Leader Development & Education for Sustained Peace Program: Cross-Cultural, Geopolitical & Regional Education

LDESP USPACOM News Update – July 2012

The PACOM update includes news coverage from Pakistan to the Pacific Islands. As with all LDESP news briefs, the information contained within the PACOM update is to increase situational awareness. The PACOM update focuses on issues concerning South Asia, South East Asia, North East Asia, China, Australia, and the Pacific Islands, including articles central to transpacific security and stability, as well as political and economic issues that may impact the region and U.S national interests in the region.

Disclaimer: Articles are taken from established and diverse professional periodicals, news articles, and editorial commentaries from different countries, reflecting a range of political views/biases, that are intended to provide readers with a better understanding of various interests and perspectives regarding the situation in the region. External links may expire at any time depending on the archiving policy of the particular news agency. News summaries may highlight only a portion of an article that is relevant to the readers and may not necessarily be the focus of the entire article or the headline. Opinions expressed in the articles, commentaries, and featured topics do not constitute endorsement by the Department of Defense, the US Navy, or the LDESP staff.

China’s growth rate slowed for a sixth successive quarter to its slackest pace in more than three years, highlighting the need for more policy vigilance from Beijing even as signs emerge that action taken so far is beginning to stabilise the economy. Year-on-year growth of 7.6 percent in the second quarter was a whisker above the government’s official 7.5 percent full year target and dragged the first half average down to 7.8 percent – below the 8 percent level that in previous downturns has triggered a robust response from policymakers.”It pretty much depends on what will be the strength of further easing, but I think the chance is good that (policymakers) are willing to respond to this growth slowdown.” (Reuters)
Hong Kong stocks rose, with the benchmark index advancing for a second day, after Premier Wen Jiabao said China’s government will boost measures to support growth in the world’s second-biggest economy. Belle International Holdings Ltd. (1880), China’s No. 1 retailer of women’s shoes, rose 1.9 percent. Sands China Ltd. climbed 2.4 percent after the gaming company said it was given more time to build a casino resort in Macau on land granted by the government. ZTE (763) Corp., the second-largest maker of telecommunications equipment in China, slumped 16 percent after saying first-half profit probably dropped by as much as 80 percent from a year earlier. “There should be some more stimulus,” said Castor Pang, Pang, head of research at Core-Pacific Yamaichi International Ltd. in Hong Kong. “China’s measures aren’t enough to bring the economy back to a normal level. That’s why investors are uncertain about earnings.” (Bloomberg)
China’s economic growth fell to a three-year low, and a potential recovery later this year will probably be too weak to pull the world out of its slump. The world’s second-largest economy grew by 7.6 percent over a year earlier in the three months ending in June, its slowest since early 2009 during the global crisis, data showed 13 July (…) The latest data dampen hopes China can make up for weak demand from debt-crippled Europe and the United States, which is struggling with a sluggish recovery. (…) The slowdown has raised the threat of job losses and political tension at a sensitive time for the ruling Communist Party. It is trying to enforce calm ahead of a planned once-a-decade handover of power to younger leaders late this year. (…) Quarterly growth was in line with the government’s target of 7.5 percent for the year, which forecasters say China still is likely to achieve. That is far above Western levels but a marked drop from 2010’s explosive 10.5 percent expansion. Even after growth rebounds, it is unlikely ever to return to double-digit annual rates. (Business Insider)
A weakening Chinese economy, underlined by a further slowdown disclosed on 13 July in Beijing, is starting to pose a headache for United States officials and the two presidential campaigns, as Chinese companies shift toward a greater reliance on selling to the American market. A real estate bust in China and sweeping layoffs in the country’s construction sector, together with slower growth in retail sales and declining exports to Europe, have left one area that is thriving: exports to the United States. But the result is a swelling American trade deficit with China in an election year. The bilateral deficit widened 10.2 percent in the first five months of this year compared with the gap in the period a year earlier, and preliminary data suggest that it widened further in June. The deficit could swell even more as November approaches. The weakness of the Chinese economy is holding down its demand for American exports, even as Chinese exporters show a laserlike focus on selling to the American market. (New York Times)
China’s economic woes that have brought growth to a three-year low will continue for some time, but the slower expansion remains within expectations, Premier Wen Jiabao says. Wen said Chinese need to recognize the seriousness and complexity of the challenges the country faces. But he added that China’s economic fundamentals remain favorable, even if the economy hasn’t fully stabilized. “At present, our country’s economic growth rate remains within the target range set earlier this year and we are seeing the effectiveness of stabilization policies,” Wen said during a tour of the southwestern city of Chengdu on 14 July. His remarks were posted 15 July on the central government’s official website. “However, we also need to soberly see that the current economy has not yet formed a stable recovery and the economic difficulties may continue for some time,” he said. The government will prioritize job creation and provide financial aid and tax breaks to companies suffering from slowing exports due to sinking overseas demand, Wen said. (Associated Press)
Over the past decade, the South China Sea has become one of the most volatile flashpoints in East Asia. China, Vietnam, the Philippines, Malaysia, Brunei and Taiwan each assert sovereignty over part or all of the sea, and these overlapping claims have led to diplomatic and even military standoffs in recent years. Because the sea hosts numerous island chains, is rich in mineral and energy resources and has nearly a third of the world’s maritime shipping pass through its waters, its strategic value to these countries is obvious. For China, however, control over the South China Sea is more than just a practical matter and goes to the center of Beijing’s foreign policy dilemma: how to assert its historic maritime claims while maintaining the non-confrontational foreign policy established by former Chinese leader Deng Xiaoping in 1980. China staked its modern claim to control of the sea in the waning days of the Chinese Civil War. Since most of the other claimant countries were occupied with their own independence movements in the ensuing decades, China had to do little to secure this claim. However, with other countries building up their maritime forces, pursuing new relationships and taking a more active stance in exploring and patrolling the waters, and with the Chinese public hostile to any real or perceived territorial concessions on Beijing’s part, Deng’s quiet approach is no longer an option. (…) China’s world is changing. Its emergence as a major economic power has forced Beijing to rethink its traditional foreign policy. Closest to home, the South China Sea issue is a microcosm of China’s broader foreign policy debate. The ambiguity of China’s maritime claim was useful when the region was quiet, but it is no longer serving China’s purposes, and coupled with the natural expansion of China’s maritime interests and naval activity it is instead exacerbating tensions. Old policy tools such as trying to keep all negotiations bilateral or claiming a hands-off approach are no longer serving China’s needs. The policy of joint development inherited from Deng has failed to bring about any significant cooperation with neighboring countries in the sea, and the assertion of the nine-dash line claims amid the U.N. sea treaty filings has simultaneously increased domestic Chinese nationalism and countermoves by neighboring countries. Despite the lack of clarity on its maritime policy, China has demonstrated its intent to further consolidate its claims based on the nine-dash line. Beijing recognizes that policy changes are needed, but any change has its attendant consequences. The path of transition is fraught with danger, from disgruntled domestic elements to aggressive reactions by China’s neighbors, but by intent or by default, change is happening, and how the foreign policy debate plays out will have lasting consequences for China’s maritime strategy and its international position as a whole. (Stratfor)
Tensions flared up in the East China Sea between Japan and China on 10 July at the start of the live war exercises of the Chinese navy in waters near Zhoushan, East China’s Zhejiang province. The exercises are seen by Beijing’s maritime neighbors in Asia as an escalation of its show of naval power amidst worsening territorial disputes in the region. China’s defense ministry had announced that the navy would conduct a six-day, live-ammunition drill, while the People’s Liberation Army issued two announcements prohibiting all vessels from entering the designated exercise area. According to the announcements, the area is bigger than in previous drills but it is not in the waters disputed by China and its neighbors, and the exercises are not a counteraction to current joint military exercises between American and Philippine forces in the waters near the islands of Mindanao and Palawan in southern Philippines. (…) The diplomatic row between Tokyo and Beijing is a development that cannot be dismissed out of hand, in light of the fact that Japan is the leading maritime and naval power in East Asia and, of particular interest to the Philippines, has been aiding the Philippines in building up its coast guard capability. Japan is also capable of standing up to China’s increasingly aggressive maritime intrusions in the waters of smaller neighbors. (Philippine Daily Inquirer)
China is closely cooperating with the navies of Japan and India in patrolling against piracy off Somalia, a sign of the country’s greater willingness to work with other nations in safeguarding global trade despite mixed sentiments among Chinese toward the country’s main Asian rivals. Japan’s Maritime Self-Defense Force became the lead navy 1 July in the pact that allows the three to synchronize patrols and best allocate each country’s escort resources, Chinese Defense Ministry spokesman Yang Yujun told reporters at a briefing. Analysts say the escort pact is a sign of growing Chinese naval confidence that could reduce the chances of confrontation in waters closer to China where navies from Japan, the U.S. and others operate in increasingly tight proximity. With China expanding its naval capabilities and asserting its interests, it’s important that Beijing’s admirals start working more closely with their foreign counterparts, defense experts say. (Washington Post)
A Chinese frigate grounded in disputed waters close to the Philippines was refloated on 15 July and headed back home, averting a possible standoff with the Philippines navy amid rising tensions in the strategically key South China Sea. The South China Sea has become Asia’s biggest potential military flashpoint as Beijing’s sovereignty claim over the huge area has set it against Vietnam and the Philippines as the three countries race to tap possibly huge oil reserves. In all, six parties have rival claims to the waters, which were a central issue at an acrimonious ASEAN regional summit last week that ended with its members failing to agree on a concluding statement for the first time in 45 years. On 13 July, the Chinese navy said one of its vessels had run aground on Half Moon Shoal, about 90 nautical miles off the western Philippine island of Palawan, prompting Manila to send two of its vessels and reconnaissance aircraft to the area. Beijing said its vessel had been on a routine patrol. (Reuters)
Chinese official called 10 July for closer defense and economic ties with Australia and warned against what he said was a growing “Cold War mentality” in the United States. Chinese Vice Foreign Minister Cui Tiankai made a veiled criticism of Australia’s deepening military ties with Washington after attending annual talks on human rights in the Australian capital of Canberra. Beijing has condemned a plan announced by President Barack Obama in November to send U.S. military aircraft and up to 2,500 Marines to the Australian city of Darwin to create a training hub to help allies and protect American interests across Asia, calling it a throwback to the Cold War. “China and Australia need to work together with other countries in this region to promote common security, peace and stability in this region; in particular, we should guard against the resurgence of a Cold War mentality,” Cui told reporters. China has accused the U.S. of attempting to contain its rise as an economic, political and military power. The U.S. says it has no intent to contain China, while affirming its determination to remain a Pacific power. Washington has been forging closer military ties with other Asian countries and has announced that 60 percent of the U.S. Navy’s fleet will be deployed to the Pacific by 2020, up from about 50 percent now. (CBS News)
China and the European Union pledged to strengthen defense and security cooperation on 9 July. The pledge came during Defense Minister Liang Guanglie’s meeting with Catherine Margaret Ashton, EU high representative for foreign affairs and security policy. China has established bilateral military relations with all EU member countries and China-EU defense and security relations have witnessed rapid growth, Liang said. China is positive about promoting defense and security cooperation with the EU and believes that the two sides will make continuous progress in their cooperation under joint efforts, Liang said. (People’s Daily)
The western region of Xinjiang has increased security measures at all 16 of its airports after a failed hijacking attempt, according to a report on 5 July by Xinhua, the Chinese state news agency. Late 4 July, a news Web site run by the Xinjiang government announced that Zhang Chunxian, the regional party chief, had visited antiterrorism security forces that day. Both reports in the state-run news media were intended to show that security had been increased after what Chinese officials said was an attempted hijacking of a Tianjin Airlines flight last week after it took off from Hotan, in southern Xinjiang. The details of the event are murky, and ethnic Uighur exiles who criticize the Chinese government for repressing Uighurs in Xinjiang have said the story of the hijacking could be fictitious. (The New York Times)
China’s top communist party newspaper said 1 July that preparations for a key meeting to set the country’s next leadership were smooth, despite a festering political scandal. The People’s Daily said work to hold a party congress for a once-in-a-decade leadership change later this year was proceeding, as the country marked the 91st anniversary of the party’s founding on 1 July. But the mouthpiece made no mention of the recent ouster of top leader Bo Xilai, which analysts say exposed deep rifts within the ruling party. “Preparation work for the 18th party congress is being carried out smoothly,” the newspaper said in an editorial. “The party and the people welcome the 18th party congress with full confidence… This is a key moment,” it said. (…) Bo, the charismatic former party leader of Chongqing city once tipped for the very highest echelons of power in China, was formally suspended from the powerful 25-member Politburo in April. (…) Bo had been widely expected to be named to the party’s nine-member Politburo standing committee — the nation’s highest ruling body — in the leadership transition. (Agence France Presse)
China’s powerful security apparatus has intensified its persecution of Falun Gong ahead of a key Chinese Communist Party leadership change later this year. Local authorities in Guangzhou have distributed leaflets to houses, forcing residents to sign a family promise to reject Falun Gong; in Beijing similar initiatives have been organized. In Chongqing internal meetings have been held to plan the suppression and detention of Falun Gong practitioners before the CCP’s 18th National Congress, when paramount leader Hu Jintao and Premier Wen Jiabao will step down to make way for other officials. The renewed campaign is being led by the 610 Office, an extralegal Party organ set up by former Chinese leader Jiang Zemin in 1999 to lead the persecution. Falun Gong is a meditation discipline originating in China and based on the principles of truthfulness, compassion, and tolerance. Inside sources said the Political and Legislative Affairs Committee (PLAC) is directing local authorities in the renewed effort, particularly by allocating huge sums of “security maintenance” money. Falun Gong practitioners in China have been subjected to beatings, brainwashing, and torture, and this has led to over 3,500 confirmed cases leading to death, according to human rights groups. The true death toll is thought to be far higher, according to these groups. (The Epoch Times)
Tens of thousands of pro-democracy protesters took to the streets of Hong Kong hours after Chinese President Hu Jintao swore in the city’s new leader and urged him to resolve what he called “deep disagreements” among the islanders. The by-now annual 1 July demonstration – marking the end of British colonial rule in 1997 – was the biggest in years as people took advantage of Hong Kong’s laws that make it the only place in China where public protests are permitted. (The Times of India)
A recently organized mass training for police chiefs around the country appears to be part of an overall effort to take important security functions from the control of a Communist Party security committee that has been under the control of rivals to the current leadership. From 26 June 26 to 31 July, the Ministry of Public Security (MPS) will conduct intensive ideological education and training, to take place in three phases, for the 1,400 county and city-level police chiefs who were appointed since 2010. This is the latest round of nationwide training for new police chiefs since 2009 and 2010. The theme for this year’s training is: Improve the ability of the frontline law enforcement officers and safeguard local stability and development. (…) The article stated that the Political and Legislative Affairs Committee (PLAC), an extralegal Party entity that oversees all law enforcement authorities in the country, has already exceeded the limits of its authority and has caused obstacles to domestic governance. In light of these events, many interpret the training in Beijing to be another step in the leadership’s attempt to replace the PLAC and help the MPS to regain power. (…) According to Peter Mattis, editor of the Jamestown Foundation’s China Brief, writing in The Diplomat, Zhou’s successor will likely see his power downgraded at the 18th National Congress. Other figures in China have also speculated that the PLAC will not hold onto the vast power it has acquired. (The Epoch Times)
A senior minister in Hong Kong is among four people arrested on corruption charges following allegations they abused government housing allowances. Mak Chai-kwong also resigned as development minister on 12 July. He has not commented since his arrest but has previously admitted to buying adjacent flats with another official and renting them out to each other. But he also said this breached no rules. This comes days after Hong Kong’s new chief executive began his first term. Chief Executive CY Leung also faces legal challenges over claims that he made false statements about illegal structures in his home. ‘Followed regulations’ Hong Kong’s Independent Commission Against Corruption (ICAC) said that it “has commenced an investigation upon receipt of corruption complaints” on four officials. (BBC News)
The Chinese central government has promulgated a new regulation designed to cut costs for the government and public institutions, a move that will prove critical for the country’s continuous efforts against corruption. The regulation made public on 9 July explicitly prohibits government agencies from purchasing luxury items, goods or commodities above certain standards, as well as defines a frugal working style for the country’s civil servants. It also calls for greater supervision over the use of public funds for receptions, vehicles and overseas trips, also known as “the three public consumptions”, as they have been deemed by the public as a major source of corruption and waste. The regulation came after intense public debate regarding the administrative costs incurred by central government departments. The departments were required to reveal their spending last year. Public opinions are now looking at whether the regulation can really work, creating unprecedented pressure for the implementation of the regulation and cost-cutting by the government. (China Daily)
China has criticised Europe’s refusal to ease two longtime trade restrictions as “discrimination”, following a high-level meeting between the two sides in early July. The accusation is contained in a statement released on 12 July and comes as part of renewed calls by the People’s Republic to end an embargo on arms sales imposed after the deadly 1989 Tiananmen crackdown on protesters. Beijing has also repeatedly pushed to be given full “market economy status”, a designation that would lift bans on certain Chinese exports and investments. “We believe that the two issues are actually an embodiment of the discrimination against China by the European side,” Hua Chunying, a foreign ministry councillor handling European affairs, told reporters. “The two issues reflect a lack of trust by the European side,” she said. “If the European side can take a small step forward in solving these two issues, then we can make a major step forward in enhancing mutual trust. “China and Europe have have locked horns over a series of trade issues in recent years, even as Europe has sought Chinese support in overcoming its debt crisis. (al-Jazeera)
The US and China signalled a willingness on 12 July to work together on “sensitive issues” in a move to cool tensions between rival claimants to the potentially oil-rich and increasingly militarised South China Sea. Long-simmering tensions in the waters have entered a more contentious chapter this year as the six parties who claim the territory search deeper into the disputed waters for energy supplies while building up their navies and defence alliances. Yang Jiechi, China’s foreign minister, said Beijing was ready to work with Washington “to expand our common ground, respect each other, properly handle differences on sensitive issues and push forward” relations. Echoing Mr Yang’s conciliatory tone, Hillary Clinton, US secretary of state, said: “The United States and China not only can, but will work together in Asia. (…) Mrs Clinton, who joined regional foreign ministers at a forum in the Cambodian capital of Phnom Penh, called on all parties to refrain from issuing threats and advocated all-party dialogue to address rival claims to the waters. Her stance was likely to upset Beijing which wants to take a bilateral approach to resolving the row. Mrs Clinton, however, said attempts to solve the problems bilaterally “could be a recipe for confusion and even confrontation”. The pledges by China and the US to co-operate could cool tempers for now, but the maritime issue is extremely complex and sensitive, and could take years to resolve. (Financial Times, Reuters)
With 28 June’s decision to grant exceptions to China, which buys up to a fifth of Iran’s oil exports, and Singapore, which buys Iranian fuel oil, the Obama administration has now spared all 20 of Iran’s major oil buyers from its unilateral sanctions. The sanctions themselves are designed to pressure Iran to curb its nuclear program, which the West believes aims to develop nuclear weapons but which Tehran says is for peaceful purposes such as generating electricity and medical isotopes. US Secretary of State Hillary Clinton said both China and Singapore earned the reprieve by cutting imports of Iranian crude and argued the reductions by all 20 countries showed that Iran was paying a high price for its nuclear program. (The Telegraph)
China has rejected criticism by U.S. Secretary of State Hillary Rodham Clinton that it is hampering efforts to end the Syrian conflict by supporting President Bashar Assad’s government. Foreign Ministry spokesman Liu Weimin said in a statement 7 July that Clinton’s remarks were “totally unacceptable” and that China has contributed greatly to the cause of Syrian peace. He said China has wide international support for its “just and constructive” stance on Syria. “Any effort to slander China and incite discord between China and any other country will be futile,” Liu said. Clinton told about 100 nations attending a conference on Syria on 7 July that they should “directly and urgently make it clear that Russia and China will pay a price” for standing up on behalf of the Assad government. Neither Moscow nor Beijing attended the conference. They have twice blocked U.N. condemnations of Syria’s government and last weekend worked to water down a transition plan by international envoy Kofi Annan. (ABC News, Associated Press)
It has become clear that U.S.-China trade squabbles may well be a permanent fixture at the World Trade Organisation. Earlier, WTO cases saw the U.S. challenge duties that China had imposed to restrict imports on everything from steel and rare earth minerals to chicken products made in the U.S. Most recently, the U.S. automobile industry has been caught in the crossfire, with the U.S. Trade Representative Ron Kirk announcing this week that Washington would be “challenging China’s imposition of antidumping and countervailing duties on more than $3 billion in exports of American-produced automobiles”. Specifically, Mr. Kirk’s office said in a statement, the U.S. had requested dispute settlement consultations with China at the WTO in an attempt to “eliminate these unfair duties, which appear to represent yet another abuse of trade remedies by China.” (…) Once it gains traction at the WTO, this dispute would represent the third instance of the U.S. formally complaining about alleged misuse of trade remedies by China during the Obama administration’s time in office. (The Hindu)
Samuel J. Locklear, commander of the U.S. Pacific Command (USPACOM), said on 11 July that his visit to China marked a “new beginning” of the U.S.-China military relations. This visit made him more convinced that both the U.S. and China are able to work hard on pushing the relationship between the two militaries back on track on the basis of expanding consensus. In an exclusive interview by the American Forces Press Service of the U.S. Department of Defense, Locklear said that during his visit to China at the end of June in 2012, he held talks with such senior military officials as Liang Guanglie, minister of national defense of the People’s Republic of China, and Ma Xiaotian, deputy chief of general staff of the Chinese People’s Liberation Army (PLA), among others. Both sides have recognized that the establishment of a positive relationship between the U.S. and China will serve the interests of the whole world, while building up a good military relationship between the two sides will play a key role in it. (People’s Daily)

Ahead of the foreign minister level dialogue, India and Pakistan on 12 July resumed talks to ensure maritime security and establish a mechanism for release of impoverished fishermen who often end up in each other’s jails due to lack of clear demarcation of territorial waters between the two neighbours.As for the maritime talks, Pakistan strongly took up the fishermen issue asking India to provide real time information to Pakistani agencies whenever any of its fishermen is detained by ICG. “They said Indian agencies don’t provide information about detained fishermen leading to confusion in Pakistan. They said they should be informed immediately and also demanded that the boats or other shipping vessels seized in such cases be returned to Pakistan too,” said a government source. The Indian side is said to have reacted positively to the demands made by Pakistan. The issue of fishermen, who stray across maritime boundaries in the search for “lucrative catches”, getting arrested has been a long-standing one between the two neighbours. (The Times of India)

In a bid to give a big push to trade in petroleum products, India and Pakistan have decided to have focussed approach to identify possible supply routes, source and point of supply, regulatory framework and enhancement of direct banking and postal services. It was decided to chalk out a road map to take the talks further in a focussed manner. Pakistan has been invited to send a team to New Delhi this month-end to work out all parameters for giving petroleum trade a new direction. In the previous round of talks held in Islamabad held last June, the Indian side offered a range of products, including pet coke, sulphur, bitumen, lubricants as per quality requirements of Pakistan. (The Hindu)
India and Singapore 11 July signed three key agreements including one on continuing the military training that Indian armed forces extend to their Singaporean counterparts. The agreements were signed to coincide with the state visit of Singapore Prime Minister Lee Hsien Loong to India at the invitation of Indian Prime Minister Manmohan Singh and after the two leaders met for formal talks. One agreement was signed by Indian Defence Secretary Shashi Kant Sharma and Singapore’s Permanent Secretary for Defence Chiang Chie Foo. India is already training the Singaporean air force personnel at the Kalaikunda air base in West Bengal where the city state has permanently placed its air assets for training purposes. (New York Daily News)
Bangladesh, on 16 July welcomed India’s one billion dollar aid for infrastructural development, with Syed Anwar Hussain, a professor of history at the University of Dhaka, acknowledging India’s support to the eastern neighbour in times of crisis. The two countries have, until now, finalised nine projects and process is underway to finalise more projects, which would require half the credit amount. Interacting with media persons here, Hussain said, “We have just come across the information in the media that the Indian money of one billion dollars could be used in the construction of bridges. This would certainly help us in averting the crisis we are facing.” He said that India has always been closely associated with Bangladesh and they share cordial relations, adding that none of them could be solely held responsible for the glitches in their bilateral relations.(News Track India)
A Bangladesh court has jailed more than 250 people including paramilitary guards and male nurses for joining a 2009 mutiny, prosecutors said 15 July. Scores of senior army officers were killed during the uprising that began when soldiers at the Bangladeshi Rifles (BDR) headquarters in the capital Dhaka went on a killing spree, dumping the bodies in sewers and shallow graves. More than 4,000 BDR soldiers have now been convicted in cases related to the mutiny, and another 2,000 are facing trial, prosecutor Manjur Alam told AFP . The special court on 14 July sentenced 253 people who worked or were being treated at the headquarters’ hospital to up to seven years in jail for their part in the two-day mutiny, Alam said. “Of the 253 found guilty, some 140 were male medical assistants of the hospital and 80 were trainee medical assistants. At least 30 guards who were being treated there and a few of their attendants were also jailed,” he said. (India Daily News)
Bad news from India isn’t easing off just yet. Inflation hovers above 7 percent and economic growth remains tepid after plunging to a nine-year low of 5.3 percent in the first quarter, year on year. The economic slowdown blended with disquieting inflation — a level that is still beyond the comfort level of the Reserve Bank of India (RBI), the country’s Central Bank — gives little leeway for a huge cut in interest rates by the end of this year. “The combination is set to persist in the coming months, leaving room for only 50 basis points of rate cuts by year-end,” Andrew Kenningham, senior global economist at Capital Economics, said in a research note. (International Business Times)
In a major acquisition spree, India’s defence ministry 22 June approved proposals from the army, navy and the air force for quick reaction air defence missiles, bullet-proof vehicles, Dornier planes, warship guns and a pan-India communication network – worth a staggering $4.5 billion – top defence ministry officials said. The decisions were taken at a marathon two-and-a-half-hour Defence Acquisition Council (DAC) meeting chaired by Defence Minister A.K. Antony, they said, noting that such a mass scale approval was ‘unprecedented’. The approvals come at a time when the Indian armed forces stand exposed over the hollowness of their operational preparedness due to gaps in weaponry and equipment, apart from acute obsolescence. (News Track India)
A senior Pakistan politician summed up the feelings of many in the leadership of the ruling People’s party when he said on 13 July: “We can elect 10 [more] prime ministers if we want to.” The fighting words were not directed at the opposition or a vote of no-confidence, but were a response to the Supreme Court’s directive to the recently installed prime minister Raja Pervez Ashraf that his government write to Swiss authorities to reopen a corruption investigation into president Asif Ali Zardari. In June, the court disqualified Mr Ashraf’s predecessor, Yusuf Raza Gilani, for contempt of court because he did not carry out its order to restart the investigation into Mr Zardari, who has led the PPP since the assassination of his wife, Benazir Bhutto, in 2007. Mr Ashraf has been given until 25 July to comply or face what the court described as “appropriate action”, creating the next deadline in Pakistan’s continuing constitutional crisis. The latest twist has the potential to bring down the government, observers say. It comes at a time when the country arguably needs some respite from its political turmoil. The economy is suffering as chronic power shortages and double digit inflation makes life difficult for many and the rating agency Moody’s downgraded the country’s sovereign wealth rating last week because of impending repayments to the IMF. Meanwhile, terrorist attacks are continuing – nine police trainees died in an incident in Lahore on 13 July. (The Financial Times)
Pakistan Prime Minister Raja Pervez Ashraf will announce on 14 Aug the roadmap for the next general elections likely to be held in the first week of November, months ahead of schedule, Press Trust of India quoted a media report on 16 July. The ruling Pakistan People’s Party and the main opposition PML-N held a meeting on 15 July to discuss the upcoming general election, Dawn News channel quoted its sources as saying. The premier will formally announce the roadmap for the polls on Aug 14, which is Pakistan’s Independence Day, the report said. The next general election is scheduled for March next year, when the PPP-led government will complete its five-year term. However, the PPP is under pressure from the opposition to advance the polls in the wake of allegations of widespread corruption and poor governance. The opposition has also been emboldened by a standoff between the government and the Supreme Court, which has given Prime Minister Ashraf time till 25 July to approach Swiss authorities to reopen graft cases against President Asif Ali Zardari. (Bernama)
Pakistan lodged a protest with NATO and Afghan forces on 25 June, accusing them of failing to act against militant safe havens in Afghanistan after a cross-border attack killed 13 Pakistani troops, a military official said. The move is likely to intensify tensions between troubled allies Islamabad and Washington, currently involved in difficult talks to repair ties. More than 100 militants based in Afghanistan’s Kunar province entered Pakistan and attacked a military patrol on 24 June, the military official said. Fourteen militants and six soldiers were killed in the skirmish. (Reuters)
Civilian casualties from U.S. drone strikes in Pakistan have dropped precipitously, observes CNN national security analyst Peter Bergen in a new posting on CNN’s Opinion page. According to data collected by Bergen and his colleages at the New America Foundation, the estimated civilian death rate in U.S. drone strikes in Pakistan has declined dramatically since 2008, when it was at its peak of almost 50%. Today, for the first time, the estimated civilian death rate is at or close to zero. (CNN News)
Myanmar President U Thein Sein, who returned to Nay Pyi Taw on 14 July from 15’s July USASEAN Business Forum in Cambodia’s Siem Reap, underscored that the country has reached a historical turning point with its development endeavors and democratic reforms being undertaken in Myanmar. (…) To bring true change to the country, the government is striving to fulfill the wishes of the people by implementing three reform measures, he noted. The first measure is to walk out from a centralized system that the country had practiced for half a century and eventually build a matured democratic state, in which the biggest challenge for the people and the country will be democratic practice that has been vanished from the country for many years. He stressed the need to carry out reform measures in Executive, Legislative and Judiciary bodies to build a strong democratic foundation, while reviewing or revoking existing laws that no longer attend to the new system and this new era and reforming the bureaucratic system and the mindset of the government officials. (Global Times, Xinhua)
The Obama administration formally lifted prohibitions on U.S. investment in Burma on 11 July opening the door to American companies, particularly in the energy sector, that have argued they were losing business to international competitors. “Easing sanctions is a strong signal of our support for reform, and will provide immediate incentives for reformers and significant benefits to the people of Burma,” President Obama said in a statement issued by the White House. The move was the most far-reaching to date in the administration’s increasingly rapid normalization of relations with Burma. It came despite calls for caution from human rights groups and Burmese democracy activists. (Washington Post)
Secretary of State Hillary Rodham Clinton declared Myanmar open to American investment 14 July, introducing the reformist president to leaders of some of the U.S.’s biggest corporations and still prodding him to do more to expand democracy in his long-reclusive country. Following the Obama administration’s recent loosening of sanctions against Myanmar, Clinton met President Thein Sein for an hour in the Cambodian city of Siem Reap, praising him for several pro-democracy reforms while suggesting more could still be done. Clinton and Thein Sein shared a warm greeting in a hotel courtyard, their national flags and tropical foliage behind them. The two seemed much more personally engaged than when they met last year, when Clinton became the first U.S. secretary of state in half-a-century to visit Myanmar. The city hosts the famous centuries-old temples of Angkor, recalling an earlier age of regional glory. (…) Clinton called this week a “milestone” in U.S.-Myanmar relations as the Obama administration lifted restrictions on U.S. investments in the country. She said U.S. officials were taking 70 company representatives to Myanmar this weekend to speak with officials and explore opportunities.(Atlantic Journal-Constitution, Associated Press)
Just days after the United States eased key sanctions on Burma, General Electric became the first American company to invest in the former pariah state, signing deals 14 July to provide medical equipment to a pair of hospitals in the country’s biggest city. President Thein Sein held talks on 13 July with U.S. Secretary of State Hillary Rodham Clinton, who declared the country open to American investment. The meeting in Cambodia was attended by some of the largest U.S. corporations. On 11 July, President Obama’s administration officially gave the green light to American companies to invest in the country, also known as Myanmar. Western nations imposed economic and political sanctions on Burma’s previous military regime in response to its repressive and undemocratic policies, and the easing of sanctions is a reward for a series of reforms by Thein Sein’s new government over the past year. GE’s deals, worth about $2 million, were signed in Rangoon in the presence of Derek Mitchell, who assumed his job on 11 July as the first U.S ambassador to Burma in 22 years. After Clinton met Thein Sein in the Cambodian town of Siam Reap on 13 July, the two hosted representatives of American businesses including Coca Cola, Ford Motor Co., General Electric, General Motors, Goldman Sachs and Google. Clinton said U.S. officials were taking 70 company representatives to Burma this weekend to speak with officials and explore opportunities. (San Francisco Gate, Associated Press)
Myanmar authorities released 20 student leaders detained during the 50th anniversary of an army crackdown on 7 July, a prominent activist said after a series of police swoops that raised doubts about the government’s reformist credentials. The activists were picked up in Yangon and Mandalay, Myanmar’s two largest cities, Lashio and Shwebo on 6 July night and taken to undisclosed locations. They were freed late on 7 July, said former political prisoner Phyo Phyo Aung, who was among those held. (…) The military seized power in 1962 and ruled the country under various guises until March last year. The United States and European Union have suspended some sanctions in recent months in response to reforms by the new quasi-civilian government, which include moves to liberalize the economy, the release of more than 600 political prisoners and the introduction of laws allowing demonstrations. However, despite government claims that the reforms are “irreversible”, the arrest and detention of dissidents still goes on, albeit not as often, which rights groups say proves the retired generals still in power are not fully committed to promises they have made. (Reuters)
The year 2012 is critical to economy due to prolonged instability and uncertain politics, according to entrepreneurs. “Let’s make Nepal a safe haven for domestic and foreign investments,” said president of Federation of Nepalese Chambers of Commerce and Industry Suraj Vaidya at a press meet organised here to announce Money Expo 2012 16 July. “The Money expo must focus on building investment climate and promote domestic industries,” he added. Confederation of Nepalese Industries (CNI) vice president Haribhakta Sharma urged the private sector to issue white paper to pressure the government. “Private sector must unite in common minimum economic agenda and build pressure to the government,” he said, adding that the expo is best time for it. Chief executive of the Investment Board Radhesh Pant, on the occasion, said that political and economic agendas must be separated for stability. (The Himalayan Times)
Nepal will be urging the European Union to increase its assistance in developing infrastructure, promoting good governance and vocational education during the Eighth Nepal-EU Joint Commission meeting in Brussels, Belgium on 18 July Foreign Secretary Durga Prasad Bhattarai is leading a four-member Nepali delegation while Managing Director of European External Action Service, Viorel Isticioaia Budura is leading the EU team for the biennial meeting. According to Arjun Bahadur Thapa, Europe Division Chief and Spokesperson of the Ministry of Foreign Affairs, areas of cooperation like strengthening human rights, electoral assistance and economic development will be discussed. (The Himalayan Times)
The defeat of one of the world’s largest and most lethal terrorist organizations — and the end of a three-decade civil war — should have heralded a bright new dawn for the tropical Indian Ocean island of Sri Lanka. The economy is one of Asia’s fastest growing, and tourism is booming. But three years after the war ended, human rights groups and opposition leaders warn that the country is descending toward dictatorship, with dissent brutally crushed, the media cowed and the minority Tamils, whose insurrection caused the war in the first place, still treated like second-class citizens. (…) The United States and India, Sri Lanka’s two main trading partners, had largely looked the other way as the government crushed the Tamil Tiger rebels three years ago in a campaign that left between 7,721 and 40,000 people dead, according to U.N. estimates. But the two countries have expressed frustration at the lack of postwar reconciliation and urged Sri Lanka to do more to protect human rights. At the same time, Washington and New Delhi have found themselves increasingly marginalized, their leverage limited as the government in Colombo has forged close economic and diplomatic links with China and Iran. (Washington Post)
The United States and European Union have raised concerns over media freedom in Sri Lanka after police shut down two anti-government news websites, a move press groups said was intended to intimidate critics of President Mahinda Rajapaksa. Sri Lanka is already under heavy pressure to address rights issues after a U.S.-backed U.N. resolution was passed in March urging the country to prosecute war criminals. The police Criminal Investigation Department (CID) on 29 June raided and closed news websites srilankamirror.com and srilankaxnews.com, which operated from the same premises, arresting nine people including eight journalists attached to the websites. (Reuters)
South Korea, the United States and Japan announced 12 July the establishment of a three-way security consultative body, laying the groundwork to build a trilateral alliance in the face of North Korean aggression. The announcement was made after South Korean Foreign Minister Kim Sung-hwan, U.S. Secretary of State Hillary Clinton and Japanese Foreign Minister Koichiro Gemba held a trilateral meeting earlier in the day on the sidelines of the ASEAN Regional Forum. Clinton hailed the new organization, named the Steering Group and to be based in Washington, as an initiative to “build even deeper connection” among the three nations and across the Asia-Pacific region to “bring even greater order and structure to our three-way partnership.” (…) The launch of the consultative body reflected Washington’s plan to reinforce trilateral policy coordination with Seoul and Tokyo and more efficiently deal with North Korea’s growing threats as well as China’s rising military influence in the region, Seoul officials said. (Yonhap News Agency)
South Korea expressed regret 16 July at North Korea’s silence over requests to start repayments for past food aid worth $720 million. The South’s unification ministry, in charge of cross-border affairs, said the North had not responded to Seoul’s earlier request to pay up. “This constitutes a violation of a pact between South and North Korea. Our government expresses deep regret,” spokesman Kim Hyung-Suk told reporters. Under the previous left-leaning government, the South provided the North with some 2.6 million tons of food worth $720 million in six installments between 2000 and 2007. The food aid was provided in the form of a cheap loan, with repayments to be made over 20 years. Seoul sent a notice through its Export-Import Bank in May giving advance notification that the first payment, including interest, of $5.83 million was due on 7 June. It sent a new notice on 16 July after its impoverished neighbor failed to respond. The South could declare to the international community that Pyongyang is in default, but the spokesman said Seoul would not do so anytime soon. (Jakarta Globe, Agence France Presse)

TAIWAN

Former premiers Frank Hsieh and Yu Shyi-kun, along with the former New Tide faction, the most powerful grouping in the Democratic Progressive Party (DPP), came away victorious last night in elections that will shape the party for the next two years. The two political heavyweights were elected to the 10-person Central Standing Committee (CSC), the party’s top decisionmaking and administrative body. Three members of the New Tide faction — Tuan Yi-kang, Yen Hsiao-ching and Rosalia Wu — were also voted onto CSC. (…) Biennial elections for new members of the CSC, the Central Executive Committee (CEC) and the Central Review Committee, which oversees the party’s internal affairs, were held at the party’s annual national congress 15 July. The event marked a changing of the guard in the DPP after Su Tseng-chang became party chairman in May. Thirty Central Executive Committee members were selected from 560 party representatives to make the final nominee list, before the newly elected CEC members cast their votes to elect the CSC members. The CSC is comprised of 17 members: the 10 elected members — which also included Tsai Hsien-hao, Ho Chih-wei, and Lee Ching-fu — along with seven members designated by the chairperson, three DPP legislative caucus executives and three mayors. (…) The results of the Central Executive Committee election yielded a balanced power-sharing structure between the now disbanded factions, with New Tide winning seven seats, closely followed by Yu’s faction, with six seats, Hsieh’s faction with five and the Su Tseng-chang faction with four. (Taipei Times)
The arrest in mainland China a little over three weeks ago of a citizen of Taiwan poses a significant challenge to relations between the People’s Republic of China (PRC) and the Republic of China (ROC or Taiwan). The arrest also reasserts the PRC’s claim to control what information may reach the Chinese people, no matter how dangerous such a policy might be. Chung Ting-pang was ready to return to Taiwan after visiting family members in southeastern China’s Jiangxi Province when security police arrested him at Ganzhou airport on 18 June. His family in Taiwan has not heard a single word from him since. (…) A look at the charges against Chung suggests he may have been wrongfully accused. The Chinese authorities first claimed he was arrested “to help with the investigation of Falun Gong.” Then, the charge was changed. (…) The signing of the Cross-Strait Investment Protection Agreement has been promised for months but postponed many times. Recent news reports suggested the long-delayed signing was imminent—and then Chung was arrested. (…) The legal situation regarding the relations of the PRC and Taiwan is unique in both countries. (…) If Chung can be apprehended under PRC law for actions he took in Taiwan, his case poses serious problems for Taiwan’s sovereignty. (The Epoch Times)
Former U.S. Ambassador to China Jon Huntsman Jr. arrived in Taiwan on 16 July to gain a better understanding of issues related to Taipei-Washington ties and Taiwan’s political and economic developments, the Ministry of Foreign Affairs said that day. During a three-day visit, Huntsman is scheduled to meet with President Ma Ying-jeou, Foreign Minister Timothy Yang and Deputy Economics Minister Francis Liang, the ministry said in a statement. Huntsman, also a former governor of Utah, will deliver a speech titled “America 2012: Challenges and Opportunities” 18 July in Taipei. In 2011, Huntsman resigned as ambassador to China to become a U.S. presidential candidate. However, he terminated his campaign for the Republican presidential nomination and endorsed his party fellow Mitt Romney earlier this year. (Focus Taiwan)
South Korea’s announcement of the unexpected interest rate cut this week has given an indication to market players that policymakers are unnerved by the country’s economic condition. South Korea’s central bank cut the interest rate 12 July for the first time in over three years in a move to stimulate the faltering economic growth of the country. (…) While cutting the interest rate, the central bank said that growth was likely to be weaker than it had previously expected, with a negative output gap persisting for longer. South Korea’s economic growth forecast was reduced by the central bank to 3 percent this year, down from 3.5 percent prediction made in April. (…) However, the figures in June indicated that inflation had been diminishing, which must have been a major reason for the present interest rate cut. (…) Exports to the EU have been falling and shipments to the U.S. and China have also been disappointing. With the euro zone expected to head into a deep recession in the second half of the year, conditions faced by South Korea’s exporters are unlikely to improve soon. The business sentiment too is not expected to be positive as a result of the debt crisis faced by the euro zone, which in turn will affect the job market. (International Business Times)
The South Korean government reported that crude oil imports from Iran since June were down more than 20 percent compared with the previous year. South Korea for the first six months of the year imported 21 percent less oil — around 35 million barrels — from Iran than it did the previous year, reports Bloomberg News, citing customs data. U.S. Secretary of State Hillary Clinton last June said India, Malaysia, South Korea, South Africa, Sri Lanka, Taiwan and Turkey reduced the amount of crude oil purchased from Iran. That meant that U.S. sanctions targeting the Iranian energy sector “will not apply to their financial institutions for a potentially renewable period of 180 days,” she said in a statement. (United Press International)
Most of the quarter-million people who fled massive flooding in southwest Japan were able to return home by 16 July, but the danger had not fully passed from record rains that have killed at least 28 people. (…) Yoshika, wife of an award-winning Hagi-yaki style potter, said workers used a bucket relay with plastic pails to get rid of the water flowing into their shop. In Yame, a city of 69,000 in Fukuoka prefecture, dozens of people were stranded by the flooding. (…) Kyodo News service said 28 people have died and police were searching for four missing people in the three prefectures of Kumamoto, Oita and Fukuoka, from the heavy rainfall that began 12 July. Nationwide tallies of the dead and missing were not immediately available. (…) The intense rain occurred as far north as the ancient capital of Kyoto, where rainfall exceeded 90 millimeters (3.5 inches) per hour – a condition in which rain cascades in such torrents that seeing ahead becomes impossible. (…) Fukuoka prefecture said that as of 16 July, damage there extended to more than 4,300 homes, 800 roads and 20 bridges. At least 518 landslides were recorded, and more than 2,700 people had evacuated their homes, it said in a statement. (Huffington Post)
Japan posted a set of weak economic figures on 2 July, underscoring fears about a recovery for the world’s third-largest economy amid turmoil in Europe, a key export market. Official data showed that the surplus in Japan’s current account, the broadest measure of trade with the rest of the world, plunged 62.6 percent to 215.1 billion yen ($2.7 billion) in May from a year earlier. That was well below the 511 billion yen surplus expected by economists, according to Dow Jones Newswires, with separate data pointing to weakness in new investment by corporate Japan. “A surplus in the current account shrank substantially due to an expansion in its trade and service deficit as well as a contraction in investment income surplus from a year earlier,” the ministry said. (Agence France Presse)
A significant change in Tokyo’s official position on collective self-defense may be afoot after a committee under the prime minister’s office drafted a reform calling for the amendment of the Constitutional interpretation that permits it. (…) These actions by the DJP fall in line with a recent foreign affairs focus on deepening Japan’s alliance with the United States. Washington has been calling on Japan to play an active role in Northeast Asian defense ever since the Cold War era system broke apart in the 1990s. (…) In a 2010 defense white paper, the DJP administration indicated a change in course away from its previous reluctance to use military force, toward a more active approach based on the concept of “dynamic defense.” (…) While the country has a relatively small army at 140,000 troops, its 448,000-ton naval vessel is almost three times as big as South Korea’s 180,000-ton one, and it has almost as many air force operations aircrafts, at 430 to South Korea’s 570. Its 2009 defense budget was US$40.9 billion, putting it close to France’s US$42.6 billion. A country that has yet to fully atone for its aggressions during the era of imperialism era is now on its way to becoming a fully-fledged military power. (…) Analysts took this as a sign that the government is taking the talk in Japan about recognizing collective self-defense rights very seriously. (The Hankyoreh)
North Korea has announced the removal of its military chief, a key advisor to leader Kim Jong Un. In a surprise radio announcement on 16 July, North Korea’s official Korean Central News Agency said Vice Marshal Ri Yong Ho has been removed from all this posts because of illness. The radio announcer said the decision was made by the Workers’ Party central committee political bureau and included the removal of Ri from the presidium of the politburo, considered North Korea’s most powerful body. Ri became head of North Korea’s army three years ago. (…) Analyst Chon Hyun-joon, a senior researcher at Seoul’s state-funded Korea Institute for National Unification, contends that even if the 70-year-old Ri is actually ill, he would not have been dismissed from all of his positions. Chon says there is no doubt Ri, a hardliner, lost a power struggle with moderates. The analyst says this denotes a collapse of one of the supports for the military – the other axis being the political chief of the army. Chon predicts the change will allow Kim Jong Un to proceed with a more flexible diplomatic policy. (…) Since the junior Kim took power his military increased its bellicose rhetoric towards the South. (Voice of America)
North Korea told Cambodia 14 July it was ready to rejoin six-party denuclearisation talks, Phnom Penh said, without outlining any conditions to a potential return to the negotiating table. North Korean Foreign Minister Pak Ui-Chun met with his Cambodian counterpart in Phnom Penh and “clearly stated that the Democratic People’s Republic of Korea is ready to participate in the six-party talks”, Cambodian foreign ministry spokesman Koy Kuong told reporters. “Cambodia welcomes the positive step,” he said, adding that Pak “did not talk about conditions during the meeting”. Tensions are high on the Korean peninsula after the North’s failed rocket launch in April, seen by the United States and its allies as an attempted ballistic missile test. Six-party talks involving the two Koreas, China, the US, Russia and Japan have been stalled since December 2008. The North has repeatedly expressed a willingness to return to the forum on its nuclear disarmament but without prior conditions. Washington and South Korea say before a resumption of discussions, the North must first show it is serious about the process, notably by shutting down a uranium enrichment programme which could be reconfigured to make bombs. (Agence France Presse)
North Korea’s economy rebounded last year on a recovery in agriculture, bolstering Kim Jong Un after he succeeded his father to lead the nation where a past famine killed an estimated 3 million people. Gross domestic product in the communist nation increased 0.8 percent in 2011 after a 0.5 percent decline in 2010, according to an estimate published by the Bank of Korea in Seoul. (…) North Korea’s nominal GDP totaled 32 trillion won ($28 billion) in 2011, compared with South Korea’s 1,237 trillion won, the BOK said. North Korea’s per capita income was 1.33 million won while South Korea’s was 25 million won, according to its estimates. After adjusting for inflation, North Korea’s economy remained smaller at the end of 2011 than it had been in 2008, according to the Bank of Korea. North Korea doesn’t release official economic data. South Korea’s central bank releases an annual estimate of North Korea’s economic growth, based on information from the National Intelligence Service and other related organizations. Food Insecurity Some 16 million of North Korea’s 24 million people suffer from chronic food insecurity, high malnutrition rates and deep- rooted economic problems, Jerome Sauvage, United Nations resident coordinator in Pyongyang, said in a 12 June statement. The cereal deficit for last year was estimated at 739,000 metric tons, according to Sauvage. (Bloomberg)
THE top US commander in the Pacific has noted defence spending in Australia has slipped below America’s European allies and warned military planning cannot be turned on or off when economies go bad. The Gillard government slashed defence spending in the May budget, next year taking the overall military budget to 1.5 per cent of the Australia’s economy. This is despite commitments in the 2009 defence white paper to build a new fleets of 12 attack submarines and buy additional fighter jets to met the threat of ”shows of force by rising powers” in the region — widely interpreted as code for China. Admiral Samuel Locklear, who heads US Pacific Command in Hawaii and has charge of forces across half the globe, told reporters in Canberra this morning that even in difficult fiscal times maintaining a credible deterrence and defence was important. (Brisbane Times)
THE International Monetary Fund (IMF) has cut its global growth forecasts, warning that downside risks for the world economy continue to “loom large.” In its World Economic Outlook Update released overnight, the IMF has also slashed the growth outlook for two of Australia’s key trading partners, China and India. The Washington-based institution said its latest forecasts were predicated on two key assumptions – that there will be sufficient policy action to allow financial conditions in the euro area to ease, and that recent policy action among emerging economies will gain traction. “Clearly, downside risks continue to loom large, importantly reflecting risks of delayed or insufficient policy action,” the IMF said. (…) While it does not give a specific forecast for Australia, “other advanced economies” have been downgraded to 2.4 per cent growth from 2.6 per cent for 2012 and to 3.4 per cent from 3.5 per cent for 2013. (The Herald Sun)
Little more than a dozen years after the region’s crippling financial crisis, Southeast Asia is looking more a safe haven than a risky bet, with foreign investors souring on China and India and pouring money into markets proving resilient to the global gloom. Short-term investors in Southeast Asian stocks and bonds are being overtaken by those with a longer-term horizon, signalling growing confidence in a region of 600 million people that boasts a rapidly growing middle-class. Foreign investment in regional funds is at a record high. (…)”It’s a structural change in terms of the way investors perceive the market,” said Rajesh Ranganathan, a portfolio manager at Hong Kong-based hedge fund Doric Capital, which has invested in Southeast Asia for over a decade. “Today, India and China are the places where people are looking for beta (risk) and Indonesia and Thailand are the places where people are hiding.” (Reuters)
European Union foreign policy chief Catherine Ashton on 12 July signed the Instrument of Accession of the European Union to the Treaty of Amity and Cooperation in Southeast Asia (TAC), with ten ASEAN Foreign Ministers simultaneously signing the Instrument of Extension to agree to the EU’s accession from the ASEAN side. “I am absolutely delighted to have signed the Instrument of accession of the European Union to the TAC 13 July, Ashton said after signing the treaty along with her ASEAN counterparts in the Cambodian capital city of Phnom Penh on 12 July “This is an important step because it commits us to working together in tackling issues that we face in a peaceful way. It also confirms that we will work together to address some of the security and political concerns of the region,” she added. The TAC is a non-aggression and cooperation pact between ASEAN members and their partners, and is a precondition for membership of the East Asia Summit. The treaty was initially signed in February 1976 by the leaders of the then-members of ASEAN (Indonesia, Malaysia, Thailand, Singapore, Philippines). The treaty was subsequently signed by the five other nations which joined the ASEAN regional grouping later, including Vietnam, Myanmar, Cambodia, Laos and Brunei. (RTT News)
The Philippines says it is considering several options to keep watch over disputed areas in the South China Sea, including enlisting the aid of U.S. military spy planes. President Benigno Aquino raised the idea days before a major regional security summit where the United States and China have clashed in the past. President Aquino first remarked on 2 July to the Reuters news agency that the Philippines “might be requesting over-flights” of the South China Sea by U.S. military spy planes. Presidential Communications Secretary Ramon Carandang stressed on state-run television Tuesday there has not yet been a decision on the matter, and that the primary responsibility for monitoring remains with the Philippine government. (…) A China Foreign Ministry spokesman said Monday Beijing hopes the Philippines will stop making provocative statements regarding the maritime dispute. Spokesman Liu Weimin said, “It is the hope of the Chinese side that peace and stability can be maintained in [the] Asia Pacific region, and parties concerned do things conducive to regional peace and stability.” The Philippines, Vietnam, Malaysia, and Brunei all claim portions of the sea adjacent to their coasts, while China and Taiwan claim practically the entire sea, a crucial navigation route which is potentially rich in oil and gas. (Voice of America)
The Philippines will bid out oil exploration contracts in the South China Sea despite recent tensions with China over conflicting territorial claims in those waters, an official said on 11 July. The three blocs in the South China Sea, off the coast of the western Philippine island of Palawan, are believed to be the most promising for oil and gas deposits, said Energy Undersecretary James Layug. “All reserves in that area belong to the Philippines. We will only offer areas within our exclusive economic zone,” he said at the sidelines of an energy forum in Manila. The area, known as the northwest Palawan basin, is just beside the Philippines’ existing natural gas fields, which already provide 40 percent of the electrical power of the main Philippine island of Luzon, said Layug. “These are all beside our existing service contracts so there is no doubt that these areas belong to the Philippines,” he added. He said historically Philippine energy exploration had the most success in these areas off Palawan, indicating the three new blocs might also hold large oil and gas reserves. The exploration contracts for the three blocs will be bidded out on 31 July, he said. (AFP)

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