June 4, 2014 9:44am 1028 35 1 1294 (Updated 5:37 p.m.) A United Nations-backed international arbitral tribunal has ordered China to respond to the Philippines' claim that Beijing illegally occupied certain areas in the South China Sea. The Hague-based Permanent Court of Arbitration issued its second Procedural Order after the second meeting of the Arbitral Tribunal's members last May 14 and 15. However, in an statement later Wednesday, China reiterated its refusal to take part in the arbitration proceedings and rejected the ruling. ‘Open and friendly resolution mechanism’ In a memorial submitted to the tribunal on March 30, 2014, the Philippines argued that China illegally occupied at least eight South China Sea shoals, reefs and similar features belonging to the Philippines. It also said China's claims that it owns the disputed territory did not conform with the United Nations Convention on the Law of the Sea (UNCLOS). Beijing has continuously ignored the arbitration process, even saying in its May 21, 2014 note verbale that it will not participate in the proceedings. Earlier Wednesday, the Philippines asked China to reconsider its rejection of the legal challenge to its territorial claims and join the arbitration case. "We wish to reiterate that arbitration is a peaceful, open and friendly resolution mechanism that offers a durable solution to the disputes in the South China Sea," Foreign Affairs Spokesman Charles Jose told a press briefing. "We continue to urge China to reconsider its decision not to participate in the arbitration proceedings." At a press conference, presidential spokesperson Edwin Lacierda said they leave it to China whether or not it will comply with the order. "This is a process that all parties are abiding by. So, whether China responds or not... we leave it with them," he said. And while the country is waiting for the decision of the tribunal, the Palace official assured the public that authorities are securing the country's territories. "I think that’s where we have made measures both by the BFAR (Bureau of Fisheries and Aquatic Resources) and also by our coast watch to strengthen and to ensure our maritime resources," he said. Until December 15, 2014 The arbitral tribunal in its Procedural Order No. 2 has given China until December 15, 2014 to submit a counter memorial to the Philippine complaint that seeks to denigrate Beijing's massive claim, which Manila calls illegal and excessive. Chairing the five-member Arbitral Tribunal is Judge Thomas Mensah of Ghana. The other members include: - Judge Jean-Pierre Cot of France - Judge Stanislaw Pawlak of Poland - Professor Alfred Soons of the Netherlands - Judge Rüdiger Wolfrum of Germany Last May 21, the Permanent Court of Arbitration received a note verbale from China where Beijing reiterated it "does not accept the arbitration initiated by the Philippines.” China added the note verbale “shall not be regarded as China’s acceptance of, or participation in the proceedings.” On the other hand, the tribunal said it allowed both sides a chance to comment on scheduling, with the Philippines submitting its comments last May 29. The arbitration procedure started on Jan. 22, 2013, when the Philippines served China a notification and statement of claim. China rejected the Philippines' notification. Foreign Affairs Secretary Albert del Rosario said the memorial submitted March 30, 2014 to the Permanent Court of Arbitration “contains the Philippine analysis of the applicable law and the relevant evidence, and demonstrates that the tribunal has jurisdiction over all the claims made by the Philippines.” Representing the Philippines are: - Solicitor General Francis Jardeleza - counsels Paul Reichler and Lawrence Martin, Foley Hoag LLP, Washington DC - Professor Bernard Oxman, University of Miami School of Law, Miami - Professor Philippe Sands, London - Professor Alan Boyle, Essex Court Chambers, London Meanwhile, China has not appointed an agent as it does not accept the arbitration process. Tensions in Ayungin Shoal included Earlier, Solicitor General Francis Jardeleza said the incidents in Ayungin Shoal were included in the Philippine case. “The Philippines amended its statement of claim including Ayungin as part of the arbitration,” he said. Tensions over Ayungin Shoal (also called Ren’ai Reef by China but internationally known as Second Thomas Shoal) intensified on March 9 when Chinese coast guard ships blocked two Philippine civilian vessels which were sailing toward the disputed rocky outcrop. Also in March, Military officials reported an incident of harassment as they launched another attempt to transport supplies and fresh Filipino troops to a grounded Philippine Navy ship manned by more than a dozen Marines and sailors, which has become a symbol of Philippine sovereignty in the offshore territory. Pressure from China Under the arbitration procedure, the filing of a counter-memorial should be made by China. Upon submission, the tribunal will decide on the next steps and advise the parties involved in the case on its next course of action. Since the Philippines filed the case in January 2013, Beijing has attempted to pressure Manila into withdrawing from the legal process. China has also put diplomatic pressure on other claimant states not to support the Philippines. China maintains "historical and indisputable claim" nearly over the entire sea and its features, even as it overlaps with the territorial jurisdiction of its neighbors like the Philippines. West Philippine Sea Manila adopted the name West Philippine Sea for parts of the waters that are within its territorial boundaries. Vietnam, Malaysia, Brunei, and Taiwan are also claimants to the South China Sea – a major trading route where undersea oil and gas deposits have been discovered. An expert said Manila’s filing of the memorial would step up pressure on China in defending its nine-dash line claim – a tongue-shaped encirclement that covers a huge swath of the South China Sea. “It will add moral pressure on China to make its claims to ‘historic rights’ and ‘indisputable sovereignty’ clearer in terms of international law,” Professor Carl Thayer of the Australian Defense Force Academy told GMA News Online. The arbitral process could take up to a year or longer and during this period, China is expected to further reinforce its claims, said Thayer. On the other hand, the United States, European Union and many Asian governments have supported the Philippines' decision to seek a solution to the dispute through peaceful means "in accordance with international law" instead of military aggression. A decision in favor of the Philippines would strengthen the rule of international law, Thayer said. “Using international law may be the ‘weapon of the weak’ but the valiant attempt by the Philippines to employ legal means to create a stable regional order will be viewed positively by most regional states, including those in the Association of South East Asian Nations,” Thayer said. UNCLOS has no provisions for enforcement, but a favorable ruling will be seen as a moral victory for the Philippines. — Joel Locsin, Michaela del Callar and Kimberly Jane Tan, with a report from Reuters/LBG/KG/BM, GMA News
Thursday, June 5, 2014
Putin looks east to bolster ties with North Korea
FILE - In this May 9, 2014 file photo, Russian President Vladimir Putin heads to speak at a navy parade marking Victory Day in Sevastopol, Crimea. Angry with the West’s response over Ukraine, Russia is moving rapidly to bolster ties with North Korea in a diplomatic nose-thumbing that could complicate the U.S.-led effort to squeeze Pyongyang into giving up its nuclear weapons program. Russia’s proactive strategy in Asia- which also involves cozying up to China and had been dubbed “Putin’s Pivot” - began years ago as Moscow’s answer to Washington’s much touted rebalancing of its military forces in the Pacific. (Ivan Sekretarev, File/Associated Press) By Associated Press June 4 at 10:32 AM TOKYO — Angry with the West’s response over Ukraine and eager to diversify its options, Russia is moving rapidly to bolster ties with North Korea in a diplomatic nose-thumbing that could complicate the U.S.-led effort to squeeze Pyongyang into giving up its nuclear weapons program. Russia’s proactive strategy in Asia, which also involves cozying up to China and has been dubbed “Putin’s Pivot,” began years ago as Moscow’s answer to Washington’s much-touted alliance-building and rebalancing of its military forces in the Pacific. But it has gained a new sense of urgency since the unrest in Ukraine — and Pyongyang is already getting a big windfall with high-level political exchanges and promises from Russia of trade and development projects. Moscow’s overtures to North Korea reflect both a defensive distancing from the EU and Washington because of their sanctions over Ukraine and a broader, long-term effort by Russia to strengthen its hand in Asia by building political alliances, expanding energy exports and developing Russian regions in Siberia and the Far East. For North Korea, the timing couldn’t be better. Since the demise of the Soviet Union and the largesse it banked on as a member of the communist bloc, the North has been struggling to keep its economy afloat and has depended heavily on trade and assistance from ally China. Sanctions over its nuclear and missile programs have further isolated the country, and Pyongyang has long feared it could become too beholden to Beijing. Better ties with Russia could provide a much needed economic boost, a counterbalance against Chinese influence and a potentially useful wedge against the West in international forums — and particularly in the U.S.-led effort to isolate Pyongyang over its development of nuclear weapons. “By strengthening its relationship with North Korea, Russia is trying to enhance its bargaining position vis-à-vis the United States and Japan,” said Narushige Michishita, a North Korea and Asia security expert at Japan’s National Graduate Institute for Policy Studies. Michishita added that showing Washington he will not be cowed by the sanctions was “one of the most important factors” why Putin is wooing Pyongyang now. Moscow remains wary of having a nuclear-armed North Korea on its border. But over the past few months it has courted the North with various economic projects, political exchanges and a vote in the Duma, the top Russian legislative body, to write off nearly $10 billion in debt held over from the Soviet era. It has pledged to reinvest $1 billion that Pyongyang still owes into a trans-Siberian railway through North Korea to South Korea — a project that is still in the very early stages. That, together with a pipeline, would allow Russia to export gas and electricity to South Korea. Michishita noted that the same day the United Nations’ General Assembly passed a resolution condemning Russia’s annexation of Crimea, Russia and North Korea were busy signing an economic trade cooperation pact. The warming began around July last year, but it has accelerated as Moscow’s antagonism with the West has grown. Moscow sent a relatively low-ranking representative to the 60th anniversary of the end of fighting in the Korean War that month. But since then, it has hosted North Korea’s head of state at the opening of the Olympic Games in Sochi and, in March, sent its minister in charge of Far East development to Pyongyang. A three-day visit in April by Deputy Prime Minister Yuri Trutnev, who is also the presidential envoy for Russia’s far eastern federal district, marked the “culmination of a new phase in Russian-North Korean relations taking shape — a sort of renaissance if you will,” Alexander Vorontsov, a North Korea expert at the Russia Academy of Sciences, wrote recently on the influential 38 North blog. “It is still an open question whether the current crisis in Ukraine will result in any more substantial shifts in Russian policy toward North Korea, particularly in dealing with the nuclear and missile issues,” Vorontsov said in his blog post. “With the West increasing pressure on Russia as a result of differences over Ukraine, the very fact that Moscow and Pyongyang are subject to U.S. sanctions will objectively draw them together, as well as with China.” Since 2003, a series of multilateral talks have been one of the primary means of pressuring North Korea to denuclearize and to coordinate policy between the six main countries involved — China, Russia, the United States, Japan and North and South Korea. Though still seen as one of the best tools the international community has to pressure Pyongyang on the nuclear issue, the talks were fraught from the start because of the North’s unwillingness to back down and the lack of a unified stance among the five other nations. With North Korea showing no signs of giving up its nuclear option, some analysts believe a widening rift between Russia and the U.S. could weaken future six-party talks. “North Korea’s motivations and actions are driven by the leadership’s perceptions, world view, and ideology,” said Seoul-based analyst Daniel Pinkston, of the International Crisis Group. “That remains the same. As long as the leadership is wedded to son’gun (Military First) ideology, they will not denuclearize before the rest of the world does. And that’s exactly what their government and media say repeatedly.” Michishita, the Japanese security expert, said the Moscow-Pyongyang thaw could just muddy the waters. “North Korea will not denuclearize anyway,” he said. “A better relationship with Russia might be a positive factor for North Korea in coming back to the six-party talks. But North Korea will certainly try to use it to enhance its position vis-à-vis not only the United States and Japan, but also China.” ___ Talmadge is the AP’s Pyongyang bureau chief. Follow him on Twitter at twitter.com/EricTalmadge. Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Sunday, May 25, 2014
Russia-China Natural Gas Pipeline to Create New Global Price Benchmark
Russia’s landmark deal to supply China with natural gas via pipeline over 30 years will have profound impacts globally and create a new price benchmark that may pressure other producers, as consumers choose from a variety of supply sources, according to analysts. OAO Gazprom on Wednesday clinched a contract with China National Petroleum Corp. (CNPC) to sell an estimated $400 billion worth of gas over 30 years beginning in 2018 (see Daily GPI, May 21). By the end of this decade, Russia could be supplying almost 10% of China’s gas supplies. The deal to supply 38 billion cubic meters (bcm) a year via pipeline is priced at around US$10.00/Mcf, versus a current price of $14.00-15.00 for Asia Pacific imports, close to what most European utilities have agreed to pay over the past two years under discounted long-term contracts. “We, Russia and Gazprom, have discovered the Asian gas market for ourselves,” said Gazprom CEO Alexey Miller on Thursday at a forum. The transaction “will influence the whole gas market,” pressuring LNG projects in North America, Australia and Africa. Several analysts agreed that the partnership is a landmark for the global gas market. The compact “sets a new benchmark for what China is willing to pay for natural gas over longer-term contracts,” said Fitch Ratings. Asia liquefied natural gas (LNG) spot prices today are about $13.70/MMBtu, versus U.S. prices of about $4.50 (Henry Hub). “The deal changes the level playing field,” Societe Generale analyst Thierry Bros wrote. “China has now secured some new gas at a competitive price,” which means LNG shipped after the pipeline is completed “would need to be competitive.” China “now has a powerful stick with which to beat down LNG prices…They can tell their LNG suppliers ‘either you bring your price below Russian piped costs, or we will install a second line from Russia and cut you out.’” Russia “has thrown down the gauntlet to LNG producers courting Chinese buyers,” said London-based Timera Energy Director David Stokes. “Russian pipeline exports, which look to be competitively priced versus LNG, are set to have a material impact in eroding Chinese LNG demand. There is likely to be an important knock-on impact on the global LNG supply and demand balance, given the central role China plays in growth projections.” Expanding Gazprom’s Reach For Gazprom, the deal also gives it a brand-new market that’s roughly the size of Europe, said Wood Mackenzie Ltd.’s Stephen O’Rourke. Russia now supplies about one-third of Europe’s gas supplies, but more important, about 80% of Gazprom’s revenues are from Europe. “With European gas demand growth uncertain and the Ukraine crisis leading to calls for Europe to reduce its reliance on Russian gas, Gazprom now needs a ‘new Europe’ — enter China,” said O’Rourke. Gazprom could increase export volumes to China without affecting its ability to deliver to existing European customers, by developing untapped reserves in eastern Russia, said Fitch Managing Director Alex Griffiths, who heads natural resources and commodities. “Some have portrayed the deal as Russia turning away from Europe, in light of the ongoing situation in Ukraine. While it certainly begins to give Gazprom options in where to export, the company’s challenge historically has been to find ways to monetize its 23 trillion cubic meters of reserves at acceptable prices — and the best scenario for the company is an increase in production. “The deal is therefore positive for Gazprom’s medium- to long-term prospects, especially if it opens the door for a further deal to sell gas from its developed western fields to China in due course…” The price Russia fetched may be comparable to that of Gazprom contracts with Western Europe customers, but it’s “far above the prices at which gas can be sold in Russia,” said Griffiths. “A key difference is that gas to be sent to China will come from largely undeveloped fields, implying a significant upfront investment, which President Putin announced as US$55 billion. The 38 bcm announced is equal to about a quarter of Gazprom’s annual deliveries to Europe.” Russia also has announced it may abolish the mineral extraction tax for gas fields that deliver gas to China, potentially adding even more to Gazprom’s bottom line, he said. Russia likely is looking well beyond China for customers. Rumors are circulating that a transaction similar to the one with China is being negotiated with India. Russia is building new facilities and expanding other LNG export plants on its Pacific coast, near Sakhalin Island, where ExxonMobil Corp. and others are partnering. ExxonMobil struck an alliance with Russia’s OAO Rosneft in 2011 (see Daily GPI, Aug. 31, 2011). The pipeline to China would position Gazprom with leading Asia Pacific gas buyers, putting it at an advantage geographically over exports from North America and elsewhere. China Gas Demand Expected to Quadruple by 2035 However, the Asia Pacific region will need a lot of gas to keep up with demand. The International Energy Agency has predicted that China’s gas demand will quadruple by 2035. Russia exports will be a “drop in the bucket” as far as Asia Pacific’s thirst for gas, said Ziff Energy’s Ed Kallio, who directs gas consulting. “It doesn’t even come close. This doesn’t even scratch the surface.” And China hasn’t placed all of its bets on Russia, with large investments in gas schemes around the world, including British Columbia (BC), where a dozen-plus LNG export terminals are on the table. It’s also a big investor in Australia export projects. As well, China is planning to build at least 15 gas import terminals, which would make it the biggest gas importer after Japan. BC Premier Christy Clark said she didn’t think the Russia agreement would satisfy China’s thirst, nor its need to diversify supply. “I don’t think there’s a country in the world that today wants to depend on Russia as their sole supplier of natural gas,” said Clark. “Providing the assurance that we are not going to play politics with energy — I think that’s worth a lot to our potential partners out there, I think, especially China…We’ve certainly seen the way that Russia likes to do business these days, and we certainly know that the Chinese want a dependability of supply. We can supply that.” Calgary-based Talisman Energy Inc. CEO Hal Kvisle isn’t overly concerned about the deal pressuring Canada LNG. The former chief of TransCanada Corp. discussed the tie-up during a conference call during Talisman’s annual investor day. The quantity of gas directed to China isn’t enough “to swamp the market…It certainly doesn’t shut the door on LNG exports from Canada.” Woodside Petroleum Ltd. CEO Peter Coleman, whose company is Australia’s biggest gas exporter by volume, agreed that China would need a lot of gas from a lot of sources. Australia export facilities, including those backed by Chevron Corp., Anadarko Petroleum Corp. and ConocoPhillips, have faced huge cost overruns and labor shortages, but the backers haven’t signaled a slowdown. “China’s growth is coming off such a small base at the moment…It’s got a lot of headroom in it,” Coleman said. Wood Mackenzie’s Gavin Thompson, who heads Asia gas research, said the “comparisons with the development of Gazprom’s export business into Europe are clear, with almost identical population sizes between Northeast China and Western Europe. Gazprom’s exports to Western Europe first reached 38 bcm by the mid-1980s and have since increased to over 150 bcm into the whole of Europe. “We anticipate overall gas demand from China over the next two decades will grow more rapidly than that witnessed in Europe from the mid-1980s.” He said eight provinces in Northeast China would receive the East Siberian gas; the area has a population of around 360 million, roughly equal to that in Western Europe. The region also experiences “extremely cold winters and suffers from a shortage of indigenous supply options.” By 2025, Wood Mackenzie estimates that total gas demand from the eight provinces alone will reach 125 bcm; the Power of Siberia gas pipeline system would meet “over a quarter of regional gas demand by this time.” Without that eastern Russian supply, the region was facing increased reliance on imported LNG, Thompson said. Qatar, the world’s largest LNG producer, already is negotiating with CNPC and state-owned PetroChina Co. to supply 7 million metric tons/year (mmty); China now has long-term contracts for around 5 mmty. Major gas fields offshore Mozambique and Tanzania also hold promise. Too Much Gas? With gas reserves increasingly growing worldwide as unconventional drilling techniques improve, will there be enough buyers? “There will be more gas than needed, so those who get to the market first and cheapest will win,” said Sasol Petroleum International’s Ebbie Haan, managing director. There’s also the political strength that China and Russia gain through the gas alliance. “From the perspective of international relations,” said Thompson, “this deal also signals a deepening of energy ties between Russia and China. They now cooperate across a range of different commodities and have established a broad base for further increases in trade in oil, gas, LNG, coal and electricity.” The crisis in Ukraine, which has strained Russia relations with Europe and the United States gave “new urgency to the Russian desire to branch out to new markets,” said Credit Suisse analysts. “The implied price comes out at just under $10.00/MMBtu, but more importantly, provides China with something of a lever to cap ‘expensive’ LNG.”
OPINION: Asians cannot count on "magic bullets" from U.S. for their problems
By Hiroki Sugita TOKYO, May 1, Kyodo Every time the U.S. president visits Asia, there are agreements, such as the "Global Alliance" or the "Strategic Partnership," which are well received in Asian countries but very modest in terms of concrete actions and effectiveness. In his late April visit to Asia, President Barack Obama was gracious enough to tell the people in the countries he visited exactly what they wanted to hear. Of course, Asians are happy right now, but we cannot ignore deeper doubts about whether he will follow through on what he said. In Tokyo, the first stop of President Obama's Asian trip, he said that the Senkaku Islands fall under the Japan-U.S. security treaty, in a show of U.S. commitment to defending the Japanese-administered islands against any attempt by China to seize them. Prime Minister Shinzo Abe of Japan praised Obama's statement, which no previous U.S. president has voiced, as "epoch-making." Japanese security experts say that the statement is the best way to deter China from starting any military operations against the islands in the East China Sea. Then, in Seoul, Obama rebuked Japan and pleased South Korea. At a press conference with President Park Geun Hye he described "comfort women" as a "terrible and egregious" violation of human rights and for the first time urged Mr. Abe to address the issue with the South Korean government. Many of the comfort women who were forced to work at Japanese military brothels during World War II were from the Korean Peninsula. President Park followed Obama by saying delightedly, "I really look forward to efforts made by the Japanese side." In Manila, Obama announced a defense pact that would give American forces greater access to Philippine military bases and facilities, including airfields and seaports. The main purpose of the pact is to fend off China's military expansion in the South China Sea. Asians except Chinese welcome all of Obama's words and policies. Many Japanese even support the "comfort women" statement. Although Obama's comfort women comment clearly puts Abe in an awkward position, it may act as a catalyst to end the bickering between Japan and South Korea over this issue. According to U.S. National Security Adviser Susan Rice, the remark was in line with the purpose of Obama's trip, namely to cement ties with Japan and South Korea and to encourage improved dialogue between these nations. However, the question is: to what extent can Obama oversee the implementation of these words and agreements? Asians were joyful when Obama announced the U.S. pivot to Asia three years ago after its long and enduring Middle East military ventures. But, we soon found in dismay the policy (later called "rebalancing") more rhetorical than real, as it lacked follow-up measures. Since the pivot announcement, Obama has cancelled two trips to Asia to deal with domestic political affairs, and last year he gave silent approval to China's Air Defense Identification Zone, over protests from Japan. One of the pillars of the pivot is the Trans-Pacific Partnership, or TPP, which was intended to create an Asia-Pacific free trade zone. During this trip to Asia, Obama made it clear that the United States would not make meaningful concessions to Japan and other TPP countries on trade negotiations for fear of angering some U.S. industries. Again, it is clear that Obama places domestic politics above Asia rebalancing. Even the Senkaku statement is not so assuring. At the Tokyo press conference, Obama avoided answering a question about the use of U.S. military force if China were to make a military incursion into the Senkakus. He explained that what he had said about the U.S. commitment to the islands was nothing new; it just repeated the U.S.'s historical interpretation of the U.S.-Japan security treaty. This response gave the impression that he would be very hesitant to use any kind of force. Given Obama's weak reaction to his declared redline regarding the use of chemical weapons in Syria and his ineffective response to the crisis in Ukraine, some Japanese naturally wonder whether the Senkaku statement is another Obama redline that would be easily ignored. Considering China's substantial economic and military strength, it is highly unlikely that the United States would get involved in a confrontation with China over a group of small and inhabited islands. Because of strict budget cuts, the U.S. military cannot meaningfully strengthen its presence. Yoko Iwama, a professor at the National Institute for Policy Studies in Tokyo, noted, "The Ukraine crisis shows the U.S. still has to put a great deal of efforts into Europe to counter Russia. It is too much to ask the U.S. to show strong presence both in Asia and Europe." Although security ties with the United States are the foundation for stability in the region, Asian countries would be wise not to expect much from the United States in the events of conflicts. It is equally important that Asian countries strengthen their own individual defense capabilities and build better relations with China. Obama has a unique capability to please host countries, as we saw in his April trip to Asia. In November, he will go to Beijing to attend the annual Asia-Pacific leaders' meeting. He most likely will reiterate strategic relationships with China for global and regional agendas, which the Japanese and Filipinos will not be happy to hear. In Tokyo he called on Japan to have talks to de-escalate the tension over the Senkakus saying, "I've said directly to the prime minister that it would be a profound mistake to continue to see escalation around this issue rather than dialogue and confidence building measures between Japan and China." If the issue is not resolved by November, then Obama in China may blame Abe for not doing enough. Asians should not be happy or disappointed each time the U.S. president makes a statement on the region. We can't expect magic bullets from the United States for Asian problems because they do not have quick solutions. Therefore, we Asians must find our own solutions to the Senkakus, comfort women, China, and any other issues we face. (Hiroki Sugita is managing feature writer of Kyodo News.) ==Kyodo
Friday, May 23, 2014
China's Xi Warns Asian Countries on Military Alliances
May 21, 2014 2:54 AM Chinese President Xi Jinping warned Asian countries against building what he sees as unhelpful military alliances, in what is seen as a swipe at nations that have developed closer defense ties with the United States. The comments came Wednesday in Shanghai at the Conference on Interaction and Confidence-building Measures in Asia (CICA), a regional grouping China hopes to use to offset U.S. influence. "We should stick to the basic norms in international relations such as the respect for the independence of sovereignty and integrity of territory, mutual non-interference into internal affairs. We should respect the political systems and development methods different countries choose willingly. We should respect and look after the reasonable security concerns of every country. It is disadvantageous to the common security of the region if military alliances with third parties are strengthened,” said Xi. Many of China's neighbors have boosted their military cooperation with the U.S. in response to what they see as China's increasing use of force and intimidation in its many territorial disputes. In particular, Beijing's maritime spats with Vietnam and the Philippines in the South China Sea and Japan in the East China Sea have worsened in recent months. During a visit to Asia last month, President Barack Obama sought to reassure allies such as Japan and the Philippines that his long-promised strategic shift towards Asia and the Pacific, widely seen as aimed at countering China's rising influence, was real. The CICA grouping includes Vietnam, while the Philippines and Japan are not members but had representatives at the meeting. The group also excludes the U.S., while including nations such as Iran and Russia. Anti-Chinese violence flared in Vietnam last week after Chinese state oil company CNOOC deployed an oil rig 150 miles off the coast of Vietnam in waters also claimed by Hanoi. The rig was towed there just days after Obama left the region. The move was the latest in a series of confrontations between China and some of its neighbors over the potentially oil-and-gas rich South China Sea. Washington has responded with sharpened rhetoric toward Beijing, describing a pattern of “provocative” actions by China. The CICA is relatively obscure in comparison to other Asian regional groupings, such as the Asia-Pacific Economic Cooperation (APEC) or the Association of Southeast Asian Nations (ASEAN), but Beijing, which took over as chair of the CICA from Turkey this week, hopes to use the group and others like it to help expand Chinese influence across the region. President Xi said the grouping should help create a "new regional security cooperation architecture." Although he provided few details, he said this could include a "defense consultation mechanism" and a "security response center" in case of regional emergencies. Addressing China's territorial feuds, he said Beijing is "committed to seeking peaceful settlement of disputes with other countries over territorial sovereignty, and maritime rights and interests." State broadcaster China Central Television aired the arrival of various leaders for the meeting live, but, underscoring the sensitivity of China's territorial disputes, it cut away from images of Xi shaking hands with the representatives from Vietnam, the Philippines and Japan. Chinese President Xi Jinping warned Asian countries against building what he sees as unhelpful military alliances, in what is seen as a swipe at nations that have developed closer defense ties with the United States. The comments came Wednesday in Shanghai at the Conference on Interaction and Confidence-building Measures in Asia (CICA), a regional grouping China hopes to use to offset U.S. influence. "We should stick to the basic norms in international relations such as the respect for the independence of sovereignty and integrity of territory, mutual non-interference into internal affairs. We should respect the political systems and development methods different countries choose willingly. We should respect and look after the reasonable security concerns of every country. It is disadvantageous to the common security of the region if military alliances with third parties are strengthened,” said Xi. Many of China's neighbors have boosted their military cooperation with the U.S. in response to what they see as China's increasing use of force and intimidation in its many territorial disputes. In particular, Beijing's maritime spats with Vietnam and the Philippines in the South China Sea and Japan in the East China Sea have worsened in recent months. During a visit to Asia last month, President Barack Obama sought to reassure allies such as Japan and the Philippines that his long-promised strategic shift towards Asia and the Pacific, widely seen as aimed at countering China's rising influence, was real. The CICA grouping includes Vietnam, while the Philippines and Japan are not members but had representatives at the meeting. The group also excludes the U.S., while including nations such as Iran and Russia. Anti-Chinese violence flared in Vietnam last week after Chinese state oil company CNOOC deployed an oil rig 150 miles off the coast of Vietnam in waters also claimed by Hanoi. The rig was towed there just days after Obama left the region. The move was the latest in a series of confrontations between China and some of its neighbors over the potentially oil-and-gas rich South China Sea. Washington has responded with sharpened rhetoric toward Beijing, describing a pattern of “provocative” actions by China. The CICA is relatively obscure in comparison to other Asian regional groupings, such as the Asia-Pacific Economic Cooperation (APEC) or the Association of Southeast Asian Nations (ASEAN), but Beijing, which took over as chair of the CICA from Turkey this week, hopes to use the group and others like it to help expand Chinese influence across the region. President Xi said the grouping should help create a "new regional security cooperation architecture." Although he provided few details, he said this could include a "defense consultation mechanism" and a "security response center" in case of regional emergencies. Addressing China's territorial feuds, he said Beijing is "committed to seeking peaceful settlement of disputes with other countries over territorial sovereignty, and maritime rights and interests." State broadcaster China Central Television aired the arrival of various leaders for the meeting live, but, underscoring the sensitivity of China's territorial disputes, it cut away from images of Xi shaking hands with the representatives from Vietnam, the Philippines and Japan. Some information in this report was contributed by Reuters.
Thursday, October 6, 2011
Burma Delivers Its First Rebuff to China ---China angry over Burma's decision to suspend work on £2.3bn dam
-Burma Delivers Its First Rebuff to China --
-China angry over Burma's decision to suspend work on £2.3bn dam
Burma Delivers Its First Rebuff to China
Shelving of gigantic Chinese hydroelectric dam could be a signal to the West
Bertil Lintner
YaleGlobal, 3 October 2011
Blocking the dam: Burmese protesters in Thailand oppose China’s Irrawaddy dam project (top); Burmese president U Thein Sein (r) receiving Xu Caihou, Vice Chairman of China's Central Military Commission
CHIANG MAI: At a time when Asian countries are increasingly worried about China’s growing assertiveness, Burma’s rejection of a huge Chinese hydroelectric dam project has raised new questions: Is this a rare victory for civil society in a repressive country? Or does it indicate an internal dispute over the country’s dependence on China? Regardless of the answers to these questions, the public difference over a close ally’s project marks a new stage in the Burma-China relationship.
On September 30, Burma’s new president, Thein Sein, sent a statement to the country’s parliament announcing that a joint venture with China to build a mega-dam in the far north of the country had been suspended because “it was contrary to the will of the people.” The US$3.6 billion The Myitsone Dam would have been world’s 15th tallest and submerged 766 square kilometers of forestland, an area bigger than Singapore.
It’s unclear if Chinese counterparts were consulted before the decision was made public. Burma has depended on its powerful northern neighbor for trade, political support and arms deliveries since the West shunned the Burmese regime following massacres of pro-democracy demonstrators in 1988.
Public opinion may have played its part. Under the 2006 deal, 90 percent of power generated from Myitsone would have gone to China. Anger over environmental destruction galvanized people against the regime in a way that the country had not seen for years. The dam was a dagger in the heart of the Kachins, the predominant ethnic minority in the area. Pro-democracy leader Aung San Suu Kyi threw her support behind the anti-dam movement. Many made their voices heard over Facebook – a new tool for anti-regime activists.
Burma depends on China for trade,
political support and arms deliveries – but the president said no
to the Myitsone Dam.
People inside Burma can’t protest openly, but "Save the Irrawaddy" meetings have been held in Rangoon. Burmese exiles have staged anti-Chinese demonstrations outside Burmese and Chinese embassies abroad. Anti-Chinese sentiment is growing in Burma, especially in the north where Chinese influence is the strongest. According to reports from Kachin State, many Chinese nationals working in the state, including traders, have fled to China following the outbreak of hostilities between the Kachin Independence Army and government forces.
But public opinion has never been a strong factor when it comes to influencing the Burmese regime. The regime doesn’t want to risk another outbreak of anti-government protests similar to the 2007 monks’ movement and invite international condemnation with more US and EU sanctions.
Dissatisfaction within the armed forces over China's growing influence in Burma is a more likely reason for the move to suspend the dam project.
Burma has historically had a strained relationship with its northern neighbor. From the establishment of the People’s Republic of China in 1949 until 1962, Beijing maintained a cordial relationship with the non-aligned democratic government of Prime Minister U Nu. Burma was the first country outside the communist bloc to recognize the new regime in Beijing. After General Ne Win staged a coup d’etat in 1962, the Chinese, long wary of the ambitious, sometimes unpredictable general, prepared for all-out support for the insurgent Communist Party of Burma (CPB).
Anti-Chinese riots in Rangoon in 1967 – orchestrated by military authorities to deflect public anger over a deteriorating economy – provided an excuse for Chinese to intervene. On New Year’s Day 1968, armed CPB units entered northeastern Burma from China’s Yunnan Province. Over the next decade, China poured more aid into the CPB effort than any other communist movement outside of Indochina.
Dissatisfaction within the armed forces over China's influence in Burma is a more likely reason to suspend the dam.
A clandestine radio station, the People’s Voice of Burma, began transmitting from the Yunnan side of the frontier in 1971. Thousands of Chinese streamed across the border, providing additional support to the CPB.
Mao’s death in 1976, and the subsequent return to power of pragmatist Deng Xiaoping, marked the beginning of the end of massive Chinese aid to the CPB. Supporting revolutionary movements in the region was no longer in Beijing's interest. Still, China coveted Burma’s forests, rich deposits of minerals and natural gas, and hydroelectric power potential.
Ending Chinese support to the CPB ushered in a more cordial era in Sino-Burmese relations, the relations growing by leaps and bound after the 1988 bloody suppression of pro-democracy movement in Burma. Apart from supplying Burma with vast quantities of military hardware, by 1991, Chinese experts assisted in a series of infrastructure projects. Chinese military advisers soon arrived, the first foreign military personnel stationed in Burma since the 1950s. Cross-border trade between China and Burma boomed.
More recently, China has provided Burma with low-interest loans, and Chinese investment in the sanctions-hit economy is substantial, particularly true of the energy sector. For example, an agreement on a gas pipeline from the Bay of Bengal will be supplemented with an oil pipeline designed to allow Chinese ships carrying Middle Eastern oil to skirt the congested Malacca Strait.
The heavy dependence on China has led to consternation among many Burmese military leaders. Those leaders do not forget that they once fought against the China-backed CPB, that their comrades were killed by Chinese arms. Aung Lynn Htut, a former intelligence officer who sought US political asylum in 2005, drew on those memories in a September commentary for The Irrawaddy, a website run by Burmese exiles.
China has called for “talks” after President Thein Sein’s statement, but skeptics point out that a 2009 internal report by the China Power Investment Corporation, the company behind the dam, said that the size was unnecessary and called for the project to be scrapped. And China still has contracts to build six other mega-dams on the Irrawaddy and source rivers. That Thein Sein dared to make his public statement reveals a wrinkle in Sino-Burmese relations – and how Burma may try to balance foreign relations, perhaps returning to its former policy of strict neutrality and non-alignment.
Burma may try to balance foreign relations, perhaps returning to its former policy of strict neutrality and non-alignment.
Some academic observers assert that Beijing’s influence over the Burmese government is exaggerated. China, the argument goes, “has not been as successful in winning Burma’s confidence as often is reported,” as suggested by Andrew Selth, author and strategic studies researcher. The source of Burma’s arms suppliers offers evidence: Although China provided Burma with up to US$1.6 billion worth of military hardware since 1989, the regime has recently turned to Russia, the Ukraine and North Korea to diversify its arms-procurement program.
Instead of democratizing the country, Burma’s new government seems to have chosen to play “the China card,” an attempt to win support of the West. An unsigned opinion piece in The Bangkok Post, written by a Burmese government official, reportedly approved at the highest level in Naypyidaw, lays out its position: “We do not want our country to become a satellite state of the Chinese government. However, Western countries should not force us into a corner where we have no option but to increasingly rely on China.”
In this context, “force” means insistence on genuine democratic reforms. From the regime’s point of view, improved relations with the West could be accomplished simply by playing up the Chinese threat, with the hope of diminishing Western criticism of the regime.
But the regime has time and again stressed that how the country is governed is an internal matter. The West must decide if it will play along.
Bertil Lintner is a Swedish journalist based in Thailand and the author of several works on Asia, including “Blood Brothers: The Criminal Underworld of Asia” and “Great Leader, Dear Leader: Demystifying North Korea under the Kim Clan.” He can be reached at lintner@asiapacificms.com
Rights:Copyright © 2011 Yale Center for the Study of Globalization
China angry over Burma's decision to suspend work on £2.3bn dam
Beijing threatens legal action as Burma halts dam because it is 'against the will of the people'
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Jonathan Watts
guardian.co.uk, Tuesday 4 October 2011 19.46 BST
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Technicians inspect the hydropower plant at the Three Gorges project in China. Beijing is angry that Burma has cancelled a similar project. Photograph: Du Huaju/AP
Burma's decision to suspend the country's biggest hydroelectric project has shocked and enraged China, the government's most influential backer on the international stage.
Senior officials in Beijing have castigated their south-east Asian ally and threatened legal action. It emerged that they were not consulted before President Thein Sien of Burma announced last Friday a halt to building the $3.6bn (£2.3bn) hydropower dam on the Irawaddy – known as the Myitsone project – because it was "against the will of the people".
China is the impoverished nation's second-largest trading partner and biggest foreign investor. Such public displays of discord are unusual. Its reaction contrasted sharply with the response of the US government, which praised Burma's "significant and positive step" towards listening to public concerns and promoting national reconciliation.
This may be because Beijing has more at stake. China Power Investment is the primary funder of the project. Its manager, Lu Qizhou, told domestic media that he was astonished by the announcement.
"I hear about this through media reports. I was very shocked. Before this, Burma did not communicate with us about plans for a suspension," he said, in a warning that a halt to construction would precipitate legal action.
Lu said the project had received the necessary approval in both countries. He described the sudden suspension as "incomprehensible" and the cost for both countries as "immeasurable".
He said the loss was not just about the direct investment, but it was also a missed opportunity to generate electric power and there was damage to the country's reputation because of a breach of contract. In total, he calculated that the cascade of hydropower projects – of which Myitsone is just one – would have earned the Burmese government $54bn in tax revenues, shared profits and free electricity.
Lu downplayed the human and environmental impact of the dam, saying the Myitsone reservoir would necessitate the relocation of only 2,146 people in five villages. He said the Chinese company had provided them with two-storey houses, 21in colour televisions and a 100,000 kyat living allowance.
At the weekend, Hong Lei, a Chinese Foreign Ministry spokesman, called on Burma to hold consultations over the dam and noted that both countries agreed to move ahead with the project after a thorough assessment of the impact.
Opponents of the dam accuse China of being disingenuous. The Burma Rivers Network, which represents communities affected by the hydropower project, said Beijing had negotiated its investments with the military government without considering the will of the people.
"The villagers at the dam site, numerous political and community organisations, international human rights organisations have attempted to contact China Power Investment and discuss the concerns about the impacts and process of the project. Even though CPI never responded to all these attempts at dialogue, they cannot claim to be unaware of the feeling about this project by the people of Burma," the group said.
Far from benefiting Burma through flood control, the group argue that the dam would put the demands of power generation for China before the needs of local people.
"Chinese engineers running the dams will decide how much water to release downstream according to orders from Beijing ... As seen with the Mekong, this can cause unexpected and devastating water surges and shortages," it said.
Wednesday, August 3, 2011
Analysis: Pakistan relying too much on China against U.S.
By Chris Allbritton | Reuters – 1 hr 58 mins agotweet17ShareEmailPrintRelated ContentPakistan's Prime Minister Yusuf Raza Gilani and China's Premier Wen Jiabao at the …
ISLAMABAD (Reuters) - Pakistan's quick response to charges by China that militants involved in attacks in Xinjiang had trained on its soil shows the importance of its ties with Beijing, but it could be a mistake for Islamabad if it relies too much on China.
Pakistan immediately dispatched Lieutenant-General Ahmed Shuja Pasha, director general of Pakistan's powerful Inter-Services Intelligence (ISI) spy agency, to Beijing after Islamic militants mounted a weekend attack that left 11 people dead in the western region of Xinjiang, according to media reports.
While the ISI declined to confirm the trip, Western diplomats and Pakistani analysts agreed that the attacks would likely be at the top of any agenda.
"We cannot allow Pakistani territory to be used for any activities against any neighbor, especially a close ally like China," said Mushahid Hussain Sayed, Chairman of the Pakistan-China Institute.
"There are strong ties between Pakistan and China, and we are cooperating closely on this issue."
Pasha's speedy trip was a clear sign of Pakistan's priorities.
The United States rarely gets that level of cooperation when it presses Pakistan on militants operating in its border regions. American officials for years said al Qaeda leader Osama bin Laden, killed in a U.S. raid in Pakistan in May, was hiding in the country.
Pakistan often responded with demands for specific, actionable intelligence before it would consider investigating.
Islamabad makes no secret of its preference for China over the United States as a military patron, calling Beijing an "all-weather" ally in contrast to Washington's supposedly fickle friendship.
The Pakistani foreign ministry issued a statement on Monday extending "full support" to China.
China is a major investor in predominantly Muslim Pakistan in areas such as telecommunications, ports and infrastructure. The countries are linked by a Chinese-built road pushed through Pakistan's northern mountains.
Trade with Pakistan is worth almost $9 billion a year for Pakistan, and China is its top arms supplier.
But all that matters only up to a point.
"Pakistan wants to play its own game by creating a front against the United States," said Hasan Askari-Rizvi, an independent political analyst.
"That will not happen. ... Now China has the same complaint which the United States has with Pakistan."
Barry Sautman, a professor at Hong Kong University of Science and Technology, said that China, like the United States, wanted Pakistan to help it control Islamist militancy. But it is frustrated by the chaotic nature of Pakistani governance, and its inability to control militants or militant-friendly elements in its security agencies.
"I would think the Chinese government would want to have its military and security apparatus liaise with Pakistani authorities to come up with a common plan, but the U.S. found that very difficult to do," he said. "And I am sure China will find it difficult as well."
Furthermore, Pakistan's usefulness to China is only in South Asia, where it competes with India. But China has global ambitions; it is unlikely to sacrifice them for an ally that has proved a headache to the United States, which has its own deep relationship with China.
"Being seen to take a provocative stand alongside Pakistan comes at a substantial cost, but provides little strategic benefit," Urmila Venugopalan, an independent analyst and former Asia editor at Jane's Intelligence Review, wrote last month in Foreign Policy.
China, he wrote, does not want to push India deeper into the American orbit.
"An escalation in Chinese aid to Pakistan would surely antagonize India, creating a new point of friction in the triangular relationship between Beijing, New Delhi, and Washington."
China has also shown no sign that it is willing to shoulder some of the financial burden of propping up Pakistan that the United States has so far been willing to bear.
In 2008, when Pakistan was suffering a balance of payments crisis and sought China's support to avoid turning to the International Monetary Fund and its restrictive terms on a $7.5 billion loan, China provided only $500 million.
China may share concerns over Pakistan's stability, Venugopalan writes, "but it has preferred to let Americans bear the costs of improving the country's security".
Pakistan's attempts to play China off the United States will ultimately backfire, analysts say. Although important, Pakistan is not the most important issue for Beijing and Washington.
"It is our misunderstanding if we think that we will team up with China if we are pressed by the United States," Rizvi said. "China and the United States have their own relations and they cannot compromise them for the sake of Pakistan."
(Additional reporting by Zeeshan Haider and Qasim Nauman in Islamabad, and Michael Martina in Beijing; Editing by Ron Popeski)
Monday, June 6, 2011
China shops for Latin American oil, food, minerals
By IAN JAMES, Associated Press Ian James, Associated Press – 1 hr 1 min ago
CARACAS, Venezuela – Latin America is blessed with a wealth of natural resources such as oil, copper and soy, and seeks investment and loans to capitalize on them. China needs the commodities to keep its economy growing and has about $3 trillion in reserves to burn.
Those interests have come together in a burgeoning and unorthodox partnership, as China lends and invests tens of billions of dollars in countries around Latin America in return for a guaranteed flow of commodities, particularly oil.
Recent deals have made China a key financier to the governments of Venezuela and Argentina. At the same time, Chinese companies have secured a decade's worth of oil from Venezuela and Brazil, and steady supplies of wheat, soybeans and natural gas from Argentina.
China is breaking new ground by aggressively locking down commodities around Latin America through large loans, investments and other financial arrangements, said Orville Schell, director of the Center on U.S.-China Relations at the Asia Society in New York.
"I don't know of any other government which has done this sort of securing of rights for commodities and natural resources so systematically around the Third World as China, and they've used a whole host of new financial instruments to do this," Schell said.
"China's been very, very prolific in spreading its investments around Africa and Latin America, even though the terms aren't ideal."
Ernesto Fernandez Taboada, director of the Argentine-Chinese Chamber of Production, Industry and Commerce, said China is simply making sure it has the resources it needs to continue growing its economy, which, by some accounts, is projected to surpass the U.S.'s by 2020.
"For China, this is a strategic, long-term investment," Fernandez Taboada said. "They're thinking in the future, not just in the moment. These oil investments, for example, are for 15 to 20 years."
Some of the largest investments have gone to Brazil and Argentina, but China has extended even bigger loans to Venezuela, agreeing to provide more than $32 billion to President Hugo Chavez's government.
Venezuela will pay its debt in oil, and in increasing amounts of it during the next decade. The infusion of cash has swiftly made China Venezuela's biggest foreign lender, enabling Chavez to boost spending ahead of next year's presidential election.
"Viva China!" Chavez exclaimed during a televised meeting with business leaders from Beijing, thanking them for helping set up mobile phone factories and build railways and public housing in Venezuela. He gushed: "I'm in love with China."
The relationship is driven in part by Chavez's eagerness to form alliances that exclude the U.S. But it's also good business for Chinese companies: Venezuela says it has been exporting to China about 460,000 barrels a day, about 20 percent of its oil exports, according to official figures. It hopes to double that soon.
"Venezuela has what we need," said Chen Ping, political counselor at the Chinese Embassy in Caracas. "And we also have what they need, for example technology ... Therefore we can help each other mutually."
The loans are typically secured against revenues from oil sales to Chinese companies, purportedly at market prices, though there could be discounts in some cases, said Erica Downs, an expert at the Brookings Institution think tank in Washington. She wrote a March report on the China Development Bank's energy deals worldwide.
In many cases, financing is being channeled through the state-controlled China Development Bank, which has worked with Chinese companies to lock in commodity supplies.
Downs said such loans give Chinese state oil companies an edge by allowing them special access to local projects. In some cases, she said, such as in Venezuela and Argentina, the loans appear tied to hiring Chinese companies that carry out public works projects for the borrowing government.
China's financing has also been unique, she said, in that in recent years "virtually no other financial institutions were willing to lend such large amounts of capital for such long terms."
Countries such as Venezuela and Ecuador would otherwise have few options for obtaining such large lines of credit, in part due to their presidents' hostility toward traditional lenders such as the World Bank and the International Monetary Fund, Downs said.
The China Development Bank has become a convenient "lender of last resort," Downs said, and Venezuela's government, in fact, has become the bank's biggest foreign borrower.
In Ecuador, the Chinese oil company PetroChina agreed in 2009 to lend $1 billion to state company PetroEcuador in exchange for oil deliveries. The China Development Bank also agreed to lend $1 billion last year to Ecuador's government, to be repaid through oil shipments.
The Chinese stake appears set to grow exponentially.
Direct Chinese investments totaled more than $15 billion in Latin America and the Caribbean last year — 9 percent of the region's foreign direct investment, according to a May report by the U.N. Economic Commission for Latin America and the Caribbean.
The report said that while the U.S. is still Latin America's largest investment source, China has climbed to third place, behind the Netherlands.
In Argentina, Chinese companies have even replaced U.S. and British corporations in controlling lucrative natural gas and oil resources.
Last year, the state-owned Chinese oil company CNOOC entered into a 50-50 joint venture with Bridas Energy Holdings Ltd., a family owned Argentine company. The joint venture then bought out British company BP's shares in Argentina-based Pan American Energy, giving it 18 percent of Argentina's oil and natural gas production. This year, the venture also purchased U.S.-based Exxon Mobil Corp.'s interests in Argentina, Paraguay and Uruguay, including a refinery and more than 700 service stations.
"Clearly, the U.S. remains the significant actor in Latin America and will remain so for the foreseeable future," said Eric Farnsworth, vice president of the Council of the Americas, a U.S.-based business group. "But China's a huge part of the scene now. It was commodities exports to China over the last five years that allowed Latin America to weather the economic turmoil."
One Chinese company not only locked in a long-term supply of commodities, but also set a more stable price for years to come and circumvented market rates, which have soared in part because of Chinese demand.
China and Chile created a $2 billion sales, finance and investment joint venture in 2005 that guaranteed China 836,250 metric tons of copper over 15 years, at rates partially fixed on what was then the market price of $2.07 a pound. Chile's state-owned Codelco mining company had to put up its entire 49 percent interest in the venture as collateral, and give China Minmetals Corp. an option to purchase 100 percent of one of the world's most promising copper mines.
Chileans criticized the deal as a threat to their patrimony as they became aware of its details and copper prices soared. Both sides backed off the Chinese purchase option in 2008 to fend off the criticism, but with copper now trading above $4 a pound, Chile's top client is still getting thousands of tons of copper at far below market prices.
China also controls 50 percent of Argentina's largest oil field, Cerro Dragon, and all the oil and gas reserves in the far southern Argentine province of Santa Cruz over the next 40 years, deals that became anti-government campaign issues in provincial elections.
During recent visits to Brazil, Schell said he has heard wariness from businesspeople about a system in which "Brazil sends their natural resources and China sends their flip-flops and consumer goods."
Rubens Barbosa, Brazilian ambassador to the U.S. from 1999 to 2004 and now a business consultant, said Brazilian officials have complained that cheap Chinese exports have destroyed domestic industries such as shoe and textile manufacturers. Brazil this year imposed antidumping tariffs on imports of some Chinese fibers within months of China becoming Brazil's biggest trading partner.
"With trade, we have a problem because the aggressiveness of Chinese companies is very strong," Barbosa said. "But the government still has a lot of interest in these relations with China. China is now the principal partner of Brazil."
China's commercial ties with Brazil continue to grow. About 14 percent of the South American country's oil production went to China in 2009, and that portion is expected to expand because Brazilian oil company Petrobras signed a 10-year deal with Chinese-owned Unipec Asia to export 150,000 barrels of oil a day in the first year. The deal calls for exports of 200,000 barrels a day for the next nine years. At the same time, Petrobras secured a $10 billion, 10-year loan from the China Development Bank.
Petrobras says the deals were separate and that the oil is not being used to pay back the loan. Still, the agreements ensure Chinese access to Brazil's booming oil production, which promises to skyrocket after vast offshore reserves discovered in 2008 come online.
China has also been active across Argentina. The China Development Bank has offered a $2.6 billion, 10-year loan to revive a freight train system connecting Buenos Aires to much of Argentina's central heartland. In the country's Rio Negro province, the Metallurgical Corporation of China has invested $80 million to reactivate an iron ore mine, and China's Beidahuang Group company has promised $1.4 billion in irrigation infrastructure in exchange for a 20-year contract to grow corn, wheat, soy and dairy on otherwise dry land for Chinese consumers.
And in remote southern Tierra del Fuego, near the tip of South America, Chinese companies are investing $1 billion, not only to produce fertilizer, but to build an energy plant, for which Argentina has promised China natural gas for 25 years.
"Two weeks ago, the Chinese commerce minister visited us with 60 business executives, and they showed great interest in investing in other sectors," Fernandez Taboada said. "There is a fundamental expansion of China in Latin America. In all the countries, from Mexico on south."
According to Schell, China is just getting started.
"This is a real tipping point moment, of which the Chinese investments in commodities and extractive resources of Latin America is just the opening bell," he said. "Who's got the money? And it's not the United States any longer. It's China. This is the next great pool of (foreign investment) that the world is going to reckon with in myriad ways."
____
Associated Press writers Michael Warren in Buenos Aires, Argentina, Bradley Brooks in Sao Paulo, Jack Chang in Mexico City and Jorge Rueda in Caracas contributed to this report.
Friday, December 10, 2010
China tired of Burma reform 'foot-dragging': cables
Published: 10/12/2010 at 12:01 PM
Online news: Asia
China is fed up with the "foot-dragging" of the military junta in Burma on reform and fears the ruling generals can no longer protect its interests in the country, leaked US diplomatic cables show.
Burma soldiers take part in a military parade in Naypyidaw. China is fed up with the "foot-dragging" of the military junta in Burma on reform and fears the ruling generals can no longer protect its interests in the country, leaked US diplomatic cables show.
China is a key supplier of arms to its southern neighbour and a buyer of its natural resources. It has also been the junta's main ally on the international stage, but the secret cables released by WikiLeaks tell a different tale.
"The Chinese clearly are fed up with the foot-dragging by the Than Shwe regime," the top US diplomat in Rangoon, Shari Villarosa, wrote in a January 2008 memo summarising a meeting with the Chinese ambassador at the time.
"The Chinese can no longer rely on the generals to protect their interests here, and recognise the need to broker some solution that keeps the peace," she wrote, following mass street rallies in 2007 that ended in bloody violence.
"The Chinese ambassador no longer tried to defend the regime, and acknowledged that the generals had made a bad situation worse," she said.
The cable added that after Chinese efforts to push for reform had ended "without much observable result", Beijing was willing to work with the United States to get the generals back to the negotiating table.
Another cable from January 2008 from the US embassy in Beijing quoted a Chinese foreign ministry official as saying China wanted to see the junta take "bold measures" to improve the livelihood of Burma's people.
The cable quoted the same official as saying China wanted to see "national reconciliation through dialogue with Aung San Suu Kyi and democracy supporters".
The 65-year-old opposition leader and Nobel peace laureate, who spent 15 of the last 21 years under house arrest, was released last month, days after a rare election that was widely panned by foreign observers as a sham.
The junta's political proxy claimed an overwhelming victory in the elections -- Burma's first in two decades -- amid opposition complaints of cheating and voter intimidation. Suu Kyi's party boycotted the polls.
Burma has been ruled by the military since 1962 and has refused to recognise the results of elections in 1990 that Suu Kyi's party won by a landslide.
Villarosa said the Chinese envoy to Rangoon, Guan Mu, said the generals might be "more amenable to ceding power gradually" if they were "offered assurances that they would not lose their lives and could keep their economic interests".
House praises Chinese Nobel laureate
Agence France Presse: House praises Chinese Nobel laureate – Olivier Knox
Wed 8 Dec 2010
Filed under: International
WASHINGTON — In a move sure to stoke China’s anger, US lawmakers voted overwhelming Wednesday to honor Nobel Peace Prize laureate Liu Xiaobo and called on Beijing to free the jailed champion of democratic reforms.
The House of Representatives approved the symbolic message by a 402-1 margin, congratulating Liu and honoring his “promotion of democratic reform in China, and the courage with which he has borne repeated imprisonment.”
The measure also urged President Barack Obama — due to host his Chinese counterpart, Hu Jintao, for a state visit next month — to keep pushing Beijing to free Liu from prison and release his wife Liu Xia from house arrest.
The Nobel Peace Prize was awarded in October to Liu, who was jailed in December 2009 for 11 years on subversion charges after co-authoring “Charter 08,” a manifesto calling for democratic reform in one-party China.
China has accused Norway, the Nobel committee’s home, of undermining relations and encouraging a “criminal.” China has also pressured nations not to attend the Nobel ceremony.
The US resolution also “calls on the government of China to cease censoring media and Internet reporting of the award of the Nobel Peace Prize to Liu Xiaobo and to cease its campaign of defamation against Liu Xiaobo.”
And it asserts that “in honoring Liu Xiaobo, it also honors all those who have promoted democratic reform in China, including all those who participated in the 1989 Tiananmen Square demonstration for democratic reform.”
Democratic House Speaker Nancy Pelosi and Republican Representative Chris Smith, who crafted the resolution, were expected to attend the Nobel prize ceremony in Norway on Friday.
Pelosi, a frequent critic of China’s rights record, urged Liu’s “immediate and unconditional release” on Tuesday and said Washington must keep up pressure on Beijing over expanding political and religious freedoms.
“We have many issues where we have common ground or where should seek common ground. But all of that is better served by candor in our friendship and not ignoring sore spots,” she said in a speech in support of the resolution.
Other leading lawmakers fired harsh criticism at China on Tuesday, noting it was joining Nazi Germany, Soviet Russia, and Myanmar’s military junta among countries that have blocked a Nobel peace prize winner from receiving their award in person.
“China should be ashamed and China should be embarrassed to be in the company of Nazi Germany, the Soviet Union, and Burma,” Republican Representative Frank Wolf said at a press conference with other lawmakers.
Representative Ileana Ros-Lehtinen, the incoming Republican chair of the House Foreign Affairs Committee, said Beijing must listen to critics of its “warped political system” and demanded Liu and his wife be set free “at once.”
She noted that Nazi Germany blocked the 1935 laureate, Carl von Ossietzky, from attending his award ceremony, while Moscow barred Soviet dissident Andrei Sakharov in 1975, and Myanmar’s military rulers stopped democracy icon Aung San Suu Kyi from attending hers in 1991.
“Beijing now joins the ranks of the infamous Nazi regime and the repressive Burmese junta in locking up a Nobel Peace prize winner,” she said, demanding “rulers of Beijing, have you no shame?”
Tuesday, November 2, 2010
Clinton warns of 'dependency' (ON CHINA)
Clinton warns of 'dependency'
US Secretary of State Hillary Clinton urged Cambodians not to become 'too dependent' on China. -- PHOTO: AFP
PHNOM PENH - US SECRETARY of State Hillary Clinton urged Cambodians on Monday not to become 'too dependent' on China, during a visit to the capital in which she was expected to call for respect for human rights.
'You look for balance. You don't want to get too dependent on any one country,' Mrs Clinton told young Cambodians when asked about China's growing influence in the impoverished southeast Asian nation.
China - a former patron of the Khmer Rouge regime, which oversaw the deaths of up to two million people in the 1970s - is the country's top donor, according to Cambodia.
Nearly 400 Chinese companies have invested billions of dollars in Cambodia, including key infrastructure projects such as hydropower dams and coal power plants.
'China is a great country and China has a very exciting future,' Mrs Clinton said at the town hall-style meeting in Phnom Penh. 'There are certainly many reasons for Cambodia to have good relationships with China.
'I think there are also important issues that Cambodia must raise with China,' she added. -- AFP
Tuesday, October 12, 2010
Liu dedicates Nobel prize to Tiananmen victims
Chinese Nobel Peace laureate Liu Xiaobo has tearfully dedicated his award to victims of the 1989 Tiananmen Square crackdown, activists said, as his wife was held under house arrest on Monday.
Liu dedicates Nobel prize to Tiananmen victims
"This award is for the lost souls of June Fourth," the US-based group Human Rights in China quoted Liu Xiaobo as telling his wife Liu Xia, referring to the bloody June 4, 1989 crackdown on democracy protests at the vast Beijing square.
The 54-year-old writer, who was jailed for 11 years in December after authoring a bold petition calling for democratic reforms, was awarded the prize by the Oslo-based committee Friday, sparking a furious reaction from Beijing.
Leaders around the world including US President Barack Obama -- last year's Nobel Peace Prize winner -- lauded the 2010 winner and called on the Chinese government to release him immediately.
Tibet's exiled spiritual leader the Dalai Lama, who won the Nobel Peace Prize in 1989, also on Monday criticised China's irate response.
The Dalai Lama told Kyodo News during a stopover at Tokyo's Narita airport that the Chinese government does "not appreciate different opinions at all".
He also said building an open and transparent society is "the only way to save all people of China" but that some "hardliners" inside the leadership were stuck in an "old way of thinking."
Four UN human rights experts hailed Liu as a "courageous human rights defender" and urged China to release him immediately.
Via her Twitter account, Liu Xia said she had been placed under house arrest at her Beijing home both before and after travelling to the prison in northeastern China where her husband is being held to inform him of his prize.
"Brothers, I have returned home. On the eighth (of October) they placed me under house arrest. I don't know when I will be able to see anyone," said the Sunday night Twitter posting.
"My mobile phone has been broken and I cannot call or receive calls. I saw Xiaobo and told him on the ninth at the prison that he won the prize. I will let you know more later. Everyone, please help me (re)tweet. Thanks," she said.
Liu Xiaobo's wife was taken to the prison under police guard, his lawyers said at the weekend.
At least two dozen police, plainclothes officers and other security personnel were seen at the compound where Liu Xia lives on Monday, interrogating returning residents and preventing journalists from entering.
Calls to her mobile phone were met with a recording saying it was out of service.
Liu Xiaobo is the first Chinese citizen to win the Peace Prize issued by the Oslo-based Nobel committee and China immediately lashed out at the award, calling it "blasphemy", and labelling Liu a "criminal".
Profile: Liu Xiaobo
China has warned Oslo the award would damage relations and on Monday cancelled a scheduled Wednesday meeting between a Norwegian fisheries minister and a Chinese vice minister.
China's censors have mounted an effort to prevent news of the award circulating on the Internet in China and searches on the subject remained blocked Monday.
Liu, a former university professor, helped negotiate the safe exit from Tiananmen Square of thousands of student demonstrators before military tanks crushed the six weeks of peaceful protests in the heart of Beijing.
He has spent much of the intervening period in jail, under house arrest or other restrictions but has continued to seek the release of those jailed due to the protests.
He was last jailed following the publication of Charter 08, a manifesto calling for democracy and human rights that was signed by hundreds of Chinese activists and then thousands more after it was circulated online.
Reax: Top authors urge China to free Nobel peace laureate
Liu dedicated his award to Tiananmen victims to honour their "non-violent spirit in giving their lives for peace, freedom, and democracy", Liu Xia was quoted as saying by Human Rights in China.
She said her husband was moved to tears as he discussed the subject, according to the group.
During the one-hour meeting, Liu asked his wife to represent him at the Nobel awards ceremony in December, the Hong Kong-based Information Centre for Human Rights and Democracy said in a statement.
It was not immediately clear if Chinese authorities would allow her to attend.
Liu also told his wife he was suffering from a severe gastric ulcer while in prison, the statement said, citing a Monday telephone conversation between Liu Xia and the information centre.
After Liu was awarded the prize, authorities arranged to take Liu Xia to the prison in Liaoning province where he is serving his sentence, rights activists said. They said she went to the prison on Saturday and returned on Sunday.
Liu is one of three people to have been awarded the prize while being jailed by their own government. The other two are Myanmar's Aung Sang Suu Kyi in 1991 and German pacifist Carl von Ossietzky in 1935.
Tuesday, August 3, 2010
China Setting Milestone as Economy Passes Japan's
China Setting Milestone as Economy Passes Japan's
China milestone: Economy seen overtaking Japan's, highlighting challenges at home and abroad
By JOE McDONALD
The Associated Press
BEIJING
China is set to overtake Japan as the world's second-largest economy in a resurgence that is changing everything from the global balance of military and financial power to how cars are designed.
By some measures it has already moved to second place after the U.S. in total economic output a milestone that would underline a pre-eminence not seen since the 18th century, when the Middle Kingdom last served as Asia's military, technological and cultural power.
China is already the biggest exporter, auto buyer and steel producer, and its worldwide influence is growing. The fortunes of companies from Detroit automakers to Brazilian iron miners depend on spending by China's consumers and corporations. And rising wealth brings political presence: Chinese pressure helped to win developing countries a bigger voice in the World Bank and International Monetary Fund.
"Japan was the powerhouse driving the rest of Asia," said Rob Subbaraman, chief Asia economist for Nomura Securities. "Now the tide is turning and China is becoming a powerful influence on the rest of Asia, including Japan."
China's rise has produced glaring contradictions. The wealth gap between an elite who profited most from three decades of reform and its poor majority is so extreme that China has dozens of billionaires while average income for the rest of its 1.3 billion people is among the world's lowest. Beijing has launched two manned space missions and is talking about exporting high-speed trains to California and Europe while families in remote areas live in cave houses cut into hillsides.
Japan's people still are among the world's richest, with a per capita income of $37,800 last year, compared with China's $3,600. So are Americans at $42,240, their economy still by far the biggest. But Japan is trapped in a two-decade-old economic slump, the U.S. is wrestling with a financial crisis, and China's sheer economic size and the lure of its vast consumer market adds to its clout abroad.
Its explosive growth has driven conflicting shifts in Asia and beyond, triggering a scramble for commercial opportunity but fueling unease that the wealth is helping to finance a military buildup to press the communist government's claims in the region.
"I think everyone in the region is trying to benefit from Chinese economic dynamism but at the same time is trying to make sure China does not become a regional hegemon," said Greg Sheridan, foreign editor of The Australian newspaper.
Exactly when China passes Japan formally will be unclear until after this year ends. It depends on shifting exchange rates and data reported in different forms by the two governments.
Chinese GDP in 2009 was $4.98 trillion and Japan's was $5.07 trillion. In 2010, Chinese GDP was $1.335 trillion for the April-June quarter a period for which Tokyo has yet to report. China is growing at 10 percent a year, while Japan's expansion this year is forecast at no more than 3 percent.
"On that basis, the crossover probably happened last quarter," said Julian Jessop, chief international economist for Capital Economics in London, in an e-mail.
Beijing appears to take it for granted that it already has overtaken Japan.
"China already is the world's second-biggest economic body," said a deputy central bank governor, Yi Gang, in a policy discussion posted July 30 on the foreign exchange agency's website.
Australia has been one of the biggest beneficiaries as China's voracious appetite for iron ore, coal and other commodities drove a mining boom that kept its economy growing through the global crisis.
That booming trade prompted Australia to reconsider its stance toward China, previously seen as a communist aggressor. In 2008, then-Prime Minister Kevin Rudd, a Mandarin-speaker who was a diplomat in Beijing, called for closer political, economic and academic engagement with the Chinese government.
But Rudd also displayed Australia's independence from Beijing by talking about human rights, Tibet and China's Muslim minorities issues Chinese leaders want other countries to keep quiet about. And Australia affirmed its longtime security alliance with Washington a counterweight to China's growing might. Rudd's successor, Julia Gillard, has given no sign of a major change of direction.
In the long historical view, China's 21st century rise is a return to the status it held for most of the past 2,000 years as "Zhong Hua," or the Central Brightness, East Asia's economic and military giant and a beacon of technology and elite culture to societies from Vietnam to Korea to Japan.
China's was the biggest economy, with its workshops and textile mills accounting for up to one-third of global manufacturing. But it went into steep decline in the 19th century as its rulers resisted mimicking Japan's embrace of Western technology. By the 1930s, China produced just a few percent of global factory output.
After a civil war, communist takeover and political upheaval, free-enterprise reforms pioneered by leader Deng Xiaoping opened the door for hundreds of millions of Chinese to work their way out of poverty.
Since those reforms began in 1979, China has grown into the world's low-cost factory, its biggest exporter and producer of half its steel. It wants to evolve beyond cheap manufacturing and is trying to build up technology industries but has had little success so far.
Last year, the World Bank ranked China 124th among economies in per capita income, behind Latin America and some African nations, while Japan was No. 32. The United States was 17th.
Yet already, China's consumers are so avidly courted by global companies that products from autos to home appliances destined for sale worldwide are designed with their tastes in mind. This year, French luxury goods maker Hermes Group unveiled a brand, Shang Xia, to be designed specifically for Chinese customers.
Unlike Japan, which renounced aggressive force after its World War II defeat, Beijing sees itself as Asia's rightful military leader. It has openly possessed nuclear weapons since the 1960s and is spending heavily to build up the Communist Party's military arm, the 2.5 million-soldier People's Liberation Army.
Beijing's military outlays are the world's second-highest and have tripled since 2000 to an estimated $100 billion last year, though well behind Washington's $617 billion, according to the Stockholm International Peace Research Institute.
China's demand for oil, iron ore and other raw materials is pumping money into developing economies as far-flung as Angola and Kazakhstan that supply them. Chinese companies are making inroads into Africa in search of resources and markets.
"Now, Africa has an alternative development model," said Derek Scissors, a Heritage Foundation scholar in Washington. Instead of Western investment with environmental or other strings attached, Scissors said, "they now see the Chinese as an alternative: 'We don't want to deal with you. We'll get some Chinese state-owned company to put $1.5 billion into this mining project.' "
Chinese pressure helped to trigger the biggest changes in decades in the U.S.- and European-dominated World Bank and IMF, which agreed to give China, Turkey, Mexico and other developing countries a bigger say in picking leaders and deciding policy.
The boom has helped communist leaders pay to cultivate "soft power" educational and media activity to win hearts and minds abroad.
Of course, even after slipping to third place, Japan is still rich and comfortable the Switzerland of Asia.
The society that created hybrid cars and the Walkman has 99 percent literacy and the world's longest life expectancy at 83 years. Tokyo is the capital of fine dining, with more Michelin-starred restaurants than Paris.
Toyota has overtaken General Motors as the biggest global automaker at a time when China companies have yet to establish their own brand names.
Now, with Japan in the rear view mirror, can China catch up with the United States?
Yes, say many analysts.
China could match the U.S. in total output as early as 2020, said a World Bank forecast in June. But still, it said per capita income would be one-fourth the U.S. level, comparable to Malaysia or Latin America.
Achieving even that will require China's unelected, secretive leaders to radically change their state-dominated economy.
They need to promote technology and education, fight rampant corruption that is stoking public anger and resist temptation to favor government-owned companies at the expense of a dynamic private sector that creates jobs and wealth.
Success is far from guaranteed, warn the World Bank and others.
They say China, Mexico and other developing countries easily can stall at middle-income levels if they fail to develop an educated, creative work force and legal systems to support innovation or if they allow entrenched companies to stifle competition.
"Are they going to pass the U.S. in total GDP? Yes, very likely," said Scissors. "Are they going to move into upper-middle-income status? That's a much tougher thing."
———
Associated Press writer Tomoko A. Hosaka in Tokyo contributed to this report.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Copyright © 2010 ABC News Internet Ventures
Thursday, July 29, 2010
China's Billion-Dollar Aid Appetite
http://www.foreignpolicy.com/articles/2010/07/19/chinas_billion_dollar_aid_appetite?print=yes&hidecomments=yes&page=full
JULY 28, 2010
China's Billion-Dollar Aid Appetite
Why is Beijing winning health grants at the expense of African countries?
BY JACK C. CHOW | JULY 19, 2010
Back in 2001, I was the lead U.S. negotiator in international talks meant to transform the way that poor countries fight some of the world's most pernicious diseases -- HIV/AIDS, tuberculosis, and malaria. Our vision looked like this: Instead of each country spending on its own, rich countries would pool donations into one coordinated fund that would give grants to help resource-strapped countries purchase medicines, build health programs, and prevent the diseases from spreading. We imagined the bulk of the money ending up in places like Lesotho, Haiti, and Uganda, where these three diseases have reached crisis levels. So it might surprise and concern you -- as much as it still does me -- to learn that one of the top grant recipients isn't in sub-Saharan Africa, Latin America, or impoverished Central Asia. It's a country with $2.5 trillion in foreign currency reserves: China.
More... Over the eight years since the Global Fund to Fight AIDS, Tuberculosis and Malaria first launched, China has applied for and been awarded nearly $1 billion in grants, becoming the fourth-largest recipient of funds behind Ethiopia, India, and Tanzania. Already, the country has drawn nearly $500 million from this credit line and soon expects to receive $165 million in new grants. China's aggregate award from the fund is nearly three times larger than that of South Africa, one of the most affected countries from these three diseases. Moreover, China has won malaria grant money totaling $149 million (and $89 million more might be on the way) -- in a country where only 38 deaths from the mosquito-borne illness were reported last year. That is more than the $122 million awarded to the Democratic Republic of the Congo, which reported nearly 25,000 malaria deaths during the same period. In fact, only seven sub-Saharan African countries receive more malaria aid than China -- and 29 countries in Africa get less. Combined, those 29 countries report 64,000 deaths from the disease each year.
China has aggressively pursued Global Fund grants and has continued to win significant amounts with every passing year. Beijing does make a nominal contribution to the fund of $2 million annually, meaning that it has donated $16 million over the last eight years. By comparison, the United States, the leading donor, has committed $5.5 billion, and France has offered $2.5 billion over the same period. These contributing countries expect no financial return for their gift, but China has recouped its spending by 60 times.
Even more alarming, China's persistent appetite threatens to undermine the entire premise behind the Global Fund. The organization's leadership is trying to solicit between $13 billion and $20 billion to cover its next three years of operations -- a tall order at a time of global recession. Donors will grow even more reluctant if they realize that substantial funds are being awarded to a country that can more than pay for its own health programs.
How did China ever become eligible for grants in the first place? In short, because of a loophole. The Global Fund decides eligibility for grants based on the World Bank's classification system, which divides countries by income. High-income countries such as the United States, the European industrial countries, and Japan are ineligible. Low-income countries, including many in sub-Saharan Africa, are grant-eligible. In between, so-called lower-middle-income countries like China are eligible if the grants are part of a cost-sharing program through which the fund pays up to 65 percent and the country pays the rest. (China stays in this lower-middle-income category because its huge population keeps per capita figures down.) The country competes with the likes of Bolivia, Cameroon, and India in this category. But because the fund's pot of money isn't allocated by income group, any grants that China wins reduce the remaining money available for all eligible countries.
For a country like Cameroon, cost-sharing grants make a lot of sense. By giving part of the full amount, the fund can spur the host government into investing more of its discretionary budget in health. The extra cash can build health infrastructure and capacity, preparing the country to wean itself from foreign funds. But in China's case, the argument for a Global Fund grant is tenuous at best. During the depths of the world economic crisis in 2008, China put forth a massive economic stimulus package of $586 billion that included new health and education spending of $27 billion. The government announced its intention to boost rural health coverage with $125 billion in spending over the next several years. Even a fraction of that promised amount would negate any need by China to draw upon the Global Fund.
This is not to say, of course, that China's health system does not face formidable challenges. Indeed, global health policymakers worry that HIV/AIDS and tuberculosis in particular could rise dramatically as the country urbanizes and industrializes and a new middle class veers away from traditional social mores. Everyone remembers the SARS outbreak in 2002 and 2003 that practically shut down major cities in China. And beyond specific threats, the Chinese Center for Disease Control and Prevention, the chief implementer of the Global Fund portfolio and officiator of the government's public health strategy, has hard work ahead to build up China's health workforce and medical infrastructure.
But China might want these grants for reasons having more to do with politics than public health. The Health Ministry is the only member of China's policymaking State Council not led by a political party member. As such, its ability to compete for domestic funds pales in comparison with other assertive, powerful ministries led by longstanding party leaders. So the Health Ministry might be driven to external funding by political necessity. Or, China might value obtaining the technical assistance of international health agencies such as the World Health Organization, UNAIDS, and the U.S. Centers for Disease Control and Prevention; Global Fund grants provide a means of securing their advice and services. China's participation on the fund's board might also be useful to Beijing's global politics, confirming its importance on the world stage.
Whatever benefits China gains from seeking grants, however, stack up poorly against expensive opportunity costs exacted upon needier countries. The $1 billion awarded to China could have been used by the poorest countries to distribute 67 million anti-malarial bed nets, 4.5 million curative tuberculosis treatments, or nearly 2 million courses of anti-retroviral therapy for AIDS patients (a number equivalent to all those living with the disease in Kenya).
It is intriguing that health ministers from the poorest countries have expressed neither concern nor opposition to China winning grants. Nor has there been any substantial public challenge to or debate about the money China has received from the Global Fund. Part of the reason might be structural; the fund's large 26-member board (which includes representatives of countries, regions, organizations, and the Global Fund itself) operates based on consensus, and its meetings are time-constrained forums that pressure members to make rapid decisions. Changing eligibility policy, for example to exclude China, would entail time-intensive negotiations that may well pit groups of grantees against one another. The board also approves grants en bloc, relying upon the advice of technical experts who review them for feasibility and public health impact, not fairness, balance, or a country's ability to pay.
Even so, there is likely more behind the silence than just procedure. For many of the poorer countries that lose out, opposing China in international forums would risk incurring Beijing's diplomatic wrath. Health ministers are skittish to imperil their country's broader interactions with China, which in the case of African countries, often entails Chinese loans, grants, infrastructure projects, and investment -- and indeed, even further, health aid. In turn, African countries seeking access to the burgeoning Chinese market must curry Beijing's favor. Any country that openly opposes China at the Global Fund might see these economic links broken or be put at a disadvantage to competitors. And so the neediest countries endure a loss of grant money to China through their collective silence.
Donor governments have also been mute or reluctant to oppose China at the Global Fund, perhaps for similar reasons of not wishing to provoke a reaction that impacts other diplomatic or political equities elsewhere. In the United States, neither Congress nor the White House has voiced open concern that an amount equivalent to President Barack Obama's entire fiscal 2011 Global Fund budget request of $1 billion has gone to a country that can afford to pay its own way.
This has left the fund's leadership as the only front left for trying to change China's stance. Based on China's national income and the rate of other donor contributions, the Global Fund recommends that China should give $96 million over the next three years, amounting to 16 times its current annual donation. In 2007, prior to China's hosting of a board meeting in Kunming, the fund asked China's government to up its donor commitment, but the appeal went nowhere. In June, with fundraising pressures escalating, the fund's executive director, Michel Kazatchkine, met in Beijing with Chinese Vice Premier Li Keqiang, who issued a vague promise to cooperate with international organizations to expand disease prevention and treatment, but made no announcement to refrain from taking new grants or signaled any intent to become a major donor.
Not even a rival country's actions seem to have convinced Beijing. In recent years, nearby Russia has transformed itself from recipient to donor, and it has done so under arguably less favorable economic conditions than those in China today. In 2006, then President Vladimir Putin pledged to repay the Global Fund $270 million over four years, covering the past assistance it received, and announced $156 million in new domestic spending for HIV treatment. Now four years out, Russia has paid in $250 million to the Global Fund, essentially fulfilling Putin's pledge.
It is audacious for China to assert that it needs international health assistance on par with the world's poorest countries. In fact, at the same time it is drawing from the Global Fund, China is building its entire global image as one of economic growth, accumulating wealth and international stature. To boost its public profile and prestige, China spent billions to host the Beijing Olympics and the Shanghai World Expo. Surely it could spend another $1 billion of its cash on health as well. And why not take it one step further? By becoming a Global Fund donor, China could win acclaim with the West and the world's poorest -- earning exactly the kind of respect that a rising power deserves.
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China Photos/Getty Images
Jack C. Chow served as U.S. ambassador on global HIV/AIDS from 2001 to 2003 and was the lead U.S. negotiator at talks that established the Global Fund to Fight AIDS, Tuberculosis and Malaria. He is currently distinguished service professor of global health at Carnegie Mellon University in Heinz College's School of Public Policy and Management.
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(21)SHOW COMMENTS LOGIN OR REGISTER REPORT ABUSE
PUBLICUS
1:26 AM ET
July 20, 2010
Absurd
We know that the PRC is not a responsible member of the international system, as this piece mightily documents in yet another way.
Beijing has little give and a lot of take.
The CPC leadership in Beijing continues to hold and practice a world view that is selfish and too self-centered to expect any changes to China's low international standing any time soon. There's the bully pulpit and then there's simply the bully.
REPLY KASEMAN
9:54 AM ET
July 20, 2010
damn clever these Chinese, eh?
And the place is run by engineers not lawyers! When was the last time we heard of our engineers outsmarting our tribes of perfidious Lawyers?
Engineers construct, lawyers destruct.
REPLY VILKSSWEDEN
11:55 AM ET
July 20, 2010
and assholes make irrelevant comments about
lawyers and engineers. Point is, China is taking the money from more needy countries, when it can more than easily foot the bill itself, at no harm to its economy or policy.
REPLY COOL_HEAD
5:40 AM ET
July 20, 2010
What about India
China has applied for and been awarded nearly $1 billion in grants, becoming the fourth-largest recipient of funds behind Ethiopia, India, and Tanzania.
What about India -- the 2nd-largest recipient?
REPLY NORBOOSE
10:15 AM ET
July 20, 2010
India isnt oppressive
First of all, I am writing from an American perspective, about why I think America should give lots of aid to India. If youre from some other country, then this is irrelevant.
India has problems, like any country (Kashmir, overeaction to the Naxalites), but all in all, its a pretty free country. China is ruled by a clockwork system of oppression. India will probably be a close US ally untill hell freezes over, as almost all of our long-term interests align perfectly. It is in our own interest to help India modernize as rapidly as possible.
REPLY SAM FROM CALIFORNIA
4:52 PM ET
July 20, 2010
Uhhhh
India is a lot poorer than China, and it may have a worse AIDS problem (both countries do have an AIDS problem, i'm too lazy to check which is worse.) China is now wealthy enough to provide the universal, national health care its socialist system promises, without taking aid money. Or at least it should take less.
But perhaps there is a problem with a time lag; ie, China is traditionally a poor country, and has yet to really reorient its foreign policy in line with its newfound wealth. I think the Chinese still think they are a third world country like any other; they are, but they are also the country with the world's largest and most profitable businesses and many broken or unfulfilled social promises.
REPLY MINDALAY
12:05 PM ET
July 23, 2010
If the very wealthy Chinese
If the very wealthy Chinese state doesn't care about its citizens, why should anyone else? You are right: nation-state power is not the the same as the wealth of individual citizens. So where are the Chinese donations to American citizens in Appalachia and the South Bronx? The moment China started a space program is the moment they no longer deserved any foreign aid.
REPLY BOBCHEN
8:34 AM ET
July 20, 2010
I don't understand.
Why couldn't the Global Fund make the requirement for nations with low-to-middle income AND the largest population with AIDS/tuberculosis/malaria.
This loophole has been around for 8 years, and nobody at Global Fund thought to close it?
REPLY KASEMAN
9:51 AM ET
July 20, 2010
HIV is racially blind
All humans are the same altho some more so than others
REPLY FIRST ADVISOR
6:13 PM ET
July 20, 2010
American Jingoism and China-Bashing
As the brainless bigotry of many comments demonstrate, this essay is merely more US China-bashing, with no purpose or conclusion at all. Some posters proudly display their utter innumerancy by arguing that China is wealthy, apparently incapable of performing the Grade 4 artihmetic of dividing GDP by population. Monkeys in a cage in a zoo have more common sense.
What is immediately obvious, and most important to an intelligent, educated reader, is the astonishing rudeness and inexcusable offensiveness of a supposed professional diplomat publicly criticizing and complaining about the national government of any country. Dr. Chow confesses that as far as he can tell, no one in the entire world cares about China's so-called 'scam', not even his own government.
He makes up, out of his own head, highly questionable speculation and extremely dubious conclusions, trying to explain to himself and the reader WHY no one else in the world seems to care but him. This is elementary school fights nonsense. It is shocking, and deeply embarrassing, to see a supposed diplomat make a public fool of himself, ranting and raving and foaming at the mouth over an imaginary bugaboo that only he can see.
It would be folly for any nation not to take advantage of any cost-savings they could find in healthcare, particularly in the realm of prevention. The claim that China can afford healthcare for 1.3 billion people isn't just shocking and ludicrous, it is flatly, factually false and untrue. As amateur propaganda, the allegation is outrageous -- defamatory, slanderous, and libelous, against every member of the State Council.
Dr. Chow appears to have a mean, petty, spiteful, and vindicative pet peeve against one specific country, for doing exactly what any and every country in the world would do in similar circumstances. We can only speculate over the reasons for his prejudices and bigotry. But try as we might, nothing can justify his exposure and deliberate exhibition of his obnoxious envy and resentment in front of the whole planet. This is unforgivable, intolerable, unacceptable behavior in any would-be diplomat.
REPLY AMOSYARKONI
7:53 PM ET
July 20, 2010
Yeah First Advisor -
"The claim that China can afford healthcare for 1.3 billion people isn't just shocking and ludicrous, it is flatly, factually false and untrue."
Yeah, instead China has to make room in its budget to spend billions on the Olympics and the shanghai expo. I mean it's "ludicrous" that we expect them to use that money on their own health care! Or that they use money from their huge budgetary surplus! Instead, let them take it from poor Africans. I mean those African countries must be having surpluses from their booming economies, right?.....right?......crickets......
REPLY FIRST ADVISOR
10:41 PM ET
July 20, 2010
Zany and Incoherent Reply
Do you know what a return on investment is? The ROI on a nation's first ever Olympics, and a nation's first ever World Expo, is incalculable in both income plus the abstracts of prestige, status, goodwill, future contracts, and so on. Try and figure out the return on investment, with a calculator, pen and paper, of healthcare for HIV/AIDS patients, who in China are virtually all hard drug addicts, with a sprinkling of homosexuals and prostitutes. What is the benefit to China in providing treatments to those people, exactly? Show me the money, in dollars and cents. Condoms don't do much good for people shooting up heroin with a dirty needle. The same is true of the majority of the incidence of TB in China; nearly all the sick people are hard drug addicts.
Now read very carefully, because this involves arithmetic, which is clearly not your strength. If China tries to sell any -- ANY -- of its holdings in the bonds currency of other nations, such as USA six-month Treasury bills, the value of the treasury bills and the US dollar will plummet, the value of China's holdings would collapse, the global market would be flung into turmoil, America would certainly be plunged into a second recession, and quite possibly a second Great Depression would begin. Selling those T-bills is the very last thing China can do. Their holdings in US debentures are worthless to them. They simply have no other choice over buying them, because there is nowhere else to put their money. If you think the Chinese don't resent this dilemma, you are incorrect.
No one is taking anything from African nations. Don't you grasp the simple fact that Dr. Chow is not a reliable source of information? Look at the dishonesty and deceit of his essay. Are you telling the world you actually believe the silly fairytales he writes? Even Mr. Chow's own US government doesn't agree with his hysterical obsessions; don't you get it? In fact, HIV/AIDS is a trivial disease, of no concern to any national government. Heart and stroke harm is 10 times worse, at least, and smoking, obesity, diabetes, mental illness, autism, and dozens of other medical conditions are all hugely more important and serious. You really should stop letting newspaper reporters tell you what to think, and what not to think about.
REPLY MERVYN
8:59 PM ET
July 20, 2010
juxtaposition of the world we live in
There is no white man's burden with the Chinese.
Why sub-Saharan Africa, Latin America, or impoverished Central Asia are on the first list when HIV/AID spread is concerned? I might add Indochina to that list. China and few others are now getting out of name and shame list. The vaccine used are exclusively made from Western Phama companies, thus the high cost.
I don't disagree that China should get less of the fund allocation, but only few countries can afford the vaccination without subsidies. I'd suggest let the big phama to phase out rights on most demanded drugs and make licensing available of generic version to India or China phama. Then push the Chinese and Indian to donate these generic drugs to where it is required, domestic and overseas.
REPLY HERA
4:47 AM ET
July 21, 2010
who get the money at last?
What we should be concerned with shouldn't be whether the Global Fund should provide China great amount of aids, but how can they ensure that the money really arrives at people who are in need. It is undeniable that among 1.3 billion Chinese people there must be some one suffering from various diseases, especially in undevelopement area such as the Mid-Western countryside. The real tragedy is that bureaucrats safisfy themselves from corruption instead of giving this money to those who need it.
REPLY SEZER
8:10 AM ET
July 21, 2010
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REPLY XTIANGODLOKI
3:02 PM ET
July 21, 2010
It's all funny money anyway
When America gives $1 Billion to Africa for AIDS most of the money is going to fat consultants who sit around and do nothing anyway. Dr.Chow who came from the upper echelons of McKinsey probably knows this well; getting paid hundreds to thousands of dollars per hour to BS about the non-existent magical bullet which would solve the hardest problems in an instant. Whatever.
The reality is that money going to 3rd world nations do not generally help because that money never gets to the right hands anyway. This is why after spending billions after billions places like haiti still stand on their own.
REPLY CANADALEX
4:48 AM ET
July 22, 2010
flawed reasoning
The article correctly presents the issue, but uses specious reasoning and arguments to make a china=bad guy case.
"(China stays in this lower-middle-income category because its huge population keeps per capita figures down.)"
It presents this fact as if China were gaming the system by having a huge population. No, in fact there is a reason we use per-capita figures to judge income. Otherwise we can make claims like India is over 2x as rich as Switzerland (GDP). This issue seems very simple. Chinese gov't realizes they can get grant money through Global Fund, so obviously they're going to take it. I highly doubt many countries would pass up an opportunity for free money. Yes we can blame China for using a loophole, but we should also blame the fund for being unable to properly disburse its funds, and allowing China to do this. The fund is clearly aware this is happening and could easily put an end to this. But it hasn't, (and as the article touched on) the reasons (as they most often are) are likely political. This isn't a transfer to help China with Malaria its another political tool to transfer funds to China.
We can get mad at China for taking free money, but we should be at least as critical of an aid system which is funneling money inefficiently to countries which don't stand the most to gain.
REPLY LIONEL
5:02 AM ET
July 22, 2010
China remains poor!
In the article, Jack Chow notes, parenthetically, that "(China stays in this lower-middle-income category because its huge population keeps per capita figures down.)" This is true. China remains a low-middle income country for a simple reason -- because most people in China remain poor.
As of 2009, PPP-adjusted GDP in China puts the country on par with Namibia and Algeria. China's economic power is mostly a function of its population size. China is still not rich.
In 2007, the World Bank reported there were over 300 million Chinese living on less than $1.25 a day. Despite China's rapid progress, it's hard to imagine that number is much less than 100 million in 2010. In any event, by the more stringent measure of $1.08 a day, China currently has about 50 million poor. China is still not rich.
China's county governments, which are responsible for most health spending and collect most taxes, are so cash strapped that they sell land to meet about 50 percent of their revenue needs. Selling off the currency reserves is not an option -- it could lead to economic implosion and misery. China is still not rich.
China has made remarkable progress but remains a country with a serious poverty problem, and needs serious assistance.
REPLY FASHIONLOVE
3:06 AM ET
July 23, 2010
China is still a poor country
All information as mentioned is very useful for us to catch up the updated news and knowing many facts around the world. China even though a big country, many parts of it remain poor and life is still hard for many people. Still, this is somewhat unreasonable when China received so many aids every year more than countries who need it.
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REPLY CITIZEN8
5:57 PM ET
July 25, 2010
First Advisor-huh????
First Advisor, if China is a world player, then like the US and other world players, its actions are subject to scrutiny and praise or criticism as the case may be. Observers are free to agree or disagree to criticisms they wish. However, what is the point in slamming a piece that you don't like by throwing around words like "brainless China bashing," "bigotry," "mean," "petty," spiteful, and "vindictive," "amateur propaganda," and nasty personal attacks, etc.? "American jingoism" in an article that hold Russia up as a model of behavior? Your posts may make you feel better, but it reads like a hysterical, hypersensitive, nationalist rant as do your rude comment to another poster. Rather, it would have advanced the discussion if you actually countered with a fact-based reply. Show me the bigotry and vindictiveness, etc. Instead, you bash and distort the article to such a degree that one has to wonder if your real intention is simply to stifle any examination of Chinese behavior.
You say in your second post that China can't possibly afford providing health care to all its citizens. Well, yes, that is an enormous undertaking, and you could have mentioned that China gets aid from countries like Japan to provide aid in the health sector. Even so, one has to wonder about China's acceptance of finds from the Global Fund or from Japan when it is sitting on enormous currency reserves and spending ever-increasing billions of dollars in aid overseas, with a new pledge of $10B in loans and $1B fund for business development to Africa made in November 2009. Given China's foreign aid program of several billion dollars a year and its spending on assets around the world, surely it could rustle up a $1 billion somewhere for more funds for health care in China, couldn't it? Using $1 billion of foreign currency for spending of home is not going to cause worldwide financial turmoil.
(BTW,why aren't you chiding China for taking money from the Global Fund if it is such a wasted effort to you? it's interesting that you see no need treating people with HIV/AIDS in people you consider worthless, even though TB is spread through proximity, and HIV+ prostitutes could spread the disease to their customers who refuse, or don't have access to condoms?)
Instead, it sure does seem like that on one hand, China is extending a hand to other developing countries while on the other, through its actions vis-a-vis the Global Fund, harming the poorest countries by taking aid resources that could have gone to them. Is this part of China's effort to keep its aid and investment front and center in the minds of people in the recipient countries while diminishing the Global Fund's presence? That may not be China's intention at all, and the author notes that China's Health Ministry may have various reasonable reasons for taking money from the Global Fund, whether it might be domestic budget considerations or the desire for technical assistance. (Even the author, whom you attack so viciously, notes that Beijing faces funding issues in health and that the Chinese health system faces "formidable challenges.") Whatever the reason, China's behavior vis-a-vis the Global Fund creates a perception problem. Such a problem could have been avoided if, for example, China donated the equivalent of the grants that it received, thereby getting the technical assistance without depriving other nations of grants from the Global Fund.
You criticize the article for singling China out. Well, are there other donors to the Global Fund who are also taking more out the fund than they put in? In fact, are they are any other donors who are currently receiving funds? (I don't know; I really am asking.) If not, then China's behavior is worthy of notice.
You also didn't seem to understand Mr. Chow's position or that of the US Government. "Supposed professional diplomat" and "would-be diplomat"? He worked --past tense--in the US Government, He is not part of the USG now. He is a private citizen, and in the United States, private citizens are free to voice their opinions, according to the First Amendment of the US Constitution. As for the US Government's official position on the subject of this article, the only mention is that there has been no "open," that is, publicly mentioned, official concern about this development. Why is that? Maybe it is because there is no official concern, and you're correct on that point, though you don't provide any evidence supporting your claim. Maybe because until this article, no one has drawn people's attention to this situation. Maybe it is because it is a concern that the US doesn't want to air publicly because as the author notes, donors don't want "to provoke a reaction that impacts other diplomatic or political equities elsewhere." Similarly, it is not at all clear, as you claim, "no one else in the world cares." The billions that China is spending in poorer countries, and those countries' need for markets may be the causes of the silence. Moreover, Mr. Chow does offer ideas why there has not been much public discussion. Unless they work directly on this issue and are somehow involved in the Global Fund as a recipient or a donor, people would not learn about this issue if not for an article like this.
If anyone owes anyone an apology for being offensive, it is you, First Advisor, with your attempts to intimidate anyone who might not look at everything China does through rose-colored glasses. No country is perfect, and in the United States, individuals are free to express their opinions. (I would not be surprised if you now attack me with another venomous tirade on this board, which will only prove my point that you are a bully attempting to stifle discussion. How about proving me wrong and providing an evidence-based reply to Mr. Chow's article?)
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