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News: China

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Novel-"Stealing Thunder"
China's Colission of Politics and Economics PDF Print E-mail
An excellent article by Ambrose Evans-Pirtichard which discusses the percolating problems within the Communist Chinese Party.    I have added my own bold italics for emphasis.   My novel, "Stealing Thunder" portrays the power struggles with the Communist Party as the basis for the plot.  Recently, the struggle has become intertwined with economic loss.   The Chinese economy must maintain an 8 to 10% growth rate to keep hundreds of millions employed.  Factories are slowing down.   China's economic statistics are generally unreliable and meant to assure foreign investors.   However, it's hard to hide stockpiles of iron building up in vast lots, the decline in property values in overbuilt areas as well as China's 'Ghost cities' (BBC Article) which were centrally planned but never occupied by residents.
The most reliable indicator may be electricity usage which indicates when factories are working on single, double or triple shifts.  And Chinese electricity usage is declining. 
Ambrose Evans-Pritchard has covered world politics and economics for 30 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London.

China's Revolution Risk

By Ambrose Evans-PritchardEconomicsLast updated: September 10th, 2012

China's Communist Party is facing internal problems

We all know by now about the simmering leadership crisis in China. The Bo Xilai affair has lifted the lid on a hornet's nest. I had not realised quite how serious the situation has become until listening to China expert Cheng Li here at the Ambrosetti forum of the world policy elites on Lake Como. (My hardship assignment each year.) Nor had anybody else in the room at Villa d'Este. There were audible gasps.

The rifts within the upper echelons of Chinese Communist Party are worse than they were during the build-up to Tiananmen Square, he said, and risks spiralling into "revolution". Dr Cheng — a Shanghai native — is research director of the Brookings Institution in Washington and a director of the National Committee on US-China Relations. He argues that China's economic hard-landing is intertwined with a leadership crisis as the ten-year power approaches this autumn. The two are feeding on each other. "You cannot forecast the Chinese economy unless you have a sophisticated view of the political landscape and the current succession crisis," he said.

There has of course been a basic policy error. The government thought it could cool of the property boom with surgical tightening, leaving productive industry intact. That was an illusion. "They didn't expect the market reaction to be so strong and bring down the whole economy," he said.

It remains to be seen whether this is a variant of errors made by the Fed in 1928 and the Bank of Japan in 1990 when they tried to calibrate a soft-landing after an asset bubble had already run out of control. Charlene Chu from Fitch Ratings issued a note last week warning that China's banking sector assets are near $21 trillion, up from $9 trillion in late 2008. This is extraordinary rate of banking growth. Even a modest shock could "wipe out the sector's entire earnings," she said.

Be that as it may, Dr Cheng said fears of a disintegrating political model are now eating in economic confidence. "This legitimacy crisis is worse than in 1989, and may be the worst in the history of the Communist Party. People are afraid that it could lead to revolution if it is not handled well."

The worry is that the transition could go badly awry as 70pc of top cadres and the military are replaced, the biggest changeover since the party came to power in the late 1940s. "That is what is causing capital flight. All the top officials are trying to get their money out of the country," he said.

Dr Cheng grew up during the Cultural Revolution. That makes one very sensitive to the risks of sudden lurches in the Chinese ruling system, not always for the better. He said the scandal around Bo Xilai and the party machine in Chongqing – and the fight-back by Mao nostalgics – is a symptom of a much broader crisis. The word in Beijing is that Bo Xilai alone has squirreled away $1.3 billion, but there are other even worse cases. Mr Cheng said a former railway minister – known as Mr 4pc — had ammassed $2.8 billion. "This level of corruption is unprecedented in the history of China and unparalled in the world," he said. (I would have thought Russia's oligarchs are right up there, but never mind).

Frankly, I don't know what to make of this. I pass it on to readers for your own judgement. Like everybody else with an interest in world affairs, I have been watching the escalating disputes in the South China Sea and the East China Sea with astonishment. We had a fresh clash this morning after Japan vowed to press ahead with the purchase of the Senkaku/Diaoyu islands. Chinese president Hu Jintao, no less, rattled a sharp sabre. "It is illegal and invalid for Japan to buy the islands via any means. China firmly opposes it. China will unswervingly safeguard its sovereignty. Japan must realize the severity of the situation and not make a wrong decision," he said at the APEC summit.

Personally, I rather admire the team of Hu Jintao (without wishing to get into the Tibet issue) and premier Wen Jiabao. They fully recognize that China's investment-led (50 per cent of GDP) development model is well past its sell-by date. They have been trying to rein in the hotheads and militarist adventurers. It is the possibility of what comes next that keeps one awake at night. As Dr Cheng said: "We shouldn't be afraid of China's success. We should be much more worried about China's failure."
An additional interesting article:
Chinese Navy Urged To Be Ready for Combat PDF Print E-mail

The Chinese Navy  - or the People's Liberation Army Navy (PLAN) - has been aggressively beefing up its naval forces and is now urging them to be ready for combat.  But with who?

A number of potential targets are on China's radar from its former nemesis, Japan, to countries circling the South China Sea like the Philippines, Vietnam, Malaysia and Indonesia.   China has to keep its economy pumping, despite reports that its internal municipal debt approaches a Greek like sovereign debt bubble, with a massive real estate bubble and increasing unrest from a population underserved by its Communist masters in Zhongnanhai's Maoist compound.

Hu Exhorts the Chinese Navy to Be Ready for Combat

U.S. - China Tensions Heating Up PDF Print E-mail

The plot of "Stealing Thunder" deals with the rising tensions in the Pacific Rim between Communist China and the United States and - in particular - over disputes to rich oil and natural gas territory in the South China Sea.  So here's the headline from Reuters:

REUTERS: Tension between the United States and China spilled over into meetings of Asia-Pacific leaders on Friday as the two countries jostled over how to handle competing claims to the South China Sea.


Vietnam, the Philippines, Taiwan, Malaysia and Brunei are the other claimants to parts of the South China Sea, a major route for some $5 trillion in trade each year and potentially rich in resources.

The Southeast Asian countries along with the United States and Japan, are pressuring China to try to seek some way forward on the knotty issue of sovereignty, which has flared up again this year with often tense maritime stand-offs that an Australian think tank said could lead to conflict.

U.S. Secretary of State Hillary Clinton urged claimants this week not to resort to intimidation to push their cause, itself an indirect reference to China, which lays claim to large swathes of the sea.

In bilateral meetings, Obama said the maritime dispute was an issue to be discussed by the summit. Indeed, he told India's Prime Minister Manmohan Singh that the East Asia Summit was the "premier arena" for resolving such an issue.

Japan added its voice to the call, saying those with claims should "seek a peaceful resolution in a transparent matter based on international law."


U.S. Navy Stealth Ship PDF Print E-mail

This US Navy ship is using stealth technology and a unique supercavitation system.  Supercavitation was first used by the Russian navy (or that's the first I heard about it).   Simply put, the Russian torpedo would pump out gases at the top of the torpedo.  These gases created an 'envelope around the torpedo.  And shooting through an envelope of air has far less friction than water.  Hence, faster.

Check it out here:

Socialist China's Trackers for Hong Kong Cars PDF Print E-mail

Socialist Chinese authorities have been installing devices on Hong Kong dual license plate vehicles to listen to conversations.

For years now Chinese authorities have been installing spying devices on all dual-plate Chinese-Hong Kong vehicles, enabling a vast network of eavesdropping across the archipelago, according to a Hong Kong newspaper.

The report in Apple Daily states that the recording devices began being installed as “inspection and quarantine cards” in July 2007. They were installed without charge by the Shenzhen Inspection and Quarantine Bureau on thousands of vehicles.

Smugglers were the first to note something strange about the devices. A source told Apple Daily that after the cards were installed mainland authorities had no trouble picking off the cars carrying illicit goods.


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