Chinese Auto Makers Creating Jobs in North America
In contrast to the usual dribble about Chinese companies taking away good-paying jobs from hard-working North American workers, this piece corrects some basic misperceptions about the changing landscape.
Chinese industry is evolving from a user of foreign capital to an exporter of capital not only to the developing world but also to developed countries and even to industrial heartlands in North America. Public perceptions should gradually improve as more Chinese industrial companies position their manufacturing plants this side of the Pacific. On the other hand, if they fail to handle sometimes difficult labour relations well, do some damage to the environment, engage in certain shenanigans, or are too successful and grab big chunks of the market, perceptions and opinions can quickly turn for the worse.
The best strategy for Chinese companies, especially in the early phases, is to maintain a low profile, hunker down, and manage their operations well, and eventually surpass their native counterparts in efficiency and quality.
Seeking to build trust and establish themselves as credible mainstream suppliers, firms like SAIC Motor Corp., Changan Automotive, and Sichuan Bohong Industry have quietly set up manufacturing plants in Michigan, Ohio, and Ontario.
http://www.thestar.com/autos/2014/12/04/chinas_automakers_making_north_american_jobs_business_driver.html
China to Build Thailand High Speed Rail
Updating previous posts on China’s HSR diplomacy, Thailand’s parliament has just approved a MoU for China to build a 867 km line linking Nong Khai in the north to Bangkok and other cities in the south close to the Gulf of Thailand.
Since the route starts in Nong Khai bordering Laos where Laotian capital Vientiane sits across the Mekong River and the Chinese are building a major rail link to and in Laos, it most likely will serve as the second phase of the HSR line from China through Indochina to eventually connect with Kuala Lumpur, Malaysia and ultimately Singapore. The People’s Daily Online reports the Chinese government expects the railway to be put into operation by 2020 which will shorten travel time between Kunming, capital of Yunnan province, and Singapore to less than 14 hours.
Phase I of the overall route began construction last April. It passes through Mohan, a border town with Laos and Wangrong, a popular Chinese tourist city, and ends in Vientiane. Construction of a railway logistics center in Mohan has already begun.
According to the Intergovernmental Agreement on the Trans-Asian Railway Network (TARN), the Kunming-Singapore HSR line totaling 3,900 kilometers will serve as the central line of the southeast section of TARN . Once TARN is fully completed, Vietnam and Cambodia will also be linked with Thailand and Myanmar to form a regional hub centering on the Mekong River Basin where some 300 million people reside.
Thai National Legislative Assembly (NLA) yesterday approved a draft memorandum of understanding to be signed with China for the development of a dual-track railway system.
Transport Minister Prajin Juntong sought approval for the MoU with China to build a double-track standard-gauge railway covering the 734-kilometre route linking Nong Khai, Khaeng Koi and Map Ta Phut and the 133km Khaeng Koi-Bangkok route. The cost of the project has not yet been evaluated.
The deal on the railway project was made last month when Prime Minister General Prayut Chan-o-cha visited China to attend the Asia-Pacific Economic Cooperation Summit. The junta had mapped out a strategic plan for land transport in July, and Deputy PM Prawit Wongsuwan together with Deputy Foreign Minister Don Pramudwinai and junta adviser Somkid Jatusripitak visited China in October to pave the way for this deal.
The interim Constitution’s Article 23 says NLA approval is required for any agreement with a foreign country that might have implications on economic development. The NLA endorsed the MoU draft with 187 votes, while seven abstained. The MoU will be effective for five years after being signed, indicating that China will be responsible for construction and will develop the railway project. China will also conduct a feasibility study and prepare the project, Prajin said. The government wants the construction to begin by 2016, he said.
– The Nation (Thailand)
China’s GDP By PPP Now Bigger Than US
The International Monetary Fund (IMF) forecasted this tectonic shift a few months back but now it is official – measured by purchasing power parity (PPP), China’s GDP is larger than the US’s. Despite certain flaws, PPP is arguably a much better measure of domestic economic activity than GDP by exchange rate calculations. (This doesn’t include the ‘gray economy’ – under-the-table activity that cannot be included in official statistics. Some economists estimate that it may be as large as 1/4 of the economy.)
With the exception of rent and house buying in the biggest cities along with big-ticket items such as cars, major appliances, and hard wood furniture, basic living for the average Joe is fairly inexpensive. A reasonable salary for office workers in the capital is around 5000 RMB/month but a significant portion of the population earns much less, especially migrants. (Of course, the sky is the limit for high-flyers and MNC executives.) Wages and prices generally decrease as you go down to second, third, and fourth-tier cities, especially if you move inland to central and western China, not to mention the countryside.
Just anecdotally, in Beijing, if you use a transit card that provides a discount, a ride on Beijing‘s plentiful buses within the 5th Ring Road costs just 0.4 to 0.8 kuai (RMB) or $0.065 to $0.13 and the rapidly expanding subway 2 kuai ($0.32) regardless of distance although tickets are going up in the new year and partially measured by distance. Taxis will run you 14 kuai within 4 km, if not stuck in traffic. Mediocre speed internet costs around 133 kuai ($21.70) a month if you pay for a full-year’s service.
If you buy at the farmer’s market, you can procure sufficient quantity and variety of vegetables and fruit for a week for less than 150 kuai. Already cheap, shoppers constantly haggle with the farmers over price. (Produce at supermarkets are usually marked up substantially.) Of course, meat costs a lot more, especially beef and mutton but pork and farm-raised fish are more reasonable. If you ride a bike, a flat tire can be fixed for 3 kuai and major parts replaced for less than 50. Depending on your preference, a haircut can cost anywhere from 3 kuai on the street to 40+ in posh parlors. (That translates to roughly US$0.49 to $6.5+). As for vacations, 2000-3000 kuai can get you to Hong Kong/Macau, South Korea, Japan, or Southeast Asia for a few days. Needless to say, domestic vacation packages are much cheaper.
But, let’s not be too congratulatory as the country still has a long way to go before its achieves developed status. China’s exchange rate GDP will not catch up to the US for another decade or more. Even measured by PPP, given that China’s population is roughly 4 times that of the US, its per capita income is only 1/4 of the US’s. And there are still over 150-200 million people in remote areas living under $2 a day. China does not yet have a medical care system that covers everyone and despite on-going reforms to the household registration system, migrants remain second-class citizens unable to reside permanently in the cities.
Conservatively speaking, it will take China another 40 years of sustained development before per capita living standards come close to that in the developed world.
There’s no easy way to say this, so I’ll just say it: We’re no longer No. 1. Today, we’re No. 2. Yes, it’s official. The Chinese economy just overtook the United States economy to become the largest in the world. For the first time since Ulysses S. Grant was president, America is not the leading economic power on the planet.
It just happened — and almost nobody noticed.
The International Monetary Fund recently released the latest numbers for the world economy. And when you measure national economic output in “real” terms of goods and services, China will this year produce $17.6 trillion — compared with $17.4 trillion for the U.S.A.
As recently as 2000, we produced nearly three times as much as the Chinese.
To put the numbers slightly differently, China now accounts for 16.5% of the global economy when measured in real purchasing-power terms, compared with 16.3% for the U.S.
This latest economic earthquake follows the development last year when China surpassed the U.S. for the first time in terms of global trade.
I reported on this looming development over two years ago, but the moment came sooner than I or anyone else had predicted. China’s recent decision to bring gross domestic product calculations in line with international standards has revealed activity that had previously gone uncounted.
These calculations are based on a well-established and widely used economic measure known as purchasing-power parity (or PPP), which measures the actual output as opposed to fluctuations in exchange rates. So a Starbucks venti Frappucino served in Beijing counts the same as a venti Frappucino served in Minneapolis, regardless of what happens to be going on among foreign-exchange traders.
Make no mistake. This is a geopolitical earthquake with a high reading on the Richter scale.
PPP is the real way of comparing economies. It is one reported by the IMF and was, for example, the one used by McKinsey & Co. consultants back in the 1990s when they undertook a study of economic productivity on behalf of the British government.
– MarketWatch columnist
China Stops Using Organs From Executed Prisoners on January 1: Report
China will “comprehensively terminate” the use of executed prisoners as a source of organs for transplants from January 1, the Southern Metropolis Daily quoted Huang Jiefu, head of the China Organ Donation Committee, as saying.
Voluntary donation will become the only source for organ transplants, Huang, a former vice health minister, said at a meeting on Wednesday.
Beijing has made similar pledges before and Huang in November 2012 said that China would end its reliance on organs from executed prisoners within two years.
China banned trading in human organs in 2007, but demand for transplants far exceeds supply in the country of 1.3 billion people, opening the door to forced donations and illegal sales.
Huang said around 300,000 patients in China are in “urgent need” of organ transplants every year, but only about 10,000 operations are carried out, Thursday’s report said.
Only 0.6 out of every million people in China donate their organs, compared with 37 in Spain, he said.
Organ donations are not widespread as many Chinese believe they will be reincarnated after death and therefore feel the need to keep a complete body.
Apart from traditional thinking, fears over potential corruption are another cause of the low donation rates, he added.
“People’s concerns over whether organ donation can be carried out in a fair, just and open manner is also an important reason why it has been so hard for the cause to advance,” the paper cited Huang as saying.
But China has introduced a new donation system and he said around 1,500 people have donated organs so far in 2014, more than the total for the previous four years.
– AFP
China’s Railway Diplomacy (Part II)
With the Turkish Istanbul to Ankara project under its belt, China also signed with Saudi Arabia for the US$1.8 billion Phase 1 Package 1 of the Haramain HSR Project for which China Railway Construction Corporation (CRCC) again headed a consortium. The demonstration effect of its successful completion will be immense for the entire Middle East, particularly the Gulf states.
Over the summer, Premier Li Keqiang’s HSR diplomacy took him to Hungary and Serbia where he signed an agreement for a link between Budapest and Belgrade. Hungarian Prime Minister disclosed a year ago that China had already set up a fund a couple years prior to help finance Central and East European projects of which the $3 billion Budapest-Belgrade run represents a major one.
Another project grabbing international headlines in late November, albeit not HSR, was a contract between CRCC and the Nigerian Ministry of Transport for the construction of a $12 billion 22-stop 120 km/hr line stretching 1,402 kilometers from capital Lagos in the west to Calabar in the east. The line is China’s single largest overseas train contract to date.
Adopting Chinese technical standards, the project involves equipment exports of $4 billion, including construction machinery, cars, and steel products. The project will create 200,000 direct and indirect jobs and up to 30,000 permanent positions once the train is up and running. Bature Gafai, a senior Nigerian Transport Ministry official, said the coastal railway “is vital for the development of the Eastern Economic Corridor”.
China is also aggressively promoting its HSR technology to countries in South and Southeast Asia, including Malaysia, Thailand, Myanmar, Laos, and most importantly, India. In October, China Southern Railway Corp. (CSR) signed on to supply 30 80 km/hr 3-car light rail trains for the Ampang Line in Malaysia, providing financing, participation in construction, and technology transfer to the Malaysians.
In April 2013, the company had invested $122.6 million for a rail equipment manufacturing base for welding, assembly, testing, overhaul, and refurbishment. The first phase of the base will be completed by the end of the year able to assemble 150 new vehicles and overhaul 100 older ones per year.
CRCC is also making significant inroads in India where it will conduct a feasibility study starting early next year for the construction of the “game changing” 300 km/hr 1,754 km Delhi–Chennai HSR corridor, which would become the world’s second longest HSR line after Beijing-Guangzhou. However, the completion of the study does not guarantee the project will go to China. (Meanwhile, the Japan International Cooperation Agency is doing a separate study for the $9.7 billion 500 km HSR line connecting Mumbai with Ahmedabad.)
Indian Prime Minister Narendra Modi has conceived of a “diamond quadrilateral” set of projects for HSR lines connecting Delhi-Mumbai, Mumbai-Chennai, Chennai-Kolkata, Kolkata-Delhi, and Mumbai-Kolkata. Thus, the Delhi-Chennai line was put on the front burner by the new Indian railways minister, Suresh Prabhu, a close aide to the Prime Minister.
If it is a go with a price tag of $32.6 billion, the project would be a world impacting breakthrough for China’s HSR technology exports, paving the way for exports of railway designs, highly durable tracks, automated signals for faster trains, and modern train stations. The Chinese would also provide training in heavy haul for Indian railway officials, re-development of existing stations, and even the establishment of a railway university in India. Currently, India’s British-built rail system is in a sorry state of disrepair and the country has added only 11,000 km of track since independence compared with 9 times that in China. The new line would cut down travel time between the two cities from 28 to a mere 6 hours.
In North America, the CRCC-led consortium’s successful bid last month for the uncontested tender for the $3.75 billion HSR line connecting Mexico City with Queretaro was abruptly revoked by the Mexican government after opposition lawmakers accused it of being fixed. Badly embarrassed by the fiasco, the Mexicans paid out more than 100 million RMB ($16.27 million) in compensation to the CRCC consortium. Yet, just three weeks later, the local press reported and sources close to CRCC confirmed the company indeed intends to re-bid for the project.
Last October, China Daily reported that a consortium made up of China Northern Railway (CNR), its subsidiary Tangshan Railway and US-based SunGroup USA submitted an ‘expression of interest’ for a contract to supply 95 trains as well as development of maintenance facilities for the 800 mile HSR line between San Francisco and Los Angles and ultimately to Sacramento and San Diego.
Early next year, the California HSR Authority will solicit a Request for Proposals for trains that can travel faster than 200 miles (322 km) per hour. The project includes a ‘buy American’ provision requiring vehicles to be made in the US. Also in October, CNR announced it had won a $567 million contract with the Massachusetts Department of Transportation for the supply of 284 trains for Boston’s subway with an option to build 58 more.
In the same month, visiting Chinese Premier Li Keqiang signed a MoU for the building of the 803 km HSR link between Moscow and Kazan in Russia’s oil-rich Tatarstan region. Later, Russian railway officials announced Chinese companies are willing to commit $10.8 billion toward the $27 billion project that serves as the first stage of the grand $230 billion 7,000+ km line connecting Beijing with Moscow. The inter-continental link would cut travel time from the present 6 days to under two.
The Beijing Times quoted Wang Mengshu, a tunnel and railway expert at the Chinese Academy of Engineering as saying, “if the funds are raised smoothly…the line can be completed in five years at the quickest.” The line’s completion would become yet another symbol of burgeoning political and economic ties between the two giant countries.
With these mega-deals, China will have exported its train and especially HSR technology to virtually all corners of the world. And this is only the beginning.
China’s Railway Diplomacy (Part I)
Over the past few years, in tandem with China’s speedy mastery of high speed rail (HSR) technology and phenomenal growth of the HSR network throughout the country, along with the accolades have sprung up a multitude of criticisms from various quarters and over a wide range of issues.
Japan’s Kawasaki Heavy Industries has accused its Chinese counterparts of stealing technology and the Western press has disparaged China’s HSR safety record on account of the 2011 fatal collision in Wenzhou. Some international affairs commentators have even described the export of China’s HSR technology and construction of rail lines abroad as clear manifestation of China’s geo-political expansionist ambitions.
In a little more than a decade since China’s first HSR line between Qinhuangdao and Shenyang that ran at 200 km/hr (now considered ‘dongche’ speed (sub-high speed), China’s HSR network has extended to over 12,000 km, about four times as long as nearest rival Spain and more than half of the world’s total. By 2020, the Chinese Ministry of Railways wants to more than double that length to 25,000 km and connect all major cities. (Following the Wenzhou crash, train speeds were reduced from 350 km/hr to 300 km/hr but the Ministry has indicated it may raise it back up to 350 km/hr when deemed prudent.)
This two-part post focuses on the surge in expansion of China’s HSR overseas as the result of a unique mix of state strategy, financial wherewithal, centralized ownership of technologies, low cost construction, and offers of technical assistance that will assure China’s success in winning bids throughout the world, including in the developed world. So much so that foreign industry insiders complain their companies are ill-equipped to compete with China Railway Construction Corporation (CRCC) on cost and state support.
An article in Railway Technology (railway-technology.com) ascribes to the recently inaugurated 250 km/hr 533 km line between Istanbul and capital Ankara in Turkey, China’s first major completed HSR line abroad, as displaying the basic contours of China’s HSR export model – CRCC working in conjunction with the China National Machinery Import and Export Corporation (CMC) and Turkish firms Cengiz Construction and Ibrahim Cecen Ictas Construction. It represents China’s “deep commitment to cracking into and dominating the global high speed construction and rolling stock market”, wrote the author．
Last year, CRCC’s total revenue closed in on $95 billion but the company wants to greatly up the foreign share from 4% to 30%, reported Reuters. In the first nine months of 2014, CRCC has signed 115 billion RMB (US$18.7 billion) in worldwide contracts, roughly 1/5 of all new deals during that period. In May, the company created a unit to manage and coordinate its foreign operations. In addition, in preparation for better accessing international markets, China’s two domestic railcar makers, China Southern Railway (CSR) and China Northern Railway (CNR) Corporations have filed with the government to merge as the China Railway Transportation Co. with a combined market capitalization of $26 billion.
The Chinese government presides over project negotiations, leveraging the country’s centralized ownership of technologies that allows it to offer attractive export terms. The China Economic Review cites Ji Jialun, a professor at Beijing Jiaotong University’s School of Traffic and Transportation as saying it’s a luxury that few if any rival European and Japanese companies can afford since different technologies are controlled by different companies.
Much lower production and construction costs add to the attraction of Chinese bids. According to a World Bank study, based on cost efficiencies achieved at home, CRCC can build systems at US$17 to $21 million per kilometer, much cheaper than the $25-$39 million price range of European and Japanese companies. Most important, to attract developing countries that otherwise would balk at pricey HSR schemes, China is able to provide a very competitive financing regime. On the Turkish project, for example, the Chinese helped finance it with US$750 million in loans, including $500 million enjoying very favourable terms.
This is not to mention other well endowed funding channels like the China Development Bank and the Export-Import Bank of China that can coordinate support for the investment and trade activities of China’s state-owned enterprises abroad. China has also set up the BRICS bank with $50 billion to start as well as its most recent Asian Infrastructure Investment Bank (with China contributing more than half of the funding) and the $40 billion Silk Road fund envisaged by President Xi, all of which are geared toward infrastructural development and mitigating transport and other bottlenecks across Asia and the developing world. China surely doesn’t lack funds to back projects as its foreign exchange reserves have swelled to US$3.888 trillion as of the end of September.
Part II will look at other key projects the Chinese have won, actively bidding for, or interested in building.
The (British) Empire is No More: Guardian commentator
The Western, especially British, press has been in a knot over the non-visas for British MPs wishing to “investigate” the handling of dwindling Hong Kong student protests. But, Guardian commentator Mary Dejevsky, in stark terms, reminds Britons Hong Kong is no longer a colony and that Britain should know its diminished place in the international political-economic pecking order. So, get a grip Brits, the empire is long gone!
…Some have argued that in banning the British MPs, Beijing is not only reminding Hong Kong who is boss, but acknowledging the UK’s continuing influence and standing. According to this logic, a bunch of high-minded MPs is too dangerous to be let loose in the former colony. The opposite, I fear, is true.
Beijing feels it can swat away what it sees as a minor irritant at no cost to itself – reputational or economic. The UK is neither a major trading partner nor, in China’s eyes, a diplomatic heavyweight. The Westminster parliament can huff and puff, but – as visits to China by the prime minister, the chancellor and the mayor of London all show – we need them more than they need us.
The harsh truth is that for all practical purposes, the UK’s influence in Hong Kong died as the royal yacht sailed away. Thereafter, “one country two systems” meant only what Beijing was prepared to let it mean – and as much as Hong Kong, with its commercial clout, was able to insist.
The UK can, and should, treat democracy-minded envoys from Hong Kong with the respect they deserve. But if there is to be political change there, it is the people of Hong Kong who must press their case – as, perhaps, a new generation is starting to do.
In the light of this, some of what Ottaway told the BBC in response to the ban was simply abject. He said, among other things, that he and his colleagues would have “refrained from making any public comment while there”. (Er, they would clam up to save China’s face?) Then he suggested that the visit, “far from doing damage, would help in raising understanding of … the UK’s legitimate interest in Hong Kong’s future”. Oh dear, oh dear.
When will the penny finally drop? Hong Kong as a British colony is no more. The UK has no “legitimate interest” there beyond a natural concern for human rights. Its MPs can go around the world advocating “values” but they have no special hotline to Beijing, and any preaching about “democracy and the rule of law” from the former colonial power is unlikely to convince.
The UK may have a particularly guilty conscience about Hong Kong – as indeed it should have. But if it wants to influence what happens there, staking a claim to almost proprietorial privilege is not the way. Indeed, if Zimbabwe, South Africa or Kashmir are any sort of precedent, attempts to lay down the law as the former colonial power only fuel resentment.
The British empire is over. For a medium-sized country, the more productive course is to seek allies, and for the UK the ideal source of support over Hong Kong is the EU, whose economic clout at least is more equal to Beijing’s. As so often, too, a little more self-knowledge would not go amiss. It is not only Russia that finds it hard to let go.
The full piece can be read at: http://www.theguardian.com/commentisfree/2014/dec/01/britain-hong-kong-no-longer-colony-empire-china#start-of-comments
Mahbubani is Right on the Money on Asia and China
Kishore Mahbubani, former long-serving diplomat and Permanent Secretary at the Singaporean Foreign Ministry, briefly as the President of the UN Security Council during a stint as Singapore’s Permanent Representative to the UN, and now Dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore, has been right on many issues concerning the rise of Asia and his views on China are also spot on. He authored The Great Convergence: Asia, the West and the Logic of One World and is a member of the World Economic Forum’s Global Agenda Council on China.
Here are some excerpts (further condensed) from a recent keynote address at the Straits Times Global Outlook Forum: (This author particularly appreciates his exhortations against swallowing the ideological tenets and mantras of the Western media although not so sure the Singapore Straits Times (for which this author has worked) is the best positioned to become the voice of Asia as he asserts.)
Asia will experience a new golden era of peace and prosperity over the next 10 years.
The export-led growth model of the past will no longer work for the major Asian economies. Hence, we are unlikely to see a return to double-digit growth. If the major Asian economies, especially China, India and Indonesia, are able to maintain growth rates of around 7 percent a year, this will be a major achievement. Fortunately, this is within their reach.
Three factors will drive this. – The first factor is an almost unbelievable accident of history. It is truly remarkable that the three most populous Asian countries, namely China, India and Indonesia, have simultaneously put in place dynamic and reform-minded leaders who can be expected to transform their countries over the next decade.
– The second factor is the consolidation of the “Deng Xiaoping-Lee Kuan Yew consensus” on national development. We have just seen three remarkable back-to-back leaders’ meetings in East Asia: APEC in Beijing, East Asia Summit in Naypyidaw and the Group of 20 in Brisbane. An amazing number of new agreements were signed.
There was also a historic (albeit unsmiling) handshake between President Xi Jinping of China and Japan’s Prime Minister Shinzo Abe, laying to rest fears of a China-Japan war. What was the key underlying factor that explains the success of these meetings?
The simple answer is that, North Korea excepted, there is a remarkably wide and deep consensus among regional leaders that they should focus on modernization and pragmatic development. This explains why East Asia is functional while the Middle East remains dysfunctional. Our region has been infected by a silent, healthy virus of modernization. Because it is silent, the Western media has not noticed and continue to predict doom.
– The third factor is the explosion of the Asian middle-class population from 500 million in 2010 to 1.75 billion in 2020. Multinational corporations have spotted this trend. Many of these MNCs are ahead of their governments and have stepped up their presence in the region. Singapore has the potential to be the biggest beneficiary of this big shift to Asia.
Pessimistic Western consumers will not drive global demand. Instead, optimistic Asian consumers will gradually pick up global demand. It would be foolish to pretend that all will be rosy in the region.
Several geopolitical clouds will continue to affect the region. Five deserve mention.
BUT THERE ARE CLOUDS
The most important geopolitical relationship is always between the world’s No. 1 power (now the U.S.) and the emerging No. 1, now China. In theory, U.S.-China relations should hit a new peak of rivalry in the next decade, because, this year, China will surpass the U.S. and become the world’s biggest economy in purchasing power parity terms.
Curiously, the U.S.-China relationship is remarkably stable. Indeed, there is even some sun showing through what should be the darkest geopolitical cloud, as demonstrated by the extraordinary climate change agreement reached between Mr. Xi and U.S. President Barack Obama.
The most dangerous relationship this year was that between China and Japan. Many feared that they would go to war. Instead, they shook hands. If Mr. Abe can restrain his nationalistic tendencies and focus on firing economic arrows to jumpstart Japan’s economic growth, this troubled relationship can remain under control. Several Chinese leaders may have also realized that China went overboard in browbeating Japan in recent years.
The most important future geopolitical relationship is between the world’s next No. 1 and No. 2 economies, namely China and India. When Mr. Narendra Modi became prime minister of India, there was hope of a major breakthrough. However, the border issue continues to bedevil this relationship. The world will look upon Mr. Modi and Mr Xi. to wisely overcome this nagging issue.
Logically, Russia should have been drifting closer to Europe and the West to balance a rising China. Instead, the opposite has happened. The accident in Ukraine disrupted geopolitical logic. If Western leaders were as pragmatic as Asian leaders, they would have found a compromise.
Instead, the West went back to its usual self-righteous tendencies and imposed sanctions on Russia. This geopolitical loss by the West has been a gain for Asia, as seen by the U.S. $400 billion (S$520 billion) Russia-China energy deal.
Finally, the Islamic State group emerged as a complete surprise. It would have been ignored if innocent Westerners had not been killed. The decapitations forced the West, especially the U.S., to react. However, ISIS does not pose a great global threat. It is an isolated tumor.
DON’T BELIEVE THE ANGLO-SAXON MEDIA
To understand how these five geopolitical clouds will affect Asia, please do not rely on the dominant Anglo-Saxon media. Some of their editors are trapped in a narrow and often ideological Anglo-Saxon mental universe. For example, the Anglo-Saxon media has been predicting the collapse of the Chinese Communist Party for almost 25 years. I predict that they will continue to do so in the next 10 years. I also predict that the CCP will last the next 10 years.
There is a great global demand for an authoritative voice on Asia’s resurgence. When the British Empire reigned supreme, the Times of London served as the newspaper of record. When the American century began, the New York Times emerged as the newspaper of record.
As the Asian century unfolds, The Straits Times is well poised to be the newspaper of record for the Asian century. Fortunately, The Straits Times already has a group of excellent Asian correspondents in place. It has the product. All that the ST has to do is to create a new package of news on Asia for the rest of the world.
Further excerpts, on the role of ASEAN, can be read on: http://www.huffingtonpost.com/kishore-mahbubani/asia-golden-era_b_6219866.html?utm_hp_ref=world
ADB Willing to Work With AIIB: ADB President Nakao
Despite naysayers and China poopers arguing the Asian Development Bank (ADB) must not collaborate with the newly founded China-led Asian Infrastructure Investment Bank (AIIB) for a plethora of ‘issues’ and ‘concerns’, it looks like the ADB is gearing up to hop on the bandwagon. The South Koreans and the Aussies are on the verge of joining (albeit the latter wanting some assurances on governance etc.) and World Bank President Jim Yong Kim said he’s gung-ho on cooperation. So, it looks like the China-bashers will be eating some bitter words in the offing!
The head of the Asian Development Bank said Wednesday he is ready to work with China on a new infrastructure investment bank proposed by Beijing, despite fears it could undermine his institution.
The Manila-based ADB is too large and established to be threatened by the proposed lender, Takehiko Nakao told a foreign correspondents’ forum in the Philippines.
“If the AIIB (Asian Infrastructure Investment Bank) is established, we are very happy to have the appropriate collaboration,” Nakao said, adding the banks could potentially co-finance projects.
Last month China and 20 other Asian countries signed a memorandum of understanding to establish the AIIB, an institution whose development has been driven by China and which will be based in Beijing, according to the Chinese state news agency Xinhua.
However the proposed lender is seen as a potential rival to existing Western- and Japanese-dominated institutions such as the World Bank and the ADB.
The Japanese government has expressed concern, while the United States is reportedly fiercely opposed to the AIIB, which some analysts see as a venue to expand Chinese influence at their expense.
Nakao stressed there had been “no contact” yet between the ADB and the AIIB, although Chinese officials had discussed the matter with him when he was in Beijing.
He added that it was “understandable” that Asian countries would want such an institution because of the region’s huge need for infrastructure financing.
He said Asia needed $800 billion a year in funding for infrastructure, particularly for energy and ports. Of the 20 other countries that signed the AIIB memorandum, only India and Singapore are considered large economies.
However Nakao stressed that the ADB had always been active in infrastructure, even as it also supports social services as part of its mission of poverty-reduction.
“The ADB’s focus has always been infrastructure,” he said. “China has always been very supportive of the ADB so Chinese authorities have been saying (the AIIB) will be complementing and supporting the work of the ADB instead of challenging and going to be a rival,” he added.
“There is no real issue about it. We can work with the Chinese authorities and the new bank if they do regional cooperation,” he said.
Despite its rapid economic growth, China still needed the ADB’s help in areas such as environmental protection, he said.
ADB officials later told AFP the lender was supporting a project to revive an overland “silk road” between China and Europe via Central Asia and the southern Caucasus in support of regional cooperation.
China is also proposing a “maritime silk road” link to Europe that goes through Southeast Asia and Indian Ocean states.
– AFP
Furor Over the Fiery Cross Reef
A report by IHS Jane’s Defence Weekly last week on the building of a suspected airstrip on Fiery Cross Reef has stirred up an international uproar over China’s intentions in the Spratly Islands chain in the South China Sea.
Lying southwest of the main Spratly island archipelago, Fiery Cross Reef, otherwise known as Yongshu Reef in Chinese, is a group of three reefs controlled by China as part of its Sansha Island chain. In 1988, the People’s Liberation Army Navy (PLAN) built a UNESCO Marine observation station there and has since stationed around 200 troops on the reef. 
China has been at a disadvantage compared with other claimant countries in the Spratlys as it is the only one without an airfield on an occupied island. Taiwan possesses Itu Abu (Taiping) Island, the Philippines has Thitu (Pasaga) Island, Malaysia occupies Swallow Reef (an airstrip was built on reclaimed land) and Vietnam took Southwest Cay.
Airbus Defence and Space satellite images of the island taken on August 8th and three months later on November 14th indicated Chinese dredging had resulted in a new island more than 3,000 meters long and 200-300 meters wide, big enough for a runway and an apron. Along with the runway was a harbor toward the east of the island that looked large enough to take tankers and major war vessels. 
According to IHS Jane’s, this land reclamation project is the fourth undertaken by the Chinese in the Spratlys over the past year to 18 months following similar efforts on Johnson South Reef, Cuateron Reef, and Gaven Reefs, none of which were big enough to accommodate an airstrip. The Fiery Cross Reef construction brings China parity with other claimants but also likely considerable concern among them, analyzed Jane’s.
The journal was quite alarmist in suggesting, “given its massive military advantage over other claimants in terms of quantity and quality of materiel, this facility appears purpose-built to coerce other claimants into relinquishing their claims and possessions or at least provide China with a much stronger negotiating position if talks over the dispute were ever held.”
This latest installment of the ‘China threat’ story got further traction when Jin Zhirui, a colonel with the Chinese Air Force, speaking to reporters at the sidelines of the Xiangshan Forum, China’s answer to other regional defence dialogues, declined to confirm the activities on the reef but nevertheless remarked, “we need to go out, to make our contribution to regional and global peace. We need support like this, including radar and intelligence.”
Almost immediately, the Americans obligatorily called on China to halt the project: “We urge China to stop its land reclamation program, and engage in diplomatic initiatives to encourage all sides to refrain themselves in these sorts of activities, US military Spokesman Lieutenant Colonel Jeffrey Pool urged (quoted by the South China Morning Post). To which Chinese Foreign Ministry spokeswoman Hua Chunying retorted, “I think anyone in the outside world has no right to make irresponsible remarks on China-related activities.”
Air force Colonel Jin pointed to other claimant countries making significant military advances in the area ahead of China. “Although there are 50 islands and reefs in the Nasha Islands, those belonging to China are the fewest in number and China was the last to make advances there”, he said. Interviewed by the Global Times, PLA Major General Luo Yuan added, “The US is obviously biased considering that the Philippines, Malaysia, Vietnam have already set up military facilities….China is likely to withstand the international pressure and continue the construction since it is completely legitimate and justifiable”.
In addition to its occupation of and construction of facilities on Thitu Island, in 1999, the Philippines deliberately ran aground a tattered navy ship, the Number 57 – BRP Sierra Madre, near the Second Thomas Shoal, establishing it as an ‘outpost’ on which troops have been stationed ever since. And numerous flare-ups have occurred between Chinese navy and other ships and their Vietnamese counterparts.
Interestingly, following the disclosure, during a recent round of constitutional arguments on the Philippines’ Enhanced Defence Cooperation Agreement (EDCA) with the US, Associate Justice Antonio Carpio, an ardent anti-China hawk, grilled acting Solicitor General Florin Hilbay to admit that even if EDCA were considered constitutional, there is no guarantee that the country’s protector would come to its aid in case of an external attack. The Aquino government has been trying hard to convince political elites and the public that the country would be protected should push comes to fisticuffs in a showdown with China over the Spratlys.