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  1. China’s markets take a plunge-my reply to a comment
  2. China will invest currency reserves
  3. What would David Ricardo say about this?-my comment on somebody else’s blog
  4. China to Increase Military Spending
  5. China seeks to quell Social Discontent

Last week, North Korea and Myanmar signed an agreement to restore diplomatic ties. Feel free to take a look at the NYT briefing through this hyperlink:   

http://query.nytimes.com/gst/fullpage.html?res=9407E5DD123EF934A15757C0A9619C8B63

Closer ties between these two states has been of U.S. concern for quite some time. The following article talks about this.

Source: http://global.factiva.com/ha/default.aspx

Since November 2003, closer ties between the two states has been deemed unwanted by the U.S. and other Asian countries.

Growing military ties between
North Korea and
Myanmar are stirring concern among
U.S. and Asian security officials.  

Diplomats based in
Bangkok and
Yangon, Myanmar‘s capital, say they have detected fresh indications in recent months that
Pyongyang is supplying or planning to supply
Myanmar with weapons, possibly in exchange for clandestine shipments of heroin. Some attribute the activity to
Yangon‘s growing concern that the
U.S. could pose a military threat to
Myanmar, formerly known as
Burma.  

The developments come as both countries are under mounting political pressure from the U.S. – North Korea to halt its nuclear brinkmanship and Myanmar to open a real dialogue with its political opposition. A budding military alliance between the two authoritarian states would likely increase tensions in Asia and beyond, especially with North Korea strongly suspected to have nuclear-weapons technology that it is ready to export, defense analysts say.

To date, the strongest offensive against North Korea’s nuclear proliferation has been coming from the Six-Party talks. China, South Korea, North Korea, U.S., Russia and Japan are the six states that have participated. Talks are vociferously lead by the U.S. Yet other Asian countries would also be affected by a Nuclear North Korea. Sen. Richard Lugar, the Indiana Republican who heads the U.S. Senate Foreign Relations Committee predicts that a closer tie between North Korea and Myanmar can be a threat to Asian security.

“The linkup of these two pariah states can only spell trouble,” says Sen. Richard Lugar, the Indiana Republican who heads the committee. “
North Korea‘s main export is dangerous weapons technology. These developments are the seeds of a major threat to Asian security and stability.”

If Asian security may be threatened by North Korea’s nuclear proliferation, why are other Asian states not forming part of the Six-Party talks?

For a failure to incorporate others, the U.S. has lost influence in the region.  Evidence demonstrates that North Korea has been smuggling heroin (from Myanmar) into Taiwan and Australia since 2002. Incorporating others into the talks may be productive if they are conditioned to push for the disarmament of North Korea instead of simply being left to consume its heroin.

  

My question was the following:

Is the current U.S. offensive counterproductive in pushing North Korea into further disarmament? Has it made it easier for North Korea to restore ties with Myanmar?

The failure  to enhance multilateral cooperation in the region by the U.S., I believe, has made its offensive weak because others are being left to bargain with North Korea. Currently, North Korea is finding it profitable to sell its weapons to other  Asian countries in exchange for money and now an ally, Myanmar.

Source: http://www.nytimes.com/2007/04/30/business/worldbusiness/30banks.html?_r=1&n=Top%2fNews%2fWorld%2fCountries%20and%20Territories%2fChina&oref=slogin

In an effort to prevent the destabilization of its economy, China has ordered its banks to hold more deposits in reserve. Officials perceive that this will prevent credit and investment growth from strongly affecting its economy. According to Frank Gong, chief China economis “destabilizing” its authority over China’s financial sector.  t at JPMorgan Chase in Hong Kong, this will “prevent excess liquidity from getting worse.”

Speculators are attributing an increase in required reserves and interest rates to the rising trade surplus that is making cheap money increasingly available.

Mr. Gong believes that the required reserve ratio may reach 12 percent by the end of this year.

A capital market activity growth usually develops some unregulated activity. In the last couple of decades, Chinese banks have been strongly regulated by the Communist Party. As China’s financial sector has opened up by allowing foreign banks to locally incorporate their operations within the country, such regulation has been lagging. In an effort to prevent the “destabilization” of its authority over China’s financial sector, the Communist Party is regulating its banks with higher interest rates and required reserves. 

Source: http://www.nytimes.com/2007/04/25/world/asia/25china.html?n=Top%2fNews%2fWorld%2fCountries%20and%20Territories%2fChina

The Communist Party claims to be setting forth these new regulations as a way to counter corruption. These regulations have been approved by Prime Minister Wen Jiabao, but will be effective starting on May 1, 2008.

This move to counter corruption may be most likely to to the 2008 Olympics. The CCP is trying to engrave an image of its government as effective in countering corruption and giving their citizens more rights.

 The new regulations will give farmers more rights to official information of land seizures. This will allow the farmers to fight illegal land seizures. Could these regulations be influenced by the demands of the now billionaires in the real-estate business? Money brings power, and power can influence very much what others do. The CCP may be listening to these entrepreneurs’ demands to avoid negative publicity.

Still caveats suggest that these regulations will still maintain government secrecy since mostly all information is still classified as state secrets.

 Source: http://www.nytimes.com/2007/04/21/business/worldbusiness/21garden.html?_r=1&n=Top%2fNews%2fWorld%2fCountries%20and%20Territories%2fChina&oref=slogin 

China’s stock markets are ever more profitable to the Chinese people. On April 19, Yang Guoiang, owner of the real-estate company, Country Gardens, became a billionaire as it went public that day. Country Gardens was valued at $15 billion. Many others are also making fortunes by investing in stocks. This has allowed for China’s middle class to continue to grow. Today, there are new entrepreneurs in the real-estate branch in the block.

The same would not have been true early in 1990s since the government did not allow companies to acquire public land and sell them. In the late 1990s, the government finally moved to make reforms to the market to allow companies to acquire and sell public land. How will the CCP react to this rising acquisition of public land? Will they set forth new restrictions?

I believe it is too late for them to take such drastic steps primarily because people are gaining a voice and power through the wealth that they are acquiring through the stock market. Besides, the CCP has made it clear that it intends to increase protection of private property rights in the follwing years.

Source: http://www.nytimes.com/2007/04/18/business/worldbusiness/18yuan.html?pagewanted=2&n=Top%2fNews%2fWorld%2fCountries%20and%20Territories%2fChina&_r=1

As China’s trade surplus continues to increase, its trade relations have also diversified. Until recently China had been the second-biggest exporter to US markets. Early this year it ranks the biggest. Nevertheless, China’s exchange rate of the yuan to the dollar has been the cause of the recent protectionist stance of the US against China’s exports. The CCP has condemned the US stance on their currency value. While the government has not directly recommended business entrepreneurs in trading with other countries other than the US, trade relations have diversified. As global leaders continue to increase trade relations with developing countries for the purpose of increasing their profits and avoiding placing all their eggs in one basket, government officials are hoping for greater diversity to emphasize their global influence.

Chinese officials are expected to go on another buying trip to the United States before next month’s round of meetings in Washington to discuss economic policies with the United States. By wrapping together a lot of separate purchase agreements in a few heavily promoted announcements, the officials hope to portray the United States as needing the Chinese market.

Source: http://english.aljazeera.net/NR/exeres/5F9422F0-A165-4986-8042-04EA7E675746.htm

It appears that finally countries are starting to look at ways to defeat terrorists.

As Richardson has so many times explained in her book on “What Terrorists Want”, a “war on terror” can never be won because it strengthens terrorists by giving them importance at the state and international level (the US is giving them exactly the kind of publicity they want).

The ultimate goal of any war must be to deny th adversary what it is that he wants. Terrorists want to be considered at war with us (they want a reaction), so to concede this to them is to grant them what they want, instead of doing our utmost to deny them what they want. (pg 176-177)

By declaring a war on terror, far from denying it its objectives, we are condeding its objectives, and this is why the war on terror can never be won. (pg 197)

The UK has moved to remove “war on terror” phrase to refer to the current war in the Middle East. In the own words of Hilary Benn, Britain’s international development secretary, they have nicely captured Richardson’s theory.

“We do not use the phrase ‘war on terror’ because we can’t win by military means alone… this isn’t us against one organised enemy with a clear identity and a coherent set of objectives,” said an extract from Benn’s planned speech atNew York
University’s Centre of International Co-operation.

US must be next to catch up if it wants to make some progress in debilitating terrorists.