Vast Majority of Australians Don’t Want to Take Sides in East China Sea Dispute: Poll

This is interesting.  The results perhaps reflect Australia’s position as a major beneficiary of China trade but at the same time its security alliance with the US.   So, the Auzzies are prone to sit on the fence which is rational.  On the other hand, a fair number of them don’t even know what the dispute is about.

East China Sea dispute

The big question is whether Americans would support their navy’s aid to the Japanese should there be any big flare-ups over the Diaoyus.  Although the US and Japan are locked in a security treaty and the Obama Administration has been vocal about US obligations, American public sentiment is another matter.  Americans are becoming less and less inclined to support going to war over Taiwan let alone the Diaoyus.

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71 per cent of those surveyed in a poll commissioned by the Australia-China Relations Institute, headed by former Foreign Minister Bob Carr, think Australia should remain neutral.

Only 15 per cent were of the view that Australia should support Japan and the US.

The cluster of islands have been home to an ongoing territorial dispute between Japan and China.

Should a US President phone the Australian Prime Minister to ask for help in the future, 68 per cent of respondents in the poll believed he should turn America down — 14 per cent said he should say yes.

But only 40 per cent of the 1000 people polled by UMR Research were aware of the dispute at all.

Ex-Foreign Minister Bob Carr, Director of the Institute, said the East China Sea is the most volatile of any disputes that could see Australia drawn into armed conflict.

“The poll confirms Australians overwhelmingly want their country to stay neutral,” he said.

“As far as the public is concerned we are not obliged under ANZUS to make any commitment.

“We know that Australians overwhelmingly support the ANZUS treaty but this poll confirms they do not want it invoked in conflict between China and Japan over the islands in the East China Sea.”

news.com.au

 

Chen Shui-bian Weasels Out of Serving More Time, For Now

Medical parole, my foot!

He, his family, and his diehard supporters in the DPP have been trying to him get out on various pretexts since he was incarcerated for graft.  Sleep apnea is a non-life-threatening sleeping disorder that can be readily treated.  What does nerve degeneration involve and is it “life-threatening” too?

Despite their denials, his parole is definitely politically motivated!  No doubt he and his supporters will try to use the opportunity to create sympathy for a full pardon.  Watch how the soap opera plays out!

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Former Taiwanese president Chen Shui-bian was released from prison on Monday on a one-month parole for medical treatment, amid pressure from pro-independence opposition leaders newly emboldened by victory in local elections six weeks ago. 

The temporary release comes less than half way through Chen’s 17-year jail term for corruption and while the parole does not explicitly restrict him from political activities, authorities said he was to use it mainly for recuperation.

Chen’s illness remains undiagnosed, but his supporters say it involves nerve degeneration and sleep apnea, and could be life threatening.

“His condition will be reviewed monthly and may be extended if his medical status does not improve,” Ministry of Justice official Chen Ming Tang said while announcing the parole.

“The terms of his release do not limit his activities but it is to be used predominantly for medical recuperation.”

He denied that the parole was politically motivated and said that there have been no discussions of a full pardon.

Chen’s release comes after the opposition Democratic Progressive Party (DPP) ramped up a campaign for his parole, including a hunger strike by the former vice-president, following a major victory in mayoral and regional elections in late November.

Reuters

China to Triple Patents by 2020 as R & D Spending Overtakes the US and EU

While it is good for China to set targets, it is more important to 1) scrutinize the quality of patents registered in China; 2) steadily raise the proportion of Chinese patents registered internationally; and 3) translate those patents into usable technologies, an area in which China lags badly behind the US.  China’s IP protection has improved significantly over the past few years and will continue to do so into the next decade so one can only hope that with quantity comes quality and utility.

Most important is how much countries are devoting to R & D.  According to a recent OECD study, China surpassed the EU28 in S & T spending in 2013 and is expected to leap-frog over the US by 2018.  The two graphs below illustrate the dramatic trend.  But, as with patent numbers, China needs to convert that spending into tangible results to become a truly great innovation power.

Meanwhile, a Washington Post article laments the decline of US innovation: http://www.washingtonpost.com/opinions/fareed-zakaria-the-need-to-renew-american-innovation/2015/01/01/b0f0d864-913b-11e4-a900-9960214d4cd7_story.html

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China is aiming to triple the number of patents it files by 2020 as Beijing looks to boost the country’s high-tech economy in areas from agriculture to pharmaceuticals, according to a notice from the central government on Sunday.

China is targeting 14 invention patents per 10,000 habitants by 2020 compared to four in 2013. It published 629,612 patents in 2013, over 200,000 more than the United States, according to a Thomson Reuters study in December.

Beijing wants to become a bigger player in high technology industries as the country grapples with slower growth and rising costs for its manufacturing base. This is likely to raise a challenge to global players operating in China and abroad who have typically dominated in more innovative sectors.

“Intellectual property (IP) is increasingly becoming a vital component of China’s strategic resources and competitive ability,” the statement posted on the Central People’s Government website said.

It added that by 2020 China would have boosted its legal environment for IP protection and management, often an area of contention for foreign firms who say that IP law in China sometimes favors local players.

Beijing is also looking to reduce the length of the review process for patent and trademark applications. Patent reviews will decline to 20.2 months in 2020 from 22.3 months in 2013, while trademark reviews will fall to 9 months from 10 months.

Reuters

OECD graph 1

OECD grapoh 2

Source: OECD Science, Technology and Industry Outlook 2014.

The press release can be seen at: http://www.oecd.org/newsroom/china-headed-to-overtake-eu-us-in-science-technology-spending.htm

A Wish-List for President Xi to Do

Virtually everyone in China is enamoured with President Xi’s anti-corruption campaign and the many reforms and initiatives he’s introduced/taken since taking office. Over the past little while, however, a list for wholesale reforms of China’s politics, economy and society that supposedly Xi endorsed and will gradually introduce over the course of his tenure has been pasted all over the Chinese language Internet in and outside of China.

Most on the list read like Canadian taxpayers’ rants against the government but others are downright funny, outrageous, ultra-nationalistic, and/or quintessentially Chinese. Some are simply pie-in-the-sky and constitute wishful thinking on the part of radical advocates of systemic reform. (The list is attributed to a World Chinese Forum and the translation is not verbatim.)

In this writer’s opinion, items 3, 7, 8, 14, 17, 19, 22 are entirely possible or slowly being implemented; 1, 2, 4, 5, 12, 13, 15, 18, 20, 21 can or should be achieved to varying degrees; 10, 11 are funny and ridiculous but understandable from a mainland Chinese perspective; 9 is a non-sequitur and too broad; and finally 6 and 16 are sheer nonsense or must never be carried out. For instance, No.16 – a major component of China’s soft-power involves foreign aid to developing countries so that policy will NEVER be terminated.

  1. Gradually funnel 50% of national state income toward people’s livelihood (welfare), cap the budget to below 20% and set strict limits on outlays
  2. Provide universal medicare and education
  3. Control inflation; greatly augment people’s income especially the lower rungs and raise the minimum wage substantially
  4. Reduce taxes to small and medium-sized enterprises (SMEs) and set 10,000 RMB (CAN$1873) as the baseline for personal income taxes
  5. Start dismantling monopolies, even state munitions factories; and eliminate all unreasonable fees issued by banks and telecoms
  6. Learn from Eastern Europe and begin privatization of state-owned enterprises (SOEs) and distribute shares to citizens; and stop state hoarding of hard currency
  7. Stop subsidizing/supporting the real estate market and totally reform the stock market
  8. Do away with the one-child policy and dismantle the Family Planning Commission
  9. Eliminate all special services and privileges
  10. Apart from core state institutions, no more stationing of guards in front of Party and government institutions
  11. Eliminate all song and dance troupes linked to state institutions and disperse the personnel
  12. Gradually stop the recruitment of public servants and reduce their numbers year by year. Eliminate all quasi-administrative departments in legislative, administrative, justice, and military institutions and terminate their budgets
  13. When appropriate, cut administrative levels from the current five to three – central, provincial and county (with all sub-county levels eliminated and people’s autonomy introduced)
  14. Make assets of officials public and provide the people with Internet access to the information
  15. Separate the treasuries of the Party and government
  16. Gradually terminate all foreign aid
  17. Create uniformity and equality in welfare systems across the country
  18. Gradually stop providing government cars to officials; all officials are to take buses or ride bicycles to work
  19. Institute a Anti-corruption Law to punish all graft takers (yet no punishment for bribe givers)
  20. Provide more freedom of speech, allow citizens to freely form media. Only with the right to supervise officials can corruption be thoroughly exposed
  21. Allow peasants to form peasant associations, workers independent unions, and allow autonomous and self-help organizations in all segments of economy and society
  22. Completely rejuvenate Chinese traditional culture and beliefs so the Chinese people can regain spiritual belonging

The item ends with: China has woken up and Xi Jinping shoulders the historical mission of fully awakening this lion. The next stage in China’s reforms is indeed arduous but observing Xi Jinping’s determination, the confidence and vigour of the Chinese people are once again revived.

Xi: Skilled and Successful Political Leader of 2014: Washington Post columnist

On PBS‘s Newhour, David Ignatius, Foreign Policy Columnist for the Washington Post voiced admiration for Chinese President Xi Jinping’s leadership in both domestic politics and foreign policy.

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GWEN IFILL: David Ignatius, she mentions Vladimir Putin by name. Is there any other single leader who we should be the most concerned about, worried about, planning our foreign policy around?

DAVID IGNATIUS: I think we should pay special attention to the leader of China, President Xi Jinping, who would be on my list as the most skilled and successful political leader of the year.

Xi identified the biggest threats to the Communist Party’s rule in China as corruption and environmental pollution that Chinese are frightened about. And he went after both aggressively in 2014. He went after top party officials for corruption. And he signed a climate pact with President Obama in November.

GWEN IFILL: That nobody saw coming.

DAVID IGNATIUS: That nobody saw coming, but they should have because it was clear that Xi had made the decision, I have to show my people that I am acting on this issue that they fear is going to make China unsafe for them in the future.

So I am impressed by his skill and his aggressiveness, his boldness as a leader. We’re going to have to deal with him, maybe in good ways, cooperatively, maybe in more difficult ways.

 

Full transcripts and the podcast are available at:  http://www.pbs.org/newshour/bb/2014-global-conflicts-challenges-will-carry-new-year/

N.W.T. Wants Chinese to Move There

Good luck with that!

While the effort is noble and Yellowknife surely needs more people, especially investor immigrants, I doubt if there’ll be many takers.  Even winter-hardened rich Chinese from China’s frosty north and northeast will be hard pressed to emigrate to sub-Arctic territory.  The immigration lawyer is right – mild Richmond wins hands down.

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N.W.T. Premier Bob McLeod is heading to China in January. In the past, he’s used the visits to promote investment in the territory’s furs, diamonds and untapped gas reserves. This year, he also wants to promote the N.W.T. as a place to live.

McLeod believes the N.W.T. has much to offer Chinese immigrants, “and many of those immigrants are focused on investment.”

“We’re interested in increasing the population of the Northwest Territories,” McLeod says. “Just think: thousands of people coming to the Northwest Territories investing significant amounts of money. That would be quite an improvement to our economy.”

Yellowknife business owner and Hong Kong native Angela Law says it’s about time the territory and Chinese recognize what the North has to offer. She runs Yellowknife Tours with her husband and daughter. Last year, they offered tours to more than 700 visitors, many of whom came from China.

Law says she doesn’t understand why most Chinese immigrants flock to Vancouver.

“Even if they are computer specialist, doctors, highly educated… they have no job,” Law says.

But immigration lawyer Raj Sharma says wealthy Chinese immigrants are looking for big city amenities — something the North doesn’t offer.

“If the N.W.T. wants to build its population, it will not need the affluent rich Chinese who will naturally gravitate to mainland Vancouver.”

Sharma says the N.W.T. would be better offer attracting temporary foreign workers and international students who’ve just graduated from Canadian universities.

Statistics Canada figures show Chinese are one of the territories’ smallest immigrant groups, accounting for about five per cent of its immigrant population.

“You have tens of thousands of foreign workers and international students already in Canada. It boggles the imagination why the N.W.T. wouldn’t seek out those individuals,” Sharma says.

“These economies are built on trust and getting to know each other,” McLeod says. “We certainly recognize that every time we go there we get better reception. People talk much more openly about issues.”

This will be McLeod’s fifth visit to China. The group will also visit Japan, marking McLeod`s second visit to that country.

McLeod says the territorial government will finalize its China Strategy on the trip.

They group will fly to Beijing on Jan. 10 then on to Japan on Jan. 17, returning to Canada Jan. 21.

cbcnews.ca

China and Japan Agreed to Shelve Diaoyu Islands Dispute: ’82 Suzuki-Thatcher Files

Diaoyu Islands This is yet another revelation about the decision to leave aside differences over the Diaoyu Islands that then Chinese Premier Zhou Enlai and Japanese Prime Minister Tanaka Kakuei’s agreed on as a condition to normalize relations in 1972.  Soon after, however, the Japanese Foreign Ministry managed to expunge this seemingly insignificant yet vitally important fact from the official record and has since denied it ever existed.    (Senkaku is the Japanese name for the islands)

The Japanese Foreign Ministry bureaucracy is well known for being obstinate over sovereignty issues despite the inclinations and wishes of elected politicians like Tanaka.  Near the end, the article says Japan incorporated the islands through “lawful means” in 1895 after it ascertained there was no control over them.  What it fails to mention is the Japanese annexation occurred at the tail end of China’s defeat in the first Sino-Japanese War of 1894-95 which the Chinese determined as illegal.

At the start of the 21st Century, the tail that wags the Japanese dog, ultra-nationalist politician Ishihara Shintaro campaigned to buy the islands from its private owners, which effectively broke the status quo and infuriated the Chinese.   Then, the Japanese government got into the fray (claiming its hand was forced by Ishihara) by nationalizing the islands which was the last straw for China.  The result is the ongoing tension between the two countries.

Japan just couldn’t leave it alone!

The Suzuki-Thatcher conversation is just a small vignette of the goings-on at the Foreign Office from a virtual mountain of documents released this month after 30 years of secrecy maintained at the British National Archives.  (See yesterday’s post on the Thatcher government’s attitude toward Hong Kong and mainland China following agreement with Deng Xiaoping on the handover.  The British are a cynical bunch!)

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Japan and China agreed to maintain the status quo on the Senkaku Islands and avoid any discussion over their respective sovereignty claims, the late Prime Minister Zenko Suzuki was quoted as saying in a 1982 conversation with his then British counterpart, Margaret Thatcher, according to British government files released Tuesday.

The disclosure was made in a record of a private conversation that took place Sept. 20 of that year between then Prime Minister Suzuki and Thatcher.  According to the record, Suzuki offered advice to Thatcher on how she should handle the Chinese in negotiations over Hong Kong, then a British territory. The document, prepared by Thatcher’s private secretary, notes, “His (Suzuki’s) advice to the prime minister was to deal directly with (Chinese leader) Deng Xiaoping on the matter, with as few other people present as possible.

“This advice was based on his experience of dealing with the disputed territory of the Senkaku Islands on which, when dealing directly with Deng, he had easily reached agreement that the two governments should co-operate on the basis of their major common interest and leave aside the differences of detail: in consequence it had been agreed that, without raising the matter concretely, the status quo should be maintained, so that the issue was effectively shelved.

“The prime minister welcomed Mr. Suzuki’s advice on the method to deal with Deng, but commented that in the case of Hong Kong it would not be sufficient to shelve the issue if the confidence of investors in Hong Kong was to be maintained.” Also attending the meeting with Thatcher was Yoshio Sakurauchi, at that time foreign minister, and Kiichi Miyazawa, then chief Cabinet secretary and later a prime minister.

In May 1979, as a Lower House politician, Suzuki met Deng in China. This is thought to be the meeting referred to in his discussions with Thatcher. The website of the Foreign Ministry in Tokyo states, “Japan has consistently maintained that there has never been any agreement with China to ‘shelve’ issues regarding the Senkaku Islands. This is made clear by published diplomatic records. “The assertion that such an agreement exists directly contradicts China’s own actions to change the status quo through force or coercion.”

In an effort to bolster its sovereignty claims, Tokyo continues to maintain that there is no territorial dispute over the Senkakus. However, over the years there have been several reports suggesting that both Japan and China have been keen to put the issue on ice and instead focus on building diplomatic and trade ties.

The Senkakus are a small group of uninhabited islets in the East China Sea. In January 1895, Tokyo incorporated the islands into Japanese territory by lawful means after, according to the Foreign Ministry, “having carefully ascertained that there had been no trace of control over the Senkaku Islands by another state prior to that period.”

Kyodo News Service

Britain Keen on China Trade Not HK Democracy: Foreign Office Documents

30 years after the Sino-British negotiations over the Hong Kong handover, declassified files from the British Foreign Office reveal Thatcher and her government were more concerned about increasing trade with mainland China than any considerations for the rights of Hong Kongers.

Learn some history, ill-educated ‘Occupy Centralers’!

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Britain was looking for stronger economic ties with China even before the agreement which would eventually hand it Hong Kong was signed in 1984, secret documents released Tuesday showed.

Ahead of late prime minister Margaret Thatcher’s trip to Beijing in December that year to sign the deal, officials discussed how she should make the case for British business with China.

The files also revealed how China’s then leader Deng Xiaoping reassured Thatcher that his country would keep its side of the agreement, based on the concept of “one country, two systems”, adding that China “always honoured its commitments”.

The documents were released by the National Archives in London under the 30-year rule, which allows previously secret government files to be made public after three decades.

Around six weeks before her trip, the British embassy in Beijing wrote to the Foreign Office urging that Thatcher should “press for greater export and investment opportunities for British industry under the signboard of greater participation in China’s modernisation.”

It added: “It will be important however to handle this in public in such a way that Hong Kong opinion does not see our moves to develop trade as exploitation of the Hong Kong agreement.”

In a nod to this concern, officials decided that Thatcher should not travel with a party of British businessmen to avoid suggestions “that we were now getting our prize for having sold out Hong Kong to the Chinese,” Peter Ricketts, a senior Foreign Office civil servant, wrote to Thatcher advisor Charles Powell on November 16, 1984.

During the trip, business deals including around the development of a nuclear power station in Guangdong were discussed, the files reveal.

Thatcher was also assured by Deng, seen as the architect of China’s economic reforms, over his country’s intentions in Hong Kong.

“Some people harboured doubts about whether China would honour the agreement. Deng said he wished to inform the prime minister and the whole world that China always honoured its commitments,” a British embassy note of the meeting said.

AFP

China Invests in Greater Mekong

This CNBC article fails to see the forest for the trees.  It notes China doesn’t mind low-wage assembly jobs going to countries of the greater Mekong River region.

It’s not just multinational companies that are going there in search of low-wage labour, Chinese companies themselves are financing a lot of the projects in the area that will help prop up labour-intensive manufacturing for which Laos, Myanmar, Vietnam, Cambodia, and the poorer parts of Thailand can supply plenty of low-wage workers.  China is rapidly climbing up the technological ladder and accumulating vast amounts of hard currency with which to invest all over the world.  At home, it wants more high-tech jobs, not a continuation of low-wage low-tech assembly.

It is a natural process of Chinese companies going abroad for opportunities (in fact, it’s part and parcel of China’s “going out” policy) and the Chinese government is paving the way with the building of much-needed infrastructure, including the much-touted high-speed rail connection, throughout the region.  Why do you think China created the Asian Infrastructure Investment Bank and President Xi conceived of the Silk Road Fund, not to mention the $11.5 billion the country has already committed for the area.  What’s good for the region is good for China and China is helping it to industrialize.

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Phnom Penh, Cambodia

Digital Vision | Getty Images
Phnom Penh, Cambodia
The greater Mekong subregion (GMS) could become Asia’s new low-cost production hub as the region becomes more integrated, experts say. The GMS comprises Vietnam, Myanmar, Cambodia, Laos and Thailand as well two regions in China: the Yunnan province and the Guangxi Zhuang Autonomous Region.
“With China’s industrial heartland in the coastal regions of the Pearl River Delta and Yangtze River Delta facing increasing pressures on competitiveness due to rising labor costs, the GMS offers considerable potential as an alternative location for the establishment of low cost manufacturing,” Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight, said in a note last week.
Biswas estimates the region’s combined gross domestic product (GDP) at $1.1 trillion this year, larger than in Indonesia, Southeast Asia’s most populous country. By 2015, the region is forecast to grow 6.2 percent and hit a combined GDP of $3 trillion by 2024. The area currently accounts for less than 5 percent of global manufacturing in value-added terms, but IHS notes that infrastructure is key to realizing the region’s potential.
“If infrastructure connectivity is strengthened in Southeast Asia to allow high-speed rail networks and modern roads to link provinces such as Yunnan in southern China to the Indian Ocean via Thailand and Myanmar, this could significantly improve freight logistics…and create significant opportunities for the development of major ports and free trade zones in Thailand and Myanmar, boosting their economic development as entrepots.”
While China still retains its reputation as the world’s leading production center, its slowing economy and double-digit wage increases are causing foreign firms to look to Asia’s frontier economies.
Minimum wages increased by 13 percent in 20 out of 32 Chinese cities this year, according to data from non-governmental organization China Labor Bulletin. Average factory labor costs are roughly $7 a day in Vietnam, versus $28 in China, official data shows.
“While China has many advantages, including a much better developed supply base, advanced infrastructure, robust manufacturing and engineering capacity, and a huge domestic market, this [wage increase] could still create an opening for Southeast Asian economies to become the next factories to the world,” global consulting firm McKinsey said in an October report.
Aside from infrastructure, the firm identifies three developments could stimulate growth in the region’s manufacturing sector: the implementation of the Asean Economic Community (AEC) integration plan, attracting production from multinationals, and the application of big data and disruptive technologies.

China plays a major role

Beijing doesn’t appear concerned about potential competition for manufacturing. Instead, it recently pledged $11.5 billion in financial assistance, including $1 billion in infrastructure aid, during the 5th GMS Leaders Summit earlier this month.
The money comes on top of Beijing’s commitment of $40 billion for financing projects aimed at improving infrastructure across key GMS economies, such as Laos, Myanmar and Vietnam in its establishment of a Silk Road Fund in November.
So, why exactly is China so interested in the GMS?
“Improved connectivity in the Southeast Asian economies of the GMS will also assist the economic development of the inland Chinese provinces in southwest China such as Yunnan province, which is already growing more rapidly than the Chinese national average,” Biswas said.
“The economic development of the GMS will therefore help to realize a key strategic priority of the Chinese government, for reducing the economic development gap between inland Chinese provinces and the more advanced Chinese coastal provinces,” he added.

China-US Deal on Repatriation of Ill-Gotten Gains Imminent

Following soon-to-be agreements with the Canadians, Aussies, and the French, hope the US Congress won’t tie this deal up for petty political reasons and so-called concerns about China’s judicial process.  But, US politicians will think of something to delay an agreement.

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China is looking at signing an agreement with the United States to target assets illegally taken out of China by corrupt officials, a newspaper said on Monday, as the government tightens the screws in its anti-graft battle.

China has vowed to pursue a search, dubbed Operation “Fox Hunt,” beyond its borders for corrupt officials and business executives, and their assets.

China Daily said the central People’s Bank of China was talking to the U.S. Treasury Department’s Financial Crimes Enforcement Network about signing an agreement targeting ill-gotten assets held in the United States.

China is set to finalize a similar deal with Canada, Chinese state media reported this month.

The central bank was also looking at a deal with Australia, the China Daily said, citing Zhang Xiaoming, deputy head of the Finance Ministry’s legal assistance and foreign affairs department.

“After the agreements are made, China will share intelligence with the U.S. and Australia, which will also offer information to their enforcement agencies to conduct further investigations,” Zhang told the English-language paper.

“Once law enforcement officers in the U.S. and Australia identify illegal funds, they will immediately initiate judicial procedures to freeze and confiscate those criminal proceeds in their countries.”

The United States, Canada and Australia are popular locations for corrupt officials to transfer their assets, the paper added.

But legal problems have prevented China from getting these assets back, Zhang said.

“Although the U.S. Federal Bureau of Investigation or Australian police have traced the assets and collected enough evidence to identify them as ill-gotten gains, they are unable to take immediate measures to freeze and confiscate them due to the lack of asset restraining orders from the Chinese courts.”

China this month asked the United States to help it track down more than 100 people suspected of corruption. At least 428 Chinese suspects had been captured abroad by early December under the “Fox Hunt” campaign, the China Daily said.

Reuters