Under the Radar News, 11.25.09

Posted on Wednesday, November 25, 2009 by Kolby Hanson

A weekly compilation of underreported developments in Asia.

China admits Sichuan quake funds used improperly (People’s Daily) Chinese government thinktank CAST admits that Sichuan earthquake relief funds were distributed unfairly, largely benefitting wealthy people. The Sichuan quake has already been a topic of speculation on corruption and China’s rich-poor gap.

Japanese commission calls for foreign aid cuts (Yomiuri Shimbun) Pressed by budget woes and rising costs from DPJ campaign promises, Japan’s Government Revitalization Unit recommended a major reduction in foreign aid, one third of education- and health-targeted aid.

Controversy over 1960 Japan-US nuclear agreement (Yomiuri Shimbun) With the Japanese public already uncertain about the US alliance and US military presence in Japanese territory, secret documents reportedly reveal that a 1960 amendment to the Japan-US alliance has allowed American military to land in Japan with nuclear weapons.

Indonesian government lost on meeting President’s emission cut pledge (Jakarta Post) Newly-elected Indonesian President Susilo Bambang Yudhoyono pledged to cut Indonesia’s carbon emissions by 26 percent by 2020 in October, but government officials are struggling to find strategies to do so.

Australia purchases 14 Joint Strike Fighters from US (Bloomberg) The Australian government has approved a nearly $3 billion deal for 14 American-made F-35 Joint Strike Fighters, the most advanced commercially available fighters. They will be delivered in 2014.

Japan grants nearly $500 million in aid to the Philippines (Manila Times) Just as they were announcing huge overall cuts, the Japanese government announced a deal to supply $489 million in loans to the Philippines to supply agriculture and infrastructure projects.

China Keeps its Neighbor Pak-ing Heat

Posted on Tuesday, November 24, 2009 by Kolby Hanson

For Pakistan and other developing nations, finding a cost-effective source of arms has always been an issue, especially for jets and other advanced technology. Facing growing demands on its military, Pakistan is relying more and more on Chinese companies even for its most expensive weapons deals.

This month, Pakistan and China have signed two major fighter deals which greatly expand military and supply commitments on their fighters for years to come. Two weeks ago, the two governments signed a $1.4 billion deal for 36 Chinese Jian-10 fighters produced by the state-owned China Aviation Technology Import-Export Corporation (CATIC). Yesterday, the first of Pakistan and China’s co-produced JF-17 fighters rolled off the assembly line, the first results of a multi-year military cooperation deal between the two countries.

These two deals look like just the beginning for a growing Sino-Pakistani military and political relationship. Pakistan is not only interested in buying up to 150 J-10s, but also reportedly plans to purchase as many as 250 of the JF-17s they co-produce over the next four to five years. Those two deals alone may satisfy Pakistan’s fighter demand for decades. China also a less judgmental arms supplier than most Western nations, which is especially attractive after Pakistan had its F-16 supplies cut off in 1990 after reports surfaced about Pakistan’s nuclear program.

The bigger impact for both sides, however, might the future strategic cooperation signaled by these deals. China agreed to base the JF-17 plant in Kamra, Pakistan, and the Pakistani government has proposed a joint venture financing corporation to fund military cooperation in Pakistan. Meanwhile, prospects for Chinese firms are looking up, especially if they hope to compete with Western defense contractors – the J-10 is very similar in capabilities to the US-produced F-16, and could prove a less costly alternative down the road.

With the success of the deals in Pakistan, China may also become a more attractive arms source among other developing nations, especially those wary of Western dealers. Iran is already rumored to have ordered 24 J-10s, and when the People’s Liberation Army showed off the J-10 at the Zhuhai Air Show in November 2008, delegations from Angola, Nigeria, and Venezuela showed significant interest.

How much of an influence China can wield over the international arms industry is yet to be seen. But by offering attractive economic deals without judgment, Chinese firms have carved a space for themselves in even the very sophisticated world of fighter jets.

(Image: prototype J-10 fighter, artist's rendition. China Defense Mashup)

Under the Radar News, 11.20.09

Posted on Friday, November 20, 2009 by Kolby Hanson

A weekly compilation of underreported developments in Asia.

Ma Promotes ECFA (Taipei Times) Taiwanese President Ma Ying-Jeou argues that the proposed Economic Cooperation Framework Agreement with China would reduce the chance of war with China. The agreement is in the works, and appears to be a large priority for both sides of the Strait.
But Ma Says Legislature Will Play a Role (China Post[Taiwan]) Ma also reiterates that he will not implement the ECFA without the legislature’s ratification, adding another roadblock to the deal.

Myint Swe Rumored to be Burma's Next Leader (The Irrawaddy) Inside sources say that Lt-Gen. Myint Swe will succeed Sr-Gen. Than Shwe (who is expected to step down in the next few years) as commander in chief of Burma’s military junta. Myint Swe is younger (58) and lower-ranking (3-star general) than most of the others on the shortlist, and is the country’s highest-ranking ethnic minority (Mon).
Tin Aung Myint Oo Steps Down (The Irrawaddy) Just last week, another leading candidate, 4-star Gen. Tin Aung Myint Oo, suddenly resigned from the government.

Chinese Censor Obama's Speech (Sydney Morning Herald) The Chinese government blocked access around the country to Obama’s speech to Chinese students. Television cut away after a few minutes and the live feed never went up on the internet as promised.

China Expands Supreme Court Petitions Office (Xinhua) China’s Supreme Court opens a larger petition office in order to receive more appeals. This is part of China’s at-least-nominally expanding anti-corruption and rule of law efforts, which include more extensive online corruption databases and a growing effort to publicly prosecute cases.

Taiwan and China Expand Financial Integration (China Post [Taiwan]) Taiwan and China sign a memorandum of understanding that allows greater interaction between their financial markets. Concerns are being raised in Taiwan about the possible effects of Chinese investors now being able to buy into the Taiwanese stock market.

India Reacts Harshly to China-U.S. Statement (Times of India) (People's Daily [China]) Indian leaders bristle at China’s increased regional role that they believe was implied in the Obama-Hu joint statement on Tuesday. Many fear that Chinese involvement in India-Pakistan issues may lead to greater hegemony in Asia.

Obama Meets with Chinese Religious Leaders (Sydney Morning Herald) Obama meets with church officials in China, who have faced a particularly stiff crackdown this year. This was the one clear move on the human rights front for Obama during his trip to China, in which he was largely criticized for ignoring human rights issues.

APEC Cool on Climate Change

Posted on Thursday, November 19, 2009 by Prashanth Parameswaran


“We reaffirm our commitment to tackle the threat of climate change and work towards an ambitious outcome in Copenhagen”, Asia Pacific Economic Cooperation (APEC) leaders proclaimed in their final declaration in Singapore last weekend.

The reality, however, was much more sobering. APEC negotiations failed to set concrete targets for greenhouse gas emissions cuts, thereby effectively dousing hopes for reaching a legally binding global warming accord at the Copenhagen climate summit in Denmark next month.

APEC, whose 21 members account for more than 40% of the world’s trade and over 60% of its emissions, was one of the final forums for leaders to bridge their differences over a climate pact before Copenhagen. Those differences, however, ultimately proved intractable. China, along with other large developing nations, buried a bid to halve greenhouse gases from 1990 levels by 2050 because it did not also include an emissions target for rich countries. Instead, APEC members ended up backing a face-saving proposal by Danish Prime Minister Lars Loekke Rasmussen, who hastily flew to Singapore and championed a lackluster “political statement of intent” at Copenhagen.

APEC leaders insisted that expecting a legally binding agreement in three weeks was “unrealistic” anyway. It was nonetheless clear that the organization had missed another opportunity to grapple with the hard issues instead of just glossing over them.

In addition to further dampening hopes for Copenhagen, the disappointing summit delays critical measures designed to ameliorate the effects of climate change in the Asia Pacific, already home to 70% of the world’s natural disasters. The future is even bleaker. A recent WWF report warns that unless energy consumption and greenhouse gas emissions are curtailed, low-lying ‘mega-cities’ in Asia like Dhaka, Manila and Jakarta will be highly vulnerable to rising sea levels, tropical storms, droughts and heat waves in the near future. The Asian Development Bank also predicts that the region will experience food insecurity, energy shortages and worsening poverty.

In order to stem the effects of climate change, the WWF report recommends that emissions be cut by at least 40% by 2020 and by at least 95 percent by 2050 – almost twice as much as the proposal APEC initially floated but could not adopt. But the price tag for adapting to climate change in the Asia-Pacific is exorbitant and even prohibitive. According to a recent World Bank study, the region’s fragile infrastructure and large, densely populated coastal zones means developing countries will require anywhere from 75 to 100 billion U.S. dollars per year from 2010 to 2050 to do so – with substantial contributions from developed countries.

These grim projections and daunting challenges make APEC’s missed chance on climate change seem all the more regrettable.

Obama Navigates Human Rights in Asia

Posted on Tuesday, November 17, 2009 by Guest Contributor

by Kelley Currie, Non-resident fellow, the Project 2049 Institute

As President Obama prepares to depart China, it seems like a good time to check in on how his trip is going, particularly regarding key human rights issues.

Reviews of the Japan and Singapore portions of the trip have generally been positive, even as it became clear that there were no substantive outcomes forthcoming. His major set-piece Asia policy speech in Tokyo was well-received. In both tone and substance, the speech presented a far more balanced view of US relations with Asia than others from administration officials, who have at times appeared overly deferential to China and downplayed of the essential nature of our alliances in the region. Moving on to Singapore, he soothed anxieties on trade, climate change and other economic issues during the APEC portion of the trip, and announced that the next APEC meeting will be in Hawaii. More impressively, he managed to pull off the neat trick of embracing ASEAN while keeping one of its members safely at arms length. He issued a tough call for Aung San Suu Kyi's release and broader political reform in Burma during the US-ASEAN summit meetings, and avoided getting caught in a "grip and grin" photo-op with Burmese prime minister Thein Sein, but was unable to secure a condemnation of Suu Kyi's house arrest in the summit document.

China has of course proven to be the trickiest venue of his long Asian sojourn. With the Shanghai "town hall meeting with future Chinese leaders", he tried to chart a safe course around the many sensitivities of his authoritarian hosts. The White House had hoped that this town hall would be an opportunity for spontaneous interactions with a cross-section of Shanghai youth that would be available live for China's 350 million internet users. Instead, the event was tightly controlled by the Chinese authorities and was largely unavailable to those in China who could not scale the "Great Firewall." Ironically, news stories about his comments supporting internet freedom in response to a question about the Great Firewall were heavily censored. Although the questions were handpicked, there were many opportunities in the speech for raising difficult issues with these "future leaders" of China.

Instead, he chose to play it safe. He did speak about American values and universal rights, but in an innocuous way couched in "respect for different cultures" and China's "different traditions." He chose to highlight fairly noncontroversial rights issues -- opposition to child slavery and support for women's rights – rather than discuss Tibet, Xinjiang, or indigenous Chinese movements such as Charter 08. This was particularly inopportune, given recent comments from the Chinese Foreign Ministry analogizing the American Civil War to the People's Liberation Army occupation of Tibet, and the detention of prominent activists in the days before his arrival.

The joint statement and press conference today also held little positive news for human rights advocates. Aside from announcing the next round of the bilateral human rights dialogue, there was little said except that the two sides basically agree to disagree, respectfully, about human rights issues. Instead, Obama publicly acknowledged Chinese sovereignty over Tibet, while mildly expressing support for "dialogue between the Chinese government and the representatives of the Dalai Lama to resolve any concerns and differences that the two sides may have."

After the Tokyo speech, there was some hope that the lack of meaningful Chinese compromises on key issues and their regression on human rights issues in the run up to his visit might have caused President Obama to be taking a tougher line on China. It appears -- at least while Obama is in China -- that did not happen.

Regional (Dis)Unity in Southeast Asia

Posted on Monday, November 16, 2009 by Prashanth Parameswaran


Just weeks after Asian leaders waxed eloquent about unity at the 15th ASEAN Summit in Bangkok, a simmering diplomatic row between Southeast Asian neighbors Thailand and Cambodia threatens to boil over and tear efforts at regionalism asunder.

The dispute erupted when Cambodian Prime Minister Hun Sen decided to appoint fugitive former Thai premier and his longtime friend Thaksin Shinawatra as an economic adviser. The move rankled Bangkok, which views the appointment of a convicted Thai citizen as interference in its internal affairs.

Both countries have since recalled their respective ambassadors, scrapped bilateral agreements on offshore resource exploration, triggered military alerts in border hotspots, and threatened to further downgrade relations. Analysts say the relationship is at its lowest ebb since mid-2008, when the two countries exchanged deadly fire over the disputed Preah Vihear temple, killing more than a dozen troops.

But even if the cross-border saber-rattling continues, few expect it to descend into full-scale violence or all-out war. The Cambodian leadership habitually stirs up international imbroglios to score domestic political points, and this case is likely no different. Mr. Hun Sen’s remarks on the sidelines of the ASEAN summit last month indicate that the ‘Thaksin gambit’ is merely retaliation for Bangkok allowing Cambodian opposition leader Sam Rainsy to deliver a searing rebuke of government policy at the Foreign Correspondent’s Club in September, rather than a deliberate attempt to vex Thailand. With Thailand’s interior minister Chavarat Charnvirakul bearing the olive branch earlier this week and broaching the topic of talks, the bilateral spat is probably headed to the negotiating table instead of the battlefield.

Robust economic relations will also likely inch along even if these prickly historical animosities do persist. Thailand has provided tens of millions of dollars to Cambodia in grants and loans since the mid-1980s for infrastructure development. And despite the barbs traded over ancient temples last year, bilateral trade surged from US$ 1.4 billion in 2007 to US$ 1.8 billion in 2008.

The regional implications of the squabble are more sobering. The longer it continues, the more it will damage ASEAN’s credibility as a united organization behind the wheels of regional integration. The timing is also particularly inopportune, as the group will look feckless and divided just as U.S. President Barack Obama visits the region later this week and both the Asia-Pacific Economic Cooperation (APEC) summit and the inaugural ASEAN-US Leaders Meeting are held this weekend. ASEAN’s own Secretary General Surin Pitsuwan admits that “ASEAN cannot afford to be seen as being so seriously divided”.

But unless the Thailand-Cambodia dispute is resolved over the next few days, the specter of mutual hostility will loom large even as Asian leaders air their trite encomiums on unity this weekend.

Under the Radar News, 11.13.09

Posted on Friday, November 13, 2009 by Kolby Hanson

A weekly compilation of underreported developments in Asia.

National League for Democracy senior member Min Lwin announces that Burma’s military junta will release Aung San Suu Kyi before next year’s elections. The Irrawaddy
This comes just days after Japan promised more aid to Burma if they released her (Voice of America), and President Obama announced he would meet with Burmese PM Thein Sein (New York Times).

In Indonesia, new media is being employed to fight an old problem. The Corruption Eradication Commission (KPK) reaches 1 million fans on Facebook. Antara

Two major ethnic insurgent groups in Burma, the Karenni National People’s Liberation Front and the New Democratic Army-Kachin, have been officially disarmed and have become border guard forces for the government. They are the first groups to do so in preparation for the elections next year. This could be the beginnings of general disarming in the longest-sustained set of armed conflicts in the world. Xinhua

Taiwan reaches an agreement for France to supply and sustain their Mirage 2000-5 jets, and another for the U.S. to supply Javelin anti-tank missiles. eTaiwanNews
Earlier this week, it had appeared that Western nations were courting China by refusing to supply arms to Taiwan. Taiwan had grounded nine of the jets because France had halted the production of spare parts. Taipei Times

EU’s attempts to sign free trade agreement with ASEAN or with specific ASEAN nations, including Indonesia, have stalled. Problem countries like Burma seem to be standing in the way of economic integration. Jakarta Post

Pakistan signs a $1.4 billion contract to buy 36 Chinese J-10 fighters. Defense Industry Daily

Farmer’s Insurance: China Turns to the Countryside

Posted on Monday, November 9, 2009 by Kolby Hanson

For a government founded in the name of the rural proletariat, the Chinese Communist Party has, since the Deng era, been remarkably focused on urban industrial development. Heroic farmers have been replaced on billboards with brilliant businessmen as the face of China’s economic renewal. But for the first time since 1979, the government appears to be genuinely alarmed about the state of the countryside.

Decades spent fostering urban growth has left China’s rural economy in shambles. Urban incomes (US$1,907 average) are nearly four times higher than rural incomes ($572).

Over the last few years, the government has set out to spur development in rural regions. The government repealed a 2,600 year-old tax on agriculture, created subsidies for farmers’ medical care, and exempted rural students from most tuition fees. The PRC also has tried to further integrate peasants into nation-wide markets and information networks, subsidizing rural purchases of cell phones and computers. In spite of these moves, the economic gap between the urban and rural populations continues to widen because of significantly lower income growth and higher inflation in rural areas.

So the government has called in the cavalry. This week, the National People’s Congress (NPC) will pass a new electoral bill that will equalize representation for rural and urban districts. The bill would erase the four-to-one advantage in urban representation per person in the NPC (currently there is one representative for every 240,000 urban or 960,000 rural residents). It will be the first time since Mao’s chairmanship that there will be more rural than urban delegates.

Critics who consider the NPC to be merely a rubber-stamping organization will likely dismiss this as a cosmetic change. But the move is significant for rural development for at least two reasons: First, it will bring to Beijing more rural activists like CCP delegate Hu Anmei. Hu, a former schoolteacher from the tiny rural village of Taoyuangou, has burst onto the national scene as a voice for rural development, and appears to have the ear of some (at least the media) in Beijing.

Second, even if reorganizing representation does not directly improve the rural economy, it makes it clear that the Party leadership is very concerned with the rural economy. Not only does the move give us an indication of policies to come, but it also sends a dramatic message to decision-makers throughout China – that it is once again time to live up to the name “People’s Republic.”

Under the Radar News, 11.6.09

Posted on Friday, November 6, 2009 by Kolby Hanson

A weekly compilation of underreported developments in Asia.

Major Chinese official publically supports Japan’s call for an East-Asian community similar to the EU, calls it a “long-term goal”. Xinhua

South Korea ratifies free trade agreement with India. Korea Times

Chinese Premier Wen Jiabao will unveil a new plan for China-Africa cooperation this weekend at the Sino-Africa Summit in Egypt. Xinhua

Japan will increase its aid to Afghanistan to nearly 500 billion yen (US $5.5 billion) in FY 2010. Yomiuri Shimbun

China cracks down on human trafficking rings, busting nearly 1,000 rings in 7 months. Criminal Investigation Minister Yang Dong partly blames abductions on rural parents’ lack of vigilance. Xinhua

Maoists of the Communist Party of India are suspected of killing World Hindu Council (VHP) leader Laxamananda Saraswati to gain support of local Christians. Times of India

Indonesia’s new president, Susilo Bambang Yudhoyono, sets an ambitious agenda for first 100 days, including significant action on eradicating mafia action and revitalizing strategic industries like energy-production. Antara

Thai PM Abhisit says he will oppose any sort of regional autonomy for Thailand’s beleaguered southern regions. Bangkok Post

From Poor to Well-off: Why Aren’t the Chinese Consuming?

Posted on Monday, November 2, 2009 by Anne An


It is generally agreed that increasing prosperity among the Chinese populace, along with the expansion of the Chinese middle class will unleash a wave of consumption. More American large manufacturing enterprises have invested in China. They believe that the boost of this middle stratum will not only bring about significant social transformation in the next twenty years, but drive the burgeoning economy as a fertile market for western retailers, banking, insurance and luxury goods. However, will China’s expanding middle class generate significant spending growth in the coming years as the country continues to grow economically?

Chinese middle class households account for roughly 100 million people, with each earning an annual average income of 150,000 yuan (US$18,137) and holding household assets of 620,000 yuan (US$74,969) to date. However, statistics show that more than 40 percent of household income goes into savings, and their purchasing power for items beyond very basic food, clothing and housing is miniscule. Why hasn’t China’s economic boom generated more enthusiastic consumption, which is usually seen as a principle driver behind economic growth?

One reason for limited consumption is that since China’s economic reform, many formerly free services from state-owned enterprises such as housing and medical care have to be bought by households now. In 2008, urban residents spent an average 30% of total household income on housing, health care and education, which accounted for less than 20% of household income in 1995--this implies that there might not be much left for other consumption after spending on necessities. On the other hand, the relatively underdeveloped credit market on the Mainland also restricts growth of consumption.

Second, China’s phenomenal saving rates have been largely a result of its imperfect social security system. The migrant workers are not entitled to change their formal household registration to enjoy social security networks in urban cities, and yet they make up a significant percentage of the urban working population, especially in China’s special economic zones. The sense of financial insecurity in retirement, pension, health care and unemployment insurance combined with the difficulty of procuring personal bank loans largely accounts for China’s increasing saving rates.

The last reason is that the Chinese are still slowly learning to consume as it takes time to develop a culture of consumption in a country where accumulation of wealth is a highly valued virtue. A recent article in the Los Angeles Times recounted IKEA’s experience in Shanghai where nouveau riche customers make day trips to their furniture themed playlands to browse and make themselves at home by napping and dining in model bedrooms and dining rooms. While it may sound a little absurd, American enterprises have found that it takes some socialization processes for Chinese to learn to spend their money on items beyond their basic necessities, such as acquiring interior decoration ideas and learning home/apartment furnishing lessons from Western furniture chains, like IKEA.

Chinese middle class is not big consumer yet. In sum, to reverse China’s consumption-saving puzzle is not simply a basic economic problem of supply and demand, but a social equilibrium of institutional reconstruction and cultural infrastructure.

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