by Cheng Guangjin, China Daily, Nov. 27, 2009 --

The Foreign Ministry returned fire in a war of words with the chairman of the American Institute in Taiwan over an interpretation of a joint statement issued after last week's meeting between US President Barack Obama and President Hu Jintao.

"Taiwan is an inseparable part of China," said ministry spokesman Qin Gang. "Respecting China's sovereignty and territorial integrity certainly applies to Taiwan."

Qin was responding to Raymond Burghardt's remarks on Tuesday that the US government admits that the autonomous regions of Xinjiang and Tibet are parts of the mainland, but that the island of Taiwan is not mentioned in the communiqu.

Burghardt also said, with respect to the joint communiqus signed by the US and China in 1972 and 1979, that simply because US "acknowledges" that Taiwan is part of China, it does not mean that the US "recognizes or accepts" that the island is one with the mainland.

The language in the documents from the 1970s state that the US "acknowledges there is only one China, and Taiwan is part of China".

Burghardt's controversial remarks are an indirect explanation for his statement earlier this week that the US will sell jetfighters to Taiwan.

Mainland officials expressed strong dissatisfaction on Wednesday of the announcement of the arms sale.

"China firmly opposes the US' arms sales to Taiwan," said Yang Yi, spokesman of the State Council's Taiwan Affairs Office. "China's stance on this matter is consistent, clear and resolute."

Burghardt was also hoping to soothe Taiwan politicians who are worried about a possible shift in US policy toward Taiwan, said Tao Wenzhao, a US studies expert at the Chinese Academy of Social Sciences.

"The US regards it as a matter of credit to keep its promise to guard Taiwan's safety, as it is written in the Taiwan Relations Act," Tao said.

The Taiwan Relations Act was passed in 1979 by the US Congress but has never been recognized by China.

"Taiwan becomes nervous every time the mainland and the US meet," said Tao. "Taiwan fears the US will change its attitudes toward it."

The mainland's stance on the island was affirmed yesterday when foreign ministry officials urged Myanmar authorities to protect the safety and rights of Chinese sailors recently detained by the Myanmar navy.

The ministry called on Myanmar to appropriately handle the issue.

Four Taiwan sailors and one mainland fisherman were seized for alleged illegal fishing, Qin said yesterday.

The five were among 128 members of 10 fishing boats intercepted by Myanmar's navy on Nov 18 probably because they had intruded into Myanmar's exclusive economic zone.

The Chinese embassy in Myanmar is carrying out an investigation into details of the incident and has requested a visit to the detained Chinese, Qin said.

"We have been consistent in protecting the safety and rights of overseas Chinese, no matter if they are from the mainland, Hong Kong, Macao or Taiwan," Qin said.

Posted by Andy Yee, Global Voices, Nov. 26, 2009 --

Could the world's lone but weary superpower actually learn something from China? This is a question the Time magazine posted when President Barack Obama began his first visit to China. The article said this is a time when China has ‘emerged as a dynamo of optimism, experimentation and growth', while the US economy is foundering. This is a moment of humility for the US.

The article has identified five lessons from China’s success stories. Meanwhile, Xu Ben (徐贲) and Tan Mintao (谭敏涛), a Chinese scholar and lawyer respectively, has each written comments on these lessons in their blogs. . . .

 Reuters, Nov. 26, 2009 --

BEIJING — China faces a protectionist backlash next year because its manufacturers are saddled with overcapacity and are disposing of its excess output on world markets, the European Union Chamber of Commerce in China said Thursday. Jörg Wuttke, the head of the business group, said it would take about 12 months to prepare a case alleging dumping, the practice of selling goods for less than it costs to produce them. “This lead time would indicate to me that in the second half of 2010, there will be far more dumping cases against China, unfortunately,” Mr. Wuttke said.

He was speaking at the introduction of a study into industrial overcapacity in China, a longstanding situation that the chamber believes has grown more serious as a result of the global financial meltdown and Beijing’s aggressive response to it. “The crisis has throttled demand for exports from China at a time when even more investment, in the form of the Chinese government’s massive stimulus package, is being pumped into building new plants and adding unnecessary capacity,” the report said. “As a result, the problem is actually getting worse in many industries,” it said.

In a survey of the chamber’s members, 56 percent of respondents identified local government policies aimed at luring investment as the main macroeconomic reason for overcapacity; loose lending was the second most frequently cited cause.

Mr. Wuttke welcomed efforts by the central government to curb new capacity but said it was often powerless in the face of local governments that craved new factories for the tax revenue and jobs they could generate and that have done everything to keep existing plants from going under. “Local protectionism kicks in,” Mr. Wuttke said. “So even if Beijing sees a problem and wants to tackle it, they are very often derailed by local politics.” Apart from generating trade friction, rampant overcapacity would weigh on foreign direct investment into China.  “Why would you invest if that market is already oversupplied?” he asked.

By wasting resources and eroding profits, overcapacity deters research and development and encourages companies to cut corners on health and safety standards as well as environmental protection. Further, the creation of unneeded capacity raises the risk of nonperforming loans for banks that finance the investment. It also generates trade tension as producers sell their surplus production overseas at cut-rate prices, the study said.

The State Council, China’s cabinet, recently singled out the iron and steel, cement, electrolytic aluminum, glass, coal, chemical, polysilicon and wind power equipment sectors as the worst offenders when it came to overcapacity and announced steps to rein in their expansion. The chamber applauded the cabinet’s actions but said the fundamental answer was to shift from investment-led and export-led growth and to focus more on domestic consumption and services. The report made a series of recommendations that amounted to a root-and-branch overhaul of China’s economic model.

The recommendations included the redistribution of national income from companies to households. It said state-owned enterprises should disgorge dividends for the government to spend on social security, health and education instead of plowing profits back into fresh investment. It also recommended a sharp reduction in corporate capital expenditure in coming years. In addition, the report said that China should remove subsidies for energy and other inputs, which are provided indirectly by households. Claiming that the manufacturing sector has become addicted to these subsidies, it recommended increasing resource and environmental charges.

Source: China Seen Facing Protectionist Backlash Next Year - NYTimes.com

by Juliet Eilperin, The Washington Post, Nov. 25, 2009 --

The percentage of Americans who believe global warming is happening has dipped from 80 to 72 percent in the past year, according to a new Washington Post-ABC News poll, even as a majority still support a national cap on greenhouse gas emissions. . . .

by Taras Kuzio, Eurasia Daily Monitor -- Volume 6, Issue 215, Nov. 20, 2009 --

Ukrainian Presidential Candidate Arseniy Yatseniuk’s Foreign Policy

(Ukrainian Presidential Candidate Arseniy Yatseniuk). In 2008-2009 Arseniy Yatseniuk grew rapidly in popularity and was seen as the rising star of a “new generation of Ukrainian politicians,” with some even touting him as “Ukraine’s Obama” who would inevitably prove “pro-Western.” Evidence of Yatseniuk’s pro-Western stance was seen when he promoted Ukraine’s trans-Atlantic integration as foreign minister in 2007-2008, his election in the first five candidates of the pro-Western Our Ukraine-People’s Self Defense bloc in the 2007 elections and his signature (together with President Viktor Yushchenko and Prime Minister Yulia Tymoshenko) on a January 2008 letter to NATO requesting a Membership Action Plan for Ukraine.

These assumptions about Yatseniuk were not based on his statements or election program, which was only released in October (www.frontzmin.org). Yatseniuk’s foreign policy shift away from Brussels and Moscow is described by Ukrainian experts as “isolationist” or a nationalist third-way.

In June 2009, Yatseniuk’s main financial sponsor –oligarch Viktor Pinchuk– pressured him to exchange Ukrainian for Russian political technologists: Timofei Sergeitsev, Dmitry Kulikov and Iskander Valitov (www.proua.com, July 3; Ukrayinska Pravda, July 21-22). These political technologists had a poor reputation –they had not only worked in Viktor Yanukovych’s 2004 dirty election campaign, but also belonged to the State Duma Expert Council controlled by the Ukrainophobe Konstantin Zatulin who is banned from entering Ukraine.

Russian political technologists moved Yatseniuk away from his pro-Western orientation to a Ukrainian “third way,” isolationist-nationalist platform. In an interview in Korrespondent (July 31), Yatseniuk praised the former Russian President Vladimir Putin for bringing order to Russia. When asked if he wanted to be a “Ukrainian Putin” he replied that he planned to be neither a “Putin” nor an “Obama,” indicating the isolationist-nationalism position he was adopting. Yatseniuk has also used the global economic crisis to become a critic of liberalism (wwwfrontzmin.org).

Since last summer Yatseniuk has abandoned the pro-NATO position that he held in 2007-2008. In a lengthy interview in Komsomolskaya Pravda v Ukraini (July 31-August 6), Yatseniuk stated his now often repeated phrase that Ukraine is not being invited into NATO or the E.U. and, therefore, membership in both organizations is currently not an issue for the country. Yatseniuk’s election program, speeches and statements call for a new “Eastern European union” of countries not given a membership option by the E.U. which he defines as “Greater Europe” (Komsomolskaya Pravda v Ukraini, September 28). . . .

by Si Tingting, Efforts underway to cool hot money flow, China Daily, Nov. 27, 2009 --

After a string of emerging countries - including India, Indonesia, Thailand and Brazil - began to target the flow of short-term speculative capital, many experts believe China will step up its efforts to control the flow of so-called hot money.

The deputy governor of China's central bank, Yi Gang, said on Wednesday Chinese authorities will increase surveillance on flows of speculative money. And on the same day, the State Administration of Foreign Exchange tightened rules on individuals transferring yuan and foreign exchange between bank accounts.

Many analysts interpreted the rules as a way to control cross-border transfers, an important channel for hot money flowing into China.

Under the rules, individuals and companies from overseas can no longer send foreign currency to five or more Chinese individuals for conversion into yuan on a single day or on consecutive days.

In addition to more scrutiny of cross-border fund flows, China's policymakers are "likely to increase support for outbound investments", said Jing Ulrich, chairman of China Equities and Commodities at JPMorgan.

However, Liu Yuhui, director of the Center for Chinese Economic Evaluation at the Chinese Academy of Social Sciences, warned that the rule may have limited impact on the influx of hot money, because there are other ways speculative capital can enter China - including through current accounts.

Although there is no official data on how much hot money flows into China, Liu and other economists believe it is substantial.

"Since the second quarter of this year, there has been a mysterious infusion of about $30 billion poured into the nation's already huge foreign exchange reserves each month," said Liu.

Wang Yuanhong, senior economist with the State Information Center, said China is attractive to speculators because equity and property prices are at a relative low level and because there are fewer risks of policy tightening this year than next year.

Hot money has already helped fuel bubbles in the equity and property markets and added inflationary pressures.

Shanghai's dollar-denominated B-share index plunged 7.3 percent on Tuesday, after surging 26 percent earlier this month. Analysts blamed the rise on hopes that China would allow the yuan to appreciate. They suspect Tuesday's fall was down to a cooling off of such talk.

Li Wenjie, general manager of property agency Centaline China (North China region), told China Daily there had been a strong speculative sentiment in China's property market since mid-2009 and confirmed that many foreign investors were buying apartments in China, betting on surging property prices.

Chinese authorities will soon find themselves in a trap. Once the country starts to see inflation in 2010, the obvious response will be to appreciate the currency or raise interest rates, both of which will attract more hot money and fuel inflation.

The dilemma is deepened by recent indications that the US Federal Reserve may hold its rates steady until 2011.

by David E. Sanger and William J. Broad, NY Times, Nov. 26, 2009 --

The director general of the United Nations nuclear watchdog declared in unusually blunt language on Thursday that Iran had stonewalled investigators about evidence that the country had worked on nuclear weapons design, and that his efforts to reveal the truth had “effectively reached a dead end.”

ElBaradei, came four days before he is to leave office after 12 years at the head of the International Atomic Energy Agency. His remarks refocus attention on Iran’s alleged work on weapons design at the moment that the West is considering moving to harsher economic sanctions on the country, after Tehran backed away from a commitment it made in early October to temporarily send much of its nuclear fuel abroad.

Dr. ElBaradei’s remarks also came as President Obama’s end-of-year deadline is approaching to reassess whether the United States should move toward what Secretary of State Hillary Rodham Clinton has termed “crippling sanctions” on Iran. Israeli officials, meanwhile, have said they will not consider taking military action until Mr. Obama’s deadline runs out, leaving hanging the suggestion — maybe the bluff — that it is preparing for that possibility in 2010. . . .

Source: U.N. Nuclear Agency Calls Iran Inquiry ‘Dead End’ - NYTimes.com.

The following OECD publication(s) is/are hot off the press!:

Periodicals

OECD Economic Surveys: Denmark 2009

OECD's periodic review of Denmark's economy. This issue includes chapters covering the recent developments and policies to overcome the crisis, the decline in productivity growth, and human capital.

Now available from the Online Bookshop.

Also sold as a subscription.

Lamy calls for exit strategies on temporary trade restrictions and subsidies

Director-General Pascal Lamy, in his annual report on trade and trade-related developments in 2009, said that “although there have been instances of slippage, in general terms the world economy is about as open for trade today as it was before the crisis started.” He called on members “to devise and announce exit strategies to remove trade restrictions and production subsidies that they have introduced temporarily to counteract the effects of the crisis, and start implementing those strategies as soon as domestic economic recovery takes hold.”

> Trade and Trade-Related Developments in 2009
> Shaping factors for Trade: looking to the future

Source: WTO | News - What’s happening at the WTO.

[Xinhua, Nov. 21, 2009] --

China's Ministry of Commerce (MOC) announced Friday that it will maintain anti-dumping measures on some imported Toluene Diisocyanate (TDI) from Nov 21.

The anti-dumping measures target TDI, a widely used organic compound in the chemical industry, imported from Japan, the Republic of Korea, and the United States. The period will be five years.

China launched anti-dumping measures on TDI from those countries in 2003 for a period of five years, and launched an investigation into ending of the measures in November 2008, on the request of some Chinese companies.

The MOC said that if China suspended anti-dumping measures on the material, the domestic industry would continue to be harmed.

Press Release No:2010/148/PREM

Contact:

Alejandra Viveros 1 (202) 473-4306

aviveros@worldbank.org

WASHINGTON, November 18, 2009— Countries can contribute to a more robust recovery from the global recession by rapidly concluding the Doha Development Round (DDA), which could bring up to US$160 billion in gains, according to new World Bank research.

Released just days before the World Trade Organization’s (WTO) ministerial meeting in Geneva on Nov 30, Conclude Doha: It Matters! notes that now more than ever the completion of the Doha deal is a must, as it would create new market access, lock in existing market access openness, and boost real income for the world.

“There is a significant deal on the table that will help the global economy get out of the recession,” said Bernard Hoekman, World Bank Director for Trade. “A conclusion of the Doha Round will reduce the probability of protectionism, help reduce fiscal pressures by imposing limits on subsidies, and improve prospects for trade policy cooperation in other critical areas such climate change.”

According to the working paper, prepared by Bernard Hoekman, Will Martin, and Aaditya Mattoo, despite outstanding disagreements –on agricultural safeguards, the extent of liberalization commitments for merchandise trade, and the coverage of additional services commitments – the benefits of what is now on the table are larger than what many skeptics think.

According to the document, even by taking into account likely product exceptions and sensitivities, the modalities under consideration will generate increased trade that in turn could produce an additional US$160 billion in real income for the world. Average farm tariffs exporters face would fall to 12 percent (from 14.5 percent) and the tariffs on exports of manufacturers to less than 2.5 percent (from about 3 percent). Just as important, there are substantial opportunities for the DDA to deliver enhanced security of market access for services activities—which account for 60-75 percent of total employment and production in many countries.

Global trade volumes are expected to decline by some 10 percent in 2009. While an unavoidable consequence of the collapse in demand, trade will be critical for the recovery, especially for the many developing countries with small domestic markets that rely heavily on external markets as a source of employment and foreign exchange.

Apart from constraining the scope for tariff protection in all goods, the DDA would ban agricultural export subsidies in the industrial countries and sharply reduce the scope for distorting domestic support –by 70 percent in the European Union (EU) and 60 percent in the U.S.

On the environmental front, Conclude Doha: It Matters! notes there will be benefits from disciplining the use of subsidies that encourage over-fishing and from lowering tariffs on technologies that can reduce global warming. Over 75 percent of global fish stocks –crucial for food security in many developing countries—are over-exploited with a resulting annual loss for the world economy of US$50 billion.

According to the working paper, developing countries will benefit from a Doha deal as a result of reductions in high “peak” tariffs that constrain their exports. They also have much to gain from actions to reduce the costs of moving goods through borders and from taking advantage of the Aid for Trade initiative, which seeks to improve infrastructure, trade institutions and policies to help countries to exploit trade opportunities.

The Doha Development Round was launched eight years ago to help countries prosper through trade.

 WTO: 2009 NEWS ITEMS

23 November 2009

TRADE NEGOTIATIONS COMMITTEE

Lamy outlines busy week for senior Doha negotiators

Director-General Pascal Lamy, at an informal Trade Negotiations Committee meeting on 23 November 2009 kicking off the Second Senior Officials Week, outlined a programme of meetings covering agriculture, industrial goods, services, rules, trade-related intellectual property rights, and environment. He expressed the hope that the meetings “will help provide the momentum we need as we move towards the Ministerial Conference... (and) in setting the tone and preparing for the next Senior Officials Meeting in December.”

Thank you all for coming to this meeting.

As I foreshadowed in my fax to delegations on 10 November, the purpose of this meeting is to “kick-off”, so to speak, the Senior Officials Week. I am pleased to note the large number of Senior Officials that have made the trip to Geneva this week.

Delegations will all have seen the preliminary programme which was circulated on 10 November. That programme remains largely intact with a few minor modifications. In particular, the open-ended meeting of the CTD SS [Committee on Trade and Development - Special Session] originally planned for Tuesday afternoon no longer features on the programme. The Chairman believes that the meeting already scheduled for the 3rd Senior Officials Week in December is the more appropriate opportunity to review the status of work.

As I said in the fax, this programme has been compiled and circulated in the interest of transparency and inclusiveness and to provide delegations with the opportunity to organize themselves over the next few days. This continuing commitment to a predictable and transparent process will guide not only this Senior Official Week, but all of our work as we move to the Ministerial Conference and onwards to the next Senior Official Week in December.

Let me say a few words, more generally, how I see the activities of this week. First of all, and more generally, this second Senior Officials Week signals members' adherence to the Work Programme we developed together further to the call made by Ministers at the New Delhi meeting. This meeting will be followed by a third Senior Officials Week in mid-December. In other words, members are not taking their foot off the accelerator, even if we still seem to be moving at below Geneva city-centre speed limit!

In more specific terms, this week's meeting on agriculture will continue last week's engagement on templates and the Chairman may further explore a number of outstanding modalities issues, including the SSM [Special Safeguard Mechanism] where I understand useful technical engagement is taking place. I understand that various groups are also continuing talks on the issue of tropical products and that the Chair is hoping for a fuller picture of these talks to emerge in time for the December Senior Officials Meeting.

On NAMA [non-agricultural market access], I understand that this week's meeting will follow up and build on the positive engagement seen so far on NTBs [non-tariff barriers]. The Chairman also envisages a discussion of the questions that were made available to Senior Officials in October to frame the discussion over remaining open issues.

On services, the Chairman has indicated that he will be seeking to continue work on a draft text on the implementation of the LDC [least-developed countries] modalities, which has started taking shape. This is good news. In addition, I understand he will be addressing the domestic regulation disciplines that are currently in a text-based phase of the negotiations. He will also be consulting on GATS [General Agreement on Trade in Services] Rules.

In Rules, the Chair will be meeting in an open-ended format with the presence of senior officials to review the state-of-play in the Rules negotiations including the systemic issues of RTAs [regional trade agreements], where no serious engagement has taken place so far. This will be the first time that these issues will be addressed at a high level and I hope the Chair will get greater clarity on the programme of work moving forward.

In the TRIPS [Trade-related Aspects of Intellectual Property Rights] Special Session on Friday, the Chair will present his hand-over report which assesses the status of the negotiations and also presents suggestions for the way forward. Members will have the opportunity to put their views and reactions to the report on record.

On environment, a number of new proposals have been tabled very recently, and in particular on the environmental goods and services part of the mandate. This week could provide useful political focus over this chapter.

I hope these meetings, as well as other activities you will be engaging in this week, will help provide the momentum we need as we move towards the Ministerial Conference. I also believe this week will be important in setting the tone and preparing for the next Senior Officials Meeting in December. This time next week, the 7th Session of the WTO Ministerial Conference will be opening. This is the first time in almost four years that we bring together our political masters to review the activities of the multilateral trading system and provide the necessary guidance to the institution for the next few years.

We have all agreed that this regular Ministerial Conference will not be a negotiating session and that the DDA [Doha Development Agenda] negotiations are on their own, separate, Geneva-based track where we are trying to resolve remaining issues. At the same time, I think we agree that what is needed more than anything in the current economic situation is a platform for Ministers to exchange views on the entire WTO waterfront, the conclusion of the DDA being first among such issues.

The presence of Senior Officials here this week, I am convinced, provides a very appropriate and timely linkage between the Geneva process, capital-based Senior Officials and Ministers just days before our Ministerial Conference. In a way, your presence here this week offers a perfect opportunity to ensure that any disconnect between the Geneva negotiating platform and the signals coming from political masters in capitals is identified, scrutinized and resolved.

We will have an opportunity to elaborate on the outcome of this week's work at the informal TNC [Trade Negotiations Committee] on Friday afternoon. In the meantime the Chairs and myself remain available to consult with any delegation. I myself will be holding a Green Room on Thursday afternoon.

The good news today is that the CERN has managed to get its accelerator working again. In the interest of coherence I guess the WTO should now follow suit and seriously move to a higher speed.

This concludes my statement. Let me now open the floor to any delegation wishing to intervene at this stage.

The floor is open.

Source: WTO | 2009 News items - Trade Negotiations Committee - Statement by Pascal Lamy to the TNC, 23 November 2009

> More on the Seventh WTO Ministerial Conference
> Negotiations, implementation and development: the Doha agenda
> The Doha Declaration explained
> The Implementation Decision explained
> How the negotiations are organized
> The Trade Negotiations Committee

> Minutes of this meeting (issued as a restricted document and subsequently derestricted following the procedures for the circulation and derestriction of WTO documents).
> Minutes of previous meetings

by John Pomfret and Joby Warrick, Washington Post, Nov. 26, 2009 --

Before Obama's visit, NSC warned leaders of Mideast turmoil

Two weeks before President Obama visited China, two senior White House officials traveled to Beijing on a "special mission" to try to persuade China to pressure Iran to give up its alleged nuclear weapons program.

If Beijing did not help the United States on this issue, the consequences could be severe, the visitors, Dennis Ross and Jeffrey Bader, both senior officials in the National Security Council, informed the Chinese.

The Chinese were told that Israel regards Iran's nuclear program as an "existential issue and that countries that have an existential issue don't listen to other countries," according to a senior administration official. The implication was clear: Israel could bomb Iran, leading to a crisis in the Persian Gulf region and almost inevitably problems over the very oil China needs to fuel its economic juggernaut, said the official, who spoke on the condition of anonymity.

Earlier this week, the White House got its answer. China informed the United States that it would support a toughly worded, U.S.-backed statement criticizing the Islamic republic for flouting U.N. resolutions by constructing a secret uranium-enrichment plant. The statement, obtained by The Washington Post, is part of a draft resolution to be taken up as soon as Thursday by the 35 nations that make up the governing board of the International Atomic Energy Agency, the U.N. nuclear watchdog.

While largely symbolic, it is the first such declaration since 2006 to be backed by both China and Russia. And the statement marks a departure for China, which has long refrained from criticizing Iran's nuclear policies.

The issue of how China will handle the Iranian nuclear issue has emerged as an early test of what Obama has described as a relationship that "will shape the 21st century." . . . .

by David E. Sanger and William J. Broad, NY Times, Nov. 16, 2009 --

(In a September 2007 photo, antiaircraft guns are seen, left center, at Iran's main plant for nuclear enrichment in Natanz; Photo/Hasan Sarbakhshian/AP). WASHINGTON — International inspectors who gained access to Iran’s newly revealed underground nuclear enrichment plant voiced strong suspicions in a report on Monday that the country was concealing other atomic facilities. The report was the first independent account of what was contained in the once secret plant, tunneled into the side of a mountain, and came as the Obama administration was expressing growing impatience with Iran’s slow response in nuclear negotiations.

In unusually tough language, the International Atomic Energy Agency appeared highly skeptical that Iran would have built the enrichment plant without also constructing a variety of other facilities that would give it an alternative way to produce nuclear fuel if its main centers were bombed. So far, Iran has denied that it built other hidden sites in addition to the one deep underground on a military base about 12 miles north of the holy city of Qum. The inspectors were given access to the plant late last month and reported that they had found it in “an advanced state” of construction, but that no centrifuges — the fast-spinning machines needed to make nuclear fuel — had yet been installed. The inspectors said Iran had “provided access to all areas of the facility” and planned to complete it by 2011. They also said they had been unable to interview its director and designers.

(Iran’s Hidden Nuclear Facility; NY Times). The inspectors confirmed American and European intelligence reports that the site had been built to house about 3,000 centrifuges, enough to produce enough material for one or two nuclear weapons a year. But that is too small to be useful in the production of fuel for civilian nuclear power, which is what Iran insists is the intended purpose of the site. The plant’s existence was revealed in September, as many as seven years after construction had begun. . . .

[Xinhua, Nov. 20, 2009] --

China on Thursday rejected requests made by the United States, the European Union and Mexico to establish a WTO expert panel to investigate and rule on so-called Chinese restrictions of raw materials exportation. At a meeting of the WTO's dispute settlement body, the Chinese delegation reiterated that "its measures related to exportation are consistent with the principles and rules of the WTO," and the country "consistently respects and abides by the WTO rules and its own commitments."

"China is disappointed that the three complainants choose to move forward with requests for panel establishment at this meeting ... and is not in a position to agree to the establishment of a panel at this time," the delegation said.

The United States has accused China of restricting exports of " numerous raw materials critical to US manufactures and workers," thus violating WTO rules. The materials at issue include coke, bauxite, fluorspar, magnesium, silicon metal and zinc.

The EU joined the United States in filing WTO complaints on the matter in June, and they were later joined by Mexico.

Two rounds of consultations were held in July and September between China and the three complainants, but they failed to resolve the problem. Requesting a panel is the next step in the WTO dispute settlement process after consultations fail. According to procedures, a panel request can only be blocked once, and if the three complainants choose to made a second request at a later date, a panel would be set up automatically.

WSJ, Nov. 25, 2009 --

A small bubble popped in China on Tuesday. Its formation illustrates one of Beijing’s worries as pressure builds on its exchange-rate policy, says Heard on the Street.

Source: Andrew Peaple, Heard on the Street.

Posted by Barry Ritholtz | Nov 20, 2009 --

Back in October, I laughed off the latest China GDP data as utterly fabricated. As it turns out, I was not the only one. China expert Gordon G. Chang (author of The Coming Collapse of China) is more than skeptical — he has the data to question much of China’s growth miracle. . . .

>>Read full article here at RGE – Asian EconoMonitor.

Bloomberg/China Daily, Nov. 26, 2009 Print Edition --

China likely to allow blue-chips to issue debts within  12 months

SINGAPORE: Foreign companies may be able to sell bonds in China within a year as the government expands its domestic capital markets, according to China International Capital Corp (CICC), the No. 2 underwriter of yuan debt this year. “The first group of future international issuers is likely to be blue-chip companies,” John Cheng, CICC’s investment banking manager director, said in an interview on Tuesday. Overseas “firms will increase their  presence in China and they’ll need to march their growing yuan assets with instruments in yuan, be it debt or equity,” he said.

China is urging domestic companies to tap bond and equity markets for funding and reduce reliance on banks after regulators said record loan growth poses risk. Authorities will consider allowing sales of high-yield corporate bonds to provide new sources of funding, People’s Bank of China Deputy Hu Xiaolian said on Nov. 18.  Outstanding corporate debt rose almost threefold to 2.1 trillion yuan at the end of October compared with 2006, Hu said at a forum in Beijing.

The government has encouraged a $1.3 trillion credit boom this year to complement its monetary and fiscal stimulus plans, propelling the economy last quarter to its fastest pace of expansion in a year. The government may need to rein in loan growth to “prevent the emergence of inflationary pressure and asset bubbles,” the Organization for Economic Cooperation and Development said on Nov. 20.

The five biggest banks – Industrial & Commercial Bank of China Ltd, China Construction Bank Corp, Bank of China Ltd, Agricultural Bank of China and Bank of Communications, Ltd – extended a record 4.7 trillion yuan this year, according to data compiled by Bloomberg. Beijing-based CICC underwrote 174 billion yuan of transactions, ranking second after ICBC, the world’s biggest bank by market value. Minor modifications to regulations would be required for foreign companies to be able to tape the market, Cheng said. Some “companies have expressed interest but no formal applications have been made,” he said, declining to name any companies. . . .

As China’s corporate bond market develops, so will its fledging derivative market, according to Cheng. “When you buy bonds in China now you cannot lay off different risk components,” he said. “In order to do this, domestic derivatives instruments are needed. For a full market to develop, you need these auxiliary tools.”

[by Neil Irwin, Washington Post Staff Writer,  Nov. 25, 2009] --

(In this Wednesday, Nov. 4, 2009, photo, Michael Rader, of Ashland, Pa., looks over small electronics at Best Buy in Mechanicsburg, Pa. Americans' confidence in the economy improved slightly in November, but they remain gloomy amid a weak job market heading into the holiday season; Photo/Carolyn Kaster/AP).

Consumer spending rose in October and fewer people filed for jobless benefits last week than in over a year, according to a new round of economic data that provides a bit of hope for the economy heading into the holiday season. Personal consumption expenditures rose 0.7 percent in October, the Commerce Department said Wednesday, more than expected and following a 0.6 percent drop in September. Personal income also rose more than expected, with a 0.2 percent climb.

And 466,000 people filed first-time claims for unemployment insurance benefits last week, the Labor Department said, the lowest level since the recession deepened in September 2008. Although still high by most standards, there has been a steady downward slope to that weekly jobless claims number that offers hope that total job growth could return in the first part of next year.

There was a negative surprise in Wednesday's economic data as well, however. Orders for durable goods -- those expected to last for years -- fell 0.6 percent in October, the Commerce Department said. The number was expected to rise, and it tends to presage economic activity overall. That's because when orders are placed for such big-ticket items as automobiles, airplanes, computers and industrial machinery, it takes time for their production to occur, keeping workers busy sometimes for months. The steepest decline was in orders for defense-related goods. Excluding defense, new orders actually rose 0.4 percent.

The stock market was little changed in early trading Wednesday morning, as the good news on jobs and consumer spending was weighed down by the durable goods orders. At 9:40 a.m., the Dow Jones industrial average was up 3 points, or 0.03 percent.

The rise in personal consumption expenditures offers some hope for holiday sales at retailers. The 0.6 percent rise followed an 0.7 percent drop in September, but that drop was distorted by the end of the Cash for Clunkers auto purchase program, which had artificially inflated August consumption data.

by Paul Lin 林保華, Taipei Times, Nov. 26, 2009, Page 8 --

A seminar in Taipei to mark the 60th anniversary of cross-strait relations on Nov. 13 and Nov. 14 was intended to reflect the changes in the relationship between Taiwan and China over the years, but regrettably, the Chinese mindset remains the same as it was six decades ago: China will annex Taiwan. Not even the pan-blue camp, which supports mutual cooperation between the two nations, can accept this notion.

The Chinese delegation was led by Zheng Bijian (鄭必堅), who was introduced in the media as a member of Chinese President Hu Jintao’s (胡錦濤) brain trust and a former vice president of the Chinese Communist Party’s (CCP) Central Party School. Zheng is widely credited for being the first to talk publicly about China’s “peaceful” rise during the Boao Forum in 2003 to allay growing global concerns about Beijing’s expanding power. However, this notion of peaceful development is nothing but an illusion, with Beijing throwing a big military parade to celebrate the 60th anniversary of the People’s Republic of China last month. Two conclusions that can be drawn from Zheng’s rigid mindset and the incoherent comments of other Chinese delegates at the seminar were that they are blind to reality and that Hu Jintao wishes to rush unification with Taiwan.

Zheng’s remark that the majority of the public opposed Taiwanese independence and that the independence movement was doomed was sheer nonsense. It is clear that he misconstrued Ma Ying-jeou’s (馬英九) election as president as public opposition to Taiwanese independence. Ma did not have the nerve to hold a referendum on signing an economic cooperation framework agreement with China because of strong public opposition to the economic pact. Several opinion polls conducted by the Mainland Affairs Council also suggest that about 70 percent of the public consider themselves Taiwanese. Although “Taiwanese” does not necessarily mean “people in support of Taiwanese independence,” it is certainly different from “Chinese.”

Why did these Chinese delegates participate in the seminar? That’s because Hu is in a rush. Ma is not aggressive enough and the Chinese delegates were afraid that the Democratic Progressive Party might return to power. Hu is also at a disadvantage in an internal party struggle, and it was obvious that he was under considerable stress during the APEC summit. Hu must therefore resort to united-front tactics to carry out Beijing’s unification agenda.

Ma is in the same situation. His approval ratings have dropped and he has lost much weight as he comes under increasing attack within his party. Thus, he is in a desperate need of Hu’s support. The hasty signing of a memorandum of understanding on cross-strait financial supervisory cooperation reflects the similarities in their situation.

The problem is not the decline of support for Taiwanese independence, but the fact that Beijing’s authoritarian government is on the wane and local factions are on the rise as evidenced by Beijing’s failure to control the political situation in Xinjiang and Chongqing.

Paul Lin is a political commentator; translated by Ted Yang.

by Xie Yu, China Daily, Nov. 26, 2009 Print Edition

Beijing might consider removing a portion of its missile arsenal in South China, a long-held precondition by Taiwan officials for peaceful cross-Strait ties, a mainland expert said yesterday. The possibility of the mainland’s missile removal should not be excluded, according to Li Jiaquan, a senior researcher with the institute of Taiwan studies at the Chinese Academy of Social Sciences, ahead of new round of talks next month between the two sides. “(Removing the missiles) would be a goodwill gesture by the mainland toward Taiwan,” Li said.

But he emphasized that the missiles are not targeting Taiwan and are positioned at their current location to safeguard national safety. It is thus impossible for the mainland to remove them all, he added. According to the island’s defense officials, the mainland has nearly 1,500 missiles pointed at Taiwan. Li’s remarks come after two key instances in the past days. Yang Yi, spokesman of the Taiwan Affairs Offices of the State Council, gave a positive response to the mainland’s reported plan to remove regional missiles at a press conference yesterday.

On Tuesday, Raymond Burghardt, chairman of the Washington-based American Institute in Taiwan, said the United States plans to resume arms sales to Taiwan. Yang expressed firm opposition to US arms sales to Taiwan. “We strongly oppose US arms sales to Taiwan and our stance is consistent, clear and resolute,” Yang said.

Cross-Straits relations have improved since Taiwan leader Ma Ying-jeou of Kuomintang came into power in May. Both sides have established closer economic and cultural exchanges. But Ma has said the missiles remain a big hurdle to warmer relations. Yang’s overture, however, signaled a departure from Beijing’s practice of shunning the issue of removing missiles from South China. At the press conference, Yang did not attempt to deny the media that the mainland plans to remove “one-third of the missiles targeting Taiwan” before next March or April and said: “We  hope both sides can make joint efforts to get prepared for addressing political difficulties in the future.”

The mainland has recently expressed a strong desire to open political talks as soon as possible, but Taipei has backed off from discussions and has said “the time is not ripe.”

“The mainland could accept the present cross-Straits status quo, but if it remains so in the long term, it will divide China,” said Wu Nengyuan, director of the Institute of Taiwan Studies at the Fujian Academy of Social Sciences. He added that it seems that Ma is delaying political and military talks indefinitely in a compromise with the opposition pro-independence Democratic Progressive Party to stabilize his power on the island. “So there is a possibility that the mainland is making some concessions, including removing some missiles, to show its sincerity of pushing forward peaceful negotiations,” he said.

Li said removing the missiles could also serve as a signal to the US, which is pushing with its plan to resume arms sales to Taiwan.

[Xinhua, Nov. 25, 2009] --

WASHINGTON: The US Commerce Department on Tuesday announced its decision to set final countervailing duties (CVD) on imports of the US$2.6 billion oil country tubular goods (OCTG) from China, the biggest US trade action against China.

The department said in its final determination that it found Chinese producers/exporters of OCTG have received net countervailable subsidies ranging from 10.36 to 15.78 percent, which means that the Chinese companies involved in this case will receive CVD in this range respectively. As a result of this final determination, the Commerce Department will also instruct US Customs and Border Protection to collect a cash deposit or bond based on these final rates.

The antidumping and counterveiling petition case was filed in April this year. The Commerce Department made its preliminary determination on CVD in September. On November 4, it also set preliminary antidumping duties on such imports from China. Under that preliminary determination, the Commerce Department set a 36.53 percent antidumping levy on OCTG from 37 Chinese companies, while some other Chinese companies will receive a preliminary dumping rate of 99.14 percent. According to the case calendar, the US International Trade Commission will make its final determination on the CVD case on January 7, 2010.

If the commission makes an affirmative final determination that imports of OCTG from China materially injures, or threaten material injury to, the domestic industry, the government will issue a countervailing duty on January 14, 2010. China's Ministry of Commerce has expressed strong opposition to the US decision, saying it is a protectionist move that hurts Chinese companies' interests. "This does not comply with WTO agreements on subsidies. The US used an incorrect method to define and calculate the subsidies, which has resulted in an artificially high subsidy rate, hurting Chinese firms' interests," ministry spokesman Yao Jian said in September.

Posted on Monday, November 23rd, 2009, by the Center for Geoeconomic Studies --

Global imbalances, as reflected in the current account deficits and surpluses of the world’s major regions, fell with the collapse of trade and oil prices in 2008, but should rise again as both recover. This chart shows that global imbalances are driven primarily by the U.S. and China. Absent significant macroeconomic policy changes in one or both, the likelihood of a sustained, significant improvement in global imbalances, without another crisis, is small. . . .

Source: Council on Foreign Relations (CFR).

WTO: 2009 NEWS ITEMS

17 November 2009

GENERAL COUNCIL

Geneva Ministerial a “unique occasion” to send strong signals on WTO issues — Lamy

Director-General Pascal Lamy, in his report to the General Council on 17 November 2009, said that while the upcoming WTO Ministerial Conference would not be a negotiating session, it would be “a platform for ministers to review the functioning of this house,” including the Doha Round, and an occasion “to send a number of strong signals to the world with respect to the entire WTO waterfront of issues — from monitoring and surveillance to disputes, accessions, Aid for Trade, technical assistance and international governance”.

>>Read full text of report here.

by Willy Lam, China Brief, Volume IX, Issue 23, Nov. 19, 2009 --

(Mao statue).

As the Chinese Communist Party (CCP) leadership tries to convince President Barack Obama and other world leaders that China is eagerly integrating itself with the global marketplace, the ultra-conservative norms and worldview of Chairman Mao Zedong are making a big comeback in public life. In provinces and cities that foreign dignitaries are unlikely to visit, vintage Cultural Revolution-era totems are proliferating. In Chongqing, a mega-city of 32 million people in western China, Mao sculptures—which were feverishly demolished soon after the late patriarch Deng Xiaoping catalyzed the reform era in 1978—are being erected throughout government offices, factories and universities. A newly constructed seven-story statue of the demigod in Chongqing’s college district dwarfed nearby halls, libraries and classroom buildings. Not far from the Helmsman’s birthplace in Juzhizhou village, Hunan Province, the latest tourist attraction is a sky-scraping, 32-meter torso of the young Mao. Moreover, the long-forgotten slogan “Long Live Mao Zedong Thought” has been resuscitated after banners bearing this battle cry were held high by college students and nationalistic Beijing residents during parades in Tiananmen Square that marked the 60th birthday of the People’s Republic (Globaltimes.com [Beijing], November 2; China News Service, October 30; People’s Daily, October 2). . . .

The reinvigoration of Maoist standards, then, could prove to be the biggest challenge to unity within the Hu-Wen administration. . . .