China Challenges

Japan: War Worries on the Rise

The Japan Times has two interesting articles today.  First, it reports that a new government survey shows that 45 percent of the public is worried about the possibility of the country getting involved in a war, the highest figure since the poll was started in September 1969.

Asked what are the biggest issues concerning Japan's peace and safety, 63.7 percent of the respondents pointed to the security situation on the Korean Peninsula, followed by international terrorism at 46.2 percent and China's modernization of its military and its maritime activities with 36.3 percent. More than one answer was permitted. The answer regarding China was included in the survey for the first time.

Link:  http://search.japantimes.co.jp/cgi-bin/nn20060430a3.html

Second, the Times editorializes about Dr. Wang and the FG incident during President Hu's recent visit to Washington.  It argues:

The bottom line is, people find it hard to sympathize with such a fuzzy victim -- and  FG is being victimized. Censorship is only the least of its problems. The United States has been given a remarkable opportunity to take a stand: By dropping its charges against Dr. Wang, it will send the message that maybe those Secret Service people had a point letting her rant for three minutes.

Listen up, China: The right to free speech extends even to rude, irritating fanatics whom you'd just as soon stifle.

To read more:

http://search.japantimes.co.jp/cgi-bin/ed20060430a1.html

The Hong Kong Bubble

In the Asian Times, Mr. John Berthelsen writes:

With the domestic Shanghai and Shenzhen markets remaining moribund, capital-hungry companies have flooded instead into the Hong Kong Special Administrative Region (SAR). But if the past is any prologue, that shift spells danger for investors. At some point, the confluence of Chinese companies with no semblance of rigorous corporate governance and the torrent of money pouring into Hong Kong is going to spell disaster.

But not yet - though in mid-April, foreign investors showed signs of backing away from Asian markets as they soared to a 16-year high, stretching valuations to their highest levels since the dot-com bust of 2000.

To road more:

http://www.atimes.com/atimes/China_Business/HD28Cb01.html

China's Outward Direct Investment

Global Insight says in a new special report about China:

Chinese companies spent a reported US$6.9 billion on overseas investments during 2005, and official forecasts posit that international M&A activity by Chinese firms will increase by a total of US$60 billion over the next five years.

This report is the first in a series examining the growth of Chinese outward direct investment (ODI) into various regions of the world, and its impact on the country's commercial and diplomatic relationships. Chinese ODI flows remain modest compared to the country's annual inflows of foreign direct investment (FDI), but as China's hunger for natural resources and markets increases, so too will the influence of its firms in host markets...

To read more:

http://www.globalinsight.com/Highlight/HighlightDetail2717.htm?CFID=14301141&CFTOKEN=93276862

China Raises Lending Rates

Everyone in here Shanghai today seems to be talking about the government's move to increase interest rates for borrowers.  What does this mean for the exchange rate, the local real estate market, and country's high growth rates?  No one knows for sure.  The NY Times notes:

The central bank said it was acting to strengthen economic controls to "sustain fast-paced, balanced and healthy development of the economy."

But the central bank did not change bank deposit rates. By raising lending rates while leaving deposit rates untouched, the government will allow banks to widen their profit margins to cover losses on loan defaults.

Moreover, by isolating deposit rates, China's move is unlikely to address calls by industrialized countries, including the Group of 7 last weekend, for China's currency to gain in value. One-year bank deposits earn just 2.25 percent in China, and leaving that rate unchanged makes it slightly less attractive for foreign investors to pump money into China and therefore bid up the value of the yuan, the Chinese currency.

Low deposit rates also encourage Chinese consumers to spend more, a government goal, rather than save. Urban savings rates exceed 40 percent, as families realize that the government has drastically reduced its role in providing pensions, health care and education.    

To read more:

http://www.nytimes.com/2006/04/28/business/worldbusiness/28yuan.html?_r=1&th&emc=th&oref=slogin

Faking A Company

Some Chinese pirates are really doing their homework.  Using the Japanese firm NEC as example, the IHT says:

At first it seemed to be nothing more than a routine, if damaging, case of counterfeiting in a country where faking it has become an industry. Reports filtering back to the Tokyo headquarters of the Japanese electronics giant NEC in mid-2004 alerted managers that pirated keyboards and recordable CD and DVD discs bearing the company's brand were on sale in retail outlets in Beijing and Hong Kong. Like hundreds, if not thousands, of manufacturers now locked in a war of attrition with intellectual property thieves in China, the company hired an investigator to track down the pirates.

To read more:

http://www.iht.com/articles/2006/04/27/business/nec.php#

More Bird Flu Coverups??

This report comes via the China Economic Review:

It is possible that local health officials are concealing suspected cases of human bird flu, the Wall Street Journal reported, citing a source familiar with the topic. This appears to tally with a sharply worded statement that appeared on the Ministry of Health's website on Tuesday reiterating warnings that cover-ups and delays could facilitate the spread of the disease.

However, ministry spokesman Mao Qunan said there was no evidence of local authorities suppressing information relating to the H5N1 virus, although he admitted that problems have been experienced with hospitals not reporting cases of severe pneumonia that could be bird flu. Officials in Beijing have been working closely with the World Health Organization, reporting confirmed cases of the disease and allowing foreign scientists to take part in research.

But some international experts have long warned that the real challenge is in ensuring health officials in remote areas are prompt in reporting cases to Beijing. So far there have been 17 confirmed human cases of bird flu, 12 of which have been fatal.

Source: www.chinaeconomicreview.com

America's Economic Strength

Mr. Gerald Baker argues that America's economic dominance remains strong:

In an era in which China embodies the hopes and fears of much of the developed world, the US, with a growth rate of half that of China's, is adding roughly twice as much in absolute terms to global output as is the Middle Kingdom, with its GDP (depending on how you measure it) of between $2 trillion and $4 trillion and its growth of about 10 per cent.

Even when you account for the fact that US growth is not going to continue at 5 per cent, but will revert to its trend of more like 3.5 per cent per year, you are still talking about an economy adding more than $400 billion in inflation-adjusted terms every year (not quite Brazil or Australia, but significantly bigger than Switzerland or Belgium) .

That means that, on current trends, for at least the next decade the US will actually keep growing in total dollar or yuan numbers by a larger amount than will China (even if the yuan is substantially revalued, by the way). And beyond that ten-year horizon, can anybody really be confident that China will maintain its current rate of growth? (We haven't even talked here about per capita GDP, where the US advantage will remain unapproachable for decades.)

To read more:

http://business.timesonline.co.uk/article/0,,13129-2150167,00.html

Chinese Consumer Contradictions

Mr. Stephen Roach writes about the Chinese consumer and their saving habits:

Family dissatisfaction is mounting over the amount they are able to set aside each year. In 2004, fully 68% of all Chinese in the Gallup sample were dissatisfied with their ability to save — a meaningful deterioration from the 61% reading in 1997.

On the surface, this may seem like a very puzzling result. China’s national saving rate is close to 50% and its household sector saves about 30% out of current income.

On this basis, China has by far the highest saving propensity of any major economy in the world. Yet, the Gallup Poll shows consumers are overwhelmingly dissatisfied with their saving positions.

To read more:

http://www.theglobalist.com/DBWeb/StoryId.aspx?StoryId=5261

Empty Chinese Real Estate

The China Economic Review reports:

National Bureau of Statistics figures show a 24% year-on-year rise of unused space in new buildings to 123 million square meters at the end of March. In the residential sector, 69.8 million square meters of housing is lying empty, representing about 700,000 unoccupied apartments. Total investment in the property sector reached US$35 billion in the first quarter, up 20%, while foreign investment in the sector dropped 4% to US$650 million.

A real estate expert with the Chinese Academy of Social Sciences, Yin Zhongli, has warned the real figure might be far higher because the space purchased by speculators but not yet sold on had not been factored in.

To read more:  www.chinaeconomicreview.com

Reformers Make Call

The China Reform Monitor reports:

The transcript of a "secret" internal meeting of forty reform-minded Chinese scholars and officials calling for political reform, the promotion of a multi-party system, progress toward democracy, and press freedoms has appeared on the Internet. The meeting, known as "the symposium on China's macroeconomy and reform direction," was convened on the eve of the National People's Congress (NPC) at the China Research Society for Economic Structural Reform, a State Council think tank.

At the meeting, Gao Shangquan, the think tank's chairman, suggested that President Hu Jintao make a public statement calling on the party to promote reform; two days later, Hu did indeed make such a statement, according to the Hong Kong-based Apple Daily (Ping Kuo Jih Pao).

www.afpc.org

Undercutting the DVD Pirates

Movie maker Warner Brothers is trying to compete directly with the Chinese pirates.  They have decided that the only way to kill off DVD pirates is to undercut them. Warner Home Video has begun trial sales in China of a movie DVD priced at US $1.50. This is the same price as a pirate copy, but it is legal.

To read more:  http://dvd-recordable.org/Article2625.phtml

 

Beijing Pulls for the KMT

Newsweek International reports that Beijing is looking forward to the 2008 election in Taiwan.  They explain:

Hu may not be as skittish about Taiwan these days as he has been in years past. Beijing has maintained a fairly constant stream of invective against the island's pro-independence president, Chen Shui-bian, ever since he was elected in 2000. But as Hu no doubt recognizes, Taiwan's complex political dynamics might be turning in the mainland's favor. Chen has become deeply unpopular; he's blamed for Taiwan's stagnant economy and for failing to deliver on his party's promises of change.

Meantime, the leader of the opposition Kuomintang (KMT), the 55-year-old Ma Ying-jeou, is heavily favored to win the 2008 presidential election. The KMT aims for closer ties with the mainland and eventual unification. Aware that the majority of Taiwanese voters back the political status quo, whereby the island enjoys de facto independence, Ma has tried to finesse the sovereignty issue by insisting that unification could only happen with a democratic China. But he's been aggressive in pushing for cross-strait economic links.

To read more:

http://www.msnbc.msn.com/id/12441464/site/newsweek/

Prison Time For Heckler?

Does President Hu's heckler deserve to go to jail.  The editors of the Washington Post argue no.  They write:

Wenyi Wang acted rudely when she yelled and waved a banner at visiting Chinese President Hu Jintao during his White House appearance Thursday. The Secret Service was right to hustle her off the grounds. President Bush was right to apologize. But does Ms. Wang deserve to go to prison for six months? That might be the response to embarrassing and rude speech in Beijing. It shouldn't be in Washington. But yesterday the U.S. government charged Ms. Wang under a law that could bring her that sentence.

To read more:

http://www.washingtonpost.com/wp-dyn/content/article/2006/04/21/AR2006042101552.html?referrer=email

The Yuan and Capital Accounts

While many Westerners have complained about China's currency policy, its capital account restrictions are often overlooked.  Mr. Daniel Rosen explains:

Many estimates of RMB undervaluation in recent years suggested anywhere from 15 to 40 percent undervaluation, but all assumed a closed capital account. These estimates were debatable even under the assumption of a closed capital account. With the capital account partly open for significant capital outflows into dollars, euro and yen, the RMB’s long-term value is less clear.

The US Congress and the Bush Administration will have to fine-tune their position on the issue, and be careful what they wish for: Full “liberalization” of China’s currency might actually push it down against the dollar instead of up.

To read more:

http://yaleglobal.yale.edu/display.article?id=7284   

President Hu and the Heckler

So who was President Hu's heckler on the South Lawn of the White House?  The Drudge Report says:

The incident occured right after Bush urged Hu to allow Chinese to 'speak freely'. The woman, had a temporary pass with a big 'T' on it, also unfurled a yellow 'FG' banner.

The woman was taken away by uniformed secret service officers.

Bush leaned over and whispered to Hu, 'You're okay.' Hu, who had stopped talking briefly, then resumed speaking.

On China TV: As Hu was speaking when yells of protesters became audible, the screen went black. When the feed came back the screen once again went black when woman was again heard. During CNN International's post-speech commentary, at mention of south lawn heckler, the screen also went black again. The CNN feed returned when the incident ended.

To read more:
http://drudgereport.com/flash.htm

Is President Hu's visit to America nothing to celebrate?  Liberal Democrat Nancy Pelsi thinks so.  To read her views:

http://www.latimes.com/news/opinion/commentary/la-oe-pelosi20apr20,0,3293278.story?coll=la-news-comment-opinions

Sino-US "Unfair" Trade Deception

In the HK Standard newspaper, Mr. Micheal DeGolyer makes some important points about Sino-US trade.  He writes:

The US-China deficit pales against the overall US trade deficit of US$726.3 billion last year. China's trade gap comprises only 27.8 percent of America's trade deficit problem.  Proportionately, since 1997 America's trade deficit with South Korea has gone up more than seven times while China's rose just over four times. The issue is clearly not only "unfair" US-China trade.

Further, like the United States, Japan and Taiwan have been rapidly moving manufacturing to the mainland.

If one examines US trade with Japan, South Korea, the mainland, Taiwan, Hong Kong and Macau - what I will call the East Asia bloc for short - things look very different.  You have to do a little math to figure this out. Maybe that is why math-phobic Americans fail to see it.

Percentages of total trade, not amount changes per year, tell the true tale of trade traumas.

Based on US International Trade Administration figures posted at http:/ /hongkong.usconsulate.gov/usinfo/ statis, the East Asia bloc was the source of 28.7 percent of all US imports in 1998. In 2004, it made up 28.4 percent. US imports from East Asia proportionately to all its imports have actually fallen.

To read more:

http://www.thestandard.com.hk/news_detail.asp?pp_cat=15&art_id=16937&sid=7553903&con_type=1

China: Iran's Enabler

Mr. John Tkacik writes at the Heritage Foundation:

How does one say “double-dealing” in Chinese?* Last weekend, Chinese assistant foreign minister Cui Tiankai visited Teheran for the ostensible purpose of expressing concern over Iran’s announcement that it is enriching uranium. But Minister Cui’s mission was more likely designed to bolster China’s security relationship with Iran.

On April 13, the day before Cui departed for Iran, the Chinese Communist Party’s official mouthpiece, People’s Daily, published a commentary that asserted “the real intention behind the US fueling the Iran issue is to prompt the UN to impose sanctions against Iran, and to pave the way for a regime change in that country. The US's global strategy and its Iran policy emanate out of its decision to use various means, including military means, to change the Iranian regime.”[1]

Also on April 15, China’s Xinhua news agency announced that Iran had been invited to join the “Shanghai Cooperation Organization,” China’s trade and military alliance framework with Russia and its Central Asian neighbors.[2] China’s purpose is to undermine any leverage the international community may have over Iran’s nuclear ambitions.

To read more:
http://www.heritage.org/Research/AsiaandthePacific/wm1042.cfm

Minimum Wages Jump

Chinese labor costs continue their march upward.  The China Economic Review says:

Shenzhen is considering raising its minimum wage by as much as 23%, which could be an indicator of coming cost pressure for manufacturers in South China, the Financial Times reported. The Shenzhen labor bureau is weighing up increasing the current equivalent rate of US$86 a month to US$100 or US$106 inside the special economic zone.

Shenzhen already has a higher minimum wage than other Pearl River Delta cities. Foreign-invested firms tend to pay more than the minimum rate to counter a labor shortage. Basic living expenses have increased in recent years, and workers now pay into health insurance and social security plans that many never would have in the past.

To read more:
www.chinaeconomicreview.com

A Chinese Shipping ban

The conflict over natural resources in the East China Sea continues.  The Japan Times reports:

A reported Chinese ban on ship traffic around disputed gas fields in the East China Sea could violate the U.N. Convention on the Law of the Sea, Chief Cabinet Secretary Shinzo Abe said Monday.

Japan had requested confirmation from China of news reports saying Beijing has imposed the ban while Chinese workers lay pipelines and cables in the area, he said.

To read more:

http://search.japantimes.co.jp/cgi-bin/nn20060418a3.html

Improved Chinese Attitudes toward America

As President Hu visits Microsoft and Boeing, it is interesting to note how the attitudes of many average Chinese are shifting.  Time magazine reports:

If there's any Chinese who feels a warm glow inside when he sees an American flag fluttering in the breeze it's Zhan Bingkui. As foreign-trade manager of the Shanghai Flag and Tent Factory, the chain-smoking 50-year-old sells tens of thousands of flags to America each year. With his livelihood at stake, Zhan is keenly aware of the state of relations between the two countries.

In the past few years, he says, Chinese attitudes toward America have improved significantly: "China is more open now and is more friendly to the U.S." Still, the relationship remains complicated, he adds, noting that many Chinese resent America's "bullying" of other countries: "What happened to the U.S. on 9/11 is terrible, but we feel like it was a lesson America had to learn about how they need to respect others."

To read more:

http://www.time.com/time/world/printout/0,8816,1184325,00.html 

A Clash of Civilizations

With President Hu visiting Washington, Melinda Liu at Newsweek International has an excellent summary of all the critical issues facing the Sino-US relationship.  She explains:

China and the United States have had a complex but cordial relationship since George W. Bush was elected in 2000. And when Hu and Bush meet, the cordial side will be on grand display—handshakes, a 21-gun salute and lofty rhetoric about "harmony and cooperation" between the two countries. Hu will arrive in D.C. humming the mantra of China's "peaceful development." Bush will nod his approval and gently press his counterpart about trade policy.

But behind the smiles, say experts, it's becoming increasingly difficult for China and the United States to mask profound differences in their approaches to the world. While Bush has spent the past five years fighting global terrorism, promoting the idea of democracy and threatening to topple oppressive despots, the unelected Hu has set a more pragmatic—some might say amoral—course for China's foreign policy. In places where Beijing has sought to lock up natural resources, in particular oil, that's meant China has adopted the role of kind uncle for many of the same rogue regimes that Bush loathes.

To read more:

http://www.msnbc.msn.com/id/12335721/site/newsweek/

Cost Savings are Difficult in Chinese Sourcing

The China Sourcing Council reports:

Most automotive suppliers have not yet realized savings objectives from sourcing in China, according to a study by the Original Equipment Suppliers Association and PRTM Management Consultants. The results of the study, "Enter the Dragon? Lessons Learned in China Sourcing," were presented today during the SAE 2006 World Congress.

An efficient low cost country supply chain is a competitive weapon and a question of survival for many suppliers. The study found many auto suppliers plan to nearly triple Chinese share of procurement spend by 2010. The study also found successful results in China sourcing are not guaranteed, as more than half of study participants achieved less than 40 percent of China sourcing goals. Suppliers achieving the best results tend to have been in China the longest and learned what it takes to succeed. Opportunity exists for other suppliers to learn from early movers to save money faster with less risk.

"China sourcing is not a quick fix for short-term cost targets. Dealing with a 7,000-year-old culture 7,000 miles away is simply complex. Winning suppliers are those with China sourcing efforts based on a solid strategy, determined leadership, sufficient investment in a 'Chinese Chinese' purchasing office, and local technical support," said Andreas Mai, a principal at management consultancy PRTM. "Many winning suppliers invested 6-10 years learning to successfully leverage China as an effective, low-cost source of supply."

To read more:

http://www.supplychain.cn/en/art/?595

A Chinese Face Transplant

Doctors in China performed a 14-hour transplant surgery on a 30-year-old man to replace his face, which was mauled by a bear two years ago.  To read more:

http://www.impactlab.com/modules.php?name=News&file=article&sid=7944

End Medical Tariffs

At TCS Daily, Mr. Roger Bate explains:

Bush administration Commerce Secretary Carlos Gutierrez has warned that the US is running out of patience waiting for China to take effective steps to do its part to reduce the ballooning US$200+ billion trade deficit with China. Recently, the US, Switzerland, and Singapore proposed a small but highly constructive remedy China could implement immediately: eliminate tariffs on medicines and medical products. Chinese President Hu Jintao's visit to Washington DC next week affords President Bush a signal opportunity to call upon China to take this urgently needed action.

To read more: 

http://www.tcsdaily.com/article.aspx?id=041406E

China Miracle and External Pressures

At RealClearPolitics.com, Mr. Richard Halloran writes:

The conventional wisdom on China today holds that it has generated an economic miracle that is propelling Beijing into the top ranks of the global arena. While there is much truth in that image, it overlooks widespread political unrest, vast unemployment and under-employment, and a disruptive disparity in the sharing of economic progress.

Moreover, China's reliance on exports to drive its economic engine has left it exposed to external pressures, notably from the United States. Foreign investment has faltered. China has sought to lock up supplies of energy without much success. China's shipping lanes through the Malacca Strait in Southeast Asia are unprotected.

To read more:

http://www.realclearpolitics.com/articles/2006/04/troubled_china.html

Protectionism Pressures Grow Inside China

The Wall Street Journal reports:

Amid one of the longest and fastest growth streaks of any modern economy, China is wrestling with concerns from a rising wealth gap to corruption to environmental damage. But the latest uproar has turned on foreigners, targeting the many outside investors that have piled into China and prospered -- even while fueling much of the country's growth.

"Since last year, foreign companies have been fiercely buying up Chinese companies, including some core companies," said Li Shuguang, a vice dean at the Chinese University of Politics and Law in Beijing. "Foreign capital is so strong, a lot of Chinese companies have just collapsed."

The concentration of industries in foreign hands has become a common theme. An oft-quoted 2004 report from the State Administration of Industry and Commerce, for instance, notes that Coca-Cola Co. dominates China's domestic soft-drink market and Eastman Kodak Co. holds a 50% share of the film sector. 

To read more:

http://yaleglobal.yale.edu/display.article?id=7244

China's Apetite for Energy

At the Jamestown Foundation, Mr. Wenran Jiang writes:

China’s growing appetite for energy has caused widespread concern around the world. The Middle Kingdom is blamed for the sharp increase in global oil prices in the past few years, and the United States grows uneasy about Beijing’s evolving cozy relations with major oil producers such as Iran, Saudi Arabia, Sudan and Venezuela—some of which are hostile toward Washington. Moreover, there is a growing call to contain China as an energy threat in a world of diminishing resources. Yet Beijing is resentful of such attitudes and has taken new measures to counter its critics.

To read more:

http://www.jamestown.org/publications_details.php?volume_id=415&issue_id=3686&article_id=2370973

Hong Kong's Intrusive Surveillance

With President Bush facing questions over wiretapping the telephone calls of alleged terrorists, some people in Hong Kong are raising similar concerns about government spying.  Newsweek International reports: 

Hong Kong also uses intrusive surveillance techniques—like bugging homes, offices or cars—almost as frequently as wiretaps. ""We still don't know the whole story," says lawmaker Margaret Ng. "But the indications are that secret surveillance is far more extensive than we imagined."

Current police tactics are the outgrowth of twin legacies. One is the sweeping anti-corruption campaign launched in the 1970s that transformed Hong Kong into one of Asia's safest, most law-abiding cities. The other is British law enforcement's post-World War II penchant for spying, which by extension influenced colonial Hong Kong's police ethos.

Despite calls for stricter oversight dating back 20 years, Hong Kong authorities consistently resisted on the grounds that police need broad powers to battle financial criminals who don't leave smoking guns or bloody knives. So unlike in the United States, where the right of privacy is strongly ingrained and surveillance is seen as a tactic of last resort, Hong Kong law enforcement leans toward "excessive use," says Hong Kong University law professor Simon Young. "This touches people's lives in a very big way."

To read more:

http://www.msnbc.msn.com/id/12270548/site/newsweek/ 

Transplant Tourism

Need an organ transplant?  Consider this story in the Japan Times:

When Kenichiro Hokamura's kidneys failed, he spent four years on dialysis before going online to check out rumors of organs for sale.

With less than 10 kidney transplants performed in Japan a year, the 62-year-old businessman was desperate. "There are 100 people waiting in my prefecture alone. I would have died before getting a donor."

Still, he was astonished by how easy it was. Ten days after contacting a Japanese broker in China in February, he was lying on an operating table in a Shanghai hospital receiving a new kidney. A doctor had only examined him that morning. "It was so fast I was scared," he says. The "donor" was an executed man, the price 6.8 million yen. "It was cheap (in comparison to the cost of my life)," says a recovering Hokamura, now back in Kyushu in southern Japan where he runs a construction-related business. "I can always earn more money."

Hokamura is one of hundreds of well-off Japanese who have recently made the trip to China for transplants. The so-called "transplant tourism" trade is also attracting a growing number of Koreans, Americans and other wealthy nationals.

To read more:

http://search.japantimes.co.jp/cgi-bin/fl20060411zg.html

A Bird Flu Media Blacout

With global threat of bird flu growing with each passing day, China's determination to control the news media is only making the situation worse.  Despite Beijing’s promise of “complete transparency” back in November, local media outlets were told not to cover bird flu cases, and to wait for a final and official statement from the government.

On Tuesday, the Hong Kong-based South China Morning Post reported that a suspected second human case of bird flu has emerged in nearby Guangzhou.  They explain:

A source at the Guangzhou No1 People's Hospital said a 41-year-old woman, identified as Ms Li, was admitted on March 25 with unexplained pneumonia. The source said experts confirmed two days later that Ms Li had the H5N1 virus but the case had yet to be reported by official media. The woman lived in the Xihua area of Guangzhou's Yuexiu district.

Aphaluck Bhatiasevi, the World Health Organisation's China spokeswoman, said the WHO was informed of the case by the Ministry of Health on March 30.

"Right now, she is not a confirmed case of H5N1. She is considered to have pneumonia of an unknown cause," she said.

If officially confirmed, Ms Li would be the third human bird flu case in a major mainland city. In March, a female migrant worker died from the virus after buying live chickens at a Shanghai market.

And on February 2, another Guangzhou resident died from bird flu He was reportedly a frequent visitor to live poultry markets.

Sadly, when it comes to reporting serious health threats, China has consistently not been a responsible member of the global community.  A few years ago it was SARS, today it is bird flu and tomorrow it maybe another mysterious health concern.

On April 3, AP reported some 400 students at the Henan University of Science and Technology in central China have come down with a mystery fever and the cause was under investigation.

With Scotland reporting its first case of bird flu a few days ago, it is probably only a matter of time before North America is hit with its own H5N1 outbreak.

Sources:

American Thinker Comment:

http://www.americanthinker.com/comments.php?comments_id=3627

SCMP story:  ($$ required)

http://www.scmp.com/topnews/ZZZXGDK1DLE.html

AP story about Henan:

http://www.sinolinx.com/frame/sinolinx.php?XML=0421mkw90sinolinxnewsfeed4vhjHi4341&url=http://hosted.ap.org/dynamic/stories/A/AS_GEN_CHINA_MYSTERY_FEVER_ASOL-?SITE=ASIAONE%26SECTION=ASIA%26TEMPLATE=DEFAULT%26CTIME=2006-04-03-07-21-22l

China's Low Social Welfare Spending

A new report from McKinsey Quarterly says:

Today, just 3 percent of government spending in China supports social welfare. According to the China Ministry of Labor and Social Security, the government will need an additional 740 billion renminbi to cover future pension expenses.⁶ The situation will likely get worse because the population is aging rapidly—a result of the country's one-child policy combined with rising average life expectancy, which under current trends will reach 79 years in 2020.

A recent survey reveals that urban Chinese are increasingly concerned about illnesses, accidents, retirement, unemployment, housing, and the education of children.⁷ One product of this anxiety is that people resist changing jobs or locations or taking other actions that could benefit them economically. This immobility contributes to the widening income gap between rich and poor, a potential cause of social instability.

Fears about an uncertain future have also generated China's stratospheric household savings rate, which at 20 percent is much higher than it is in other Asian countries. From a macroeconomic perspective, some of this private capital would be better deployed in public investments or freed up for other needs, such as private domestic consumption, which dropped in China (as a share of GDP) from 50 percent in 1990 to 41 percent in 2003 (Exhibit 2).⁸ With early signs of overcapacity in many Chinese industries, consumer confidence needs boosting in both urban and rural areas to stimulate domestic consumption.

To read more:

http://www.mckinseyquarterly.com/article_page.aspx?ar=1758&L2=10&L3=52&srid=17&gp=0

Sino-Japan Conflict - Marking an Anniversary

Thousands of Japanese marched in Tokyo to mark the first anniversary of anti-Japan protests in China last spring.  With Sino-Japan political relations in deep freeze, opponents of PM Koizumi are calling for a compromise.  The SCMP reports:

The new leader of Japan's main opposition party, Ichiro Ozawa, has proposed that the names of 14 class-A war criminals be removed from the Yasukuni Shrine to minimise the diplomatic rifts that visits to the memorial cause. The president of the Democratic Party of Japan said yesterday the intention of the shrine, to honour those who lost their lives in past wars, was lost when the names of war criminals were added in the 1970s.

To read more:

http://china.scmp.com/chimain/index.html

RMB/Dollar Prediction

The editors of the China Economic Review are predicting:  Any bets on the following? I predict that the RMB exchange rate against the dollar will shift into the sevens by the end of April and will stabilise around 7.79 by the end of the year.

To read more:

www.chinaeconomicreview.com

Buy Fewer Bonds, Import More

AP reports:

China should stop buying U.S. Treasuries and take steps to reduce its holdings in those bonds, a Hong Kong newspaper on Tuesday quoted a high-ranking Chinese official as saying.  China should instead increase imports from the U.S., said Cheng Siwei, a vice chairman of China's parliament, the National People's Congress, the Wen Wei Po reported.

To read more:

http://www.msnbc.msn.com/id/12147909/

Pingpong Diplomacy at 35

AP reports: 

In April, 1971, at the height of the Cold War, a bitterly anti-American communist China invited a lowly American table tennis team to visit Beijing. The world was stunned and mystified: Why had implacably hostile China lifted its ban, in effect since the founding of the people's Republic in 1949, on visits by Americans?

To read more:

http://news.yahoo.com/s/ap/20060407/ap_on_re_as/pingpong_diplomacy

The Productivity Race

At TCS Daily, Mr. Tim Worstall writes:

Is globalization a race to the bottom or a race to the top? Will living standards for the average American inevitably fall as all those foreigners make everything for us while being paid spit-and-a-packet-of-peanuts? Or, as most economists point out, will foreigners getting richer make us richer still?

After all, if the Chinese (for example) can do everything cheaper than we can, what on earth will we produce? If shoes, cars, clothes, steel and everything else will be made in China, what on earth is there going to be left for the American worker to make?

A fair question.

To read more:

http://www.tcsdaily.com/article.aspx?id=040706G

China, Without the Stereotypes

The CSM has an article about Western images of China.  It explains:

Three-quarters of a century ago, Americans often viewed China through one of two distorting lenses, both of which can be linked to famous works of popular culture of the 1930s. One was a patronizing lens that can be associated with the 1931 Pearl Buck novel "The Good Earth," and the popular 1937 film it inspired. The other was a demonizing lens that can be associated with a 1932 horror film, "The Mask of Fu Manchu." China today, of course, is a very different place.

To read more:

http://www.csmonitor.com/2006/0407/p09s03-coop.html?s=hns

Silk Street Sellers: Don't Blame Us

With Chinese President Hu Jintao planning a trip to Washington later this month, Beijing is eager to convince Westerners that it is serious about protecting intellectual property rights.  As I wrote last November at the American Thinker, five international fashion firms including Chanel and Gucci sued Beijing’s famous Silk Street for allegedly selling pirated copies of their products.

According to a recent report in the Shanghai Daily, the pirates are fighting back by gathering evidence of "entrapment" against the famous brands.  The story quotes Mr. Zili Wang, the market’s general manager, who claims it could not be held accountable for the alleged fake goods the five firms said they bought there.

Many foreign and Chinese people flock to the market every day and some buy fake goods under the table, but managers can’t control the practice, Wang said.

Managers had taken measures to eradicate illegal items from the market, Wang said.

Wang said "entrapment" could not be ruled out if the brand-name firms had bought fake copies of their products after the goods had disappeared from the market.

Even if the Silk Street is eventually closed, many of the pirates will just open a new shop in another location and resume business as usual.

Shanghai Daily Article

http://www.shanghaidaily.com/art/2006/04/07/259461/Beijing_Silk_Street_fights_foreign_fashion_makers.htm

Previous American Thinker Post

http://www.americanthinker.com/comments.php?comments_id=4127

Hu Will Buy American Goods

The China Economic Review reports:

President Hu Jintao's April 18 to 22 visit to the United States is expected to result in deals worth billions of dollars for American companies, state media reported. Representatives of 111 mainland companies will begin negotiations with authorities, commerce associations and companies in 13 US states ahead of the visit on deals said to involve agricultural products, software, passenger aircraft, cars, automotive spare parts and electrical products. Confirmed big-ticket purchases include 80 Boeing passenger aircraft, while reports suggest the ban on US beef imports may be lifted and imports of American soya beans boosted.

Hu is scheduled to have dinner with Microsoft chairman Bill Gates amid reports Beijing could promise to purchase more Microsoft Windows operating systems and other US-made software. The deals will ease some of the pressure on Beijing over the ballooning trade surplus with the US, which exceeded US$200 billion last year, though some analysts say the one-off purchases will provide only temporary relief.

To read more:

www.chinaeconomicreview.com

Facts Against Trade Hawks

As noted previously on this blog, US trade hawks overlook some key facts about trade with China.  Mr. Brian Bremner at BusinessWeek writes:

What U.S. trade hawks rarely point out is that a big reason China's global trade numbers have ballooned is that foreign companies are prospering on the mainland. About half the exports coming out of China are actually from multinationals producing there. In high-tech, the figure is closer to 90%, led by companies such as Motorola and Nokia. Global auto companies such as General Motors, Toyota, Nissan, and Honda enjoy huge market share in the Chinese auto market.

To read more:
http://www.businessweek.com/globalbiz/content/apr2006/gb20060404_396047.htm

Sending Chinese Illegals Home

The SCMP reports:

The United States and China are close to reaching an agreement that could eventually see the repatriation of 39,000 illegal Chinese immigrants, the US homeland security chief said yesterday.

US Homeland Security Secretary Michael Chertoff reached an agreement in principle during talks with officials in Beijing on repatriation which, he said, would also send a message to would-be illegal immigrants to stay away.

To read more:  ($$ required)

http://china.scmp.com/chimain/ZZZMTXJ1DLE.html

ChinaCubed

I have discovered an interesting new website called ChinaCubed.  Take a look:

http://www.chinacubed.com/Home/tabid/36/Default.aspx

Searching for a Middle Way

The China Economic Review reports:

The Dalai Lama may be given permission to visit China provided he has “completely abandoned” the idea of Tibetan independence, the director of the State Bureau of Religious Affairs, Ye Xiaowen, told state media. Despite the Dalia Lama endorsing a “middle way” under which Tibet has greater autonomy but no independence, he had “failed to deliver a clear message on his stance," Ye said.

The Dalai Lama, who fled to India in 1959 after a failed uprising against communist rule, said last month that he wanted to visit Buddhist landmarks in China. Ye also said that relations could be built with the Vatican as long as the Holy See severed ties with Taiwan and stopped criticising China's domestic affairs.

To read more:

www.chinaeconomicreview.com

A Mystery Fever Hits Henan University

Another mysterious health outbreak has hit China.  An AP story says:

Some 400 students at a university in central China have come down with a mystery fever and the cause was under investigation, state media said Monday.The first cases was reported March 26, when 22 students at the Henan University of Science and Technology in the city of Luoyang were sickened, the official Xinhua News Agency said on its Web site.

"The situation has been effectively controlled," Xinhua said. "After one or two days of treatment, they regained their health."  Lab tests have ruled out the possibility of an outbreak of influenza, it said, and the health officials were still trying to determine what the sickness was and what had caused it.

To read more:
http://www.sinolinx.com/frame/sinolinx.php?XML=0421mkw90sinolinxnewsfeed4vhjHi4341&url=http://hosted.ap.org/dynamic/stories/A/AS_GEN_CHINA_MYSTERY_FEVER_ASOL-?SITE=ASIAONE%26SECTION=ASIA%26TEMPLATE=DEFAULT%26CTIME=2006-04-03-07-21-22l

University of Chicago Conference

The University of Chicago Business School will have a conference about investing in China on April 15.  For more details:  http://gsbwww.uchicago.edu/student/gsbchinese/Conference/2006/html/Agenda.htm

In Search of an Optimal Relationship

Mr. Tom Plate in the Japan Times writes:

The key for Americans is to begin the process of serious and sustained public debate over what is an optimal Chinese-American relationship. Rather than seeking to enlist Asians in a China-hedging coalition, our national government needs to enlist the American people in a huge and historic national effort to understand how to maximize the harmony and minimize the friction.

Public diplomacy -- for the all-important China question -- best begins at home, not abroad. We have to convince ourselves of what our vision is before we can convince anyone else of what their vision ought to be.

To read more:

http://search.japantimes.co.jp/cgi-bin/eo20060402a1.html

Chinese Military Strategists are Coming

The Washington Times reports:

Two of China's most notorious military strategists are coming to the United States, not as guests of the Pentagon, but under a State Department program. Col. Qiao Liang and Col. Wang Xiangsui are authors of the 1999 book "Unrestricted Warfare," which advocates China's use all forms of warfare, including state-supported terrorism, to win future conflicts.  "From a military standpoint, then, the traditional terror war is characterized by the use of limited resources to fight an unlimited war," they wrote.

To read more:

http://washingtontimes.com/national/20060330-115248-1343r.htm

No Thanks, You Can Keep the Pandas

The SCMP reports:

Taiwan yesterday officially rejected the mainland's offer of two giant pandas - seen as "Trojan teddies" by the island's government and pro-independence activists.

The pandas, Tuan Tuan and Yuan Yuan, named for the Chinese word tuanyuan, meaning "reunion", to signify cross-strait unification, would not come to Taiwan, the Council of Agriculture said.

"The applicants, Taipei Zoo and the Leofoo Safari Park, have yet to complete their breeding facilities and provide training for workers for medical care of the pandas," said Lee Tao-sheng, deputy director of the council's forestry bureau.

To read more:  ($$ required)

http://www.scmp.com/topnews/ZZZPZMJ1DLE.html

New Manufacturing Export Leader

IndustryWeek reports:

After pulling even with the U.S. last year in manufactured exports, China, whose symbol is the red dragon, this year "will almost certainly" surpass the U.S. to become the world's number one exporter of manufactured goods, says Ernest H. Preeg, the senior fellow in trade and productivity at the Manufacturers Alliance, an Arlington, Va.-based business and public policy research group.

To read more:

http://www.industryweek.com/ReadArticle.aspx?ArticleID=11701

No Yasukuni Visit, A Summit Possible

The Japan Times reports:

Chinese President Hu Jintao on Friday blamed Prime Minister Junichiro Koizumi's visits to the war-linked Yasukuni Shrine for the deterioration of bilateral ties, adding that China will hold a summit with Japan when the visits stop, Japanese politicians who met with Hu said.

Former Prime Minister Ryutaro Hashimoto quoted Hu as saying in a meeting here that the cause of the soured ties "does not lie with Chinese or Japanese people, but with the fact that a small number of Japanese leaders are visiting Yasukuni Shrine."

To read more:

http://search.japantimes.co.jp/cgi-bin/nn20060401a6.html