• Global “great power politics” returns to Mideast
• Taiwan President Names Chen Premier to Tackle Slowest Growth in Two Years
• Heartland Return for Chinese Leader
• China Loses Trade Appeal Over Its Curbs on Exports
• China Gets Tough on Superships
• China’s state TV expanding, but fetters remain

Source: Reuters By Peter Apps, Political Risk Correspondent

(Reuters) – With Russia sending warships to discourage foreign intervention in Syria, and China drawn more deeply into Iran’s confrontation with the West, “great power” politics is swiftly returning to the Middle East.

After Russia pulled back from the region at the end of the Cold War, the United States and its Western allies faced few external rivals in attempts to influence events. But as the US withdraws from Iraq, emerging economic powers reshape the globe and are themselves sucked ever deeper into the Gulf by their energy needs, that era seems over.

“What we are seeing is the U.S. losing its ability to shape events in the region, even though it remains by far the pre-eminent military power,” says Waleed Hazbun, director of the Centre for Arab and Middle Eastern Studies at the American University in Beirut.

“You’re seeing others moving in to fill the gap.”

In some ways, experts say, there are echoes of 19th and 20th century scrambles for resources, territory and influence.

“Bottom line: there will be more players in the sandbox,” says Hayat Alvi, lecturer in Middle Eastern studies at the US Naval War College. “The Middle East has always been the venue for the “Great Game.”.. Rising powers will see opportunities and advantages in engaging in (that), just like the colonial powers.”

Whereas Moscow and Beijing remained largely on the diplomatic sidelines for the 1991 and 2003 Iraq wars and even last year’s Libya campaign, they increasingly demand their voices are heard.

Both have signaled a clear intention to prevent any “regime change” intervention in Syria; but Russia’s deployment of its flagship aircraft carrier and escorts to Syria’s port of Tarsus this month drew a starker than usual line in the sand.

Whilst some Russian officials talked down the importance of the visit, saying it was preplanned, others said it was intended as a signal. The warships have since moved on, however, and as violence continues to escalate, Moscow is finding itself under ever greater pressure to abandon its one-time ally.

Meanwhile, the success of U.S. and EU sanctions against Iran will be almost entirely dependent on the extent to which China joins — with growing signs Beijing views Tehran as a useful tool to divert US military force from Southeast Asia. India, too, looks reluctant to play along with the wider western strategy of attempting to strangle Tehran economically to push it from its nuclear program and is also seen as a rising regional player.

There are stark differences to the colonial era, however.

Outside players must contend with increasingly assertive local powers, particularly Turkey, Saudi Arabia and Iran itself, keen to fill the gap left by a U.S. pullback. To make matters more complex, the “Arab Spring” overturned long-held assumptions of stability and the control governments can exert on events.

“Things are becoming less manageable as the region degenerates into deepening socio-economic malaise,” says Asher Susser, professor of Middle Eastern politics at Tel Aviv University, “Local trends are forcing external powers to pay attention and not vice versa.”

GLOBAL PRIORITIES

Nevertheless, the more muscular regional approach of Moscow and Beijing in particular appears already increasingly tied to their wider global agendas.

Russia’s support for Syria’s Bashar al-Assad is seen largely as a move to defend its Cold War-era foothold in the country as well as block the road to future Libya-style intervention. With presidential elections due later this year, Prime Minister Vladimir Putin is seen keen to show himself facing down the West and making his mark beyond Russia’s borders.

With both Moscow and Beijing facing an uptick in protest on their own territory in the last year, neither has any desire to watch another autocratic leader dragged from office. If the Kremlin allows passage of an Arab League proposal to the U.N. Security Council for Assad to yield power, it will do so only with great reservations and provision excluding military force.

With its own colossal energy reserves, Moscow has little need to keep the region’s energy states on side. China’s dependence on Middle Eastern oil and gas, however, is expected to rise further in the years to come, perhaps drawing Beijing ever deeper into its conflicts and politics whether it wants to be or not.

If the United States succeeds in its ambition to become more energy self-sufficient with new technology and greater domestic resource exploitation and pulls back from the region, some believe China could even become the pre-eminent external power in the Middle East — perhaps in a growing rivalry with India, also pulled in by its energy needs.

In the shorter term, there are clear signs the face-off over Iran’s nuclear program may also be tied into a wider growing geopolitical rivalry with the West. With Beijing increasingly concerned over the buildup of U.S. forces in its immediate neighborhood, some voices argue Iran plays a useful role in keeping US forces deployed elsewhere.

“The US strategic adjustment highlights the importance of Iran to China,” said an editorial in China’s English-language Communist Party-published “Global Times” on January 6 after Washington unveiled its new Asia-facing defense strategy. “Iran’s existence and its stance form a strong check against the U.S. China should not treat Iran following US cultural, social and political values.”

Chinese officials might be willing to use sanctions to negotiate better oil prices from Iran, but there seems relatively little prospect that they will stop buying even if Tehran’s rival Saudi Arabia makes up the difference in output.

“Each time the West tightens the leash, Beijing quietly avails itself of the slack,” says Thomas Barnett, a former strategist for the U.S. Navy and now chief analyst at political risk consultancy Wikstrat. “The more explicitly Washington bases its global strategic military posture on the perceived Chinese threat, the more Beijing will welcome – and even overtly encourage – these diversions.”

REGION TIRED OF US DOMINANCE?

In Washington, Tel Aviv and elsewhere, there are openly discussed worries a more assertive China and Russia could prove “drivers of instability,” extending a lifeline to regimes the West would rather see isolated and weakened.

For Israel in particular — long a beneficiary of U.S. power in the region and already somewhat struggling to manage relationships with a more assertive Turkey and post-revolution Egypt less influenced by Washington — that could prove an awkward dynamic.

Moscow and Beijing, however, say their aim is simply to secure peace and avoid conflict — particularly important to a China desperate to maintain the flow of Gulf oil and avoid the kind of global economic shock a regional war would produce.

The West’s actions in Iraq in particular, officials from both powers argue, did little to improve regional stability. A “pre-emptive” war in the Gulf, they say, could ultimately prove just as dangerous as a nuclear armed Iran.

With the “Arab Spring” in part a rejection of a US policy of backing autocratic “client states,” some even in the US believe such arguments could play well amongst Middle East populations.

“The regional public is tired of the same superpower exerting its will on the region,” says Alvi at the US Naval War College. “They might just set out the welcome mat to the Chinese.”

But others say it is far too soon to write off the United States, at least as long as its military remains by far the most potent force in the area and the primary guarantor of security for many of its states.

“The entire issue of American decline — globally and in the Middle East particularly — is overblown and exaggerated,” said Robert Satloff, executive director of the Washington Institute for Near East Policy. “The day I see Middle Easterners lining up outside the Chinese embassy for visas, sending their kids to Chinese universities or preferring that Chinese aircraft carriers — and drones and missile defense systems etc — protect their territory and assets, then we can have a serious discussion about decline.”

Source: Bloomberg By Chinmei Sung and Yu-Huay Sun

Taiwan President Ma Ying-jeou named Sean Chen as premier, choosing an official who oversaw the island’s markets during the 2008 financial crisis to revive growth in an economy expanding at the slowest pace in two years.

Chen announced later yesterday that Christina Liu, head of the Council for Economic Planning and Development, would be finance minister. The appointments were part of a leadership transition after Jan. 14 elections saw Ma win a second term and the ruling Kuomintang party keep its majority in parliament.

Appointing Chen suggests that Ma’s main priorities in his next four-year term will be restoring growth and helping Taiwan’s export-driven economy weather the global economic downturn, said Ellen Shen, a Taipei-based fund manager at Union Securities Investment Trust Co. Taiwan’s economy expanded 1.9 percent in the fourth quarter, the slowest pace since the third quarter of 2009, the statistics bureau said yesterday.

The Taiex Index gained 1.5 percent to close at 7,517.08, the highest since Nov. 14, before Chen’s appointment was announced. The index has risen 5.8 percent since Taiwan’s Liberty Times reported on Jan. 16 that Ma may appoint Chen his premier.

“The global economic slowdown is the biggest challenge facing the new Cabinet,” Shen said. “Chen should be able to handle it, given his background in economy and finance.”

Slower Growth

The government’s challenges became clear after the statistics bureau released yesterday’s economic data, which showed the economy had entered a technical recession. The economy contracted 0.25 percent last quarter from the prior three months, shrinking for a second successive quarter, yesterday’s report showed.

The 1.9 percent growth rate for the last three months of 2011 was the slowest since a 1.41 percent contraction in the third quarter of 2009, according to data compiled by Bloomberg. The median estimate of nine economists in a Bloomberg News survey was for a 2.8 percent expansion.

Europe’s sovereign-debt crisis is hurting Asian exporters from Singapore to South Korea, and policy makers have either cut borrowing costs or refrained from further increases in recent meetings.

“Faltering external demand proved to be a considerable drag on investment, and hence GDP growth,” Raymond Yeung, a senior economist in Hong Kong at Australia & New Zealand Banking Group Ltd., said after the report. “But I don’t think the trend will continue in 2012. Political uncertainties have waned” after the Kuomintang’s re-election.

Victory Signal

Ma saw his victory as a signal that voters don’t want major policy or leadership changes in his second term, according to government spokesman Philip Yang.

“There’s continuity in the government,” Yang said. “Taiwan weathered the financial tsunami and Europe debt crisis better than a lot countries, recovering in a very short period of time.”

Chen has served as deputy finance minister and headed the Financial Supervisory Commission. Liu was chief economist at Chinatrust Financial Holding Co. before she became minister of the Council for Economic Planning and Development. She was also a member of the Cabinet’s tax reform committee between 2008 and 2009.

Chen also announced that Jiang Yi-Huah, the current interior minister, will be promoted to vice premier.

Campaign Promises

Ma won re-election after making campaign promises to push ahead with his policy of closer ties with China. He restored air, sea and postal links for the first time in six decades during his first term and signed trade agreements with the mainland.

The new parliament will take office today, while Ma and Vice President-elect Wu Den-yih, the outgoing premier, will take office on May 20.

Overseas sales, which are equivalent to about two-thirds of Taiwan’s economy, rose at the slowest pace in 26 months in December. Export orders, an indication of shipments in the next one to three months, fell last month for the first time since 2009 as demand from China and Japan declined.

Slowing overseas demand is already affecting Taiwan’s manufacturers and the nation’s job market.

HTC Corp., Asia’s second-largest smartphone maker, this month reported its first quarterly profit decline in two years. Nanya Technology Corp. and Inotera Memories Inc., Taiwan’s second- and third-largest memory-chip makers, reported their eighth quarter of losses as slowing demand for personal computers pushed down prices.

Source: Wall Street Journal By Jeremy Page and Mark Peters
 
MUSCATINE, Iowa—This small city on the Mississippi River has long boasted that Mark Twain briefly called it home in 1854. Now, residents realize they have a more unusual bragging point: Muscatine played a minor but memorable role in the ascent of Xi Jinping, the man expected to become China’s top leader this fall.

Twenty-seven years ago, Mr. Xi, then an up-and-coming official in a pig-farming region in China, led an animal-feed delegation to Iowa. He toured farms, visited a Rotary Club and watched a baseball game. He spent two nights in the split-level home of a Muscatine couple, sleeping amid the Star Trek toys on display in the bedroom of their two boys, who were away at college. It is believed to have been his first trip outside China.

On Feb. 15, one day after he visits the White House for the first time, Mr. Xi, now China’s vice president, plans to return to Muscatine and share tea with the people he met in 1985. His trip back to the American heartland appears intended to showcase what makes him so different from China’s current leader, Hu Jintao—a confident, personable style and easygoing familiarity with the U.S.

Chinese leaders have staged photo opportunities in the U.S. before. Deng Xiaoping donned a cowboy hat at a Texas rodeo in 1979. But none has ever made such a clear attempt to demonstrate a long personal connection to America.

Over the years, Mr. Xi, who is 58 years old, has made periodic trips to the U.S. His daughter attends Harvard. He has had regular dealings with U.S. officials and business leaders, including Henry Paulson, the former Treasury Secretary. When Vice President Joe Biden visited China last August, Mr. Xi accompanied him to the western province of Sichuan and shared dinner with him at a local restaurant.

China is on the cusp of a once-in-a-decade political change. In October or November, Mr. Hu and six other members of the nine-man Politburo Standing Committee, the top decision-making body, are set to retire. The Communist Party’s next generation of leaders, led by Mr. Xi, will take over at a time of slowing growth for the world’s second-largest economy and mounting public pressure to address a raft of social, economic and environmental problems.

Mr. Xi’s personality and relative popularity have raised hopes in some quarters, both inside and outside of China, that he will resume the kind of reforms that marked the 1990s but ground to a halt in the past 10 years. The U.S., for its part, is eager to see whether his ascent to Communist Party chief and president will lead to changes in the combative diplomacy that has alarmed many of China’s Asian neighbors in recent years and prompted the U.S. to focus more on the region in its military planning and diplomacy.

Mr. Xi is the most prominent member of a group known in China as “princelings”—the sons of well-known revolutionary leaders, many of whom grew up together. His father, Xi Zhongxun, helped lead Communist forces to victory, was purged in 1962, then was politically rehabilitated and helped oversee economic reforms before his death in 2002.

That background distinguishes Mr. Xi from the man he is expected to replace. Mr. Hu, whose father ran a tea shop, had to clamber up through party ranks. Once in power, Mr. Hu promoted and relied on people from a similar background, including current Vice Premier Li Keqiang, whom he favored as his successor.

Mr. Xi “is a key figure among princelings. His father was a very popular figure,” says Zheng Yongnian, an expert on Chinese politics at the National University of Singapore.”That makes him more confident, while at a personal level he’s much more knowledgeable about the West. I think he’s confident that he can consolidate power much faster than Hu did.”

Mr. Xi will have a greater familiarity with the West than any of his predecessors, including Mr. Deng, who studied in France in the 1920s and made a landmark visit to the U.S. in 1979 after diplomatic relations were re-established. Mr. Hu, like Mr. Xi, made his first foreign trip in 1985, but it was to North Korea, and he didn’t visit the U.S. until shortly before he took power in 2002.

Mr. Paulson, who last met Mr. Xi in December, describes him as a “strong, confident leader” with an easy manner, good communication skills and an understanding of the U.S. that has been growing since his first Iowa visit.

After meeting Mr. Xi for the third time last year, Henry Kissinger, the former U.S. Secretary of State, said: “He’s more assertive than Hu Jintao. When he enters the room, you know there is a significant presence here.”

Mr. Xi’s father is renowned within the party as one of its most capable and outspoken early leaders. After helping lead Communist forces to victory, he served as vice premier until he was purged in 1962 for supporting the publication of a book deemed critical of Chairman Mao Zedong. After his rehabilitation in 1978, he proposed and supervised the establishment of China’s first special economic zone, in the southern province of Guangdong—an important step in the nation’s emergence as a manufacturing powerhouse.

The senior Mr. Xi was a relative political liberal, speaking out in defense of a reformist party leader sacked in 1987 and condemning the violent 1989 crackdown on Tiananmen Square protesters, according to some people close to the party elite. That put him out of favor once again.

His roller-coaster political career made for a turbulent upbringing for his children. Xi Jinping was born into the relative luxury of a party leaders’ compound in Beijing. He was just nine years old when his father was placed under house arrest, which lasted for most of the next 16 years.

At age 15, Mr. Xi was among millions of Chinese students sent to work in the countryside during the Cultural Revolution. He was sent to the northern province of Shaanxi, where his father was famous for having helped to lead Communist partisans in the 1930s. “Everyone knew who his father was, so they treated him well,” says one person who knew the family well in the 1970s.

Mr. Xi didn’t return home for seven years. He lived for much of that time, according to state media, in a traditional cave dwelling in the village of Liangjiahe, where he dug ditches and explored ways to collect methane gas from animal waste.

In an interview with a state-run magazine in 1996, Mr. Xi said that during his youth he had “borne a lot more hardships than most people” because of his background. He told another reporter he was forced to denounce his own father, and had himself been jailed three times.

Nevertheless, he applied repeatedly to join the Communist Party while he was in the countryside, according to a 2003 essay by Mr. Xi. After being rejected nine times because of his father, he was accepted in 1974. His applications to the prestigious Tsinghua University in Beijing were rejected twice. He was accepted after his father arranged for a note to be sent to the university saying his political problems shouldn’t affect his son’s education.

By the time Mr. Xi graduated in 1979 with a degree in organic chemistry, his father was back in the party elite. Mr. Xi got a job as a personal secretary to one of his father’s old comrades in arms, Geng Biao, a vice premier and defense minister. That uniformed job would provide Mr. Xi with enduring connections to the military—something both Mr. Hu and his predecessor, Jiang Zemin, lacked.

Mr. Xi shed his uniform in 1982 and took a job as deputy Communist Party chief of Zhengding county, a pig-farming region in the northern province of Hebei. That is when he first met Terry E. Branstad, the current governor of Iowa, who visited Hebei in 1984 as part of a “sister-states” exchange. The following year, Mr. Xi led the animal-feed delegation to Iowa.

Sarah Lande of Muscatine worked for the exchange organization back then and hosted the delegation for dinner one evening. “Some people in town were wondering why we were hosting people from a Communist country,” she recalls. At the dinner, she says, “we were inquiring about China, and they were asking lots of questions, too. I remember hogs were very important to them as they needed more lean meat at the time.”

Mr. Xi’s group came to inspect the greenhouse where vegetable farmer Tom Hoopes was growing seedlings for sweet potatoes. “I kind of explained to them what I was doing,” Mr. Hoopes recalls. “Golly, I really don’t remember much more than that.”

Mr. Xi spent two nights at the four-bedroom home of Eleanor and Thomas Dvorchak. Ms. Dvorchak, who now lives in Florida, recalls that in the morning she would serve him tea—not coffee—before a car would pick him up for his daily rounds. When his translator was absent, she says, they struggled to communicate.

She says Mr. Xi gave them a bottle of Chinese spirits when he left. “Whoa, it was tough,” she recalls of the drink.

Back in China, Mr. Xi rose steadily in the party. The Hebei job led to one as deputy mayor of the eastern port of Xiamen, working for another protégé of his father. After that came powerful posts leading Fujian and Zhejiang, two of China’s most economically dynamic provinces, where he proved himself as a capable and business-friendly administrator.

While Mr. Hu was handpicked by Mr. Deng as a future leader 10 years before he took power, Mr. Xi emerged unexpectedly as heir apparent in 2007 through an informal vote within the party’s upper ranks.

When Mr. Xi assumes the top leadership posts, he will be the first among equals on the standing committee. His main duties will be to maintain unity and forge consensus among its members.

It remains to be seen whether Mr. Xi will be more assertive than Mr. Hu in handling bureaucratic and business interests that oppose reform, or the hawkish generals who have shaped China’s diplomacy in recent years.

Many Chinese regard him as a more likable figure than Mr. Hu, thanks in part to his easy smile and glamorous wife—famous folk singer Peng Liyuan—and common touch that some friends attribute to his years in the countryside.

Mr. Xi’s visit to Iowa years ago apparently made a lasting impression on him. John Tkacik, a former U.S. diplomat, recalls Mr. Xi telling him in 1991 that he also had visited Oregon and California, but most enjoyed his home stay in Muscatine.

When Mr. Branstad, the Iowa governor, met Mr. Xi last year on a trade mission to China, the vice president immediately recalled his visit to Iowa, the governor said in an interview.

“The first thing he said was: ‘I met you in your office in the state capital on April 26, 1985,’” Mr. Branstad said. “Then he named some of the people he met.”

Late last year, Mr. Branstad wrote to Mr. Xi to invite him back to Iowa, suggesting a reunion with his 1985 hosts.

About two weeks ago, the Chinese consulate in Chicago informed the governor they were considering the invitation. A few days later, the Chinese ambassador in Washington flew to Iowa to help with arrangements. The Chinese Embassy in Washington and the Foreign Ministry in Beijing didn’t respond to requests for comment.

Mr. Xi’s return to Iowa is partly diplomatic theater. He will be the most senior foreign leader to visit the state since Nikita Khrushchev came to inspect American agriculture in 1959 on the first visit to the U.S. by a Soviet leader. Mr. Xi’s trip is an opportunity to demonstrate the benefits of trading with China, which bought $627 million of Iowan exports in 2010, according to the U.S.-China Business Council.

Few people in Muscatine had any inkling of what had become of their long-ago visitor until they started getting calls about a reunion. Mr. Hoopes, the now-retired vegetable farmer, says that when he found out that one of the delegation was about to become China’s top leader, it “just blew my mind.”

Ms. Lande had traveled to China four times, but she hadn’t followed Mr. Xi’s career. She says she was surprised when the governor called her two weeks ago to tell her she might have a visitor.

Since then, she has been helping with preparations, including tracking down the people Mr. Xi met. She says the Chinese advance party had requested a photograph of the bedroom in which he slept. The Dvorchaks plan to travel up from Florida for his visit.

The reunion, Ms. Lande says, will be an informal affair, probably a teatime reception. “He only wants to meet with his old friends,” she says.

Source: Wall Street Journal By Tom Barkley

WASHINGTON—A World Trade Organization appeals panel ruled against China’s efforts to limit the export of raw materials used in the steel and chemicals industries, a decision that could provide the U.S. and Europe with ammunition against similar limits on China’s rare-earth exports.

U.S. Trade Representative Ron Kirk on Monday called the WTO decision a “tremendous victory.”

“Today’s decision ensures that core manufacturing industries in this country can get the materials they need to produce and compete on a level playing field,” he said in a statement.

China pledged to scrap export controls when it joined the WTO in 2001. But under pressure to retain raw materials for domestic needs, Beijing has gradually restricted exports, defending its curbs on environmental grounds, saying it needs to conserve some of the materials and limit the environmental impact of the production of others.

It has made similar arguments in defense of its export quotas on rare earths, 17 elements that are key to the production of high-tech products.

The WTO panel Monday confirmed that China’s export duties and export quotas on raw materials violated global trade rules and had to be changed. While WTO rules let countries restrict exports to protect the environment, it has said China hasn’t demonstrated that it accompanied the export restrictions with limits on domestic production or consumption of the materials.

The European Union and Mexico had joined the U.S. in the case, which began in 2009. The countries have argued that Chinese restrictions on the export of several raw materials—bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc—gave Chinese companies an unfair advantage by keeping the price of domestic raw materials low compared with prices in other parts of the world.

The case has been watched closely as the U.S. and others weigh how to increase pressure on China over rare earths, whose prices have climbed sharply due to China’s export quotas.

The appeals panel decision could result in an easing of exports of the coveted minerals, say U.S. and European officials.

“We certainly expect China to get rid of the export restraints,” a senior U.S. trade official said in an interview. “And to the extent that these export restraints cover a much broader set of products than just the one we brought—including rare earths—then we would expect them to move on those fronts.”

The official reiterated that the raw-materials ruling could help determine the course of action on rare earths, while adding that no decision has been made.

“Obviously we had some pretty serious concerns about rare earths to begin with, and this decision just compounds those. So we are looking at it very carefully,” the official said.

EU Trade Commissioner Karel De Gucht also signaled that the ruling has rare-earth implications. “China now must comply by removing these export restrictions swiftly and furthermore, I expect China to bring its overall export regime—including for rare earths—in line with WTO rules,” he saidin a statement.

Chinese officials “regret” the WTO decision, the Ministry of Commerce said on Tuesday, according to the state-run Xinhua news agency. In a statement on the ministry’s website, an official reiterated China has tightened oversight of high energy-consuming and polluting resources in recent years. “The WTO should not only uphold free trade but also allow members to take necessary steps to protect the environment and natural resources,” it said.

The appeals panel didn’t uphold all of the initial rulings that favored the U.S., Europe and Mexico, reversing findings on China’s export-licensing requirements, minimum export-price requirements and some administrative and fee matters. But the main ruling—that the export duties and quotas violate WTO rules—survived with the appeals panel rejecting China’s argument for the restrictions.

The WTO’s dispute-settlement body will decide whether to adopt the panel report within 30 days, after which China would have to come up with a proposal to comply with the ruling.

The ruling comes as the U.S. is taking a more muscular approach to conflicts with one of its major trading partners. President Barack Obama, in last week’s State of the Union address, said the U.S. was forming a high-level panel to deal with trade disputes with China.

“The Obama administration will continue to ensure that China and every other country play by the rules so that U.S. workers and companies can compete and succeed on a level playing field,” Mr. Kirk said.

The administration faces pressure political pressure—both in Congress and on the election trail—to take a bolder stance against China’s trade and currency policies. U.S. Sen. Sherrod Brown (D., Ohio) said he plans to call for more aggressive trade enforcement action against China on Tuesday, holding an event with labor leaders at the Capitol on highlighting American job losses caused by alleged Chinese unfair practices in the auto-parts trade.

Source: Wall Street Journal By Chuin-Wei Yap

BEIJING—China’s central government put a tight rein on the ability of a new breed of supersize iron-ore freighters to stop at Chinese ports, potentially complicating efforts by Brazilian mining company Vale SA to gain access to the lucrative market.

China’s Transport Ministry called for more stringent review for accepting such ships into ports. It also said port operators no longer would enjoy discretion in allowing dry-bulk and oil ships exceeding current weight limits to berth at the ports.

“The safety outlook regarding oversized ships is not good, and the risks from their stopping at ports is on the higher side,” the ministry said on its website Tuesday. China had given port operators discretion to permit oversize ships to berth three times a year.

The ministry’s statement stopped short of an outright ban on the ships, an apparent compromise in the face of competing agendas from Chinese companies that see profit and peril in the ships.

The move appeared aimed at Vale, one of the world’s largest producers of iron ore, a critical ingredient for making steel. Vale is counting on a new class of ships, known as very large ore carriers, with enough cargo capacity to offset the long distance its ships travel across the Pacific Ocean. Without them, the Brazilian miner has a disadvantage against Anglo-Australian rivals BHP Billiton and Rio Tinto, which ship iron ore from Australia.

A Vale spokeswoman in Shanghai declined to comment.

The bigger ships indicate the importance of China, which is the world’s largest producer and consumer of steel, to resource companies. And the ministry’s compromise move indicated their influence.

China’s steel industry had opposed allowing the ships, saying a large pile of iron ore at its doorstep would undermine the country’s attempts to set iron-ore prices. And the China Shipowners’ Association, which could face increasing competition from very large ore carriers, has called the ships “safety and pollution risks.” The association in December cited how the Vale Beijing, a VLOC, had to be towed for repairs after cracks appeared in its ballast tanks. Vale says the ships, also known as Valemaxes, are viable.

But as Chinese steelmakers have been less active in attempting to secure a unified iron-ore price, they have been less vocal in opposing the supersize ships. And the ministry’s decision not to ban VLOCs reflected the competing needs of Chinese shipowners, who view the ships as a threat, and shipbuilders, who want lucrative construction contracts.

“The shipowners don’t want VLOCs, but the shipyards do,” said Jay Hsiao, a Beijing-based executive with global ship broker Braemar Seascope. “Within China, there is a dilemma as well.”

China Rongsheng Heavy Industries Group Holdings Ltd. is building 12 of the superships for Vale and delivered its first in November. China Rongsheng competes with such shipyards as South Korea’s STX Pan Ocean Co., which also is building VLOCs for Vale.

The ministry on Tuesday revived a law enacted in March 2006 that spelled out a stringent 20-day review process that calls for expert opinions and the ministry’s permission to allow oversize ships to berth at Chinese ports. By the end of that year, that strict review had given way to allowing port operators the discretion to allow oversize ships.

The VLOCs, typically with capacities of 300,000-400,000 deadweight tons, are about twice the size of Capesizes, the next-largest class, at around 180,000 tons.

China’s largest berth currently appears to be Dalian, with a formal limit of 300,000 deadweight tons, Mr. Hsiao said, based on a review of the Netpas global maritime database.

A handful of Chinese port operators—including the ports of Qingdao and Dongjiakou in Shandong province and Zhanjiang in southern Guangdong province—have been renovating or building new berths to accommodate VLOCs.

Source: By Christopher Bodeen, Associated Press

BEIJING (AP) — The killing of a South Korean coast guard officer by a Chinese fisherman should have been tailor-made for China’s CCTV News as it embarks on an ambitious plan to become a global network with assertive international coverage.

Instead, according to CCTV employees, the story languished for hours as editors awaited political guidance from above, while would-be competitors such as Qatar’s Al-Jazeera reported extensively on December’s attack.

In charting its growth, CCTV is closely studying other models, especially Al-Jazeera, which rolled out a global English language 24-hour news network five years ago and quickly made a name for itself.

Qatar’s government bankrolled the station as part of its ambitions to parley its massive energy wealth into international influence, much as China is seeking global media stature behooving its booming economy, which now ranks second largest in the world behind the U.S.

But while Al-Jazeera’s access and deep knowledge of the Middle East — and a hands-off approach by its masters — have been its greatest assets, state-run CCTV’s emphatic allegiance to the authoritarian communist state and the party seem to be its biggest liability.

This greatly challenges CCTV’s credibility and agenda to influence and channel global public opinion, said David Bandurski, editor of the China Media Project website at the University of Hong Kong.

“The role of the media as defined by the (Communist) Party is to serve the party’s interests,” Bandurski said.

A longtime CCTV program producer who asked to remain anonymous because of the sensitivity of the topic said virtually everything in the news report is decided based on political considerations. The issues are discussed at meetings, but the decision always lies with the top bosses while the journalists have no say in the outcome, she said.

Still, CCTV is gearing up to supersize its global footprint this year in pursuit of swaying a foreign audience to China’s views and confronting what Beijing considers the Western media’s inate anti-China bias.

The network is opening studios in Washington and Nairobi, Kenya, each employing as many as 200 staffers. Worldwide, it will increase numbers of foreign correspondents from 66 to 80 by the end of 2012, with more to come, according to people familiar with the plans.

In Africa, CCTV has linked up with major satellite TV operator MIH Group and plans to operate upward of a dozen offices, according to Martyn J. Davies, director of the Center for Chinese Studies at Stellenbosch University in South Africa who has discussed the expansion with CCTV officials.

“China is a major player in Africa but its media has been very low key,” said Davies, who in 2004 helped set up Africa’s first Beijing-sponsored Confucius Institute for Chinese language studies.

Yin Fan, spokeswoman for CCTV’s international department, said the station was withholding comment until a formal launch of the expanded service. Individual employees said they had been told not to speak to the media about the expansion plans.

Many of the reporters, cameramen and technical staff are being lured from other news organizations with high salaries and attractive perks. One freelance reporter in east Africa said CCTV recruited him aggressively and agreed to almost doubled his fee from $350 to $600 dollars per report. It also offered him the chance to present his reports in front of the camera instead of passing the footage to others. The reporter asked not to be identified by name.

Veteran U.S. foreign correspondent Jim Laurie, hired to help in Washington, said on his website he was looking for experienced news professionals and that plans call for the U.S. operation to produce four hours of programming daily by June. Laurie declined to comment for this article.

At a time when budgets are tightening in news rooms, China’s government appears willing to pour billions of dollars into expanding its international media footprint. Hong Kong’s South China Morning Post newspaper has reported the total budget to be as high as 45 billion yuan ($7.1 billion), although no official announcement has been made.

Expansion plans found support after 2008, a year in which China’s image was walloped by protests among Tibetans and chaotic scenes accompanying the Beijing Olympic Torch on its journey around the globe, said Zhong Xin, a professor of mass media at Beijing’s elite Renmin University.

Many Chinese opinion makers also felt let down by Olympics coverage that praised China’s organization but also spotlighted political repression and stifling security, Zhong said.

CCTV was already broadening its overseas offerings to include programing in Russian, Arabic, Spanish and French, along with Chinese and English, claiming to reach 219 million households in 156 countries and regions. Programming is distributed on cable and satellite carriers in the U.S. as well as over the Internet. The Associated Press distributes a selection of CCTV news content to broadcast subscribers and also provides content and other services to the Chinese state broadcaster.
Many of the biggest stories emerging from China in 2011 are off-limits, including arrests of lawyers and dissidents and the detention of internationally famed artist Ai Weiwei. Reports on the much-criticized response to a deadly high-speed rail crash hewed to the official line, while unflattering stories such as December’s stabbing in the Yellow Sea that sparked anti-Chinese protests in Seoul can be downplayed or ignored entirely.

Still, even that marks an improvement from years past, says Renmin University’s Zhong.

“CCTV is basically trying to follow the model of CNN and BBC in delivering balanced information and reporting swiftly and from all angles,” she said. “We’ve seen major changes in the reports over the past few years, both in their content and the way they’re presented.”

Slick production values have been embraced, along with varied reports on sports, the economy, travel and culture.

Notwithstanding the cosmetic changes, the fact is that CCTV is controlled by the state.

Its head is appointed by the party and the latest pick, longtime Communist Party newspaper editor Hu Zhanfan, seems intent to cement its control. Shortly before his appointment in November, Hu upbraided journalists who placed the truth above loyalty to the party, saying news must always reflect “our party and country’s political stance.”

“It takes a lot more than very smart looking programs to overcome perceptions about China and the Chinese government,” said Anne-Marie Brady, who teaches at New Zealand’s University of Canterbury.

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Source: Reuters By Kazunori Takada and Samuel Shen

(Reuters) – China intends to establish Shanghai as the global centre for yuan trading, clearing and pricing over the next three years as part of broader plans to make the commercial hub an international financial centre by 2020.

The plan for Shanghai’s financial innovations through 2015, published jointly by the country’s economic planning agency and the Shanghai government on Monday, set goals on a wide range of areas aimed at further developing Shanghai, though some analysts said many of them appeared ambitious.

“This anticipated pace of development looks a bit quick to me,” said Frances Cheung, a strategist at Credit Agricole in Hong Kong.

China wants to transform Shanghai into an international financial centre on par with the likes of New York and London by 2020. That goal was set in 2009 by the State Council and analysts have taken it as a broad deadline for liberalizing the currency.

The state economic planning agency, the National Development and Reform Commission, outlined a series of goals under the 2015 yuan plan.

These included making the daily yuan mid-point published by the central bank in the onshore yuan market serve as the benchmark for both domestic and foreign yuan trading markets.

Currency traders interpreted the statement partly as a message from Beijing that the yuan’s movements, which have increasingly been influenced by the offshore market over the past few months, should be decided by the government.

“There have been recent developments that have put Hong Kong’s offshore market in the spotlight from time to time, such as its pricing of the yuan quite differently from the onshore market,” said a trader at a European bank in Shanghai.

“In this sense, the NDRC statement is published at a sensitive time and means the government once again wants to emphasize that it has the final say in the value of the yuan.”

The plan also aims to make the government-backed Shanghai Interbank Offered Rate (Shibor) the benchmark for yuan credit everywhere and targeting to more than double the annual non-forex financial market trading volume to 1,000 trillion yuan by 2015.

While the plan lacked details on how China would achieve these targets, analysts were skeptical on the feasibility of some of the planks in the platform.

“Shibor is not even a very well established benchmark onshore,” Cheung said. Markets currently use the government’s seven-day repurchase rate as the lending benchmark.

Analysts said the NDRC’s plan gave no fresh insight into how quickly China would liberalize its capital account, a crucial step in Shanghai’s attempt to become a global money hub.

China has taken a series of measures over the past two years to invigorate the offshore yuan market in Hong Kong as part of a longer-term plan to promote the use of the yuan overseas and make it a fully-convertible and international reserve currency along with the U.S. dollar.

Earlier this month, Britain said it was teaming up with its former colony to secure London a top spot as an offshore trading centre for the yuan.

The NDRC’s plan would not threaten Hong Kong’s current position as the main offshore yuan centre, analysts said.

“Promoting Shanghai as an onshore yuan centre complements Hong Kong’s growing role as an offshore yuan center, and should help to strengthen the circle of onshore-offshore yuan flows underpinning the yuan trade settlement process,” said Donna H J Kwok, economist at HSBC in Hong Kong.

China will also encourage overseas companies to sell yuan-denominated shares in its domestic stock markets, but the plan did not give a detailed timetable.

Authorities have been discussing launching a so-called “international board” on the Shanghai stock exchange for listing foreign companies’ shares, seen as a centerpiece for the 2020 goal, but the city’s mayor said this month that the time was not currently right for its launch.

Shanghai will explore M&A opportunities involving overseas stock exchanges to increase its global clout, the NDRC’s plan said without elaborating.

Source: Reuters

(Reuters) – China’s economic planning agency and the Shanghai government have published a plan laying out the next few years of financial innovation in Shanghai, with the aim of turning it into a global financial centre by 2020.

Shanghai, however, still faces a struggle in attaining that goal. One of the disadvantages China’s most populous city faces is that China’s key economic policymakers and most top local and foreign banks are based in the capital city of Beijing.

Below is a list of key financial institutions in China and where they are based.

BEIJING

- The People’s Bank of China (PBOC). The central bank has its market-related operations headquartered in Shanghai but the top policymakers, including the governor, are based in Beijing.

- The State Administration of Foreign Exchange, the currency regulator, which is a unit of the central bank.

- All three financial industry regulators — the China Banking Regulatory Commission, the China Insurance Regulatory Commission and the China Securities Regulatory Commission.

- The National Development and Reform Commission, a powerful central planning agency responsible for formulating economic and social strategies.

- All the top four state-owned banks: Industrial and Commercial Bank of China, China Construction Bank, Bank of China and Agricultural Bank of China.

- China headquarters of most of the major Western investment banks, including JPMorgan, UBS, Deutsche Bank and Goldman Sachs.

SHANGHAI

- The Shanghai Stock Exchange, the country’s biggest bourse.

- The Shanghai Futures Exchange, the country’s biggest commodities exchange.

- China Financial Futures Exchange, the country’s only such futures market. Currently there is only one product being traded — the CSI300 Index Future for 300 Shanghai- and Shenzhen-listed firms.

- The PBOC’s Shanghai head office, which is in charge mainly of the central bank’s market-related functions, such as its bill sales and overseeing the interbank market.

- China Foreign Exchange Trade System (CFETS), an interbank market under the central bank, where trading in the yuan and other currency pairs, lending and borrowing rates, and government bonds takes place.

- Bank of Communications, the country’s fifth-biggest lender.

- The locally incorporated commercial banking units of a number of major Western banks, including Citigroup, HSBC Holdings, Standard Chartered and Royal Bank of Scotland.

- Morgan Stanley has moved its China headquarters to Shanghai from Beijing.