Posts tagged ‘WTO’

Wednesday, October 31, 2012

For whichever Presidential candidate I’d vote, I wouldn’t vote for a Tea Partisan Congressional candidate

A not so disguised “endorsement” for President Obama

In 1994, Germany’s incumbent federal chancellor, Helmut Kohl, was in trouble. General elections loomed, and his challenger, a social democrat, was leading in the polls. East Germany would be blooming, Kohl had promised four years earlier, in the 1990 general elections, the first after German reunification. But in 1994, the five new federal states were anything but blooming. There was some disappointment in West Germany, because it had become clear that the road to a blooming East Germany would be long – and costly for West Germans not least. The East Germans were probably even more disappointed – the 1990 elections had been their first free elections on the national level ever since the Weimar Republic, and these first four years with a all-German parliament had taught them a number of disillusioning lessons about election promises.

On October 16, 1994, the Kohl coalition government won the Bundestag elections by a narrow margin anyway. Compared with the 1990 elections,chancellor Kohl’s christian democrats lost 2.2 percentage points in former West Germany, and 3.3 percentage points in former East Germany. But this still proved a stable majority for another four years.

Many observers had considered Kohl politically dead in 1989. He had been chancellor for seven years by then, and change was in the air. Then came the fall of the Berlin Wall. The way Kohl handled the aftermath, especially reunification talks with America, the USSR, Britain, and France, brought him back. The surprise was that in 1994, after he had been in office for twelve years, people, even if fed up with him, gave him another chance.

Contrary to Americans (and French people, probably), Germans are (sometimes shockingly, maybe) patient when it comes to politics. Four years are considered a short time for things to grow in my country. Many Germans probably agree that to cap a political chief executive’s maximum time in office to eight years would make a lot of sense – but to change the direction of politics every four or eight years wouldn’t necessarily make as much sense – unless a government turns out to be quite a disaster. Even as the going got tough under Helmut Schmidt, in 1976, his social-democrat/liberal coalition was confirmed, even if only narrowly. In 1980, it was confirmed with an even bigger majority – and times had become still tougher in the meantime. Unemployment had risen to unprecedented levels in post-war Germany, but justifiably or not, Germans gave Schmidt’s government credit for what they saw as a still better situation than the one found elsewhere in Europe. In the end, it wasn’t the voters who finished his government – it was the social democrats’ coalition partner, in 1982. Kohl replaced Schmidt, and remained in office for sixteen years, before a majority of German voters decided that his government had become useless. When the shift came, it came swiftly, and with a clear majority for the opposition parties.

In its September 1 issue, The Economist – no friend of “big government” – graded Barack Obama as follows:

Subject Grade
crisis response  A-
 stimulus  B+
 housing  C+
 labor market  C+
 trade   B-
 industrial policy   F
 regulation   D+
 debt/fiscal policy  incomplete

More details here »

The Obama administration’s marks in the field of industrial policy, according to the Economist’s report card, indicate maximum failure. In short, saving Detroit alone isn’t an industrial policy after all. It’s just crisis response. But then, I can’t even imagine Mitt Romney‘s industrial policy. “Buying American” isn’t one, either. However, taking cases to the WTO is still better than branding China, or any other global manufacturing competitor, a “currency manipulator” at a time when it makes less sense than any time previously in more than a decade.

Maybe Obama’s core problem is the messiah-like status he had reached in 2008 – naturally, he wouldn’t live up to that image. Another problem may be that he hasn’t sufficiently “reached out” to the Republicans when it came to Obamacare. But then, Obamacare was pretty much Romneycare. If that couldn’t satisfiy even a single Republican on Capitol Hill, one may wonder how Romney should convince them – chances are that as a president, he would only be able to deal with Congress once there is a Democratic majority, say, after 2012 after 2014.

I don’t know how the American people will decide on November 6. But I do know what I would do. I’d vote for Obama, and for Democratic candidates for Congress. Yes, a president needs to show leadership. But it seems to make no sense to me to build a tea party into any presidential term, be it a Democrat’s or a Republican’s presidency.



» Creative Destruction or…, March 15, 2010
» U.S. fiscal cliff, Wikipedia, acc. 20121031
» So habe auch ich mich getäuscht, Febr 1994

Tuesday, October 23, 2012

Mitt Romney has no China Strategy

When it comes to China, it becomes obvious to me that Mitt Romney has a problem. Heard on the radio this morning, and found on a transcript of the debate.

Barack Obama:

And that’s the reason why I set up a trade task force to go after cheaters when it came to international trade. That’s the reason why we have brought more cases against China for violating trade rules than the other — the previous administration had done in two terms. And we’ve won just about every case that we’ve filed, that — that has been decided. In fact, just recently, steelworkers in Ohio and throughout the Midwest, Pennsylvania, are in a position now to sell steel to China because we won that case.

We had a tire case in which they were flooding us with cheap domestic tires — or — or — or cheap Chinese tires. And we put a stop to it and, as a consequence, saved jobs throughout America. I have to say that Governor Romney criticized me for being too tough in that tire case, said this wouldn’t be good for American workers and that it would be protectionist. But I tell you, those workers don’t feel that way. They feel as if they had finally an administration who was going to take this issue seriously.

Over the long term, in order for us to compete with China, we’ve also got to make sure, though, that we’re taking — taking care of business here at home. If we don’t have the best education system in the world, if we don’t continue to put money into research and technology that will allow us to — to create great businesses here in the United States, that’s how we lose the competition. And unfortunately, Governor Romney’s budget and his proposals would not allow us to make those investments.

Mitt Romney:

Well, first of all, it’s not government that makes business successful. It’s not government investments that make businesses grow and hire people.

Let me also note that the greatest threat that the world faces, the greatest national security threat, is a nuclear Iran.

Let’s talk about China. China has an interest that’s very much like ours in one respect, and that is they want a stable world. They don’t want war. They don’t want to see protectionism. They don’t want to see the — the world break out into — into various forms of chaos, because they have to — they have to manufacture goods and put people to work. And they have about 20,000 — 20 million, rather, people coming out of the farms every year, coming into the cities, needing jobs. So they want the economy to work and the world to be free and open.

And so we can be a partner with China. We don’t have to be an adversary in any way, shape or form. We can work with them. We can collaborate with them if they’re willing to be responsible.

Now, they look at us and say, is it a good idea to be with America?

How strong are we going to be? How strong is our economy?

They look at the fact that we owe them a trillion dollars and owe other people 16 trillion (dollars) in total, including them. They — they look at our — our decision to — to cut back on our military capabilities — a trillion dollars. The secretary of defense called these trillion dollars of cuts to our military devastating. It’s not my term. It’s the president’s own secretary of defense called them devastating. They look at America’s commitments around the world and they see what’s happening and they say, well, OK, is America going to be strong? And the answer is yes. If I’m president, America will be very strong.

We’ll also make sure that we have trade relations with China that work for us. I’ve watched year in and year out as companies have shut down and people have lost their jobs because China has not played by the same rules, in part by holding down artificially the value of their currency. It holds down the prices of their goods. It means our goods aren’t as competitive and we lose jobs. That’s got to end.

They’re making some progress; they need to make more. That’s why on day one I will label them a currency manipulator which allows us to apply tariffs where they’re taking jobs. They’re stealing our intellectual property, our patents, our designs, our technology, hacking into our computers, counterfeiting our goods. They have to understand, we want to trade with them, we want a world that’s stable, we like free enterprise, but you got to play by the rules.

Ezra Klein explained ahead of the debate why this is unlikely to impress Beijing, and why it shouldn’t impress the Chinese leadership. The New York Times adds some more points.

If Romney uses this one argument when it comes to U.S.-chinese trade relations (it’s been his leitmotif throughout his campaign), it only shows that he has no comprehensive strategy – other than doing business with China, and that would be that. What he refuses to see – ostensibly, anyway – is that as a president, he wouldn’t be in a position to talk to Xi Jinping the way Ronald Reagan talked to Zhao Ziyang. This is 2012, not 1988. There have been many crackdowns and many years of Chinese economic and political growth in between. And mind you, Reagan had come to office promising that he would seek to restore normal diplomatic relations with Taiwan. We know where that promise ended.

Obama on the other hand hasn’t talked tough, but he has been tough in defending his country’s industrial base. Basically, the choice between Obama and Romney boils down to a choice between these concepts.



» Can China Handle America’s Return, The Diplomat, Dec 14, 2011


Tuesday, September 25, 2012

Recommended Links: Tibet, Senkakus, and Revolutionary Opera

Woeser posted her observations about a propaganda film apparently produced by CCTV, and available in Chinese and English on YouTube. High Peaks Pure Earth translated Woeser’s blogpost, which had previously been broadcast on Radio Free Asia (RFA):

How CCTV’s Propaganda Film Depicts the Tibetan Self-Immolators.

Another East-Western beauty contest has been going on there on the Peking Duck. The threads are often very helpful for me to reflect on my own views – as a German, my country’s past is similar to Japan’s. The difference is that the whole world seems to believe that in Germany, we have done “a much better job” at addressing the crimes of the past. That’s certainly true when it comes to history books, but few people seem to remember then U.S. president Ronald Reagan‘s visit to the Bitburg Cemetary, where members of the SS are buried, along with Wehrmacht soldiers – at the insistence of then German chancellor Helmut Kohl. I’m not going explain my views here; they can be found there, among many others.

But there’s one thing I’d like to note here. Too many people like to make fun of – frequently rather brainless, I agree – Chinese protesters, or about fenqings who show up there in the threads. I suspect that to make fun of them serves at least two purposes: to laugh away worries about a possible war, and to feel morally superior.

If “we” – the West, or the Western alliances – were “superior”, our governments would send a clear message to Beijing, even if only behind the scenes. If the CCP leaders intend to use our countries and their people – i. e. us – as bugaboos to increase “social cohesion” at home, we can’t look at China as a friendly country. If the CCP – a totalitarian regime, after all – discretionarily uses economic means to “punish” Japan, no other country’s companies should be allowed to profit from gaps provided by such boycotts and sanctions.

I’m not suggesting that no business should be done with China. But when we do business with a state-capitalist country, we’ll need a state-capitalist approach ourselves – unless we want to allow a totalitarian regime to play one country off against the other. As long as we allow this to happen, we have no reason to make fun of useful Chinese idiots.

Last but not least, the DPRK Sea of Blood Opera Troupe is or (probably) was on tour in China. If you are a revolutionary-opera connoisseur, and intend not to miss their next time in China (or elsewhere in the world), feed your anticipation with this review on Sino-NK. It starts with Act II, and contains links to two previous instalments of the review.



» Good Ganbu’s Friday Nights, Nov 29, 2009


Saturday, September 22, 2012

International Press Review: Senkakus, India’s Economic Reforms

1) Senkaku Islands

The Economist discusses what could be done to avoid a war about the Senkakus. One of their editorials suggest that China needs reassuring that, rather than seeking to contain it as Britain did 19th-century Germany, America wants a responsible China to realise its potential as a world power – but that would amount to shutting up completely, if this is the Economist’s point in case for reassuring China.

The Economist recommends three immediate safeguards.

Meantime, Hundreds of Japanese marched through downtown Tokyo on Saturday in a loud but tightly controlled protest against China’s claim to disputed islands in the East China Sea,

reports Associated Press (AP).

Organizers of Saturday’s march said more than 1,400 people participated. That figure appeared high, but a rough count found at least 800 protesters.

China News Service (中新社) on the same topic:

Tokyo, Sept 22 (Sun Ran reporting) – An anti-Chinese demonstration with several hundred participants, organized by (a) right-wing organization(s) erupted on Saturday. During this demonstration, no injuries or property losses occured.

中新社东京9月22日电 (记者 孙冉)日本东京22日爆发了由右翼团体组织发起的数百人规模的反华游行。当天游行中并未发生人员受伤及财产损失的情况。

The right-wing organization is the “Hang-In-There-Japan National Action Committee” [Ganbare Nippon], and its leader is former Japanese self-defense airforce chief of staff, Toshio Tamogami. The organizers said that 1200 common Japanese people had taken part in the demonstration, but according to China News Service’s reporter’s estimate, there were about six- to seventhousand people, far from a thousand.


The embassy apparently felt that no sufficient number of police had been deployed to protect the embassy, and the Chinese ambassador told China News Service that representations had been made to Japan to increase police presence and to protect [the embassy] and consulates on Japanese ground as well as Chinese-funded organizations (要求其采取切实措施并加强警力,保护好在日使领馆和中资机构的安全).

The “Go-Japan National Action Committee” is a Japanese extreme-right organization. In 2010, after a Chinese captain had been arrested, the organization also organized several anti-China demonstrations. On June 10 this year, the organization organized a fishing contest of more than 120 people in the Diaoyus adjacent waters.


Huanqiu Shibao republished the China News Service article. On the now customary emoticon board, 54 readers expressed anger, and twelve found the news ridiculous.

2) Global Economy

Indian prime minister Manmohan Singh made a televised speech on Friday, trying to explain recent economic reforms to the public – cutting diesel subsidies, limiting subsidies on cooking gas, and allowing foreign supermarket giants to buy large stakes in India’s retail sector.

Singh warned the public that

The world is not kind to those who do not tackle their own problems. Many European countries are in this position today. They cannot pay their bills and are looking to others for help. They are having to cut wages or pensions to satisfy potential lenders.

I am determined to see that India will not be pushed into that situation. But I can succeed only if I can persuade you to understand why we had to act.

People’s Daily Online reports on Singh’s speech, too, but mostly restates the opinions from the international papers and other media:

On September 20, 50 million Indians are said to have taken part in an unprecedented national strike. On September 21, the “wave of explosions” reached the world of politics. Six members of Singh’s cabinet resigned, the ruling coalition split, and the Indian government was nearly “on the ropes”. Will the reforms be groundbreaking, or the beginning of a fierce struggle? In the view of German media, Singh, who is almost eighty years old, has been pushed with his back nearly to the wall: it’s either reform, or the end of his rule.

20日,据说5000万印度人参加了史无前例的全国性罢工。21日,“大爆炸冲击波”延至政坛,辛格内阁中有6人退出,执政联盟分裂,印度政府踏上“摇摆 的绳索”。这次改革是开天辟地,还是开启一场恶斗?在德国媒体看来,年近80的辛格似乎已被逼到墙角:要么改革,要么执政结束。


“Now, Singh needs to sell the concept of freedom to the Indians”, a Bloomberg analysis says, and these reforms meant that in the current economic crisis, only shock therapy could be an effective cure. The “Voice of Germany” [Deutsche Welle] commented on Friday that Singh had made more changes in his economic policies within a few days, than in all the eight past years. […] The “Chicago Tribune” says that as India’s credit ratings faced the threat of falling to “junk status”, Singh has no time to demonstrate preparedness to consolidate the troubled economy, and rather has to run reforms at high speed, hoping to survive the “difficult time”. On Friday, Singh said in a nation-wide televised speech that “money doesn’t grow from trees”, and called on the people to “support the reforms against economic difficulties”.

“现在辛格需要向印度人兜售自由理念”。彭博新闻社分析称,这些改革措施意味着印度在经济危机的情况下只能通过“休克疗法”来治疗。“德国之声”21日评论称,辛格在几天之内对经济政策作出的改动,比过去8年总和还要多。[…..] 《芝加哥论坛报》称,信用评级面临降为“垃圾”级的威胁,辛格已经没时间展示整顿经济的严肃态度,从而强调改革速度,期望挺过“艰难时刻”。21日,辛格对全国发表演讲,称“钱不能从树上长出来”,他呼吁民众“支持应对经济困境的改革”。


But even if you only quote non-Chinese media and experts, you’ll find someone who provides the correct conclusions. People’s Daily Online quotes an “Open Europe” researcher, from a Huanqiu Shibao interview:

Britain’s “Open Europe” think tank’s researcher 保罗·罗宾逊*) told Huanqiu Shibao in an interview on September 21 that India’s most outstanding achievement in the past twenty years of reforms had been the privatization of state-owned companies. Those measures had provided Indian economic development with a more relaxed environment. However, 罗宾逊 believes that the instability of a democratic political system had led to indecisive government which kept sticking to conventions. China’s reforms had been clearly stronger than India’s, and deeper, too. Therefore, the effects [in China] had also been greater.

英国“开放欧洲”智库研究员保罗·罗宾逊21日在接受《环球时报》采访时表示,印度过去20多年的改革中最可圈可点的是对国有企业的“私有化”改革。政府 的改革举措为印度经济发展赢得了更为宽松的环境。不过罗宾逊认为,印度民主政治制度的不稳定导致政府优柔寡断和墨守成规,中国改革的力度明显比印度大,而 且中国的改革比印度更深入,因此效果也更大。



*) This isn’t a Chinese name, but I didn’t find its English equivalent.



» Singh’s Team, Times of India, Sep 22, 2012
» Too Complex to keep the Peace, Sep 18, 2012
» Nationalist Movement Strengthens, WSJ, Aug 14, 2012


Thursday, September 20, 2012

People’s Daily Online on Economic Sanctions against Japan: “Don’t Hurt the Friends, don’t Please the Enemy”

The following is a translation of an article published by People’s Daily Online (人民网) on September 18, 2012.

Links within blockquotes were added during translation.

The article focuses on two levels of sanctions: government-level (with a very cautious attitude) and “non-governmental boycotts” (with an “understanding” attitude).  In terms of business, the article addresses losses that China would incur in terms of technological progress if it took comprehensive “countermeasures” against Japan. Further down, the article suggests that rare-earth sanctions against Japan had basically backfired, in or since 2010.

Rather than expressing an editorial stance of its own, the article quotes a number of academics. The subtitles within the following translation are not part of the original article.

Main Link: 打经济战 中国承受力定比日本强? – People’s Daily Online, September 18, 2012

Economic Sanctions: Not while Japan maintains its Technological Edge

[…] Vice Minister of Commerce Jiang Zengwei said recently that the so-called “islands purchase” by Japan (Diaoyu Islands) made it hard to avoid negative impacts on Sino-Japanese trade relations.


In Chinese public opinion, voices sympathetic to terrorizing Japan by economic sanctions have emerged, which say with certainty that Japan’s economy was more dependent on China than vice versa. Even if economic and trade confrontation had the killing power of weapons on both sides, China’s ability to bear that was far stronger than Japan’s. However, to “play the economic card needed to be done  cautiously, and the two countries’ abilities to bear this be judged by seeking the truth in the facts, and this issue be dealt with rationally and objectively”. Recently, a scholar with a good knowledge of Sino-Japanese economic and trade issues talked with this People’s Daily Online reporter.


Japan’s economy entered a long-term depression in the 1980s, with exports as the main driving force in economic development. Although European and American markets were the main factors in influencing Japan’s economy, China’s influence was no insignificant factor either.


China is currently Japan’s biggest trading partner and its biggest export market. According to Japan’s Ministry of Finance statistics, Japan’s trade with and its exports to China stand at 19.7 percent and 20.6 percent respectively, in its total amount of foreign trade. After the European Union, America, and ASEAN, Japan is China’s fourth-largest trading partner.


Analysts have pointed out that Japan’s economy is more dependent on China than vice versa. Even if economic and trade confrontation had the killing power of weapons on both sides, China’s ability to bear that was far stronger than Japan’s. Once China started economic and trade sanctions against Japan, this could lead to a Japanese economic crisis.


Feng Zhaokui, a researcher with the National Japanese Economic Research Institute, told this People’s Daily Online reporter that taking economic countermeasures against Japan’s economy could have a greater than on China in theory. “However, the so-called ability to bear” is no mere matter of numbers.


Feng Zhaokui says that since 2002, in Sino-Japanese trade, China has always recorded a trade deficit, mainly because much of the trade was in the field of production. The levels of bilateral import and export differed, and the weight of technological content differed. In the industry chain, Japan stood at the high end, and China mainly imported key core technological components from Japan, with high technological content, much added value, and if these imports were affected, the industrial chain would see disrupture, which would damage China’s production. Even as Sino-Japanese trade was gradually transforming from a vertical division of labor to a horizontal pattern, Japan generally was the side with goods of high technological content, high added value and maintained an edge there.


According to surveys, Japanese foreign direct investment (FDI) in China in 2011 was at 6.35 billion US dollars, an increase of 49.7 percent compared with the previous year. This was abut 40 percentage points more than the increase in what China attracted in overall FDI (9.72 percent). Japanese investment in China supported Japan’s economic recovery and growth; it also contributed to China’s economic development. Hasty economic sanctions against Japan could lead to Japanese companies withdrawal from China.


“China’s economic growth this year is voluntarily restricted to eight percent, which is to say that we are approaching the lower limit”, says Feng, as China adds twenty million new workforce annually. Our country has entered a period of accelerated promotion of economic transformation, it faces growing pressures from the global economy which complicate the external environment, with growing uncertain factors such as if the economy can maintain needed growth, and the job market may suffer blows. “Therefore, the economic card must be played cautiously, and the two countries’ ability to bear this be judged by seeking the truth in the facts, and this issue be dealt with rationally and objectively”.


The Rare-Earths Card

Among the economic-sanction measures discussed recently, limiting exports of rare earths to Japan has been most frequent. Many people say that when it comes to rare-earths resources, Japan will continue to depend heavily on China in the near future, and therefore, China should play the “rare-earth card”.


According to the Nihon Kezai Shimbun, Japan’s imports of rare earths frm China have fallen by 3007 tons during the first six months of 2012, i. e. 49.3 percent of Japan’s total imports. These imports were reduced by fifty percent within half a year. Before 2009, 90 percent of Japan’s rare-earths imports came from China.


China got a lesson, in terms of economic sanctions”, Feng believes. In 2010, Japan had illegally detained the captain of a Chinese trawler. Although China hadn’t openly acknowledged the use of economic sanctions, practically, China temporarily halted rare-earths exports and created temporary difficulties for Japan at the time. “But in fact, Japan mainly cried out, and had already got prepared. Their inventories were ample.


China holds only one-third of the global rare-earth reserves, but currently supplies some 90 percent of the worldwide quantity. “There are countries rich in rare earths, too, and their technological ability to produce them has increased” Feng Zhaokui says. After China had restricted imports of rare earths in 2010, Japan resumed research of resources policies, and especially decided that it couldn’t depend on only one country for rare minerals and rare metals. These days, Australia, Malaysia and other countries rare-earth projects are developing very smoothly.


“As far as our talk about having a monopoly position on rare earths, other countries have caught up, and we haven’t increased our technological content, and we haven’t upgraded the industrial change. Our competitiveness in the field of rare earths has been greatly affected.”


Feng believes that rare earths won’t restrain Japan anymore, and that they are no longer a card that could be played. If one wanted to impose economic sanctions, one had to take the rare-earths lessons into account.


In the wake of the heightened temperatures from the Diaoyu Islands’ issue, another popular surge in “boycotting Japanese goods” and even a low in travels to Japan are inevitable. Information from all travel agencies say that since September, the number of group travels to Japan had gone down drastically, and some travel agencies have stopped Japan travel services altogether. Numbers released by the Chinese automotive industry on September 10 show that compared with last year’s same period, August sales of Japanese cars had dropped by two percent. From August, Japanese goods such as household appliances had also gone down in China.


Vice Minister of Commerce Jiang Zengwei said on a press conference that given Japanese violations of Chinese territory, Chinese consumers had a right to express their position in reasonable manners, and that we should express understanding for that.


“Reach for the wine when friends arrive, and reach for the gun when enemies arrive”, China Academy of Social Science Japan Institute director Gao Hong told People’s Daily Online reporter in an interview. The Chinese people have shown patriotic enthusiasm, and spontaneous boycotts of Japanese goods was a right which gave no cause for criticism. “However, we need to distinguish between the non-governmental and the governmental level when it comes to the economic card. At the government level, more economic policies need to be adjusted to each other.”


Liu Gang, professor at the Okinawa University, pointed out in a number of media that to sanction a country, other countries’ support was frequently required. To mobilize international sanctions against Japan, these needed to be adopted by the United Nations. That’s how so-called sanctions would be legitimate. If one country high-handedly reached for the big stick of economic sanctions, this didn’t only deviate from WTO principles, but also give rise to gossip and a series of other side effects.


“As for economic sanctions, I believe that generally-speaking, it isn’t China’s position that they should be a tool in handling international relations”, Qu Xing, director of the China Institute of International Studies, clearly points out.


Gao Hong also told the People’s Daily Online reporter that as far as countermeasures were concerned, these were meant to subdue the other side. Countermeasures needed to correspond with the other side’s provocation. If Japan didn’t continuously act provocatively on the economic level, countermeasures on a governmental level could usually not be carried out. After Japan’s so-called “nationalization” [of three of the Senkaku islands – JR], China had announced its points about the Diaoyu territorial seas, institutionalized the dispatch of naval patrol boats, and submitted material and cartography to the United Nations, etc.. These “combined punches” had already hit Japan where it was vulnerable.


Liu Gang believes that Japan’s established policy of swallowing the Diaoyu Islands is an international problem, and China didn’t need to oblique references to that. The best approach would be tit-for-tat, to confine oneself to the facts, to make representations when needed, and to let strength and actions speak – to learn from Russia meant to use strength as a backup, with less talk and more action.


The Diaoyu issue is inherited from history, as many experts say. The struggle for the Diaoyu Islands is a long-term one and can’t be done overnight. This is only the first round of the struggle, and the struggle needed long-term preparation. China’s departments in charge also state clearly that they reserve the right to all kinds of action. Since a long-term struggle was needed, strategies needed to be made, orders [of approaches], and sequences of goals. Nothing should be done on the spur of sentiments, and not in a way that would “hurt friends and please the enemies”.




» Making Patriotism Useful, Sep 17, 2012
» The Nine-Dotted Line, Foarp, Sep 30, 2011
» Collision with Sth Korean Coast Guard, Dec 18, 2010
» A Nefarious Turn, Sep 25, 2010


Friday, August 31, 2012

International Press Review: Merkel’s China Trip and Germany’s Submissive Bosses

translations from Chinese and German by JR. Links within blockquotes added during translation

Xinwen Lianbo, CCTV, August 31, 2012

Xinwen Lianbo, CCTV, August 31, 2012

Beijing Youthnet (北青网), August 31, 2012, 0715 local time (China)

Contrary to Thursday, which was packed with a political agenda, Friday is the day which is about “cultural tourism” and “economic cooperation trips”. Although this is Merkel’s sixth visit to China, this is the first time that she visits the Forbidden City. The scheduled fourty minutes of sightseeing let this German chancellor learn about Chinese history and culture first-hand, and deepen her comprehensive understanding of China.


After the visit to the Forbidden City, Chief State Councillor Wen Jiabao personally accompanies Merkel on her trip to Tianjin, on the high-speed Beijing-Tianjin railway, which is the first time for Merkel to travel on a Chinese high-speed train. Concerning this, Merkel, herself from a great country of high-speed trains, says that this trip lets her experience China’s rapid development.


The third “first”: this is Merkel’s first visit to Tianjin. Before, Merkel visited several Chinese cities, including Nanjing, Xi’an, and Guangzhou, but she is going to Tianjin for the first time. Tianjin is also Wen Jiabao’s hometown. During yesterday’s meeting with Merkel, Wen said that these Sino-German government consultations would be the last during the tenure of the current Chinese government. This means that if nothing extraordinary happens, this visit by Merkel will be the last one during which Wen will greet her in his capacity as Chief State Councillor. Merkel says that her stay as a guest in Wen’s hometown will be a memorable visit for her.


An important reason for Merkel to visit Tianjin is that Tianjin has become a focus of German companies in northern China. According to statistics, until July this year, 334 German-invested companies have been approved in Tianjin, and accumulated contractual investment is at more than 2.1 billion US dollars. Germany has also become the European country with the most companies investing in Tianjin.


During the time in Tianjin, Chief State Councillor Wen and Merkel held an hour of talks with Chinese and German entrepreneurs. This arrangement had been made during several of Merkel’s previous visits to China, too. In July 2010 and in February this year, when Merkel visited China, Wen held talks with Chinese and German entrepreneurs in Xi’an and Guangzhou, together with Merkel. This reflects the importance the two [heads of government] attach to listening to the comments and suggestions from entrepreneurs from both sides, concerning the development of Sino-German economic and trade cooperation. As for Merkel’s visit to China this time, an important goal is to further strengthen economic and trade cooperation with China. There are not only many entrepreneurs accompanying Merkel, but on Thursday, after the Sino-German government consultations, the two countries signed 13 agreemens concerning electric vehicles, biotechnology, climate protecton and other areas. The value of cooperation for the companies reached nearly seven billion US dollars.


There is an important item on Chief State Councillor Wen’s and Chancellor Merkel’s agenda in Tianjin; they take part in Airbus Tianjin Company‘s ceremony, as the 100th A320 plane is completed. The Airbus assembly line in Tianjin is the first comprehensive one of this aircraft company outside Europe, a product of Airbus cooperation with Chinese companies. Both [heads of government] are witnessing the moment when the 100th plane since August 2008 leaves the assembly line.


This production line is a win-win product for China and Europe. Airbus Tianjin Assembly Line general manager Shang Luguo said in an interview before that one of this projects biggest successes has been that it trained more than 400 Chinese technicians to master the world’s most advanced aircraft production technology. At the same time, it promoted China’s aviation industry’s development. China is currently conducting its own big-aircraft development program, and is learning from aircraft-building peers’ experience. This was very important for China, and this assembly line [in Tianjin] provided China with an opportunity to learn, which showed its importance.


Also, China and Germany signed the “second-term Airbus China Assembly Line agreement”, and a purchasing agreement about 50 A320 aircraft at 3.5 billion US dollars. Wen and Merkel witnessed the signing of the contracts. Earlier, there were reports saying that Airbus expected purchases of 100 planes, but in fact, China bought only 50.


Reuters, August 31, 2012

The European Commission has until next Friday to decide whether to launch an investigation into a complaint brought by European solar firms and people familiar with the case believe it may well go ahead and do so.

On Thursday, Merkel told reporters after talks with Wen that she favoured negotiations over confrontation in the matter, comments that were welcomed by the Chinese premier but stoked concern in the European industry.

But on Friday she appeared to row back on her conciliatory tone, saying Chinese solar firms needed to recognise that subsidies, such as bottom-rate bank loans, distorted competition and violated European law.
“We are not out of the woods yet,” she said. “My plea is that everyone be transparent, that they lay their cards on the table about how they produce.”

Der Spiegel, international online edition, August 31, 2012

The chancellor’s course on China, in fact, has slowly come to resemble the business-first policies pursued by her predecessor Gerhard Schröder. He almost surely approves of the lovely images of her visiting the Airbus plant in Tianjin, where she made a stop just before flying back to Berlin. The factory visit took place a day after a contract was signed for 50 new planes ordered by the Chinese.


Merkel, in fact, seems to have become almost completely domesticated by the economic gains made by the Asian superpower. She still, of course, addresses points of bilateral contention — during a press conference with her host Premier Wen Jiabao she requested that German press correspondents be treated better following repeated incidents of hassling. Beyond that, however, Merkel appeared overly considerate of a single-party dictatorship that pays little mind to human rights, neither at home in China nor elsewhere in the world.

Financial Times Deutschland, August 31, 2012, 1720 local time (Germany): Germany’s Submissive Bosses (Deutschlands devote Chefs)

When it comes to lobbying during the German-Chinese economic forum in Tianjin, it was Wen Jiabao and Angela Merkel who taught Peter Löscher and a few others some lessons. “Are there deficits in equal treatment for foreign companies in China?”, Wen followed up on Löscher’s vague opening statement, on which [Löscher] only goody-goody said: “I see it as a sign of trust that we can bring these issues forward with you personally.”

In Sachen Interessensvertretung waren es beim deutsch-chinesischen Wirtschaftsforum in Tianjin Wen Jiabao und Angela Merkel, die Peter Löscher und anderen ein paar Lektionen erteilten. “Gibt es in China denn auch Mängel in Sachen Gleichbehandlung für ausländische Unternehmen?”, hakte Wen nach Löschers vagem Eingangsstatement nach. Woraufhin der nur artig sagte: “Ich sehe es als Zeichen des Vertrauens, dass wir diese Themen bei Ihnen persönlich vorbringen können.”

It wasn’t the only moment when Wen or Merkel were compelled to actively encourage the top managers to complain. […]

Es war nicht der einzige Moment, in dem Wen oder Merkel die Topmanager aktiv zu Klagen ermutigen mussten. […]

Handelsblatt, August 31, 2012

[China’s] market may be the world’s biggest one – but the Chinese government continues to hamper investors. In the chancellor’s presence, German company bosses vented their furustrations. There are many reasons to complain.

Der Markt mag der größte der Welt sein – doch die chinesische Regierung stellt Investoren weiterhin Hürden. In Anwesenheit der Kanzlerin machten deutsche Firmenchefs ihrem Unmut Luft. Anlässe zur Klage gibt es viele.



» Independent Innovation, May 29, 2012
» Industriousness and Wisdom, January 9, 2011


Sunday, August 12, 2012

Huanqiu Shibao: is South-East Asia replacing “Made in China”?

The following are loosely translated extracts from an article by Huanqiu Shibao, published on Friday, and authored by several Huanqiu reporters.

It refers to an UNCTAD 2012 Investment Report, apparently this one, officially published on July 5, 2012.

There is a rising trend at Huanqiu Shibao to provide emoticon votes, rather than opening a commenter thread. This article doesn’t appear to allow online readers’ comments either (there is a button, but it leads nowhere, and there are indeed no comments), although it is hard to see how its topic should be particularly sensitive.

Links within the following paragraphs were added during translation — JR

Main Link: Is South-East Asia replacing “Made in China”? (Huanqiu Shibao, August 10, 2012)


From Adidas to Oclaro [currently Shenzhen, scheduled to leave for Malaysia within three years], foreign manufacturing investors announce relocations from China to South-East Asia, write the Huanqiu reporters. And a recent UNCTAD report said that in 2011, foreign direct investment (FDI) to South-East Asian nations had reached 117 billion US dollars, an increase by 26 per cent, far more than a rise by less than eight per cent in FDI to China. And Vietnam’s state news agency excitedly announced that the scale of NIKE trainers made in Vietnam now exceeded that of those made in China, making Vietnam the world’s biggest NIKE trainers producer. Currently, Vietnam’s share in NIKE trainers global production was at 41 per cent, with China’s only at 32 per cent. Previously, Adidas had announced it would move its only wholly-foreign-owned factory in China to [correction – 20130729] Cambodia Laos. This causes worries to people at home that international investors could be moving from China to South-East Asia, in terms of manufacturing, writes Huanqiu.


Souvenir from Turkey, made in China

Souvenir from Turkey, made in China

The article then quotes a Chinese garment manufacturer who is sympathetic towards European and American buyers’ demands that he relocate his production to South-East Asia. “I find that understandable – who wouldn’t want to buy at low prices?” (我很理解,谁不希望以更低价格拿到进货呢?) The European Union had allowed duty-free imports from Cambodia from January 2011.

However, a Standard Chartered Bank analyst is also quoted, with more encouraging news for the readers: It was difficult to determine if this was a real shift from China to South-East Asia, as foreign investment in China was rising, too.
A major reason for the slowdown in foreign investment in China was that the global economy had slowed down, and China’s economy along with it, but that didn’t mean that South-East Asia would replace China. Some international companies were seeking diversification, especially because of rising costs in China, and to avoid risks of protectionism against China in some [importing] countries.


After a discussion of Japanese investment in South-East Asia, the article addresses the challenges it sees for South-East Asia.

Vietnam’s 41 per cent share in Nike’s trainers’ production didn’t spell great practical benefits for the people. A Nike trainer on the Vietnamese market costs about as much as one anywhere else, according to Huanqiu Shibao’s research, and would therefore be out of reach for normal Vietnamese buyers.Besides, Huanqiu’s Hanoi correspondent quotes a 28-year-old worker from the 10th Garment Factory in Hanoi’s suburbs, the monthly income is at 2,500,000 Vietnamese Dongs (1 USD about 21,000 Dongs). That is above the state-defined minimum wage standard, and a free lunch is included as another benefit, but that is mostly spent on her motorcycle rides to and from work (500,000 Dongs monthly spent on gasoline), a monthly flat rental (1,200,000 Dongs), water, energy etc. at 300,000, etc.. Even her and her husband’s incomes combined didn’t pay the bills, when they both worked at the garment factory, and extra jobs needed to make ends meet.


Companies like Nike had moved to South-East Asia mainly for lower labor costs and to achieve a maximum profit, writes Huanqiu. Adidas, one of the biggest London Olympic Games sponsor, was facing investigations by the London Organizing Committee not long ago, for allegations that factory workers only earned ten British Pounds a week, and their factory therefore being called a “sweat shop”.


Dissatisfaction with wages had led to protests among workers in many South-East Asian countries, and after the “Adidas sweat shop” incident, the Cambodian minstry of labor had stipulated that from September 1, factories in the Cambodian textile and shoe industry had to provide an extra amount of five US dollars, a non-leave pay (or attendance bonus) of ten US dollars, seven dollars for transport and living costs etc., which would then amount to 83 US dollars a month as a minimum wage. The Vietnamese government had also adjusted the minimum wages several times in recent years, most recently in October 2011, stipulating that foreign-invested companies needed to pay 2,000,000 Dongs as a monthly minimum, instead of only 1,550,000. But this still didn’t meet the demands of Vietnamese workers. According to statistics by the Vietnamese garment-industry “labor union”, fluctuation within the workforce at state-owned companies was at 15 to 20 per cent, it was at 20 to 30 per cent in some small and medium-sized companies, but at 40 per cent in foreign-invested companies.


Also, Huanqiu quotes Jiang Jianhua, the Cambodia Wenzhou Chamber of Commerce’s deputy managing director, as saying that while labor costs in some South-East Asian countries were relatively low, Vietnam’s garment industry’s management costs were close to those in China, and that they didn’t provide a great advantage. Besides [it isn’t quite clear from the article if the following should still be attributed to Jiang], Vietnam’s legal system was rather backward, its taxation system not transparent, and these, too, were hampering factors. In Thailand, garment manufacturing costs were too high, frequently higher than even in China, and while Cambodia’s political environment was rather stable and labor costs cheap, investors in Cambodia needed to be mindful about backward infrastructure and a usually low quality among the workforce.


It was quite true that the textile industry was gradually shifting to the entire Asia-Pacific region, the article quotes a KPMG report. Rising labor costs in China had compelled multinational companies to look to other parts of Asia, and a number of South-East Asian countries were going to profit from regional integration and preferential terms of trade. But from consumer electronics to furniture and other hardware products, China remained the country of origin. Besides, a Chinese consultant is quoted, most of the South-East Asian countries were rather small, and none of them provided the entire industrial chain. In that regard, there were complementary relations between China and South-East Asia.



Unctad’s latest report also believed that while there was stagnation in foreign direct investment to China in the short term, China remained the place with the highest attractiveness for foreign investment. Some people in the market had also said that the absolute majority of the Made-in-China industry was looking for its own road, i. e. upgrading production or moving to hinterland provinces in China, seeking development there. There were close customer and supplier links between China and other regions, and some manufacturers would continue to rely on China even after relocation, in that they needed to import production equipment from China, or in that they needed China as an export market, for example.


And a Standard Chartered Bank analyst is quoted as saying that if the manufacturing industry was actually moving to South East Asia still remained unclear. China was more competitive than many South-East Asian nations in terms of logistics infrastructure, and Chinese manufacturers no longer produced for export markets only, but for growing domestic demand, too. Rather than reductions in foreign investment in China, there might rather be more rapid investment in other east Asian markets. Some European and American market participants also said that it was too early to talk about a large-scale manufacturing relocation to South East Asia. However, they also suggested that China should address improvement issues among its suppliers, as timely adjustment from passive to active patterns would be helpful for China’s development.


In the words of the report – apparently this one,

FDI flows to China also reached a record level of $124 billion, and flows to the services sector surpassed
those to manufacturing for the first time. China continued to be in the top spot as investors’ preferred
destination for FDI, according to UNCTAD’s WIPS, but the rankings of South-East Asian economies such
as Indonesia and Thailand have risen markedly. Overall, as China continues to experience rising wages and production costs, the relative ompetitiveness of ASEAN countries in manufacturing is increasing.

FDI outflows from East Asia dropped by 9 per cent to $180 billion, while those from South-East Asia rose
36 per cent to $60 billion. Outflows from China dropped by 5 per cent, while those from Hong Kong, China, declined by 15 per cent. By contrast, outflows from Singapore registered a 19 per cent increase and
outflows from Indonesia and Thailand surged. [page xvi – xvii]


FDI inflows to developing Asia continued to grow, while South-East Asia and South Asia
experienced faster FDI growth than East Asia.
The two large emerging economies, China and India, saw inflows rise by nearly 8 per cent and by 31 per cent, respectively. Major recipient
economies in the Association of South-East Asian Nations (ASEAN) subregion, including
Indonesia, Malaysia and Singapore, also experienced a rise in inflows. [pages 3 – 4]

As indirectly quoted by Huanqiu Shibao, the report states that

Among the economies of the Association of Southeast Asian Nations (ASEAN), four – Brunei
Darussalam, Indonesia, Malaysia and Singapore – saw a considerable rise in their FDI inflows. The
performance of the relatively low-income countries, namely Cambodia, the Lao People’s Democratic
Republic and Myanmar was generally good as well, though Viet Nam declined slightly. Although natural
disaster in Thailand disrupted production by foreign affiliates in the country, particularly in the automobile
and electronic industries, and exposed a weakness of the current supply-chain management systems,
FDI inflows to the country remained at a high level of nearly $10 billion, only marginally lower than that of
2010. Overall, as East Asian countries, particularly China, have continued to experience rising wages
and production costs, the relative competitiveness of ASEAN in manufacturing has been enhanced.
Accordingly, some foreign affiliates in China’s coastal regions are relocating to South-East Asia,2
while others are moving their production facilities to inland China. [page 43]

Addressing FDI into Chinese manufacturing in particular, the report states slowing growth as a short-term prospect:

FDI growth in the region has slowed since late 2011 because of growing uncertainties in the global economy. FDI to manufacturing stagnated in China, but the country is increasingly attracting market-seeking FDI, especially in services. According to the annual World Investment Prospects Survey (WIPS) undertaken by UNCTAD this year, China continues to be the most favoured destination of FDI inflows. FDI prospects in South-East Asia remain promising,
as the rankings of ASEAN economies, such as Indonesia and Thailand, have risen markedly in the survey. [page 44]

The report doesn’t only discuss China’s (and other developing countries) as recipients, but also as sources of foreign direct investment.

All in all, the Huanqiu Shibao article appears to be basically assuasive, but still somewhat more “alarming” than the UNCTAD report would seem to warrant. It’s conventional wisdom that China is moving up the value-adding chain, and rising wages are a logical phenomenon in this process. The main goal in terms of propaganda appears to be that the laobaixing, the common people, should continue to push ahead in terms of personal education and qualification, in a competitive global economy. In this context, it also makes sense that websites like “Utopia” remain closed down – a measure which was reportedly criticized, among others, by some 1,600 cadres and scholars who accused chief state councillor Wen Jiabao in particular for closing these sources down, and of subverting the socialist market economy. That Huanqiu Shibao may distrust the outside world appears to be an intended goal (no cohesion within China, without such distrust) – but another intended goal is that the readers accept the challenges posed by global competition, rather than rejecting them in favor of, for example, Maoism.

I hadn’t been a regular reader of Utopia, one of the websites that have been closed since spring this year, but came across an article there some six months before the closures. The article’s author was Gu Genliang, a People’s University (aka Renmin University) professor, and it wasn’t exactly globalization-friendly:

We are mired in heavy dependence on foreign resources and on on our own cheap exports. Large-scale low-end exports consume a lot of energy and natural resources, which led to our country’s dependence on foreign energy and resources which not only made the prices for these sources explode, which transferred the fruits of our people’s hard work into the hands of energy-exporting countries, but also has the potential of making us suffer from foreign countries’ embargos, thus carrying a huge security risk. At the same time, while our country is so reliant on foreign resources, it is ridiculous that we are exporting large quantities of rare earths and minerals coal, etc. at low prices.

The topic of Huanqiu Shibao’s article on ASEAN as a competitor for efficiency-seeking FDI doesn’t look exactly sensitive, but a current anti-“Maoist”, anti-“utopian”, or simply anti-“nostalgia” struggle might help to explain why there is no room for readers’ comments underneath. Such comments could spoil the article’s intended pro-competition message.



» UNCTAD World Investment Report 2012


Saturday, July 28, 2012

Keeping an Angry Readership Posted: Will Vietnam become an American Ally?

Soft power is something China’s leaders want to build both abroad and at home – those among China’s leaders who care about the concept, anyway. Huanqiu Shibao, the trade journal for angry nationalists, tries to involve its angry readers, and is quite probbly following a consensus between a number of stakeholders (not least the propaganda department).

When reading Huanqiu Shibao these days, it feels a bit like reading a copy of Reader’s Digest from the 1960s (I still got some on the attic), and I’m pretty sure that Huanqiu’s more recent approach is modelled after that perfect exemplar of the monolithic conformist Eisenhower ’50s – only from a very different kind of conservatism.

In short, and only my personal, rough working hypothesis of course, Huanqiu has begun a shift away from angry articles on how to become America’s adequate adversary, to the sedate, even-handed and self-confident voice of a rising superpower.

The readership, however, may not change that easily – not if the commenter threads are anything to go by.

It may not exactly be the approach Cheng Tianquan suggests – making Chinese “citizens” participate in foreign affairs -, but at least a try to calm netizens down when it comes to diplomatic issues, as Zhao Qizheng, a public-diplomacy expert, advised earlier this year.

The following are excerpts from a Huanqiu Shibao interview with Qi Jianguo (齐建国), China’s former ambassador to Vietnam.

Main Link: Vietnam won’t become America’s “ally”, published by Huanqiu Shibao on July 26, 2012. Links within blockquote added during translation – JR

[Editor’s note]

Editor’s note: Recently, the establishment of Sansha City in the Paracel Islands was officially established. This lead to “protests” from the Philippines and Vietnam. America also expressed “concern”. The South China Sea situation once again attracted attention. Looking at the entire South China Sea dispute, people can’t help but ask themselves this question: if the Philippines become America’s ally, with American forces protecting it, thus being “able” to deal with China, couldn’t Vietnam, a country from the “socialist camp” and with intense and deep-seated hatred for the U.S. thirty years ago, do likewise?


After Vietnam and America established diplomatic relations, their relations warmed quickly during the past few years. On the South China Sea dispute, America also openly expressed support for Vietnam, and Hillary Clinton openly praised Vietnam’s reforms. One could see Vietnam and America approaching this point of “ability”. However, what is the current situation like? Could Vietnam throw itself completely into America’s arms and become America’s “ally”? Concerning Vietnam’s foreign and domestic political issues, Huanqiu Shibao’s review channel recently interviewed China’s former ambassador to Vietnam, and Asia-Pacific Research Center director Qi Jianguo. The record of the interview will be published in instalments.


[The interview]

Q: After the establishment of diplomatic relations between America and Vietnam, the relations between the two countries have become warmer. Which factors brought the two countries closer together?


A: Vietnam and America established diplomatic relations in 1995, 17 years ago. Objectively speaking, their relationship went from a mutually cool attitude to a warm one. Two examples: trade and politics. As for trade, America has lifted the trade embargo since 1994, but up until 2000, after only six years of diplomatic relations, a trade agreement was signed. That’s to say, relations wer very normal then. Politically speaking – I had become ambassador in Vietnam by then – American president Clinton visited Vietnam to promote progress in their relations, but because Clinton talked a lot about so-called democracy, human rights etc., points of view Vietnam couldn’t accept, then Vietnam CP secretary Le Kha Phieu criticized these views in their meetings with Clinton, and the meetings ended on rather bad terms. Later, America’s ambassador to Vietnam held an informal meeting. He wasn’t satisfied at all, and said that the last meeting had been “stupid”. He called secretary general Le Kha Phieu a “conservative, tough old man”. This shows that in fact, from 1995 to 2000, through all those years, the bilateral ties had been rather cold.


Only another five years later, in 2005, ten years after the establishment of diplomatic relations, Vietnam’s prime minister Phan Van Khai visited America. It was the first visit by a Vietnamese leader after the end of the Vietnam war thirty years earlier, and this marked the complete normalization of Vietnamese-American relations. In 2006, as Vietnam hosted the informal meeting of APEC leaders, American president Bush visited Vietnam. After that visit, America gave Vietnam the most-favored nation status (MFN), a status of permanent normal trading, and after that, Vietnamese-American relations moved to a stage of rapid development. Particularly during the past two years, as America accelerated the pace of its return to the Asia-Pacific region, the relations clearly warmed.


Generally speaking, the warming relations between the two countries were a matter of the past few years. It should be said that the background reason was America’s strategic adjustment. The two sides both hope to develop the relations continuously, with both sides having certain requirements [to each other], which led to the relations as they are today.


Q: What do the two countries want to get from each other? And can they obtain these things?


A: This needs to be looked at from the background of America’s strategic adjustment. What America wants to get in its shift to the East, or its return to the Asia-Pacific region, is – besides strengthening relations with allies like Japan, South Korea, Australia, the Philippines, and Thailand – the strengthening of relations with “new partners”. That’s America’s new need. As for Vietnam’s relations with America, a strategic position is very important. In America’s view, Vietnam is a new partner. At present, the two sides both prepare the advancement of their relations to “strategic cooperation and partnership”, and make efforts to these ends. For America, the main issue isn’t what to get from trade, but it mainly shows in how it uses Vietnam’s important strategic position.


Vietnam wants to get a lot from America, both politically and economically. Vietnam hopes that America will gradually abandon its peaceful-evolution towards it, it hopes for support concerning the South China Sea, and of course it also hopes for economic advantages. Currently, America is Vietnam’s biggest export market, and Vietnam’s biggest foreign-trade surplus is the one with America. China has been Vietnam’s biggest trading partner for seven consecutive years, and Vietnam’s biggest trade deficit is the one with China. Vietnam’s trade surplus with the U.S. can’t make up for the deficit with China.


When it comes to what the two sides can or can’t get from each other what they hope to get, this can’t be considered all at once. This needs to be analyzed issue by issue. What can Vietnam get? It can get advanced technology from America, more investment, even American support concerning the South China Sea. As far as that’s concerned, America is already openly supportive. But it can’t get promises and assurances from America to the end that America “won’t overthrow the communist leadership, and won’t change its socialist system”.


As for America, it can use Vietnam’s strategic position to broaden its influence in South-East Asia, make it serve its strategic adjustment, but it won’t get a promise to establish its military bases there. At best, their navy will have so-called supplies from Cam Ranh Bay. I experienced something about Cam Ranh Bay myself. It was an American naval base, originally. After the Vietnam war, the Soviet Union took it over, and by 2004, the Russians had completely withdrawn, as the Vietnamese defense ministry itself officially informed me: “From now on, Cam Ranh Bay won’t be leased out to any third country, our Chinese comrade can be at ease about that.” In my view, this Vietnamese commitment has not changed. Cam Ranh Bay won’t be what some people believe it could be – there’s no way that, in the wake of the warming ties, the U.S. navy would use Cam Ranh Bay the way they used it in the past.


[Further remarks on two further questions: U.S.-Vietnamese ties will remain close for the foreseeable future, but ideologically, there is no difference between the way America views China and Vietnam respectively.]

Q: There are views that America wants to use the South-China-Sea dispute and the resulting warming relations with Vietnam to change [“evolutionize”, 演变] Vietnam – that it wants to achieve what they didn’t achieve with the Vietnam war. How do you view this?


A: I can’t really agree with this view, because the relations and the ideologies between the two countries are different in character: one is about the way the two countries’ relations would develop further, and one is about another country’s nature. The latter issue, for the Vietnamese CP, is one of life and death. Generally speaking, these to issues are different in that one is about benefit, and one is about life and death. Even if America should have these ideas, to achieve peaceful evolution by supporting Vietnam in the South China Sea dispute, it will find it hard to achieve.


I believe that the ideological influence on both countries is big, and fundamental. To use an example from my time as ambassador to Vietnam: after the establishment of diplomatic relations between Vietnam and America, the period when America wanted to achieve evolution, relations became cold. During the first years of the 21rst century, America supported independence for Vietnam’s four western provinces by preaching the gospel of freedom etc. Several thousand people came to the provincial parliaments for so-called establishment of national parliaments. This resulted in bloodshed and were then suppressed. It is said that America had supported those people financially. […]


Neither will, for a long time to come, America give up its plans to change Vietnam’s socialist system, nor will Vietnam give up [or in, to these American plans]. Ideological differences remain the biggest restricting obstacle in the two countries’ relations.


[Further remarks: the shadows of the Vietnam War keep lingering, even if “hate-America” feelings in Vietnam aren’t particularly strong (在今天的越南,“仇美”的社会情绪应该说有,但不是特别的强烈。). Vietnam attaches importance to developing ties with big countries in general, among “three priorities, since the beginning of the century: ties with neighboring countries, ties with traditionally friendly countries, and with big countries – 三个“优先发展”:优先发展同邻国的关系、优先发展同传统友好国家的关系、优先发展同大国的关系 – Vietnamese-U.S. ties would continue to warm as the America made its return to the Asia-Pacific region.]

Q: How much potential is there in Vietnam-U.S. economic relations? How much benefit can America provide for Vietnam?


A: I believe there’s great potential with broad perspectives. Two examples: one big obstacle in Vietnamese-American trade was removed in 1994, the trade embargo. After that, the trade cooperation went through three stages. From 1994 to July 2001, it was the first stage. Then, after the removal of the embargo, the two countries signed their bilateral trade agreement, that was the second stage, from July 2001 to May 2006. Then the two countries signed an agreement for Vietnam’s accession to the WTO, which meant permanent normalization of Vietnam’s position as a trading partner. From 2006 to now, with most-favored-nation status for Vietnam, their trade cooperation entered the phase of quick development.

我认为,越美的经济合作潜力巨大,前景广阔 with broad perspectives。我举两个例子:一个是越美开展经济往来的障碍彻底消除了,1994年美国取消对越南的贸易禁令 Embargo 以后,两国的经贸合作关系经历了3个阶段:1994年到2001年7月份,这是第一个阶段,从取消贸易禁令到越美两国签订“双边贸易协定”;2001年7月到2006年5月,是第二个阶段,越美签了越南入世的协定,这意味着美国已经给了永久的“正常贸易关系地位”;2006年到现在,是第三个阶段,美国给了它最惠国待遇之后,越美经贸合作进入快速发展时期。

Also, Vietnam’s and America’s economies are highly complementary to each other. Goods Vietnam imports from the U.S., like planes, machinery and electronic products, chemical fertilizers, cotton, etc., and exports of textiles, clothing, footwear, frozen shrimps and petroleum products, that’s highly complementary. From 2000, when the bilateral trade agreement was signed, to 2005, within those five years, their trade went up from 1.4 billion to 7.6 billion dollars, of which 6.5 billion came from Vietnamese exports to America. As soon as in 2005, Vietnam’s trade surplus with America reached 5.4 billion US dollars.


In 2011, Vietnam-U.S. trade exceeded twenty billion dollars, and Vietnam’s trade surplus with America was biggest, ten billion dollars. Besides, there is foreign direct investment from America, at least twelve billion U.S. dollars. Therefore, America isn’t only Vietnam’s biggest export market, but also one of its biggest investors.


Interview conducted and edited by Wang Jingtao (王京涛).



» Only a Great Importer is a Great Power, May 17, 2012



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