assistance to Myanmar
http://yangon.unic.org/index.php?option=com_content&task=view&id=292&Itemid=73
Wednesday, 29 October 2008
Six months after Cyclone Nargis struck Myanmar, key partners in the country's recovery process gathered in Bangkok to assess how to best strengthen their joint efforts to support inclusive and sustainable recovery there.
--------------------------------------------------------------------------------
28 October 2008
Press Release No: G/55/2008
Meeting on Post-Nargis Recovery and Livelihood Opportunities in Myanmar
ESCAP, ASEAN bring together experts to discuss future steps for recovery
assistance to Myanmar
Bangkok (UN/ESCAP Information Services) - Six months after Cyclone Nargis struck Myanmar, key partners in the country's recovery process gathered in Bangkok to assess how to best strengthen their joint efforts to support inclusive and sustainable recovery there.
The two-day Regional High-level Expert Group Meeting on Post-Nargis recovery and Livelihood Opportunities in Myanmar was organized by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the Association of South-East Asian Nations (ASEAN), with the
support of the Government of the Union of Myanmar. It brought together high-ranking Myanmar Government officials and representatives of ASEAN, ESCAP and other UN and international partners, as well as experts with experience in dealing with such recent disasters in the region as the 2004 Asian Tsunami, the 2005 Pakistan earthquake, and the 2007 Cyclone Sidr in Bangladesh. The high-level commitment to this dialogue was reflected in the opening statements by ESCAP's Executive Secretary, Under-Secretary-General Noeleen Heyzer, ASEAN's Secretary-General, Dr. Surin Pitsuwan, and the Myanmar Deputy Minister for Foreign Affairs, U Kyaw Thu.
"I believe this is an opportunity for those who are involved in the post-Nargis recovery efforts to learn from the experience, although painfully gained, of those who have been on a similar path in order to put together a comprehensive and effective early-, medium- and long-term strategy," said Myanmar's Deputy Minister U Kyaw Thu, who is also the Chairman of the Tripartite Core Group (TCG), formed by the UN, ASEAN and the Myanmar Government for the purpose of coordinating relief efforts in the wake of the cyclone.
"I hope that with ESCAP, and with experts here from Pakistan, Indonesia, Bangladesh and other various international agencies, UN and non-UN, we can together enhance the capacity of the region, to add on to the lessons that we have learnt and translate the lessons into practical procedures," said
Dr. Pitsuwan, in his keynote address, adding, "if we are not prepared, we will be in deeper trouble the next time around."
Under-Secretary-General Heyzer, in noting the toll that Cyclone Nargis had taken on Myanmar, indicated that the expert group meeting represented a turning point in the partnership of the UN and ASEAN with the Myanmar Government. "This experts' group meeting should be seen as a stepping stone to move beyond discussing Nargis-related recovery strategies to a wider discussion on the future development direction for Myanmar as a whole," she said.
Ms. Heyzer highlighted that the meeting was timely, and hoped that its outcomes would feed into the Post-Nargis Recovery and Preparedness Plan (PONREPP), the ongoing TCG Periodic Review, and the ASEAN-UN Summit to be held in Thailand in mid-December. ESCAP, as the UN system's regional liaison for the meeting, is working with the Government of Thailand - the current chair of ASEAN - to finalize the Summit agenda in the coming weeks.
The expert group meeting followed visits in May and June by Ms. Heyzer to Myanmar, during which Government representatives and the UN Country Team welcomed the idea of ESCAP, as part of the advisory group to the ASEAN Humanitarian Task Force and the regional development arm of the United Nations, convening a series of regional expert group meetings and policy dialogues on issues of recovery and reconstruction in post-Nargis Myanmar.
This first meeting provided a regional-level platform to learn from the experiences of regional and international policy experts so that the best practices emerging from recent disasters in the Asia-Pacific region could inform the medium- and long-term post-Nargis recovery strategies, particularly on issues of disaster risk reduction, sustainable settlement policies, livelihood recovery strategies, and restoring economic and social infrastructure. The meeting also provided a space for Nargis recovery partners to develop a consensus on priorities and strategies for effectively moving from relief efforts to recovery and longer-term economic and social development, including for mobilizing greater technical and financial support.
Speaking at the meeting's session on settlement plans and country experiences, the Deputy for Donor and International Relations at the Rehabilitation and Reconstruction Agency for Aceh and Nias, Mr. Heru Prasetyo, shared critical lessons from the Aceh tsunami reconstruction effort, stressing that "there is a need for continuous coordination of funding, programmes and resources, as well as ongoing monitoring, accountability and public communication."
Taking into account the lessons learnt - and shared at the meeting - by the representatives from Aceh, Bangladesh, Pakistan and other countries which have dealt with the effects of previous natural disasters, the meeting's participants agreed that it was particularly important to focus on a number
of principles to guide the implementation of recovery activities. These included, amongst others, the need for all recovery efforts to aim to "build back better" and more safely with a community-based approach in order to reduce future disaster risks; and the need for disaster risk reduction to be an essential pillar of a recovery programme so that it becomes an integral part of a holistic multi-disciplinary approach to disaster management.
Noting the valuable assessments and lessons learned presented regarding recovery mechanisms and programmes implemented in response to the disasters that afflicted Aceh, Bangladesh and Pakistan, Ms. Heyzer said that this experience of the Asia-Pacific region would undoubtedly contribute to the formulation of recovery strategies for Myanmar and other future natural disasters. While an effective early warning mechanism is one critical part of any sound disaster management approach, she emphasized that early action was also needed in order to turn early warning into real disaster
preparedness.
Referring to the interest expressed by Myanmar representatives in field visits to engage in further consultations with experts in the region, which ESCAP stood ready to support, Ms. Heyzer indicated that ESCAP would also address ways to better capture and institutionalize these experiences and
lessons learned as part of a knowledge-based system that can be quickly accessed, and which could facilitate the mobilization of expert teams to provide better assistance.
Ms. Heyzer, in response to participants' positive feedback on the value of this regional dialogue session and the spirit of partnership fostered, said that ESCAP was committed to continue to host such dialogues in partnership, and that the next would be held with donors so as to encourage increased
assistance to fill critical funding gaps.
In his closing remarks, Myanmar's Deputy Minister U Kyaw Thu highlighted that "we have again found ourselves at crucial crossroads" nearly six months after Cyclone Nargis hit the Ayeyarwady delta, and that the reason for this important regional meeting was "to concentrate our knowledge and
experience to outline a set of commitments and actions to boost early recovery efforts and bridge the gap between reliance and self-sufficiency for the affected populations of the Cyclone Nargis."
"Asia has always been a focal hub for world knowledge," the Deputy Minister continued, adding that he was "engrossed by [the participants'] rich experience and compelling expertise, especially in managing and dealing with the recent natural disasters that have happened in our region."
"I am grateful for your enthusiasm and total commitment in supporting the people in the Delta to recover from their worst nightmare and offer them hope," he said, and expressed his gratitude to ESCAP and ASEAN for their cooperation and organization of the two-day meeting. "I believe the
meeting's objectives have been successfully met - and even go beyond expectations."
***
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Last Updated ( Wednesday, 29 October 2008 )
Clinton: -"we need a president who wants to understand."
http://www.centredaily.com/news/politics/story/932235.html
Clinton: Hire a decider
Former president stumps for Obama at Rec Hall rally
By Mike Joseph- mjoseph@centredaily.com
UNIVERSITY PARK — Former President Bill Clinton, in his fourth visit to Penn State in 12 years, campaigned for Barack Obama on Wednesday, saying "we need a president who wants to understand."
CDT/Nabil K. Mark
Former President Bill Clinton speaks at Rec Hall on the Penn State campus October 29, 2008. CDT/Nabil K. Mark
“How much have we suffered from people who did not want to understand?” he said.
Clinton delivered a 22-minute speech Wednesday afternoon before about 1,500 people — mostly Penn State students — in Rec Hall, where Republican vice presidential candidate Sarah Palin held a rally the night before that drew about 7,000.
The former president’s campaign appearance lacked the pom-poms, thunder sticks, live country music performance and high-inflection applause lines that punctuated the Palin rally.
But he laid out a reasoned argument for Americans, after their long job interviews with the candidates, to hire a “decider in chief” who will grow the economy from the bottom up, not from the top down, and who will bring U.S. troops home from Iraq and rebuild the military.
Without mentioning either Sen. John McCain, of Arizona, or Alaska Gov. Palin, Clinton said Obama’s choice of Sen. Joe Biden, of Delaware, as his running mate now looks especially wise.
Obama will be kept in the White House for two years fixing the economy “to get this country out of the ditch,” Clinton said. But Biden — chairman of the Senate Foreign Relations Committee — will be available “to go around the world” to help repair relations with other countries.
Clinton got the crowd to help him through an explanation of the three tests of an effective decider in chief — someone who has the right philosophy, the right policies and the ability to make the right decisions and execute them.
“Once you do it, the answer screams out at you,” Clinton said, and then paused.
“Obama!” someone screamed from across Rec Hall.
“You got it,” Clinton replied. When the financial crisis unfolded, Clinton said, both Obama and McCain did the right thing, and the unpopular thing, by supporting the $700 billion rescue package.
But he said Obama first discussed the matter with his own economic advisers, then with Clinton’s former economic advisers, and then with Clinton himself.
Clinton said the difference in understanding emerged in the last two presidential debates.
“Who had a better grasp of what had to be done?” Clinton asked.
“Obama!” the crowd roared back.
“We need a president who wants to understand and who can understand,” Clinton said.
In early remarks, Clinton referred to the 5th Congressional District race between Democrat Mark McCracken, of Clearfield County, and Republican Glenn Thompson, of Centre County.
He said no one gave Mc- Cracken a chance when the race began, but “now he’s even in the polls.”
State College Mayor Bill Welch, in a brief talk before Clinton’s arrival, welcomed the crowd to “Politics 101,” said the day’s topic is Tuesday’s general election and added that the “guest lecturer is the ultimate lecturer.”
“Your vote for Barack Obama on Tuesday will help bring about the dramatic change we need,” Welch said. “We must not be complacent.”
Clinton, after he spoke, worked a barrier line to shake hands with a crowd of students on the Rec Hall floor. One of them, political science major Jennifer Frechie, came away from the experience nearly in a state of transport.
She bounded away from the line, held one hand with the other and said: “I touched Bill Clinton.”
Mike Joseph can be reached at 235-3910.
Amazon Defense Coalition: Chevron Whitewashes Its Website of Burma
http://www.centredaily.com/business/technology/story/931521.html
Charges of Rape and Murder Prompt Disappearance of Entire Country from Corporate Website
SAN FRANCISCO — Chevron has quietly removed from its website any reference to its operations in Burma, a country where the oil giant has been implicated in allegations of rape and murder connected to a lucrative pipeline project that generates up to $1 billion annually for the country's brutal military regime, the Amazon Defense Coalition said today.
The company has replaced the majority of substantive information on its website with a short page glossing over their role in the country.
Chevron removed the references to Burma while it has been embroiled in high-stakes legal case charging it helped orchestrate the deaths of two Nigerian villagers protesting Chevron's operational practices in the African country. The trial on those charges began Tuesday in federal court in San Francisco.
Earth Rights International, a legal organization based in Washington, D.C., has leveled withering criticism at Chevron for jointly operating a natural gas pipeline with the Burmese military. Just in the last year, the Burmese army has violently suppressed protesting monks and diverted international relief aid after a devastating hurricane, and the country's government is considered an international pariah.
The pipeline generates an estimated $1 billion per year in hard currency for the clique of generals who rule Burma. Chevron has defended the project on the grounds it exercises a liberalizing influence on the country's government.
Just two years ago, Chevron's Burmese operations were featured prominently on the company's website. This week, one could not find a single reference to Burma on the website where Chevron boasts of its worldwide operations and lists the dozens of countries where it has investments.
The earlier website is archived at www.archive.org.
In a recent report, lawyers for ERI concluded that Chevron faces liability for being complicit in murder, rape, and slave labor committed by the Burmese Army in providing "security" for the pipeline. ERI is most known for having settled a legal case against Unocal over the same charges before Chevron bought Unocal in 2005 and inherited the pipeline project.
As ERI noted in their report "The Human Cost of Energy: Chevron's Continuing Role in Financing Oppression and Profiting From Human Rights Abuse in Military-Ruled Burma (Myanmar)": "Chevron and its consortium partners continue to rely on the Burmese army for pipeline security, and those forces continue to conscript thousands of villagers for forced labor, and to commit torture, rape, murder and other serious abuses in the course of their operations. Due to its involvement in the Yadana Project, Chevron remains vulnerable to liability in U.S. courts for the abuses committed by these security forces." The full report is available at http://www.earthrights.org
The removal of any mention of Burma is the latest in a long series of controversial moves by Charles S. James, Chevron's General Counsel, to hide or divert attention from Chevron's growing human rights problems.
"James has shown a repeated willingness to tolerate unethical practices by Chevron to hide its growing reputation as a global human rights violator," said Jeremy Low, who monitors the company's human rights record for the Amazon Defense Coalition, which has sued Chevron for environmental damage in Ecuador.
"What we're seeing is hard information replaced by absolute fluff or just blank space," he added.
Just last week, Chevron was accused by the environmental group Amazon Watch of paying journalists to write favorable editorial content without disclosing their financial relationship to the company. One of the journalists, San Francisco writer Pat Murphy, has not denied he accepts fees from Chevron to write one-sided articles in his online newspaper that mysteriously get "Google bombed" to the top of search engines.
Undisclosed payments to journalists for favorable coverage are considered highly unethical, yet James has not denied that the company engages in the practice.
The Nigeria case, being tried before Judge Susan Illston, has created a lengthy record of charges that Chevron paid Nigerian military officers to shoot local villagers who had staged a peaceful protest on one of the company's oil platforms. The trial, expected to last five weeks, began on Tuesday.
In the Amazon region of Ecuador, where Chevron faces a potential $16.3 billion liability for dumping more than 18 billion gallons of toxic waste, local lawyers have long accused the company of paying uniformed Ecuadorian army officers to provide "security" designed to intimidate members of indigenous groups.
"I am sure James wishes Chevron could erase its human rights problems as easily as it can erase mention of Burma from its website," said Low. "But as the company is now finding out, that's not so easy."
To view the former websites, Archive.org maintains an extensive database:
August 10, 2005 (Map of Worldwide Operations):
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operations/worldwide/
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operations/worldwide/
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documents/pdf/chevronworldwideoperations.pdf
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About the Amazon Defense Coalition
The Amazon Defense Coalition represents dozens of rainforest communities and five indigenous groups that inhabit Ecuador's Northern Amazon region. The mission of the Coalition is to protect the environment and secure social justice through grass roots organizing, political advocacy, and litigation
Japan's Toyota, Hit Hard Now But Equipped to Steer Clear
Toyota President Katsuaki Watanabe with the "ultra-compact" iQ, to go on sale in Japan. In the works: U.S. production of the Prius hybrid. "We plan to use this very severe business environment as an opportunity," a spokesman said. (By Haruyoshi Yamaguchi -- Bloomberg News)
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/28/AR2008102803638.html
Falling Demand, Soaring Yen Drive Down Profits
TOKYO, Oct. 29 -- In Japan, the global financial crisis seems to have singled out some of the world's best-known and best-managed companies for an especially bloody thrashing.
Consider Toyota Motor Corp., whose stock has lost almost two-thirds of its value since February of last year. Like many Japanese exporters, Toyota has been doubly clobbered this fall, first by collapsing consumer demand in the United States and Europe, and then by the exploding value of the yen against the dollar and the euro.
Still, the automaker is exceptionally rich and well positioned for the future. It has about $47 billion in liquid assets, the lowest manufacturing costs in its industry and global leadership in fuel-sipping hybrid cars such as the Prius. It announced this week that it will build a seventh factory with its joint-venture partners in China, where sales, although slowing, have jumped 24 percent so far this year.
So, is the company really worth just a third of what it was worth 20 months ago?
The short-term answer for Toyota and other blue-chip Japanese companies is a qualified maybe, according to economists and investment analysts in Tokyo. The medium- and long-term answer, they say, is likely no. "These stock prices reflect new fundamentals," said Takatoshi Ito, a professor of economics at the University of Tokyo. "Exports earnings are being cut severely because of yen appreciation. Even if Toyota sells the same amount of cars, its earnings decline."
The annual operating profit of Toyota tumbles by about $400 million every time the dollar's value falls by one yen, the company says. Toyota and many major Japanese exporters had expected a dollar exchange rate of around 105 yen throughout 2008, but it has dipped as low as 90 this month.
Although the yen lost value Tuesday in trading against the dollar, many analysts here are predicting the currency's value will continue to increase and squeeze profits out of Japanese companies for at least several more months. The declining popularity of complex transnational bets known as "carry trades" is partly responsible for the pressure on the yen -- in the current turbulence, investors are unraveling these trades and bringing money back to Japan for conversion into yen.
With global recession a near-certainty, Toyota and other Japanese exporters have also had to revise sales and production plans downward. The company recently recorded its first quarterly global sales decline since the downturn that followed the 2001 terrorist attacks. In the United States, Toyota's largest market, sales plunged by 32 percent in September compared with that month last year.
The home market has big problems, too. Japan's real gross domestic product shrank by 2.4 percent in the quarter that ended Oct. 1. Unemployment is at a two-year high of 4.2 percent, and last week the government issued a report warning that the economy "has weakened further."
Fundamentals, though, do not tell the whole story of why stocks in the world's second-largest economy have lost, on average, about a quarter of their value in the past month. Japanese stocks gained back some of their losses on Tuesday, after the Nikkei average reached a 26-year low the day before, but remain at disheartening lows.
"Overseas investors and investment funds are selling Japanese stocks like mad, said Edwin Merner, president of Atlantis Investment Research in Tokyo. "There is panic, and there is blood on the floor."
Merner and several other analysts said foreign investors, including managers of mutual and pension funds, are being forced to sell because they need cash to meet other obligations, particularly for redemption requests from nervous smaller investors.
"Big Japanese stocks like Toyota are easy to sell," said Merner, who has followed the Tokyo stock market for three decades. "Maybe you can't get a good price, but you can certainly sell them quick."
The Japanese government has "very few defense systems" to support the country's stock market, according to Shumpei Takemori, a professor of economics at Keio University in Tokyo.
The central bank here has little flexibility to lower interest rates to make stocks more attractive. They are already at rock bottom, about 0.5 percent for loans between banks. Despite limited capacity for cuts, the central bank will consider a 0.25 percent rate cut when it meets Friday, the Nikkei financial newspaper reported Wednesday.
The Japanese government, however, did move Tuesday to beef up one defense against market speculation. Finance Minister Shoichi Nakagawa said the government has banned the practice known as naked short-selling, which is selling a stock short without first borrowing the shares or making sure they can be borrowed.
While companies here can do little about turbulence in the stock market, many of them do have plenty of cash to ride out the storm.
About 40 percent of publicly traded Japanese companies are debt-free, according to a survey by the Nikkei financial newspaper. Major banks and many large companies have huge cash reserves, a legacy of the cautious management style that came into fashion here after Japan's financial crash in the 1990s.
Thanks to "balance sheets of armored steel," major Japanese companies such as Toyota are much better prepared than their competitors to withstand a long global recession and grab a significantly larger market share when consumers do start spending, said Ken Courtis, former vice chairman of Goldman Sachs Asia.
"My view is that Japanese producers will be hit much less hard by the crisis," he said. "They have lower cost structures, more product, technological momentum and better image. They can put products on the market which people can afford and will want to buy."
Courtis said the Japanese advantage is especially powerful in the automobile market in the United States, where General Motors and Chrysler are teetering on the edge of bankruptcy and in need of government bailout.
Toyota reached into its deep pockets this fall to grab the attention of reluctant car buyers in the United States. Taking the lead from other companies, it created Toyota's first-ever interest-free financing program and applied it to nearly all the vehicles it sells in the U.S. market.
Toyota has also responded to the listless American car market by halting the assembly of big pickup trucks at its U.S. plants for three months.
The company says it has laid off none of its 42,000 workers in North America. Instead, many of them are being retrained.
"We plan to use this very severe business environment as an opportunity to strengthen the flexibility and toughness of the company," said Toshiaki Hori, a Toyota spokesman.
In 2010, Toyota plans to open a new plant in Mississippi to make the Prius, the popular hybrid car that is now imported from Japan. By producing the car in the United States, Toyota expects to escape the punishing consequences of a higher yen.
Sometime after 2010, Toyota plans to begin mass production of all-electric cars. It has already launched a joint venture to design and manufacture long-life batteries for those cars.
"This downturn will probably be to the long-term benefit of Toyota," said Merner at Atlantis Investment. "They have high profit margins and lots of cash. There is going to be a big shakeout in the auto industry. Toyota is in better shape now than ever before to survive it."
Japan PM set to unveil economic package, hold off polls
http://news.yahoo.com/nphotos/Tokyo-Taro-Aso-Japanese-Prime-Minister/photo//081030/photos_wl_pc_afp/e5bcc31990ea69bba01a9c895097d0dc//s:/afp/20081030/wl_asia_afp/japanpolitics_081030073012;_ylt=AjRATRMoHU.hcBfsCWGEoZruOrgF
Japanese Prime Minister Taro Aso (L) heads for his office in Tokyo. Aso was set Thursday to unveil a new multibillion-dollar package to help Asia's largest economy weather the global economic crisis as he puts off high-risk elections.
(AFP/JiJi Press)
TOKYO (AFP) – Japan's Prime Minister Taro Aso was set Thursday to unveil a new multibillion-dollar package to help Asia's largest economy weather the global economic crisis as he puts off high-risk elections.
Aso scheduled a news conference for Thursday evening where he was expected to say he will hold off on elections until next year. The opposition, which is ahead in polls, has pushed Aso to call a vote as soon as November.
"Policies should come before politics. That's the answer," Aso told reporters Tuesday when asked about elections.
Japanese media, quoting unnamed sources, said Aso would announce an economic package worth five trillion yen (51 billion dollars), of which two trillion yen would consist of benefits sent back in some form to households.
The package will also reportedly include a cut in tolls on expressways and an expansion of tax-exempt housing loans -- hoping to boost the struggling property market.
The stimulative package would be the first drafted under Aso, an advocate of government spending to boost the economy, who took over a month ago in the midst of global economic turmoil.
The package would be almost three times larger than an emergency budget worth 1.81 trillion yen, which was announced in late August by Aso's predecessor Yasuo Fukuda to ease the impact of soaring commodity prices.
Parliament approved the package earlier this month, with the opposition supporting it. But the opposition has warned that further legislation will not have such an easy ride through parliament if Aso refuses to call elections.
Aso replaced Fukuda a month ago with a mission to lead the ruling Liberal Democratic Party (LDP) into elections, which must take place by September 2009.
Analysts said that the LDP feared that if it held the election now, it would lose.
The Nikkei business daily estimated this month that the LDP would lose about 130 seats in the 480-member lower house if the election were held now, with the opposition taking the majority.
"It is hard to say whether putting off general elections will turn out to Aso's advantage," said Hiroshi Hirano, professor of politics at Gakushuin University.
"At least Aso could give voters the impression that he may do something to ease the economic difficulties they face," Hirano said. "But elections at a later time could backfire with a further dwindling of public support."
The LDP has been in power for all but 10 months since 1955 but is reeling from corruption scandals and a slowing economy.
Aso, a 68-year-old blue-blood with a flamboyant campaign style, is the fourth LDP prime minister since 2006.
In a break with his predecessors, Aso puts a higher priority on stimulating the economy than on reducing Japan's ballooning public debt, which is the highest among industrialised nations.
To bankroll the economic package, Aso is expected to tap into reserves in the debt-ridden nation's special budget instead of issuing new bonds, the Asahi Shimbun reported.
Japan's economy suffered its worst contraction in seven years in the second quarter of this year and many analysts believe it is already in recession, which is usually defined as two straight quarters of negative growth.
While Japan's banks have escaped comparatively unscathed from the the financial crisis , many companies' profits are plunging due to the soaring yen, which makes their exports less competitive.
Along with Aso's new package, the Bank of Japan is widely expected to cut its already super-low interest rates on Friday.
The move marks a sea-change for the central bank, which has aimed to tighten credit since March 2006 when it ended an unprecedented policy of keeping interest rates at virtually zero.
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