Asia News Digest
China's Money Supply Soars; Fears of Inflation, 'Hot Money'
The Peoples Bank of China reported Sept. 11 that the broad money supply rose by 21.6%, year-on-year, in August. In July, "M2" had risen by 20.7%, year-on-year. The PBOC said it would take measures to stabilize the money supply.
China's money supply growth has been growing by about 17% per month so far this year. Commercial banks have been increasing lending, at the rate of 2.1 trillion yuan (US$253 billion) already in the first eight months of this year, compared to 1.84 trillion yuan (US$221 billion) in all 2002.
More money has also been released by the central bank, in efforts aimed at "absorbing excess dollars." The PBOC has issued 60 billion yuan (US$7.3 billion) in short-term securities, to absorb funds, and then took the more serious step of announcing it raised required reserves at commercial banks to 7% of their total deposits, a 1% increase, by end-October, in order to "freeze" some 600 billion yuan (US$72 billion).
China remains on "high alert" about a "huge influx of hot money," and is making a big effort to "fend off potential threats posed by speculative funds to the Chinese economy," Xinhua reported. Speculative funds amounting to some US$30-$50 billion have entered China this year.
The speculative funds entered China through trading, foreign direct investment, the qualified foreign institutional investor (QFII) program, and from overseas Chinese.
Economists are warning of the danger of inflation if the hot money flows continue.
Zhang Xiaoji, director of the Research Department of Foreign Economic Relations under the Development Research Centre of the State Council, warned of the dangers of short-term speculative capital tends. "When facing poor profit prospects, hot money, because of its speculative nature, will leave the market soon and trigger upheavals in the overall economy," Zhang said.
Economists expect that the government will be taking measures will be taken to closely monitor the flow of speculative capital in and out of the country, Xinhua said.
Provocative Exercises Against North Korea Proceeded
Australia, the U.S., France, and Japan proceeded with "piracy" exercises in the Coral Sea over the weekend of Sept. 13, according to The Australian of Sept. 10. During Prime Minister John Howard's visit to China in August, he reportedly promised the Chinese that he would postpone the exercises (aimed at threatening North Korea with a blockade of shipping on the high seas under the cover of "self-defense" against weapons of mass destruction), in deference to the Chinese effort to make the six-party talks work.
Australia has deployed Deputy Secretary of Foreign Affairs Paul O'Sullivan to China, to try to explain why they are moving forward anyway. O'Sullivan, called a "WMD expert," chaired the meeting of the 11-nation Proliferation Security Initiative (PSI) in Brisbane in July where the plan for the exercises was adopted. China has publicly denounced the exercise as a provocation and a threat to break international law.
Thai Foreign Minister, UN Rep Confident on Myanmar 'Road Map'
Foreign Minister Surakiart Sathirathai voiced support for the Myanmar junta's version of its proposed "road map," out of the crisis, saying it was the best for Myanmar because its people had drafted it. "The process was initiated by the junta, and no one knows better than the Burmese themselves," Surakiart said on Sept. 9, adding that ASEAN and the rest of the world community would be more than happy to help push for its realization.
"Reconciliation is what we want to see in Burma. The drafting of a constitution acceptable to all sides would lead to elections, which finally would lead to the removal of all international sanctions," he said. He added that, in principle, opposition leader Aung San Suu Kyi and all of Burma's ethnic minorities should have a say in the drafting process.
Also, United Nations special envoy Razali Ismail said Sept. 8 that plans for him to visit Myanmar have been put off, in order to give the Myanmar leadership a chance to implement a new democracy road map. "I am waiting to go in as soon as I can," he said. "I am allowing local efforts to happen, then of course the UN would bring all its services to bear on all parties." Razali said Yangon's plan to reconvene the constitutional convention, suspended in 1996, as a first step under the plan, is a "good idea" and the "right thing to do." Mr. Razali said, "Give Khin Nyunt a chance to try to get it done. We hope that this proposal is the precursor, the beginning, of a healing process that will bring about the release of Aung San Suu Kyi and other parties. If we can play a role to facilitate understanding of this proposal to all sides, including Aung San Suu Kyi, we will do it."
U.S. Defensive After Red Cross Backs Myanmar on Suu Kyi Issue
The International Red Cross reported Sept. 9 that its representatives had met with Myanmar opposition leader Aung San Suu Kyi, and confirmed that she was not on a hunger strike, contrary to widespread reports aimed at destabilizing Myanmar, circulated by the Bush Administration, Project Democracy, and the George Soros- and British-backed NGOs. An unnamed senior U.S. official defensively claimed that the mere fact that the Red Cross met with Suu Kyi was evidence of the "success" of U.S. pressure on Yangon.
Earlier, the Myanmar junta referred to the State Department as the "Department of Spin" and charged in an official statement that sanctions imposed on Myanmar by Washington were imposed "under the influence of extreme elements in the United States' political spectrum." The statement added, "The world will be the judge of whether the United States has any concerns for the welfare of the mass population of the country"over 50 million people. Subsequently, the U.S. dropped the claim about Suu Kyi's "hunger strike," one day after Prime Minister Gen. Khin Nyunt announced a seven-point "road map" for the country, culminating in general elections.
Australian Prime Minister and Foreign Minister Under Police Investigation
Australian Prime Minister John Howard and his Foreign Minister Alexander Downer are under police investigation for leaking a classified document. Howard and Downer are suspected of leaking a document written last October by Andrew Wilkie, a former official at the Office of National Assessments (ONA), the Australian intelligence agency, who resigned earlier this year in protest of the Howard Administration's doctoring of ONA intelligence reports to justify joining the war on Iraq. A reporter from the Herald Sun, Andrew Bolt, wrote a column claiming he had read Wilkie's top-secret report on Iraq. Then, during Parliamentary hearings investigating Wilkie's charges, Sen. Sandy MacDonald, a Howard supporter, read from the secret document in questioning Wilkie, trying to discredit him. The police are investigating both the press leak and the leak to the senator. Howard admits that his office prepared "briefing notes" for Sen. MacDonald, but nonetheless denies releasing the report.
Rumsfeld Has To Eat His Words Regarding Afghanistan
Prior to the last week's visit, the last time U.S. Defense Secretary Donald Rumsfeld had visited Afghanistan was in May. At that time, with a great deal of fanfare, Rumsfeld announced the end of combat operations against al-Qaeda and Taliban. Ahmed Rashid, an Afghan analyst, pointed out to The Nation in Islamabad on Sept. 10, that when Rumsfeld flew into Kabul Sept. 7, U.S. troops had just ended a nine-day battle with the Taliban in the hills of Zabul and Uruzgan provinces. The battle engaged some 1,000 Afghan government troops and 300 U.S. soldiers, supported by heavy aerial bombardment, trying to kill or disperse some 300-400 Taliban. A Western diplomat in Kabul told Ahmed Rashid: "The Taliban will certainly portray the Zabul battle as a turning point. It is the first time since their defeat, that they stood up and fought back rather than ran, and the U.S.-led Coalition forces are quite shaken."
The battle followed the bloodiest month for Afghanistan since the Taliban were defeated in the winter of 2001. Two hundred twenty Afghan government troops and civilians were killed in August, in a series of skirmishes, mine explosions, and mortar attacks, Ahmed Rashid pointed out. For the first time, the U.S. Army admitted that the Taliban aims had shifted, from mounting a campaign of guerrilla harassment against their forces. "We believe that strategically the anti-coalition forces seek to remove the existing national government of Afghanistan and re-establish a Taliban regime," said U.S. military spokesman Col. Rodney Davis at Bagram Air Base near Kabul just a day before Rumsfeld arrived.
Killing of Aid Workers in Afghanistan Threatens Foreign Support
Suspected Taliban rebels stopped a car carrying Afghans working for the Danish Committee for Aid to Afghan Refugees (DACAAR) on Sept. 8, tied them up, then shot four of them to death, on a road in southeastern Afghanistan's Ghazni province, Gov. Haji Asadullah told the Associated Press. In Copenhagen, a DACAAR official said it was likely an attack by Taliban, "because this fits into a pattern that we have seen lately, unfortunately." He also said that the organization will reconsider the security situation in Afghanistan. "As an immediate consequence, we must stop working in the eastern part of the country," he said. The Danish agency may withdraw from Afghanistan.
U.S. Commander: Taliban Pouring into Afghanistan
The American commander in Afghanistan, Lt. Gen. John Vines, told reporters travelling with U.S. Defense Secretary Donald Rumsfeld, who was in Afghanistan for a day on Sept. 8, that Taliban fighters, paid and trained by al-Qaeda, are pouring into Afghanistan from Pakistan. He said the Taliban are regrouping, and trying to regain control of the country they ruled until ousted by the United States in late 2001.
According to the report from the Kandahar region of Afghanistan, students from religious seminaries (madrassahs) across the border in the Pakistani province of Baluchistan have joined the war within Afghanistan, and are ready to take part in suicide missions, the London Daily Telegraph reported.
Sharon Cuts Short His Visit to India
Citing two major incidents in Israel, Prime Minister Ariel Sharon cut short his three-day visit to India and left for Tel Aviv Sept. 10. He was scheduled to visit Mumbai on Sept. 11. However, one clue that the trip could have had problems comes from the statement of the Israeli Deputy Prime Minister Yosef Lapid to NDTV on Sept. 9, in which he said: "One of the countries that worries us most is Iran, where they have Ayatollahs who are weaving the country in a very fanatic Muslim way and they also want to acquire nuclear weapons to translate their beliefs into acts of terrible consequences." If this issue had been brought up at the heads of states meeting, it is likely that Indian Prime Minister Vajpayee would have told off Sharon: India is now vigorously developing trade and strategic relations with Iran. At this point in time, Iran and India are involved in developing a North-South trade corridor linking India to Russia by land and sea through Iran, Afghanistan, and Central Asia.
On the other hand, Sharon extended an invitation to Vajpayee to visit Israel. The general statement issued by both sides indicate that the talks went well and the visit would enhance the bilateral relations between the two countries.
Israel, India Talks Focus on Arms
As expected, Ariel Sharon's visit to India was highlighted by an arms deal between the two countries. The Israeli Director-General of Defense Ministry, Amos Yaron, opened two days of talks (Sept. 9-10) on co-production and procurement of defense equipment and systems between the two countries. The talks centered on import of sophisticated aircraft-mounted radars, co-production of unmanned aerial vehicles (UAVs), and installation of electronic warfare systems. Simultaneously, the chiefs of Israeli defense companies who arrived with Sharon, held talks with their Indian counterparts and called on military and civilian officers looking after perspective planning and procurement.
Reports indicate that Maj. Gen. Yaron is understood to have discussed details of the Phalcon anti-missile radar deal, including the necessity of a tripartite agreement between India, Israel, and Russia (which will supply the aircraft for the radars) and upgrading the MiG-21 aircraft with his Indian Air Chief, S. Krishnaswamy. Israeli Phalcon radars running on Indian software will be married with Russian military transport aircraft to provide tremendous surveillance capability from a height of 30,000 feet. India tested the long-endurance Heron UAV during last year's troop mobilization on borders with Pakistan and the Indian Defense Research and Development Organization (DRDO) wants to utilize Israeli expertise for the indigenous production program.
Sumatra and Java To Be Linked in 20 Years
Satria Ganefanto, spokesman for the state-owned toll-road operator PT Jasa Marga, said that it is planning to build a huge bridge connecting Sumatra and Java, the two most populated Indonesian islands, within the next 20 years, the Jakarta Post reported Sept. 8. Drivers would be able to go all the way from Medan, North Sumatra to the East Java city of Banyuwangi facing the tourist resort of Bali, with a connection to the planned Singapore-Sumatra link in mid-island. Ganefanto, referring to San Francisco's 1.3 kilometer Golden Gate Bridge, indicated that the projected span across the Sunda Straits would be longer than 20 kilometers. The positive aspects of Ganefanto's projection for the new bridge are dimmed by his conception of an automotive-only (no rail) toll connection.
|