A new journey to make history

Admiral Zheng He

The sincerity, friendship, mutual benefit and win-win outcome which guided Admiral Zheng He still guide Malaysia and China’s bilateral relations today.

IT is a great pleasure to pay my first visit to Malaysia as Premier of the State Council of the People’s Repub­lic of China and attend the East Asia leaders’ meetings. I am no stranger to this beautiful country, as I visited Malaysia in 1996 when the Petronas Twin Towers were just completed. The past 20 years have indeed witnessed impressive and admirable achievements in Malaysia.

China and Malaysia, two neighbours facing each other across the sea, enjoy a time-honoured friendship. Trade between the two countries started over 2,000 years ago.

During the Ming Dynasty (14th-­17th century), Zheng He, a Chinese navigator, came to Malacca five times on seven sea voyages. A record of friendly China-Malaysia exchanges exists with many stories, such as those of Bukit Cina and the King’s Well, still told today.

People today remember Zheng He for what he did. His aspiration, as the records show, was to seek friendship and develop trade with neighbours.

He and his people helped local military and civilians build city walls, drive away pirates, settle conflicts and keep peace at sea. They also passed on agricultural and manufacturing technologies and medical skills to the local people to help with their lives and daily work.

Today, when we look back at that past episode in China-Malaysia exchanges, we also admire Zheng He for what he did not do. When he arrived in this land of prosperity commanding what was then the most powerful fleet in the world, he engaged in nothing like plundering, expansion or colonisation.

Instead, he became known for his goodwill and moves of peace, of which people still keep fond memories. What he did speaks volumes of the Chinese belief that “one should not do to others what he doesn’t want others to do to him”.

It also bears testimony to the Chinese wisdom that “one needs to help others achieve success if he wants success for himself”. Zheng He’s dedication to peace and readiness to reach out and help others show the essence of the Chinese philosophy, where peace and good neighbourliness always come first. It also constitutes part of the cultural legacy that brings countries in the region together.

Today, China and Malaysia are each other’s trustworthy friend. We have formed a comprehensive strategic partnership and enjoy political mutual trust and mutual respect. The leaders of our two countries visit each other often and maintain close communication.

In May last year, visiting Prime Minister Najib Razak and I attended celebrations marking the 40th anniversary of diplomatic relations at the West Hall of the Great Hall of the People in Beijing, the place where the senior generation of our leaders signed the Joint Communiqué in 1974 to establish diplomatic ties between China and Malaysia.

Over the years, our two countries have supported each other on major issues we are concerned with and jointly contributed to equity and justice in the world. Not long ago, the first joint military exercise was carried out by our militaries in Malacca, marking a major step forward in our defence cooperation.

Economically, we have had much to offer each other in win-win cooperation. Our bilateral trade has topped US$100bil (RM436.6bil).

China has been Malaysia’s largest trading partner for seven years straight, and Malaysia is now China’s biggest trading partner among Asean countries.

China’s trade with Malaysia accounts for one-fifth of its total trade with Asean. The foundation is sound for our cooperation in economy, trade, finance, infrastructure, agriculture, forestry and fishery.

Our high-tech cooperation is even reaching to the sky and seas. As a result, not only have our peoples have benefited from such cooperation; the whole region has also shared in the benefits.

People in our two countries are eager to learn from and help each other. In both China and Malaysia, badminton is a popular sport. The names of world-class players such as Lin Dan and Lee Chong Wei are known to almost every household.

As competitors and athletes aspiring for excellence, they battle each other on the badminton course. After the games, they are good friends who exchange text greetings on festivals.

China’s great poet Li Bai of the Tang Dynasty (7th-10th century) once wrote of friendship that “true friendship is revealed through adversity, and success becomes nothing when it is not shared”.

A Malaysian saying carries something of a similar effect: Bukit sama didaki, lurah sama dituruni (together we will climb the mountains and together we will cross the valleys).”

When a massive earthquake hit China in Wenchuan, Sichuan province in 2008, Malaysia raced against time to extend a helping hand. Its people from all walks of life raised as much as 200 million yuan (RM136.5mil), making Malaysia one of the biggest donors to the disaster-stricken areas.

And shortly after Malaysia Air­lines Flight MH370 lost contact, I spoke with Prime Minister Najib Razak on the phone for thorough discussions on the search and rescue mission. In times of adversity, China and Malaysia have always stood with and supported each other.

The Chinese community in Malaysia has contributed their share to local economic development, social harmony and amity among ethnic groups. They have served as a special bond contributing to China-Malaysia friendship.

Over the past 40 years, cooperation between China and Malaysia has set a good example of friendly exchanges between countries in the region. Standing at a new starting point for development in our relations for the next four decades, our two countries will continue to view and grow our relations from a strategic perspective, deepen strategic mutual trust, advance mutually beneficial cooperation, expand people-to-people and cultural exchanges, and carry forward our traditional friendship.

China has set the goal to complete the building of a moderately prosperous society in all respects by 2020. It has much in common with Malaysia’s Vision 2020.

As China is advancing the initiative of the Silk Road Economic Belt and the 21st Century Maritime Silk Road, encouraging mass entrepreneurship and innovation, and transforming and upgrading its economic structure, Malaysia is gearing toward all-round economic transformation with the New Economic Model aimed at more robust growth.

I see this as offering each other a perfect chance to boost development. We may draw on our respective strengths and conduct more cooperation on production capacity. We may encourage more enterprises to take part in the development of the industrial parks in Qinzhou and Kuantan, enhance infrastructure building and increase connectivity.

Such cooperation will produce huge development dividends to ensure steady growth and make life better for our people. China and Malaysia both play a major role in turning East Asia into a major pole and sustaining steady global growth. I have great confidence that our mutually beneficial cooperation will hold out even brighter prospects.

China-Asean relations are a major cornerstone for peace, stability, development and prosperity in the region. The upcoming East Asia leaders’ meetings will be held at a time when the Asean Community is to be formally established.

This carries a special and landmark significance. Given the lingering impact of the international financial crisis and the generally downward economic trend, it is all the more important for countries in the region to stand in solidarity and work with each other for common development and prosperity.

Ours is a time with interwoven traditional and non-traditional security challenges, on top of which external interference has led to incessant turbulences in some parts of the world and caused serious spillover effects. It falls upon countries in the region to cherish the harmonious coexistence of different cultures and development paths in the region, and work together to uphold regional peace and stability for the long run.

Sincerity, friendship, mutual benefit and win-win outcomes were what Zheng He stood for when his ships took him to Malacca. They are still the principles guiding the growth of China-Malaysia relations today.

They represent the trend of the times and aspiration of the people, not only in China and Malaysia but region-wide. It is our common goal that deserves our common effort.

I am confident that with joint efforts, China-Malaysia relations and cooperation in the region, will grow steadily and become more mature, and will head toward greater mutual benefit, mutual trust, prosperity and common development.

BY LI KEQIANG

Li Keqiang is Premier of the State Council of the People’s Republic of China. The views expressed here are entirely the writer’s own.

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A region evolves with rising China

South-East Asia’s complex big power relations demand careful and considered understanding, where frequent complications and familiar gut reactions do not help.

WHEN countries have difficulty relating to a rising China, part of the problem lies in not understanding where China is heading and not knowing what it will become.

The sheer scale of China’s development and the weight of its trajectory mean that the impact of its rise on the rest of Asia and the world is bound to be considerable and profound.

As a frame of reference, the future of today’s China is often seen in the context of its past: a “Middle Kingdom” entity, the heart of an Asian tributary system, a regional superpower with global pretensions whose once closed-door policy is opening to the world.

Yet none of these references fits because modern China’s pace of change is as rapid as it is vast. Not only is it a post-Deng China, it is now into the fourth- and fifth-generation leadership of post-Dengist society.

A sense of a likely future China may then be deduced through elimination, by discarding what it is unlikely to be.

These include a communist superpower, a nation shaped by a distinct ideology, and one led by a powerful charismatic individual. But what of those things, admittedly few, that it will still be?

One of these is rule by the Chinese Communist Party (CCP), particularly since single party rule continues to be a central bastion of the status quo. Yet even this requires qualification, if not some revision, and is already subject to much speculation.

The CCP has had to undergo some redefinition as circumstances evolve. The state socialism it championed underwent a social(ist) market phase to emerge as state capitalism.

Ideology continues to be diluted as dogma fritters away. Conservatives and reformists both within and outside China agree the trend is irreversible if not also inevitable.

Just about the only thing that a future China is still certain to be is a unitary state. But even this has to be qualified again.

What is now regarded as Greater China – the People’s Republic of China on the mainland, Hong Kong, Macao and Taiwan – are unlikely to be fused into one singularly cohesive whole anytime soon.

Yet they are moving together towards a unitary economy, the basis of the modern nation state. Such a trend is beyond the protestations of democrats and the comprehension of many strategists.

At the same time, provinces are slowly moving towards greater autonomy in economic matters, including in dealings with neighbouring countries. A country as large as China cannot endure too long under strict centralised rule.

And China has endured longer than all others, with the country now into its fifth millennium of continued statehood. These trends and movements take time and may seem imperceptible for other countries, but they are par for the course with China’s enormous timelines.

For decades now, Chinese authorities have also introduced elections at local levels with invited inputs from the Carter Center. Voting has been practised in village and provincial levels, and despite occasional fits and starts the trend is towards a controlled political opening with assured stability.

All of this contributes to the near-incomprehension of today’s China on the part of external observers. A survey of their attitudes, assumptions and responses in any given week attests to this reality.

Questions of whether China (meaning Beijing) can ever govern Taiwan, or even understand Hong Kong, are typical. The real risk of observers not seeing the wood for the trees is ever-present.

A debate of sorts has emerged over China’s likely reaction to a possible win by Taiwan’s Democratic Progressive Party (DPP) in next January’s election. Pessimists who fret over their own cynical pronouncements fail to realise that China is playing for bigger stakes than petty party feuding.

China’s interest in Taipei is Taiwan, not necessarily a Kuomintang (KMT) Taiwan. A lately declining KMT under President Ma Ying-jou has sufficiently energised pragmatists in Beijing to be diplomatic towards the DPP.

Another perennial issue is the presumed rivalry between the US and China. Although competition exists between them, they have more in common than at variance for now and the foreseeable future.

Their shared interests include international security and a single global economy in which both hold the largest stakes. Rivalry in these core areas compromises the interests of both without enlarging opportunities for either.

An understanding of that basic reality is shared between US and Chinese leaders, but apparently not by Japanese ones. The Abe administration is still stuck between old wartime anxieties and proudly snubbing Beijing.

However, China should also not expect anything but Abe’s cancellation of a visit on Sept 3. The occasion, with Western leaders absent, is being presented by some in China as celebrating its victory over Japan.

China: Military parade not aimed at any country

China says its upcoming September 3rd military parade is part of commemorations for the 70th anniversary of its victory in the war of resistance against Japanese aggression, and is not specifically aimed at any country.http://t.cn/RyzoMBy

Nonetheless, the Abe government remains an activist one in provoking competition with China over military issues. Its White Paper released last month inflates China’s maritime military capabilities and even conflicts with US calculations.

Besides the US, Taiwan and Japan, the other barometer of China’s rise as seen through its foreign relations is Asean.

China regards Asean wariness of its territorial assertiveness as limited and negotiable, since not all member countries have rival claims to offshore territory. But Beijing may seriously be underestimating Asean’s sense of solidarity, given not just Asean’s community-building agenda but also its common resolve to develop community cohesiveness.

The established links between China and Asean’s newer CLMV members (Cambodia, Laos, Myanmar, Vietnam) are both limited and fraying in places. Beijing needs to rebuild trust and good faith within Asean as much as in North-East Asia.

China has thus emphasised multi-level, multi-sectoral joint ventures both bilaterally and collectively. Its proposals for a Maritime Silk Road and a One Belt, One Road link to Europe are backed by the China-Asean Maritime Cooperation Fund, the Asian Infrastructure Investment Bank, the New Development (Brics) Bank and China’s own solvency.

On the ground however, Asean collectively seeks enlarged trade volumes with China. However, China’s currency devaluations and the subsequent jolts to regional currencies compromise these goals.

With Indonesia, China is extending cooperation in fighting drug trafficking as Jakarta favours using the yuan for bilateral trade. With Malaysia, China is building linkages in education and industrial development.

Thailand’s post-coup government is seen as leaning towards China, thanks in part to a US snub. Now Thai-Chinese ties are growing over purchases of stockpiled Thai rice and even the prospect of a Kra Isthmus canal.

China’s relations with Vietnam and more so the Philippines will require more time and work. Ironically, Unctad trade data identifies the Philippine economy as the biggest regional beneficiary of China’s rise.

Beijing’s ties with the other Asean countries may be less complicated but still require attention and constant tending. Its record of fully understanding Asean is not impressive.

Overall, Beijing’s relations with Asean and its member nations are economic, diplomatic and socio-cultural, without political interference in their domestic matters. This contrasts with Washington’s largely military posturing and its political pressures on issues of democracy and human rights.

China’s impact on this region is likely to remain non-political and non-military – differing from US interaction. This asymmetry makes up much of South-East Asia’s strategic status quo.

Whether and how it will endure, and whether it deserves to remain, still have to be seen.

By Bunn Nagara Behind the Headlines

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.

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Was Flight 370 remote-hijacked as Boeing has autopilot technology?

Boeing has patent for autopilot tech

PETALING JAYA: When it was first speculated that Flight MH370 could have been hijacked via remote control access, many dismissed it as far-fetched science fiction.

But the technology to navigate planes, ships, trains, buses and other vehicles by remote control has been around for about a decade.

The Boeing Company, the world’s leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft, has the technology.

It owns a patent for a system that enables remote controlling of its aircraft to counter hijacking attempts.

Boeing applied for the patent for an “uninterruptible autopilot control system” about 11 years ago, and was awarded it in 2006.

The system can be activated when the security of onboard controls are jeopardised.

“The method and systems of the present invention provide techniques for automatically navigating, flying and landing an air vehicle,” states the report for the US patent number US7142971B2.

Once activated, an aircraft could be automatically navigated, flown and made to land without input from anyone on board.

“Any onboard capability to supercede the automatic control system may be disabled by disconnecting the onboard controls,” states the report.

Power is provided to the automatic control system “from an alternative power control element that is inaccessible (to anyone on board the vehicle)”.

According to the patent report, control commands could be received from a remote location and/or from predetermined control commands stored on board the plane.

Boeing applied for the patent on Feb 19, 2003, barely two years after the Sept 11 attack in which hijacked planes rammed into the World Trade Centre, reducing the gigantic buildings into rubble.

Eric D. Brown, Douglas C. Cameron, Krish R. Krothapalli, Walter von Klein Jr and Todd M. William invented the system for Boeing. The patent was awarded three years later on Nov 28, 2006.

When the automatic control system is activated, no one on board the aircraft would be capable of controlling its flight.

The patent report also states that a signal might be transmitted to at least one remote location from the plane to indicate that the uninterruptible autopilot mode of the air vehicle has been engaged.

The system includes a dedicated communication link between the aircraft and a remote location, distinct from any communication link established for other types of communication.

According to an independent analyst James Corbett, the US Federal Aviation Administration had reported on the Federal Registrar last November that the Boeing 777-200, -300 and –300ER aircraft were equipped with an electronics security system to check unauthorised internal access.

Contributed by Sira Habibu The Star/Asia News Network

“Flight 370 Was Remote-Hijacked”

Author, barrister and political advisor Matthias Chang

A high-level Malaysian source has confirmed that missing Flight MH370 must have been hijacked by remote control.

Matthias Chang, a barrister who served as Political Secretary to the Fourth Prime Minister of Malaysia, Dr. Mahathir Mohamad, explained why only a remote-hijacking “fly by wire” scenario can explain the plane’s disappearance.

Read Matthias Chang’s MH 370 – A Sinister Tragedy In the Fog of Coincidence?

In an exclusive interview with Truth Jihad Radio, Chang – who remains well-connected with the highest political levels in Malaysia – patiently explained why all of the evidence points to a remote hijacking by one of the handful of countries capable of such a technological feat. He expressed annoyance with Western media criticism of the Malaysian government, arguing that it is Western governments, not Malaysia’s, that are covering up what they know while the media fails to ask the hard questions.

[The audio interview will be posted for Truthjihad.com subscribers by this evening here.]

During our interview on the morning of Friday April 4th (Malaysia time) Matthias Chang told me: “I want to raise a point that has not been much discussed in either the mainstream or alternative media, which is that the technology of autopilot has been in existence for a long time. Since September 11th, more sophisticated systems have been placed in all planes to avoid any hijackings. If there is a hijacking in progress it kicks in and flies to an airport to land safely. The system can be triggered by the pilot himself from the cockpit, or it can be triggered by ground control. And by ‘ground control’ I mean it can be operated from land, an AWAC plane, or a ship, by an entity that has the capability and technology to fly the plane remotely. That technology is out there.”

Chang pointed out that only remote-hijacking can explain the plane’s flight path: “This plane is flying for six hours on its own. Who’s flying the plane? The entity flying the plane must be those with the technology that’s used now to pilot drones. We know drones have been flown in Afghanistan from Florida. We have seen video tapes and news broadcasts about how ‘pilots’ in Florida are flying planes and drones in Afghanistan as if they are playing computer games.”

Chang explained that the Western media’s pilot suicide hypothesis “doesn’t hold water. If you’re a pilot, why turn back, go north to Thailand where there are military exercises going on, and you will know from the radar that other planes are flying, then turn south and fly for six hours? That’s ridiculous. Also, most suicides leave notes explaining why. This is another huge question mark. Why this accusation of the pilot, when the facts are inconsistent with suicide?”

Suggesting that the Western countries have been leading the public on a wild goose chase, Chang explained:

“During the past four weeks, we have heard of various countries providing data. Australia said there were two floating objects west of Perth, but when ships were sent they were not found. France, also, said they discovered two objects. When the search planes went, these too couldn’t be found. The satellite of Thailand (a US client state) found two objects. It was sea rubbish. This was followed by (US occupied) Japan saying they found objects. But those objects were not MH370s. The British firm Inmarsat, using its calculations, said the plane would have crashed in the area where the objects were located. But subsequently Boeing, doing new calculations projecting faster flight at lower altitude, said the plane could have ended somewhere 1000 miles north of the previously projected location.”

Were all of these people ordered to look in all the wrong places – by a military high command that knows perfectly well where the plane is?

Chang continues:

“Given all this information, it’s crystal clear, clear as day, that the one country that has the most sophisticated surveillance technology has remained mute. They may have given sealed evidence – I don’t know. But no public announcement.

As VT Editor Gordon Duff says, a gnat has a hard time disappearing. So how can a 777 vanish?

“America has the most advanced satellites in the world…it can detect an object the size of a coin, look at bunkers buried deep underground. NROL 39 (the US National Reconnaissance Office) uses the octopus emblem. It states clearly that enemies of America cannot hide because ‘nothing is beyond our reach.’ The octopus’s tentacles encompass the whole globe. I find it very odd that America has been reticent, conspicuously silent, about what their satellites have shown, if anything.”

What makes it especially odd that the US will not admit it tracked the plane is that the flight path involved some of America’s most sensitive military areas:

“As MH370 reached the airspace of Vietnam it went north toward Thailand where the US-run Cobra Gold and Cope Tiger military exercises were being held. Then, allegedly, the plane ended in the Indian Ocean. But there is no evidence or debris. Now what is conspicuous…is that when a plane goes past Southern Thailand into the Indian Ocean, it has to fly past a very important landmark: Diego Garcia, a secretive US military base. It was from this base that the US launched bombers to Afghanistan, Iraq, and Vietnam before that. Surely this base has some of the most sophisticated surveillance technology. Any unidentified plane that flew in the direction of Diego Garcia would certainly be located and identified.”

Chang, the former top political advisor to the Prime Minister of Malaysia, noted that the bizarre disappearance of MH370 coincided with the US-run Cobra Gold and Cope Tiger military exercises – just as previous “disasters” have mirrored suspiciously-timed drills and exercises:

“On 9/11, when planes struck the Twin Towers and the Pentagon, there were military exercises taking place, and NORAD and others were confused about whether the planes were part of the exercise or not.”

Chang was referring to the notorious 46 drills of September 11th 2001, the biggest pre-designated National Security Special Event Day in US history. Those exercises practiced and then mimicked every aspect of the actual attacks, including a live-fly plane-into-building exercise that shut down the National Reconnaissance Office and prevented NRO personnel from seeing satellite images of whatever the alleged attack planes and their military control planes, including the “Flying Pentagon” E-4B Command Center aircraft, were really doing that day.

Chang noted that the 7/7/2005 London bombings – like 9/11– perfectly mirrored drills that were occurring at exactly the same times and places:

“On 7/7 in London, there was a bombing of underground stations, plus the bus in Tavistock Square. Surprise surprise, four Muslim youth were said to be responsible for the deaths and injuries. Yet on that very day, there were terrorist bombing exercises at precisely the same four locations.”

YouTube - Veterans Today -
 
Chang observed that Christopher Bollyn, whose book Solving 9/11 implicates Israel and its US agents in the worst terrorist attack in US history, has discovered indications that the disappearance of MH370 might be connected with another false-flag plot: “Bollyn exposed how, immediately after the hijacking (of MH370), the Times of Israel put out propaganda that the plane was hijacked by agents of Iran, then landed in Bangladesh to weaponize the plane to carry out a diabolical attack like September 11th.” (Bollyn also discovered a suspicious “evil twin” of MH370 hidden in an Israeli hangar – his article is linked here.)

Chang said that the media’s focus on the search for the MH370′s black box is a deception. “We’ve been diverted to look for the black box. Bullshit! There are plenty of signals.” Chang asserts that both Boeing, a leading US military contractor, and the Rolls-Royce company that makes the plane’s engines, know exactly what happened to MH370, because they are constantly fed signals giving them every significant detail about all of their planes including exactly location, altitude, airspeed, engine function, manual or autopilot, and so on.

Regarding Rolls-Royce, Chang said:

“As long as the engine is running, they monitor it. If anything goes wrong with the engine for any reason, they land the plane and abort the flight. There have been a couple of instances when Rolls-Royce detected malfunctions and told the pilot to land as soon as possible due to the malfunction.

“So for six hours or more, Rolls-Royce would have kept track of the pings. Rolls-Royce would know where the plane’s going. Now I’m told, rightly or wrongly, that in the protocol, Rolls-Royce may be prohibited from disclosing this information.”

Likewise, Malaysia has been prevented from disclosing the sealed evidence it has been provided by one or more unnamed countries – or even the name of that country or countries.

But despite the gag order, Chang thinks the evidence speaks for itself: “There is cyber war between these (larger) countries, and we small countries are caught in the middle. I think the passengers were collateral damage.”

Chang’s conclusion about Flight 370?

“Under the cover of the military exercises, something diabolical, something catastrophic, has happened.”

 Sources Veterans Today Editor:

Dr. Kevin Barrett, a Ph.D. Arabist-Islamologist, is one of America’s best-known critics of the War on Terror.

Dr. Barrett has appeared many times on Fox, CNN, PBS and other broadcast outlets, and has inspired feature stories and op-eds in the New York Times, the Christian Science Monitor, the Chicago Tribune, and other leading publications.

Dr. Barrett has taught at colleges and universities in San Francisco, Paris, and Wisconsin, where he ran for Congress in 2008. He currently works as a nonprofit organizer, author, and talk radio host.


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US Fed tapering of bond purchases, a new economic boom or bust cycles?

Is a new economic crisis at hand?

The two-day sell-off of currencies and shares of several developing countries last week raises the question of whether this is the start of a new financial crisis.

AT the end of last week, several developing countries saw sharp falls in their currency as well as stock market values, prompting the question of whether it is the start of a wider economic crisis.

The sell-off in emerging economies also spilled over to the American and European stock markets, thus causing global turmoil.

Malaysia was not among the most badly affected, but the ringgit also declined in line with the trend by 1.1% against the US dollar last week; it has fallen 1.7% so far this year.

An American market analyst termed it an “emerging market flu”, and several global media reports tend to focus on weaknesses in individual developing countries.

However, the across-the-board sell-off is a general response to the “tapering” of purchase of bonds by the US Federal Reserve, marking the slowdown of its easy-money policy that has been pumping billions of dollars into the banking system.

A lot of that was moved by investors into the emerging economies in search of higher yields. Now that the party is over (or at least winding down), the massive inflows of funds are slowing down or even stopping in some developing countries.

The current “emerging markets sell-off” is thus not explained by ad hoc events. It is a predictable and even inevitable part of a boom-bust cycle in capital flows to and from the developing countries, coming from the monetary policies of developed countries and the investment behaviour of their investment funds.

This cycle, which is very destabilising to the developing economies, has been facilitated by the deregulation of financial markets and the liberalisation of capital flows, which in the past was carefully regulated.

This prompted bouts of speculative international flows by investment funds. Emerging economies, having higher economic growth and interest rates, attracted investors.

Yilmaz Akyuz, chief economist at South Centre, analysed the most recent boom-bust cycles in his paper Waving or Drowning?

A boom of private capital flows to developing countries began in the early 2000 but ended with the flight to safety triggered by the Lehman collapse in September 2008.

The flows recovered quickly. By 2010-12, net flows to Asia and Latin America exceeded the peaks reached before the crisis. This was largely due to the easy-money policies and near zero interest rates in the United States and Europe.

In the United States, the Fed pumped US$85bil (RM283bil) a month into the banking system by buying bonds. It was hoped the banks would lend this to businesses to generate recovery, but investors placed much of the funds in stock markets and developing countries.

The surge in capital inflows led to a strong recovery in currency, equity and bond markets of major developing countries. Some of these countries welcomed the new capital inflows and boom in asset prices.

Others were angry that the inflows caused their currencies to appreciate (making their exports less competitive) and that the ultra-easy monetary policies of developed countries were part of a “currency war” to make the latter more competitive.

In 2013, capital inflows into developing countries weakened due to the European crisis and the prospect of the US Fed “tapering” or reducing its monthly bond purchases.

This weakening took place just as many of the emerging economies saw their current account deficits widen. Thus, their need for foreign capital increased just as inflows became weaker and unstable.

In May to June 2013, the Fed announced it could soon start “tapering”. This led to sudden sharp currency falls, including in India and Indonesia.

However, the Fed postponed the taper, giving some breathing space. In December, it finally announced the tapering — a reduction of its monthly bond purchase from US$85bil (RM283bil) to US$75bil (RM249bil), with more to come.

There was then no sudden sell-off in emerging economies, as the markets had already anticipated it and the Fed also announced that interest rates would be kept at current low levels until the end of 2015.

By now, however, the investment mood had already turned against the emerging economies. Many were now termed “fragile”, especially those with current account deficits and dependent on capital inflows.

Most of the so-called Fragile Five are in fact members of the BRICS, which had been viewed just a few years before as the most influential global growth drivers.

Several factors emerged last week, which together constituted a trigger for the sell-off. These were a “flash” report indicating contraction of manufacturing in China; a sudden fall in the Argentini­an peso; and expectations that a US Fed meeting on Jan 29 will announce another instalment of tapering.

For two days (Jan 23 and 24), the currencies and stock markets of several developing countries were in turmoil, which spilled over to the US and European stock markets.

If this situation continues this week, it may just signal a new phase of investor disenchantment with emerging economies, reduced capital inflows or even outflows. This could put strains on the affected countries’ foreign reserves and weaken their balance of payments.

The accompanying fall in currency would have positive effects on export competitiveness, but negative effects on accelerating inflation (as import prices go up) and debt servicing (as more local currency is needed to repay the same amount of debt denominated in foreign currency).

This week will thus be critical in seeing whether the situation deteriorates or stabilises, which may just happen if the Fed decides to discontinue tapering for now. Unfortunate­ly, the former is more likely.

 Contributed by Global Trends  Martin Khor
> The views expressed are entirely the writer’s own.

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2. Winds of change blowing in Asia

Fed Slows Purchases While U.K. Growth Picks Up: Global Economy   

The global economic expansion is speeding up, data this week are projected to show. In the U.S., a gain in fourth-quarter gross domestic product probably completed the strongest six months of growth in almost two years for the world’s largest economy. The pickup combined with progress in the labor market means Federal Reserve policy makers meeting this week may ease up again on the monetary accelerator.

Across the Atlantic, the U.K. economy may have grown over the past 12 months by the most in almost six years, while in Germany, business confidence probably improved to the highest level since mid-2011.

This week also includes central bank meetings in Mexico and New Zealand. In Mexico, monetary officials may keep the benchmark interest rate unchanged as more government spending reduces the need for stimulus. Such a decision is less clear in New Zealand, where odds of an interest-rate increase have climbed.

U.S. ECONOMY

-- Gross domestic product advanced at a 3.2 percent annualized rate in the fourth quarter as spending by American consumers climbed by the most in three years, economists forecast the Jan. 30 figures will show. Combined with a 4.1 percent inventory-fueled gain in the prior period, GDP in the second half of the year was the strongest since the six months ended March 2012.

-- “A substantial acceleration in private sector demand led by stronger consumer spending and a significant pickup in exports after weakness through the first part of the year should drive a second straight quarter of near 4 percent real GDP growth even with an expected drag of 0.5 percentage point from federal government spending, largely reflecting lost work hours during the government shutdown,” Ted Wieseman, an economist at Morgan Stanley in New York, wrote in a Jan. 17 report.

-- “The first cut of Q4 GDP will be more about the internals of the report than the headline,” economists at RBC Capital Markets LLC, led by Tom Porcelli, wrote in a research note. “While we look for a 2.8 percent annualized advance in top-line growth, the details should seem even brighter with real personal consumer consumption rising 4 percent. We anticipate that the inventory swing will hold growth back a full percentage point.”

FOMC MEETING

-- Ben S. Bernanke will chair his final meeting of Federal Reserve policy makers on Jan. 28-29 before handing over the reins of the world’s most powerful central bank to Janet Yellen. Bernanke and a different cast of regional Fed bank presidents who’ll vote on the Federal Open Market Committee are projected to reduce the pace of Treasury and mortgage-backed securities purchases by a total of $10 billion to $65 billion as the economy improves.

-- “We expect the Fed to announce another $10 billion taper and possibly strengthen its guidance,” Michael Hanson, U.S. senior economist at Bank of America Corp., said in a research note. “The Yellen-led Fed will see numerous personnel changes in 2014, but we still expect a patient and very accommodative policy stance.”

-- “The FOMC will likely upgrade its summary of current economic conditions in its policy statement,” BNP Paribas’ Julia Coronado, a former Fed Board economist, said in a research note. “The Q4 performance is expected to be driven by final demand, in particular a surge in consumer spending on goods and services. The January FOMC statement could acknowledge this better performance by stating that ‘economic growth picked up somewhat’ of late.

‘‘The confirmation of their long-held optimistic expectation for stronger economic growth and tranquil financial markets will likely lead the Committee to announce another ‘measured step’ in the tapering process. We expect another $10 billion cut in the pace of QE asset purchases.’’

U.K. ECONOMY

-- Britain will be the first Group of Seven nation to report gross domestic product for the fourth quarter when it releases the data on Jan. 28. Economists forecast growth of 0.7 percent, close to the 0.8 percent expansion in the prior three-month period. From a year earlier, GDP probably rose 2.8 percent, driven by domestic demand, which would be the best performance since the first three months of 2008.

-- ‘‘To date, the recovery has been somewhat unbalanced, led by consumption, so we remain skeptical about the sustainability over the medium-term,’’ said Ross Walker, an economist at Royal Bank of Scotland Group Plc in London. ‘‘Still, there is clearly sufficient momentum in the short-term data to underpin trend-like rates of growth.’’ Walker sees the economy expanding 2.7 percent this year, just above the Bloomberg consensus estimate of 2.6 percent.

GERMAN BUSINESS CONFIDENCE

-- German business confidence is heading for its highest reading in 2 1/2 years, underlining the strength in an economy that’s helping to power the euro-area recovery. Economists in a survey, set for release on Jan. 27, see the business climate index increasing to 110 in January from 109.5 last month. Germany will continue to outpace the euro area this year, with the International Monetary Fund forecasting 1.6 percent expansion, compared with 1 percent for the currency region.

-- Thilo Heidrich, an economist at Deutsche Postbank AG in Bonn, said the ‘‘mood in the German economy is likely to have brightened at the start of the year.’’

-- ‘‘The near-term outlook remains one of cautious optimism,’’ Bank of America economists including Laurence Boone said in a note. ‘‘Domestic demand, in particular, should support growth in coming years.’’

JAPAN TRADE

-- Japan’s trade deficit narrowed to 1.24 trillion yen ($12.1 billion) in December from a month earlier, even as import growth probably accelerated, according to a Bloomberg survey of economists before data due Jan. 27. A record run of monthly deficits shows the cost of the yen’s slide against the dollar and the extra energy imports needed because of the nuclear industry shutdown that followed a disaster in 2011.

-- ‘‘Throughout the year, few manufacturers believed that the yen would stay weak, let alone depreciate further,” Frederic Neumann, Hong Kong-based co-head of Asian economics at HSBC Holdings Plc, said in a research report. “As a result, (dollar) prices charged for goods sold overseas were not cut amid fears that such a move would have to be reversed once the currency strengthened again, something that few firms like to do. All this meant nice profits for Japanese firms (higher yen earnings for their shipments) but no gain in export market shares.”

NEW ZEALAND RATES

-- Economists and markets are split on whether the Reserve Bank of New Zealand will increase the official cash rate for the first time in 3 1/2 years at its Jan. 30 meeting. Governor Graeme Wheeler said late last year the RBNZ will need to raise interest rates in 2014 as growth and inflation accelerate and unemployment declines. While only three of 15 economists predict Wheeler will lift the rate by 25 basis points to 2.75 percent this week, markets are pricing in an almost 70 percent chance he will do so.

-- “The lists of reasons are long for both the ‘why wait’ and ‘why not’ sides of the fence,” Nick Tuffley, chief economist at ASB Bank Ltd. in Auckland, said in a research report. “The RBNZ can justify either outcome, and we put the chances of a rate hike as 1 in 4. That is to say, not our core view, but a significant risk.”

MEXICO RATE DECISION

-- Mexico’s central bank on Jan. 31 may keep the overnight interest rate unchanged at a record-low 3.5 percent in its first decision of 2014 as increased government spending stimulates the economy.

-- “There’s no need to reduce the rate any more” after 0.25 percentage-point reductions in September and October, Marco Oviedo, chief Mexico economist at Barclays Plc, said in an e-mailed response to questions. “The economy has shown signs of recovery.”

-- Policy makers have “sent the message that they’re comfortable with the current level of interest rates,” said Gabriel Lozano, chief Mexico economist at JPMorgan Chase & Co. With sales tax increases fanning inflation, “real interest rates are temporarily negative, but the central bank will be confident this is a transitory situation that will correct in the second half of the year” as inflation slows.

Contributed by Vince Golle Bloomberg

An utterly unrepentant Japan opening up past wounds derail peace diplomacy

Whatever declarations Japanese leaders may make about the aims of their visits to the Yasukuni Shrine being only to honour their war dead, the acid test is whether victims of their past aggression believe them.

THE recent visit by Japanese Prime Minister Shinzo Abe to the Yasukuni Shrine has provoked a very negative reaction in China and South Korea.

While less strident, other countries like the United States and Singapore also did not approve of the visit. The former expressed disappointment while the latter stated that it regretted the visit.

At the heart of the disapproval is the belief that such a visit indicates that Japan has not come to terms with its past of aggression in Asia. Many compare this unfavourably with Germany where it is very unlikely, if not inconceivable, that the highest German political leader will ever make a public visit to a shrine of Adolf Hitler or of any top Nazi leader.

How valid is this comparison?

It is first necessary to state that the issue is somewhat more complicated than a clear-cut case of an utterly unrepentant Japan and a completely contrite Germany. The Japanese public are deeply pacifist. While it is true that they have caused tremendous destruction in Asia, they themselves have been profoundly scarred by the atomic devastation of Hiroshima and Nagasaki.

Moreover, there are many Japanese, parti­cularly those in the teachers’ unions, progressive intellectuals – especially from the older generation – and others, who are unequivocal in their condemnation of their country’s record in the Second World War.

Germany, for its part, did experience some neo-Nazi manifestations, especially in the eastern part of Germany just after reunification. And there was the controversy over the visit of President Reagan to a cemetery in Pitburgh in 1985 where some of Hitler’s Waffen SS were buried.

Helmut Kohl, then Chancellor, despite protests from many Jewish personalities, insisted that Reagan together with Kohl himself, not cave in to the protests. The Germans argued that many German cemeteries have buried SS officers. Moreover, many of these SS men were innocent young men forced to join the SS at a young age.

Such aside, it is nevertheless clear that in the main, the Germans have come to terms with their recent history. They have clearly acknowledged they did wrong under Hitler and have vowed not to resurrect the Third Reich.

They have, in addition to giving substantial reparations to their victims, made many convincing gestures of contrition, one of the most dramatic being that of the then Chancellor, Willi Brandt, going down on one knee in a monument in Poland in 1970 honouring the victims of the Warsaw Ghetto uprising during the Nazi era.

The Japanese on their part are much more ambivalent. Their apologies have been hedged about by many qualifications, and often when made by one leader refuted by statements and actions of other leaders.
And, more dramatically, some of their highes­t political leaders have visited, and intend to continue visiting, the Yasukuni Shrine where many class one war criminals have been enshrined.

Whatever the declarations the Japanese may make about the aims of their visits to Yasukuni being only to honour their war dead, the acid test is whether their war victims believe them. In this, the Chinese and Koreans do not. On the other hand, the victims of the Germans do.

The most dramatic recent example is the plea by the Polish foreign minister in 2011 to the Germans to take leadership of a federal Europe!

One can hardly expect a Chinese or Korean leader to ask for Japanese leadership in Asian affairs!

There are three reasons why both differ in their approach to their recent history. One consists of what they actually, or believe they actually, did.

Amidst the horrors of war the Germans unleashed, they went on an extermination of Jews and other groups which could not be justified by the exigencies of war or by any other wrongs that others may have been inflicted on the Germans. Such an extermination was a clear-cut case of genocide.

Many Japanese, on their part, argued that they committed no such genocide in Asia, and what atrocities Japanese soldiers committed were not a result of policy but of the stress of war. Moreover, in their colonial conquests, they were only following the examples of the Western colonial powers. In some places like South-East Asia, they helped their liberation movements.

While there is some degree of truth in the Japanese argument, some heinous crimes such as the human experimentation by their notorious Japanese Unit 731 and the testing of bacteriological warfare in parts of China cannot easily be justified as due to the strains of war.

While the Western comparison over colonial conquests may seem valid, it cuts no ice with those countries colonised, like Korea and China.

In fairness, some Japanese scholars acknowledge that whatever the Western example, they were wrong in colonising these two countries. Hopefully, such acknowledgement can be one basis for reconciliation between Japan and their Northeast Asian neighbours.

The second reason, somewhat related to the first, is the lack of a regional grouping the Japanese could identify with or be a member of. Germany had a regional organisation, the European community, they could, if not subordinate themselves to its regional aims, use as the focus of their attempt not to repeat their past.

In the words of one of the greatest 20th century German intellectuals, Thomas Mann, Germany should strive for a European Germany, not a German Europe. Asia is too diverse, culturally and economically, and still filled with bitter war memories, for Japan to identify with.

Third, the de-Nazification campaign in Germany was quite thorough. Few Germans, if any, with Nazi connections were allowed to occupy significant governmental and private posts in post-war Germany.

Japan was different. While in the initial stages, the Americans, who basically dominated Allied policy (there was more non-American input in running post-war Germany), intended to purge Japan of those involved in Japanese aggression in Asia, they subsequently relented by allowing many to assume positions of influence in a post-war Japan. (Abe’s maternal grandfather Nobusuke Kishi who was Prime Minister in the 1950s was one of them.)

The US needed an anti-communist, strong Japan against communism in Asia, especially China. It is thus difficult for post-war Japanese governments consisting of many who committed aggression in Asia and who could have influenced their successors to acknowledge they did wrong.

It would now seem that those inclined to the denial that Japan committed aggression are gaining momentum in Japan. It would be a sad day for Japan and for Asia that a Japan which had made a lot of headway in its peace diplomacy after the war would have that peaceful image destroyed by becoming clearly unrepentant about its past.

- Contributed by Lee Poh Ping, a Senior Research Fellow, Institute of China Studies at Universiti Malaya.

Related:

Dialogue 07/25/2013 Shinzo Abe revisits Southeast Asia CCTV News ...

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Dr. Lee Poh Ping, Senior Research Fellow, Inst. of China Studies, University of Malaya

Dialogue 07/25/2013 Shinzo Abe revisits Southeast Asia CCTV News - CNTV English

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China's assertiveness, confidence and trust, long history together with Asean

China and South-East Asia have had a long history together, but they still need to work hard to consolidate confidence and trust.

Highlights: President Xi's Southeast Asia tour

RECENTLY, the Chinese Ambassador to Malaysia, Chai Xi, remarked that the visit of Chinese President Xi Jinping will lift the bilateral ties of the two nations to a higher level.

Saying that the Sino-Malaysian relationship has taken the lead when compared to the other members of Asean, Chai pointed out that China has become Malaysia’s biggest trading partner in the world, with the first seven months of this year recording a 14.9% increase in bilateral trade to US$59.72bil (RM190.6bil).

Indeed, Xi’s visit to Malaysia was historic not only because it was his first state visit to the region since assuming office, but also in the sense that it marks another step in the continuation of the long history that Malaysia has shared with China.

It is a history that can be traced back to the 15th century, when the famous Chinese explorer Admiral Zeng He of the Ming Dynasty landed on the port city of Malacca only to find a thriving community of Chinese traders that had long established ties with the local population here.

Fast forward to the 20th century, into the height of the Cold War, and we have an international environment that is mired in suspicion and misperception, with loyalties mostly split along clear ideological lines. South-East Asia was a particular hotbed, and there was a great fear that China would turn its attention to the young and small nations of the region and begin forcibly exerting its influence to bring them under its sphere of control.

And yet, amid all the paranoia and balancing among all the nations in South-East Asia, Malaysia had the foresight of Prime Minister Tun Abdul Razak Hussein, who clearly understood the gravity and inevitability of China’s peaceful rise when he pushed for Kuala Lumpur to be the first in the region to establish diplomatic relations and normalise ties with Beijing in 1974.

Those who express opinions implying that it is possible to shape the direction of regional security and development without including China display a worrying lack of understanding and appreciation of the lessons of history, particularly that of the region.

That China will fulfil its cyclical destiny and rise to take centre stage in Asia and become a major player in world affairs is no longer a question, but the character and nature of the rise will ultimately depend on how others might want to meet this rise halfway.

Successive Chinese leaderships have assured the rest of the world that their rise is a peaceful one, which does not seek to create ripples and waves in the international world order, and there is plenty of evidence to support that assertion.

China is in pursuit of rapid economic growth and expansion to lift its 1.3 billion-strong population into the developed world. In order to do this, China needs wide-ranging support from the global community and a stable and peaceful international environment.

But China’s growing assertiveness, especially in the South China Sea, may unfortunately send the wrong signals to certain parties, and this is especially the case if there is very little understanding as to why China feels the need to proceed in such a manner.

The complexities and nuances that surround China’s actions are likely to be lost if the nervousness and concerns of its regional neighbours are not promptly and clearly addressed.

Asean countries have high hopes as to how far the Chinese dream can trailblaze the growth of the region and provide the developmental slipstream for them to follow suit.

However, the region is, understandably, still wary as it bears fresh scars of at least two other dreams before this: one that carried the salvation of “the white man’s burden” from the West, and another that sought to build a “Greater East Asia Co-Prosperity Sphere” from the East (Japanese occupation).

Granted, the Chinese dream is categorically different from these expressions of imperialism cloaked in ideology, but one needs to understand the reasons why sovereignty is an overriding concern in the region and some react strongly to the movements of greater powers.

It should not be such a stretch for China, which bears the memory of the century of humiliation dealt by former European powers through their unequal treaties, to see that the concerns of its smaller regional neighbours run along similar lines.

China and South-East Asia have had a long history together, but they must also work hard at understanding each other better so that the confidence and trust that has been built over time, albeit interrupted by occasional incidents, can be strengthened, consolidated, and built upon extensively. Trust and understanding are not built overnight, but we are not mistaken to think that the process has been going on for quite some time now.

Networks of relationships have been stitched across the region for centuries, from the trading routes and migration patterns of yesteryear to the regional production networks and the financial and business networks of contemporary times. Part of the reason why South-East Asia has been developing rapidly has been attributed to the “bamboo networks”, the ethnic-based business networks built upon the hubs and spokes of the Chinese diaspora that intersperse the region, with firm roots in the local communities but sturdily connected to the regional landscape.

But while the “infrastructure” of trust has already been firmly built between China and South-East Asia in the form of these networks of ties, which some scholars refer to as the “invisible linkages” that hold us together, there needs to be a more concerted effort to bring about more interaction and discourse, which are the lifeblood of trust, to engage the various communities at multiple levels.

These connections and dealings must not only dwell exclusively on economic and security issues; although important and, some may even argue, central, there should also be some effort invested into exploring how the cultural and normative aspects of these relations can be worked upon and perhaps improved, presenting opportunities to further strengthen the trust and deepen the understanding between China and its smaller neighbours.

In this respect, the idea of moderation as espoused by Malaysian Prime Minister Datuk Seri Najib Tun Razak and reiterated by him in his recent address to the United Nations General Assembly, may lend itself as a starting point in the search for mutualities of interest. This framework of moderation calls for the exercise of restraint and the creation of a discursive environment that allows for a multiplicity of voices to come together and collectively work towards solutions, defusing tensions and avoiding conflict.

This notion is perhaps compatible to the Chinese Dream; as China aspires for peaceful development with Chinese characteristics towards a moderately prosperous society, Malaysia and the rest of South-East Asia pursue their own goal of development that holds fast to moderate principles, so that their race towards becoming fully developed nations does not sacrifice their identities, traditions and culture, and sovereignty, the very things that make them what they are.

The idea of building a truly authentic East Asian community can begin with this very simple but powerful idea, and as Malaysia looks forward to assuming the chairmanship of Asean in 2015, it also looks to further strengthen ties between China, itself and the region through the values and principle of moderation.

Contributed by  Tan Sri Razali Ismail
> Tan Sri Razali Ismail is Chairman of Global Movement of Moderates Foundation (GMM). The GMM is an initiative of Prime Minister Datuk Seri Najib Tun Razak that calls for combating the scourge of extremism in five broad areas – peaceful co-existence, democracy and rule of law, finance, education and conflict resolution. The views expressed are entirely the writer’s own

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