In China, brutality yields confessions of graft

n13-iconThe Associated Press reports: The local Chinese official remembers the panic he felt in Room 109. He had refused to confess to bribery he says he didn’t commit, and his Communist Party interrogators were forcing his legs apart.

Zhou Wangyan heard his left thigh bone snap, with a loud “ka-cha.” The sound nearly drowned out his howls of pain.

“My leg is broken,” Zhou told the interrogators. According to Zhou, they ignored his pleas.

China’s government is under strong pressure to fight rampant corruption in its ranks, faced with the anger of an increasingly prosperous, well-educated and Internet-savvy public. However, the party’s methods for extracting confessions expose its 85 million members and their families to the risk of abuse. Experts estimate at least several thousand people are secretly detained every year for weeks or months under an internal system that is separate from state justice.

In a rare display of public defiance, Zhou and three other party members in Hunan described to The Associated Press the months of abuse they endured less than two years ago, in separate cases, while in detention. Zhou, land bureau director for the city of Liling, said he was deprived of sleep and food, nearly drowned, whipped with wires and forced to eat excrement. The others reported being turned into human punching bags, strung up by the wrists from high windows, or dragged along the floor, face down, by their feet. [Continue reading...]

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Meanwhile, China quietly takes over Zimbabwe

a13-iconTyler Durden writes: While the developed world is focusing on the rapidly deteriorating developments in the Crimean, China, which has kept a very low profile on the Ukraine situation aside from the token diplomatic statement, is taking advantage of this latest distraction to do what it does best: quietly take over the global periphery while nobody is looking.

Over two years ago we reported that none other than Zimbabwe – best known in recent history for banknotes with many zeros in them – was bashing the US currency, and had alligned itself with the Chinese Yuan. This culminated last month with the announcement by Zimbabwe’s central bank that it would accept the Chinese yuan and three other Asian currencies as legal tender as economic relations have improved in recent years. “Trade and investment ties between Zimbabwe, China, India, Japan and Australia have grown appreciably,” said Charity Dhliwayo, acting governor of the Reserve Bank of Zimbabwe.

Business Live reported then:

Exporters and the public can now open accounts in yuans, Australian dollars, Indian rupees and Japanese yen, Dhliwayo said. Zimbabwe abandoned its worthless currency in 2009.

It accepts the US dollar and the South African rand as the main legal tender. Their use has helped to stabilise the economy after world-record inflation threw it into a tailspin.

Independent economist Chris Mugaga said the introduction of the Asian currencies would not make a huge difference to Zimbabwe’s struggling economy.

“It is Zimbabwe’s Look East Policy, which has forced this, and nothing else,” he said.

And now, as a result of the “Look East Policy”, we learn that China has just achieved what every ascendent superpower in preparation for “gunboat diplomacy” mode needs: a key strategic airforce base. [Continue reading...]

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The culture of hacking in China

a13-iconThe New York Times reported last May: Name a target anywhere in China, an official at a state-owned company boasted recently, and his crack staff will break into that person’s computer, download the contents of the hard drive, record the keystrokes and monitor cellphone communications, too.

Pitches like that, from a salesman for Nanjing Xhunter Software, were not uncommon at a crowded trade show this month that brought together Chinese law enforcement officials and entrepreneurs eager to win government contracts for police equipment and services.

“We can physically locate anyone who spreads a rumor on the Internet,” said the salesman, whose company’s services include monitoring online postings and pinpointing who has been saying what about whom.

The culture of hacking in China is not confined to top-secret military compounds where hackers carry out orders to pilfer data from foreign governments and corporations. Hacking thrives across official, corporate and criminal worlds. Whether it is used to break into private networks, track online dissent back to its source or steal trade secrets, hacking is openly discussed and even promoted at trade shows, inside university classrooms and on Internet forums. [Continue reading...]

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Beijing and Moscow part ways over Ukraine

Foreign Policy reports: Days after Ukraine’s deposed President Viktor Yanukovych fled his Kiev palace, an unassuming, mid-level Chinese diplomat appeared before the United Nations Security Council to highlight Beijing’s support for the new pro-Western government, marking a rare diplomatic split from Moscow.

“We respect the choice made by the Ukrainian people on the basis of national conditions,” Shen Bo, a counselor at China’s U.N. mission said in a Feb. 24 statement that went largely unnoticed by the international press.

China and U.N. watchers say Beijing’s refusal to blindly follow Moscow’s lead during the Ukrainian crisis reflects a deep-seated anxiety about the path that Russian President Vladimir Putin has chosen to pursue. [Continue reading...]

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As China looks on, Putin poses risky dilemma for the West

a13-iconDavid Rohde writes: One senior Obama administration official called Vladimir Putin’s actions in the Ukraine “outrageous.” A second described them as an “outlaw act.” A third said his brazen use of military force harked back to a past century.

“What we see here are distinctly 19th and 20th century decisions made by President Putin,” said the official who spoke on condition of anonymity to a group of reporters. “But what he needs to understand is that in terms of his economy, he lives in the 21st century world, an interdependent world.”

James Jeffrey, a retired career U.S. diplomat, said that view of Putin’s mindset cripples the United States’ response to the Russian leader. The issue is not that Putin fails to grasp the promise of western-style democratic capitalism. It is that he and other American rivals flatly reject it.

“All of us that have been in the last four administrations have drunk the Kool-Aid,” Jeffrey said, referring to the belief that they could talk Putin into seeing the western system as beneficial. “‘If they would just understand that it can be a win-win, if we can only convince them’ – Putin doesn’t see it,” Jeffrey said. “The Chinese don’t see it. And I think the Iranians don’t see it.”

Jeffrey and other experts called for short-term caution in the Ukraine. Threatening military action or publicly baiting Putin would likely prompt him to seize more of Ukraine by force. [Continue reading...]

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China pillages Africa like old colonialists says Jane Goodall

n13-iconAFP reports: China is exploiting Africa’s resources just like European colonisers did, with disastrous effects for the environment, acclaimed primatologist Jane Goodall has told AFP.

On the eve of her 80th birthday, the fiery British wildlife crusader is whizzing across the world giving a series of lectures on the threats to our planet.

And the rising world power’s involvement on the continent especially raises alarms when it comes to her beloved chimpanzees and wildlife habitats.

During the last decade China has been investing heavily in African natural resources, developing mines, oil wells and running related construction companies.

Activists accuse Chinese firms of paying little attention to the environmental impact of their race for resources.

“In Africa, China is merely doing what the colonialist did. They want raw materials for their economic growth, just as the colonialists were going into Africa and taking the natural resources, leaving people poorer,” she told AFP in an interview in Johannesburg.

The stakes for the environment may even be larger this time round, she warns.

“China is bigger, and the technology has improved… It is a disaster.”

Other than massive investment in Africa’s mines, China is also a big market for elephant tusks and rhino horn, which has driven poaching of these animals to alarming heights.

But Goodall, who rose to fame through her ground-breaking research on chimpanzees in Tanzania, is optimistic.

“I do believe China is changing,” she said, citing as one example Beijing’s recent destruction of illegal ivory stockpiles.

“I think 10 years ago, even with international pressure, we would never have had an ivory crush. But they have,” she added.

“I think 10 years ago the government would never have banned shark fin soup on official occasions. But they have.” [Continue reading...]

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Russia and China skip UN meeting on aid to Syria

n13-iconThe New York Times reports from the UN: The morning after an aid convoy came under fire when it tried to reach a besieged Syrian city, a meeting here on a draft resolution that would force all parties in the bloody conflict to allow access for humanitarian organizations fell apart when representatives from Russia and China failed to show up, Security Council diplomats said.

On Monday afternoon, the Russian ambassador to the United Nations, Vitaly I. Churkin, did not directly say he would veto the draft if it came up for a vote, but called it “one of those political things” that would not be adopted by the Security Council. “This text would not have any practical, positive impact on the situation,” Mr. Churkin said.

The Chinese Mission declined to comment.

A United Nations spokesman said that 11 people were killed as aid workers delivered food and medicine over the weekend to the old city of Homs. About 800 people, mainly women, children and elderly people, have been evacuated so far, and some of them told United Nations officials that they had resorted to eating grass and weeds to survive. [Continue reading...]

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John Feffer: The empire’s new Asian clothes

FeatureYou want ominous?  Then offer a deep bow to conservative Prime Minister Shinzo Abe, a man eager to turn the Japanese military into an ever less defensive force, fully breach his country’s “peace constitution,” and assumedly someday end Japan’s “nuclear allergy” when it comes to a future weapons program.  In the process, rising tensions with and increasingly belligerent acts by China have proven helpful domestically.  And give Abe special credit for the provocative way he’s been using history to push his domestic agenda and increase those regional tensions.  In late December, as his first year in office ended, he paid a 30-minute visit to the notorious Yasukuni Shrine for Japan’s war dead, where 14 convicted war criminals from World War II are buried.  Both the Chinese and the Koreans, brutally mistreated by Japan in those years, were horrified and angered, though Abe, having purposely stuck the needle in, denied that his visit had anything to do with honoring war criminals.

Then, last week at the World Economic Forum in Davos, the Japanese prime minister reached even deeper into the history of disastrous global wars to up the ante again.  In the year of the 100th anniversary of World War I, at an on-the-record briefing, he likened his country’s relations with China to those of Germany and Great Britain on the eve of the Great War; that is, he compared the present situation in Asia to the moment when the two strongest imperial powers of the early twentieth century ignored their deep economic ties (like China’s and Japan’s) and went to war, turning parts of Europe into a charnel house. Happy anniversary!

Asked whether, given his analogy, he would consider deescalating tensions with China at the moment, Abe evidently said no, not as long as that country continues to build up its military.  (Japan’s chief cabinet secretary quickly insisted that the prime minister was not predicting a new war.)  Given a rising anti-Japanese nationalism in China, a growing regional arms race, and increasingly aggressive Chinese claims to islands near energy-rich deposits in regional seas, this might seem to be a moment to calm the waters, so to speak.

But not for the Obama administration, which recently welcomed Abe’s decision to put more money into new weaponry for the Japanese military.  To this world of rising tensions Washington has, in recent years, added a much ballyhooed new focus on Asia, a “pivot” or “rebalancing” to the region.  Its emphasis has clearly been on heightening tensions by organizing a string of countries against a rising China, triggering old Cold War-era Chinese fears of encirclement (or “containment,” as it was called in those days).  Admittedly, as TomDispatch regular John Feffer, co-director of the website Foreign Policy in Focus, so cannily explains, Obama’s pivot is proving remarkably heavy on the rhetoric and light on new military might.  Fans of World War I will, however, remember that enough heated rhetoric, combined with unexpected small “incidents,” can be quite effective in ratcheting up tensions to the breaking point.  “Retreat” can sound like “charge” in the right mouths.

Of course, this is neither 1914 nor 1941, though you might not notice, given the old-fashioned thinking behind Washington’s pivot, Japan’s military growth, and China’s territorial claims.  Nonetheless, the thought that, on our present planet, the “capitalist road” version of a Communist Party, precariously balanced over a slowing economic “miracle,” is likely to take China to dominance as a future hyperpower should be viewed with ay jaundiced eye.  In fact, Washington should be asking whether, on a planet in a state of incipient environmental breakdown and blowback, the rise of a new empire is even possible.  In the meantime, its pivot to Asia reminds us that the leading brains in the Pacific might as well still be in the pre-World War I era. Tom Engelhardt

The Pacific pivot
Why America’s strategic rebalance is really just retreat
By John Feffer

In a future update of The Devil’s Dictionary, the famed Ambrose Bierce dissection of the linguistic hypocrisies of modern life, a single word will accompany the entry for “Pacific pivot”: retreat.

It might seem a strange way to characterize the Obama administration’s energetic attempt to reorient its foreign and military policy toward Asia. After all, the president’s team has insisted that the Pacific pivot will be a forceful reassertion of American power in a strategic part of the world and a deliberate reassurance to our allies that we have their backs vis-à-vis China.

Indeed, sometimes the pivot seems like little less than a panacea for all that ails U.S. foreign policy. Upset about the fiascos in Iraq and Afghanistan? Then just light out for more pacific waters.  Worried that our adversaries are all melting away and the Pentagon has lost its raison d’être? Then how about going toe to toe with China, the only conceivable future superpower on the horizon these days. And if you’re concerned about the state of the U.S. economy, then the Trans-Pacific Partnership (TPP), the regional free-trade deal Washington is trying to negotiate, might be just the shot in the arm that U.S. corporations crave.

In reality, however, the “strategic rebalancing” the Obama administration has been promoting as a mid-course correction to its foreign policy remains strong on rhetoric and remarkably weak on content. Think of it as a clever fiction for whose promotion many audiences are willing to suspend their disbelief. After all, in the upcoming era of Pentagon belt-tightening and domestic public backlash, Washington is likely to find it difficult to move any significant extra resources into Asia. Even the TPP is an acknowledgment of how much economic ground in the region has been lost to China.

[Read more...]

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Soil pollution is poisoning China’s food supply

soil-pollution-china

The New York Times reports: The farm-to-table process in China starts in villages like this one in the agricultural heartland. Food from the fields of Ge Songqing and her neighbors ends up in their kitchens or in the local market, and from there goes to other provinces. The foods are Chinese staples: rice, cabbage, carrots, turnips and sweet potatoes.

But the fields are ringed by factories and irrigated with water tainted by industrial waste. Levels of toxic heavy metals in the wastewater here are among the highest in China, and residents fear the soil is similarly contaminated. Though they have no scientific proof, they suspect that a spate of cancer deaths is linked to the pollution, and worry about lead levels in the children’s blood.

“Of course I’m afraid,” said Ms. Ge, in her 60s, pointing to the smokestacks looming over her fields and the stagnant, algae-filled irrigation canals surrounding a home she shares with a granddaughter and her husband, a former soldier. “But we don’t do physical checkups. If we find out we have cancer, it’s only a burden on the children.”

With awareness of China’s severe environmental degradation rising, there has been a surge of anxiety in the last year among ordinary Chinese and some officials over soil pollution in the country’s agricultural centers and the potential effects on the food chain. In recent years, the government has conducted widespread testing of soil across China, but it has not released the results, adding to the fear and making it more difficult for most Chinese to judge what they eat and pinpoint the offending factories.

An alarming glimpse of official findings came on Monday, when a vice minister of land and resources, Wang Shiyuan, said at a news conference in Beijing that eight million acres of China’s farmland, equal to the size of Maryland, had become so polluted that planting crops on it “should not be allowed.”

A signal moment came in May, when officials in Guangdong Province, in the far south, said they had discovered excessive levels of cadmium in 155 batches of rice collected from markets, restaurants and storehouses. Of those, 89 were from Hunan Province, where Ms. Ge farms.

The report set off a nationwide scare. In June, China Daily, an official English-language newspaper, published an editorial saying that “soil contaminated with heavy metals is eroding the foundation of the country’s food safety and becoming a looming public health hazard.”

One-sixth of China’s arable land — nearly 50 million acres — suffers from soil pollution, according to a book published this year by the Ministry of Environmental Protection. The book, “Soil Pollution and Physical Health,” said that more than 13 million tons of crops harvested each year were contaminated with heavy metals, and that 22 million acres of farmland were affected by pesticides.

But the government has refused to divulge details of the pollution, leaving farmers and consumers in the dark about the levels of contaminants in the food chain. The soil survey, completed in 2010, has been locked away as a “state secret.” [Continue reading...]

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Why China’s riches won’t bring it freedom

Pankaj Mishra writes: Modern history is the story of how liberal democracy, originating in the U.K. and America, spread around the world. This may sound like an absurd fantasy. In actuality, this Whiggish narrative of progress underpins most newspaper editorials, political commentary and speeches in the West, and frames larger views of political developments in the non-West.

It accounts for the gloomy undertone to Freedom House’s latest report, which records the shrinking of liberal democracy worldwide. Even countries with regular elections, such as India, are far from upholding the notion of liberalism, which advocates the maximizing of individual rights for the fullest realization of human potential.

Perhaps we should discard the ideological prejudice that assumes the universalization of liberal democracy. We might then be able to see dispassionately the true multiplicity of political forms, how they came into being and what they portend.

The specific socioeconomic conditions that enabled both liberalism and democracy, such as the Reformation’s stress on individual responsibility or industrial capitalism, were particular to Western Europe and America.

They couldn’t be recreated elsewhere easily, especially among countries trying to catch up to the West. Japan, the first non-Western country to try to become modern, became an economic and military power without enshrining liberal concerns for individual rights.

Before Japan, there was Germany, another society that embarked on industrialization relatively late compared with the rest of Western Europe, and was modernized by a strong centralized state.

Neither Germany nor Japan embraced the traditions of Anglo-American liberalism, which encouraged individualism, laissez-faire economics and a fundamental distrust of state power. Individual rights were subordinated to the economic and military imperatives of countries lurching late into the modern world. [Continue reading...]

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China walks the tightrope in the Persian Gulf

The Hindu reports: Without undermining its ties with Iran despite growing military tensions in the region, China, is seeking a deeper engagement in the oil and gas sector with Saudi Arabia and other Arab Gulf states, as part of a developing contingency plan, in order to ensure stable energy supplies.

Chinese Prime Minister Wen Jiabao has just concluded a visit to Saudi Arabia and has arrived on Monday in the United Arab Emirates (UAE), as part of a regional tour, which will also take him to Qatar, a leading international natural gas exporter.

The visit takes place shortly after Timothy Geithner, the Treasury Secretary of the United States, journeyed to Beijing to implore the Chinese leadership to scale down its energy dependence on Iran, China’s third largest supplier of oil. Washington is trying to throttle Iran’s oil exports, apparently, to dissuade Tehran to acquire nuclear weapon capability—a move that Iran has countered by threatening to close the Strait of Hormuz through which 20 per cent of the world’s oil supplies pass.

China, as was evident during Mr. Geithner’s visit has rejected acceptance of a linkage between oil exports by Iran, and its atomic programme. Nevertheless, Beijing appears to have adopted a double track approach-of keeping Iran engaged while expanding energy ties with Tehran’s Arab foes, chiefly Saudi Arabia.

“Wen’s visit shows that China is seeking to reinforce its energy security in the region, but it does not necessarily mean that Beijing no longer regards Iran as a major oil supplier,” said Han Xiaoping, chief information officer of the China Energy consultancy. Speaking to the Chinese daily Global Times, Mr. Han acknowledged that if “the Strait of Hormuz is blocked, 40 percent of China’s total oil imports will be affected, and the country would face a major energy crisis”.

Meanwhile, Bloomberg reports: China stands to be the biggest beneficiary of U.S. and European plans for sanctions on Iran’s oil sales in an effort to pressure the regime to abandon its nuclear program.

As European Union members negotiate an Iranian oil embargo and the U.S. begins work on imposing sanctions to complicate global payments for Iranian oil, Chinese refiners already may be taking advantage of the mounting pressure. China is demanding discounts and better terms on Iranian crude, oil analysts and sanctions advocates said in interviews.

“The sanctions against Iran strengthen the Chinese hand at the negotiating table,” Michael Wittner, head of oil-market research for Societe Generale SA in New York, said in a phone interview. While there are no confirmed numbers, Chinese refiners are likely to win discounts on Iranian crude contracts as buyers from other nations halt or reduce their purchases of Iranian oil to avoid being penalized under U.S. and European sanctions, he said.

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Are we entering a new era of Chinese exceptionalism?

Reaching for the heavens – China’s expanding ambitions now include sending men to the moon as well as rapid expansion of military capacity on earth. And all the while its economy continues to grow at a rate far outpacing the economies of western nations.

With increasing confidence, China’s leaders have now stepped to the center of the world stage and for many people in China that is exactly where they should be, given the country’s history and civilisation.

Does that necessarily mean that we are entering a new era of Chinese exceptionalism or even dominance?

Professor Zhang Weiwei, served as a translator for one of the key architects of China’s transformation, Deng Xiaoping.
He is now an international scholar arguing a case for China as the world’s exceptional civilisation. In his latest book, The China Wave: the Rise of a Civilizational State, he offers a robust rebuttal of critics, especially in the West, who keep emphasising China’s shortcomings.

Professor Zhang Weiwei talks to Al Jazeera’s Teymoor Nabili about the ‘China model’ and explains where China is going.

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Occupy Beijing?

Minxin Pei writes: Rapid economic growth hasn’t been able to stem the rising tide of discontent in China. Even as the economy has soared, the number of protests has jumped. So what’s really wrong?

The outbreak of spontaneous mass protest against corruption and abuse of power in China is showing no signs of abating. In the latest instance, which received sustained Western press coverage, thousands of villagers in Wukan, a farming community in Guangdong Province, “occupied” their village for nearly two weeks before successfully extracting important concessions from the provincial government, which had to dispatch a deputy party secretary to negotiate with the villagers. The specific trigger for this unusually large mass protest is a common scourge plaguing Chinese farmers: the theft of their land by local officials. Although farmers in China have, nominally at least, 30-year leases on their state-owned land, local officials often sell leases, for a huge profit, to commercial developers without bothering to consult the affected farmers. The lion’s share of proceeds from such illegal transactions go into the coffers of local governments and the pockets of corrupt officials, with the farmers, now landless and without income, receiving a pittance.

The villagers in Wukan are among millions of the victims of this widespread practice in China. Illegal land seizures (along with forced evictions in urban areas) have become the most common cause of collective protests and riots in China these days. Estimates by Chinese scholars suggest they account for roughly 60 percent of the so-called “mass incidents” recorded by Chinese authorities. Unlike the villagers in Wukan, who have won a promise from senior Guangdong officials to review the illicit land deals, the majority of farmers whose land was stolen have received little help from the government.

Because of the size, duration, and outcome of the protest in Wukan, analysts of Chinese politics are tempted to view this incident as a harbinger of things to come. Perhaps this incident will encourage aggrieved farmers elsewhere to organize and protest in a similar fashion? Perhaps the soft handling of Wukan’s protest suggests the Communist Party will behave differently in responding to social unrest?

One shouldn’t read too much into one incident. The most probable reason for the peaceful settlement of this incident had to do with succession politics in Beijing, as the party secretary in Guangdong, a hot contender for a seat on the nine-member Politburo Standing Committee, could have endangered his own chances had the protest ended in a bloodbath. Unusual political circumstances forced local officials to behave with rare prudence and restraint. Nevertheless, the Wukan incident should worry Chinese Communist Party leaders.

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China vice premier sees chronic global recession

Reuters reports: A long-term global recession is certain to happen and China must focus on domestic problems, Chinese Vice Premier Wang Qishan has said.

“The one thing that we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic,” Wang was quoted by the official Xinhua news agency as saying at the weekend.

Wang’s comments were the most bearish forecast ever by a top Chinese decision-maker about the world economy, and Beijing’s worry about a worsening global environment could translate into an impetus for pro-growth policies at home.

China launched a massive fiscal stimulus package with a price tag of 4 trillion yuan ($650 billion) in late 2008 to avert a big impact from the global financial turmoil.

According to Xinhua, Wang did not speak this time about any major policy change but reiterated that banks should be more flexible lending to the agricultural sector and small firms.

“As for our country, which relies highly on external demands, we must see the situation clearly and get our own business done,” Xinhua quoted Wang as saying, referring to exports.

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Nuclear powers plan weapons spending spree, report finds

The Guardian reports: The world’s nuclear powers are planning to spend hundreds of billions of pounds modernising and upgrading weapons warheads and delivery systems over the next decade, according to an authoritative report [PDF] published on Monday.

Despite government budget pressures and international rhetoric about disarmament, evidence points to a new and dangerous “era of nuclear weapons”, the report for the British American Security Information Council (Basic) warns. It says the US will spend $700bn (£434bn) on the nuclear weapons industry over the next decade, while Russia will spend at least $70bn on delivery systems alone. Other countries including China, India, Israel, France and Pakistan are expected to devote formidable sums on tactical and strategic missile systems.

For several countries, including Russia, Pakistan, Israel and France, nuclear weapons are being assigned roles that go well beyond deterrence, says the report. In Russia and Pakistan, it warns, nuclear weapons are assigned “war-fighting roles in military planning”.

Max Fisher writes: After 10 years of close but unproductive talks, the U.S. and China still fail to understand one another’s nuclear weapons policies, according to a disturbing report by Global Security Newswire and the Nuclear Threat Initiative. In other words, neither the U.S. nor China knows when the other will or will not use a nuclear weapon against the other. That’s not due to hostility, secrecy, or deliberate foreign policy — it’s a combination of mistrust between individual negotiators and poor communication; at times, something as simple as a shoddy translation has prevented the two major powers from coming together. Though nuclear war between the U.S. and China is still extremely unlikely, because the two countries do not fully understand when the other will and will not deploy nuclear weapons, the odds of starting an accidental nuclear conflict are much higher.

Neither the U.S. nor China has any interest in any kind of war with one other, nuclear or non-nuclear. The greater risk is an accident. Here’s how it would happen. First, an unforeseen event that sparks a small conflict or threat of conflict. Second, a rapid escalation that moves too fast for either side to defuse. And, third, a mutual misunderstanding of one another’s intentions.

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China’s debt pileup raises risk of hard landing

Reuters reports: When China announced a nearly $600 billion package to ward off the 2008 global financial crisis, city planners across the country happily embarked on a frenzy of infrastructure projects, some of them of arguable need.

Chengdu, the capital of southwestern Sichuan province, answered the call for stimulus action with a bold plan for a railway hub modeled after Waterloo railway station in London.

Except London’s Waterloo was not ambitious enough.

“I was shocked when I finally got to visit Waterloo. It was so small,” said Chen Jun, a director at Chengdu Communications Investment Group, which built the new Chinese terminal. “I realized we would probably need a station a few times bigger to meet the demands of our city.”

In a manner typical of many infrastructure projects in China, Chengdu more than doubled the size of its planned transport hub, borrowed 3 billion yuan ($473 million) from a state bank to finance it, then set out on a blistering construction timeline that saw the finishing touches put on the project two years later.

But instead of getting the accolades they expected for helping to stimulate the economy, Chengdu Communications and many of China’s 10,000 local government financing vehicles (LGFV) have now come under a harsh spotlight for the grim side-effects of the construction binge.

China’s local governments have piled up a mountain of bad debt, some of it to finance bridges to nowhere and other white elephant projects, which now threatens to constrict growth at a time when the global economy is sputtering. It is adding to other systemic risks in China, including a sharp downturn in the property market and a rapid rise in problematic loans.

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