Chinascope – Page 1028

Scholar: Protect the Dollar Value of China’s Holdings of U.S Debt.

Sun Lijian, a Professor of Finance and Vice Dean of the School of Economics at Fudan University, wrote an article in Shanghai Securities News recommending that China should expand Shanghai’s offshore settlement business to control the dollar value of its holdings of U.S. debt. “When they (the United States) threatened to default, we realized how critical it is for China to … internationalize the renminbi.” Sun recommended that China leverage Shanghai as an international financial center and proactively expand the Asian dollar offshore settlement business. This would enable China to get around the bottleneck from the absence of a market mechanism for adjusting the exchange rate and the interest rate, the lack of international finance professionals, and the deficiencies in risk management. That, wrote Sun, would allow China to protect, to the maximum extent, the dollar value of its holdings of U.S. debt, and buy time for China to internationalize the renminbi.

Source: Shanghai Securities News reprinted by Qiushi, August 1, 2011
http://www.qstheory.cn/jj/jjyj/201108/t20110801_98836.htm

Briefings | | August 4, 2011 | Economy/Resources

China’s Defense Minister Promotes Military-Civilian Integration

In an article in Qiushi, China’s Defense Minister, Liang Guolie, a member of Chinese Communist Party’s Central Military Commission, stated that the ultimate purpose of the military-civilian integration strategy is to develop the country’s prosperity and empower the military, both being the cornerstones of the rise of China. The military-civilian integration consists of four major tasks: 1. Establish and perfect scientific research & development (R&D) of military armaments; 2. Establish and perfect a mechanism to train and retain military talent; 3. Establish and perfect information sharing by leveraging civilian information technology; and 4. Establish and perfect the national defense mobility system, including the militia and reserves.

Source: Qiushi, August 1, 2011
http://www.qstheory.cn/zywz/201108/t20110801_98732.htm

Briefings | | August 4, 2011 | Defense/Military

State Think Tank Critical of Secretary Clinton’s Remarks on India

Xinhua reprinted a commentary from Jiefang Daily that Wang Yusheng, the Executive Director of the Centre for Strategic Studies at the China Foundation for International Studies, wrote about U.S. Secretary Clinton’s speech made during the U.S. – India Dialogue. According to Wang, Clinton “encouraged and urged India” to play a role in the east. The title of the commentary was “Hilary: You Cannot Hurt China; You Only Exposed Yourself." Wang stated that the objective of Secretary Clinton’s remarks was to instigate fights and contain China. “Although the U.S. neo-conservative idealists expected tension between China and its neighboring countries, it did not occur. This was not because of the U.S. ‘hard power’ and ‘soft power’ or its much relished ‘smart power’; rather, it was the result of China’s ‘affinity power.’” The negative behavior of the U.S. toward China “cannot hurt China and merely brings to light the dark side and the vulnerability of its international behavior.”

Source: Jiefang Daily reprinted by Xinhua, August 1, 2011
http://news.xinhuanet.com/world/2011-08/01/c_121750738.htm

Briefings | | August 4, 2011 | US-China Relations

China Review News: China’s Stimulus Package Now Hurts Its Growth

China Review News published a commentary stating that, though China’s loose monetary policy quickly stimulated the economy, its residual effect has been to dampen China’s economy. First, a huge amount of loans has built up inflation pressure. The CPI has kept increasing since the fourth quarter of 2010; it reached a peak of 6.4% in June 2011. Since 2010, the People’s Bank of China has been forced to raise the deposit reserve ratio 12 times and the interest rate 4 times. This credit tightening causes economic growth to slow down. The unemployment rate may shoot up as small-and-mid-level businesses face challenging times to get loans.

Second, in 2008, by issuing bonds, local governments financed 70% of the government’s 4 trillion yuan ($US600 billion) stimulus package. By the end of 2010, local government’s debts had jumped to 10.7 trillion yuan ($US1.6 trillion). Local government’s inability to pay back the loans will hurt banks. The large local government debts also hinder the central bank’s ability to fight inflation, as higher interest rates makes it harder for local governments to pay back their loans.

Third, China’s efforts to cool down the overheated real estate market will hurt construction and other real estate related industries.

Source:
China Review News, August 3, 2011
http://gb.chinareviewnews.com/doc/1017/8/3/8/101783832.html?coluid=1&kindid=0&docid=101783832&mdate=0802001129

Briefings | | August 3, 2011 | Economy/Resources

CCTV Finance Channel: How to Deal with the Sky-High U.S. Debt

On People’s Daily Online, Niu Wenxin, Managing Editor and Chief Commentator of the CCTV Finance Channel, commented on the “sky-high" U.S. debt. Niu argued that, technically speaking, the U.S. government is already bankrupt. The total U.S. debt in 2007 was $US73 trillion, including hidden debts such as social security liability and bonds issued by companies with government guarantees or by local governments, but the total of U.S. current assets is only $US50 trillion. “The best choice for the U.S. is to repudiate its debt” and “force other countries to accept U.S. debt restructuring.”

“It is a ‘zero-sum’ game. If the U.S. wins, other countries (including China) will lose.” Niu then listed four reasons why China should not tighten its monetary supply: 1. Such a tightening will suppress economic growth. 2. It may lead to a financial crisis and recession in China. 3. It will cause higher unemployment. which in turn will result in social unrest and challenges to the CCP’s ruling position. 4. Europe is trying to hang on to the U.S. and hopes China will be sacrificed.

Source: People’s Daily Online, August 1, 2011
http://finance.people.com.cn/GB/15294964.html

Briefings | | August 3, 2011 | Economy/Resources

Central Military Commission Requests Military Study Hu’s Speech

On August 2, 2011, the Central Military Commission issued “The Opinion on In-depth Study of (Party) General Secretary Hu Jintao’s Important Speech at the Chinese Communist Party’s (CCP’s) 90th Anniversary Celebration.” The "Opinion" stressed that “when studying (Hu’s) speech, one should firmly stick to the fundamental political requirements to hold (high the CCP’s) banner and follow the Party’s direction, forever maintain faith in Marxism, forever maintain faith in socialism with Chinese characteristics, forever maintain the stand that the party has absolute leadership over the military, and forever maintain trust in the Party Central Committee that is under Hu’s leadership to ensure that the military resolutely follows the direction of the Party Central Committee, the Central Military Commission, and President Hu.”

The opinion requested that “Party committees at all levels in the military should put the study in a prominent position. The Party secretary should fulfill the responsibility of the person-in-charge to carry out the mission."

Source: Xinhua, August 2, 2011
http://news.xinhuanet.com/politics/2011-08/02/c_121760949.htm

Briefings | | August 3, 2011 | Defense/Military

Xinhua: China Building Hydropower Station in Zambia

Xinhua recently reported that construction started on July 20, 2011, on the Zambian Kafue Gorge Lower Hydro-power Station. The China Water & Electric Corporation (CWE), the China-Africa Development Fund, and Zambia Electricity Supply Corporation Limited (ZESCO) funded the project. The President of Zambia attended the opening ceremony and welcomed the Chinese investment. The capacity of the power plant is 750,000 kw. The construction project is expected to take 6 years to complete. Once the plant starts producing, CWE will remain as a primary shareholder .

Source: Xinhua, July 21, 2011
http://news.xinhuanet.com/2011-07/21/c_121697509.htm

Briefings | | August 2, 2011 | Geo-Strategic Trend

Politburo: Maintain Strong Control of the Real Estate Market

According to China Review News (CRN), a Politburo meeting chaired by Hu Jintao on July 22 reported that China’s general economic health is positive, but the issues of imbalance, inconsistency and unsustainability are still very pronounced. New issues are also coming up due to the changes in the international and domestic environments. The primary goal of macroeconomic management is to stabilize the overall consumer price level, which includes maintaining strong control over the real estate market. The meeting also emphasized the firm position of lowering the rate of increase in housing prices and speeding up the development of low-income housing projects. The meeting called for unifying all thoughts and actions on all administrative levels towards the direction that the Party Central Committee pointed out.

Source: China Review News, July 22, 2011
http://gb.chinareviewnews.com/doc/1017/7/5/4/101775457.html?coluid=151&kindid=0&docid=101775457&mdate=0722214159

Briefings | | August 2, 2011 | Economy/Resources

Wu Guoguang: Xi Jinping’s Reversal of the Course, Will China’s Transition be Peaceful or Marked with Bloodshed?

Cheng Xiaonong: U.S.-China Strategic Relations Have Crystallized

Xinhua Commentaries: “Exposing the Three Major Political Deficits of the U.S.”

The CCP’s Performing Arts Troupes in the U.S.