Archive for February 6th, 2010

Saturday, February 6, 2010

Economist: “Facing up to China”

It’s an unusual leader, even by Economist standards. It’s about the unusual ferocity of the Chinese regimes response to arms sales to Taiwan, as recently approved by Washington. The paper has always been uncompromisingly market-liberal – but that really seems to include true liberalism, too. The article criticizes American business people who, at the World Economic Forum in Davos, muttered “despairingly about their own ‘dysfunctional’ political system – extolling the virtues of decisive authoritarianism over shilly-shallying democratic debate.

Making room for a new superpower should not be confused with giving way to it, titles the article. It calls Beijing’s Taiwan policy a failure, stating that there is little sign of progress towards China’s main goal of “peaceful reunification”, which it believes is one cause for Beijing’s unusual ferocity. Its verdict on Beijing’s Tibet policy is no nicer.

And the cartoon added to it, showing Barack Obama in a habitually easy, umm, discourse with a fuming dragon is priceless.

I have my reservations about the Economist’s market ideology. But at the same time, I do feel that a business paper that encourages the Obama administration and other governments to “face up to China” deserves a lot of attention. The Economist is true to its own standards, and it is, unfortunately, quite exceptional at that.

Saturday, February 6, 2010

Rio Tinto: Introducing an “Old Friend”?

Ian Bauert succeeds Tony Loo as Rio Tinto’s managing director for China. Bauert had opened the company’s first China office some twenty-five years ago, writes Reuters. Price negotiations between iron ore miners and the China Iron and Steel Association are dragging on, as the suppliers expect a 40 per cent rise, while the Chinese side seeks to limit the rise to 20 to 30 per cent in benchmark prices for 2010, according to ABC News.

China appears to invoke price agreements the international mining companies struck with Japan earlier in 2010, around May, and with South Korea, and asks for lower prices than those agreed with Japan. However, Japanese and Korean buyers had apparently opted for annual contracts which make for better production cost planning in 2008, while the Chinese importers had chosen spot prices which are more difficult to forecast, and seems to have relied on its position as the world’s biggest steel producer in the negotiations. The international suppliers’ stance seems to be that this makes price negotiations with Chinese buyers a seperate issue from the deals struck by the country’s eastern neighbors. An apparent recent preference by China’s authorities for coal over iron ore in its custom duties’ design may add to the cost pressures on the country’s steel producers.

ABC News quotes an analyst as saying that Rio Tinto had “a lot of its eggs in the iron basket” concerning business with China. Price negotiations carry on while the company’s chief negotiator for China, Stern Hu, and three more of its employees remain in custody in China after their arrest last year. The company’s chief executive Tom Albanese said in a statement that he was “deeply committed to developing our relationship with China”.

On the other hand, industries with smaller stakes in the Chinese market seem to have become more cautious in their approach to investment in the country. The European Union Chamber of Commerce in China (EUCCC) last year called on China to better define its “national interests” after the arrest of the Rio Tinto employees.

If Bauert fulfils the criteria of being an old “friend of China”, the Chinese side may be willing to be more forthcoming in coming rounds of price negotiations. They might feel a need to demonstrate that such a status pays.

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Related
China’s Steel Industry: The Grey Area, July 18, 2009
Chinalco, Rio Tinto: No Deal after All, June 5, 2009

Saturday, February 6, 2010

BJRB: Hegemonists should Harbor no Illusions

The following is a translation of an article by Wang Qing (王卿), originally written for Beijing Ribao, and published online by Tianjin’s Enorth website on Febr 6.

In the Face of International Interests, there is no Space for Illusions

As we are entering the new year, the originally warm Chinese-American relations have suffered “a current of cold air”, “clash”, “cold war” “struggle”, according to all these kinds of headlines. Indeed, the recent Chinese-American focus is on trade disputes, the administration of the internet, arms sales to Taiwan, meetings with the Dalai etc., launching an intensive game of attack and defense, leaving the impression on people that Chinese-American relations were heavily in trouble, and at a new low point.

From remembering the Obama administration’s performance during its first year, we can see that in international activities and diplomacy, there was a strategic change in that it appeared to be more humble, the posture softer. Especially, compared to the past, it attached more importance to multilateral mechanisms when dealing with problems hard to deal with on its own, thus highlighting its “smart power” diplomatic concept (巧实力外交理念). Obama visited China during his first year in office, emphasizing consultations and cooperation with China on various occasions, and the relations saw a rather smooth “run-in period”, with the implementation of a smooth transition. On a foundation of strengthening mutual trust, the two countries would lift their relationship to a new level of strategic content with a new pattern. Over the past year, Chinese-American relations tended to be on a rather equal footing in a more stable structure of relations which attracted international attention and even led to assumptions that there was a “G2” at work. But reality is the best lesson to people, and the recent American punches against China are showing that any sayings about Obama being pro-China (亲华) were wishful thinking.

When looking at relations between countries and international politics, factors of feelings and history may be hard to gainsay, but it is more important to never forget the “law of interests” – in diplomacy, a country must guard its interests at maximum. The reason for Obama to emphasize relations with China, intensifying cooperation with China in all fields, was in America’s own interest. The recent ways in which America played the big protectionist card against China and used the Google incident (谷歌事件) to promote freedom of the internet, the way it sells arms to Taiwan without heeding China’s warnings, threatening (扬言) that there is a need to meet the Dalai, is still based on its own national interests. In the final analysis, in its contacts with China, the Obama administration is the spokesperson and defender of America’s interests, and it can by no means defend China’s interests. When the interests of our country are concerned, we must give up our illusions, and fight with resolve. Some people in our country in particular, who still harbor illusions about Obama, should look clearly at the nature of the problems, and take a firm stand to defend our country’s national interests.

It should be noted that the fact that America revolted against China within a very short period still didn’t happen on the spur of a moment, but was a combination of pre-arranged punches.  When Obama entered the stage, he faced both the pressures from the financial crisis and from the quagmire of war. There was no way not to be warm to the outside world and to create a positive international atmosphere, but after a year of intense strategic readjustment, America is again changing its tune, returning to strongly safeguarding their own interests, and changing the pattern of their diplomacy. Behind this apparent change, there is America’s hegemony with its unscrupulous nature of profitmaking (一如既往的则是美国霸权主义不择手段为己谋利的本性).

After the end of the Cold War, as the world’s only superpower, America defended its hegemonic position with all its forces, beating with ease, contained imaginary enemies, disregarding and sacrificing other countries’ interests (漠视和牺牲他国利益), not hestitating to harm others and benefit itself, breaching trust and abandoning honesty (背信弃义), shifting crisis and unleashing war. In recent years, with the rapid development of the emerging forces and the general trend of democratization of international relations, as the days when the developed countries alone dominated and enjoyed the world’s resources are coming to an end, America’s comprehensive force and global influence is declining. Although America may compromise or concede on some tangible problems, from a fundamental point of view, America can’t be willing to lose its hegemonic position, but will instead mobilize all resources and forces it can to defend its interests. In his recent state-of-the-union address, Obama expressed the resolve never to allow America to be in second position (决不接受美国成为第二) [remark: Obama was referring to jobs and green technology there — JR], thus amply demonstrating the reluctance to abandon hegemony.

With this background, any belief in smooth relations with America is wishful thinking. Although China and America have a broad range of common interests, and broad space for development, quarrels and frictions are unavoidable and will become more frequent and specific, America can still play big games and tricks on China’s interests. Of course, China is now different from the past, and the great country’s rise can’t be stopped. Nobody should expect that the Chinese would swallow the bitter fruit of damaging their own interests. In this regard, the hegemonists themselves should harbor no illusions either.

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Related
Lee Kuan Yew: America must Strike a Balance, November 7, 2009

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