In this issue:

China To Help Pakistan on Nuclear Power Plant

LTTE Split Worries Some in Washington

China Crack Down on Foreign Banks' Renminbi Speculation

Will China Avoid Trap That Caught Ibero-America 20 Years Ago?

Extension of Shanghai-Pudon Maglev Mooted

Tom Ridge on Anti-Terror Tour of Asia

NATO General Claims Taliban Are Finished, And Yet....

Mekong Sub-Region Outlines Plan for River, Rail Transport

From Volume 3, Issue Number 11 of Electronic Intelligence Weekly, Published Mar. 16, 2004
Asia News Digest

China To Help Pakistan on Nuclear Power Plant

According to Liu Jianchao, spokesman for the Chinese Foreign Office at a weekly news briefing for the reporters, China will help Pakistan to develop the Chashma Nuclear Power Plant-Phase II, near the port city of Karachi. He said China-Pakistan cooperation for development of the nuclear power plant is purely for peaceful purposes, and it has nothing to do with transfer of nuclear technology for weapons manufacturing.

The two countries had signed a Memorandum of Understanding last year for setting up another 300-megawatt nuclear power plant in Pakistan to be called Chashma-II.

Spokesman Liu said the details of the cooperation are being worked out between the relevant departments. It was also agreed that the technology for power generation would not be transferred to any third party.

LTTE Split Worries Some in Washington

Following the split of Sri Lanka's Liberation Tigers of Tamil Eelam (LTTE) into northern and eastern factions, Tiger chief V. Prabhakaran has officially "dismissed" the rebel Eastern Commander V. Muralitharan, a.k.a. Col. Karuna, and has appointed Ramesh to head the Eastern Command.

Reports indicate that Ramesh is making moves to gain control of the Batticaloa-Amparai districts in the east, and punish Karuna, who claims that Prabhakaran has sent death squads to assassinate him. However, it is evident that Karuna is no pushover and that the 6,000 LTTE troops he commands continue to support him.

The split occurred on a existing north-south division between the LTTE cadres. A majority of LTTE members come from the northern Jaffna peninsula, and the easterners claim that the northerners enjoy benefits of all kinds, depriving their eastern brothers and sisters.

But, there is more to it. At this time, the Sri Lankan government is happy that the Tigers are split, and it is likely that both Sri Lanka and India would do their best to protect Col. Karuna. At the same time, Colombo, scheduled to re-open peace talks with the LTTE through Norway, following the country's parliamentary elections scheduled for early April, has no choice but to recognize the Prabhakaran faction as the real LTTE.

On the other hand, the split may worry some in Washington, were working through Norway to help Prabhakaran get an autonomous Tamil group comprised of northern and eastern districts. Their interest is in securing a naval base in Trincomalee, considered the best deep-water port in Asia, located on the eastern coast. The split has put the Trincomalee port area under the control of Col. Karuna.

China Crack Down on Foreign Banks' Renminbi Speculation

The China Banking Regulatory Commission (CBRC) will demand twice-yearly operations reports of foreign banks' branches in China. Before the foreign banks only had to report on their global operations. By October 2003, there were 62 foreign-invested banks in China.

"This has posed a challenge to continued effective supervision, and requires regulators to be clear about every foreign bank's overall operations and risk levels, and properly assess their business strategies and risk management capabilities," said the CBRC spokesperson. As of December 2003, about 40% of foreign bank offices could provide Chinese currency services, increasing their economic influence in China.

These foreign-owned banks have been heavily increasing foreign loans in China. They borrowed US$58.6 billion in foreign loans in the first nine months of 2003, to lend to foreign companies in China, which made up 81% of China's total new foreign liabilities!

These were mostly short-term debts, making forex regulators suspicious that the foreign banks were speculating on a revaluation of China's renminbi. This process has been driving dollar inflows into China, pushing its foreign-exchange reserves to unprecedented levels and fuelling monetary expansion last year, reported Xinhua March 9.

Will China Avoid Trap That Caught Ibero-America 20 Years Ago?

China should not allow itself to get caught in the same trap that Ibero-American countries did 20 years ago, a National People's Congress deputy from Guangdong province wrote in People's Daily on March 9.

China is in a "period of strategic opportunity," wrote Fu Hanxun. Since the 1980s, countries such as Brazil and Argentina, striving to expand their GDP, allowed all-out transfer of U.S. and EU processing industries, but, by not passing and enforcing profit and asset transmission laws, they ended up in the control of the U.S. and EU. Now, many of these industries have been transferred to China, leading to economic collapse and deterioration of living standards in Ibero-America.

The question for China is: Do Chinese, or foreign enterprises dominate its economy? Foreign capital now dominates 92.7% of Brazil's enterprises. For the past 25 years, foreign enterprises have been given "super-national treatment" status in China, unlike domestic enterprises. Some 60% of China's foreign trade, worth 800 billion yuan last year, was from foreign-controlled processing industries. Also, 51.2% of manufacturing exports are from joint ventures. Such foreign dependence could well threaten China's economic security, warned Fu Hanxun.

Extension of Shanghai-Pudon Maglev Mooted

The Shanghai government and Germany's Siemens and Tyssenkrupp are discussing an extension of the Shanghai-Pudon maglev train to Hangzhou, a city 200 kilometers southwest of Shanghai, in Zhejiang province. Shanghai government spokeswoman Li Rong said on March 8 that the "governments of the two sides are discussing such a project." It is awaiting approval in Beijing. "Shanghai can't start such a big construction project without central government orders."

The Shanghai Maglev Transportation Co., which operates the 30-km existing commercial maglev, said that it is only in the early stages of doing feasibility research on extending the Shanghai Maglev train line to Hangzhou. In Germany, on March 8, radio reports said Transrapid International is about to complete an agreement to build the new section.

No decision has yet been made on what rail technology will be used for the longer Shanghai-Beijing high speed railroad.

A report on China News Net, run by the Overseas Chinese Affairs Office of the State Council, said that Zhejiang Province officials are to present their proposal for the new maglev line to the central government by the end of 2004. If the plan is approved, construction would begin in 2005. The maglev, which can reach speeds of 430 km per hour already on the short Shanghai-Pudong stretch, would reduce travel time between Shanghai and Hangzhou from two hours to 30 minutes. It could begin operation in 2008.

Tom Ridge on Anti-Terror Tour of Asia

U.S. Homeland Security Director Tom Ridge is on a nine-day Asian tour, seeking closer cooperation on anti-terrorist measures. Ridge's was scheduled to spend five days in Singapore, where he will meet with Home Affairs Minister Wong Kan Seng, Prime Minister Goh Chok Tong, and the "best bloody Englishman west of Suez," the aging Le Kuan Yew.

The Singapore talks will also give Ridge the opportunity to deliver a speech, entitled "Fighting Terrorism: Security and Cooperation in the 21st Century" on March 9, to an elite crowd at the Institute of Defence and Strategic Studies.

Currently, Singapore is holding 37 persons under its tough Internal Security Act, most of whom are accused of links to Jemmah Islamiya, which was blamed for the October 2002 bombing in Bali, Indonesia, which killed 202 people, and the August 2002 Marriott Hotel bombing in Jakarta, in which 12 people were killed. Singapore officials have alleged JI was planning truck bomb attacks on the U.S Embassy and related targets in Singapore in the wake of the 9/11 attacks, but the arrest of JI members foiled the plot.

NATO General Claims Taliban Are Finished, And Yet....

Speaking before the Belgian Senate Committee, NATO Supreme Allied Commander Gen. James Jones concluded that the Taliban and al-Qaeda fighters in Afghanistan are finished. But, in the same breath, the general also told the Belgian Senators that there exist serious problems of feuding warlords and drug-trafficking, and the Karzai government in Afghanistan was struggling to impose its control beyond the capital city of Kabul. How these two contradictory statements could be linked? General Jones, for one, did not give any clue. He simply asserted that, "we should be clear about the fact that the war against al-Qaeda and the Taliban as fighters is virtually, almost complete."

Another incident of double-talk was exhibited by U.S. military spokesman Lt. Col. Bryan Hilferty in Kabul. He told reporters on March 9 that the American officer investigating the killing of nine Afghan children by U.S. air strikes last December, has absolved the American forces of all wrongdoing by saying that they had followed "appropriate rules of engagement and did follow the law of conflicts." In the same breath, Hilferty pointed out that the investigation report will remain classified, "because of the intelligence involved and the target involved."

Mekong Sub-Region Outlines Plan for River, Rail Transport

A policy and planning adviser to Thailand's National Economic and Social Development Board, Utis Kaothien, said the Mekong River would be developed as a tourist destination rather than as a transportation route. He said roads and railways would be the major routes for goods transportation, adding that the East-West corridor was expected to be finished soon and would link Vietnam to Burma through Thailand's northeast.

A Burmese businessman said he hoped the Thai private sector would invest in clothing and agriculture, pointing out that U.S. sanctions on his country had accelerated widespread unemployment in these sectors, especially in the Myawaddy area across from Mae Sot, Thailand. Other problems remain, including high tariffs on goods between the Greater Mekong Sub-Region member states.

The GMS is home to more than 200 million people and accounts for the combined GDP of member countries of more than $250 billion in 2003. It includes Cambodia, Laos, Myanmar, Thailand, Vietnam, and China's Yunnan province.

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